Mega Brands, Perceptions and Reality

Mega Brands, Perceptions and Reality The top five brands in terms of brand valuation as at end 2005 and ranked by Businessweek/Interbrands were Coca Cola, Microsoft, IBM, GE and Intel. The estimated brand values were USD 67.5, 60, 53.4, 47, 35.6 billions respectively. The figures have been rounded off to the nearest decimal. They are all corporate as well as product or service brands. Unless some cataclysmic event occurs, which is highly unlikely, these brands will continue to dominate the top five. Amongst all the above companies, Intel is the most focused followed by Microsoft.

When you have such an overwhelming brand power and pull, the normal tendency of companies is to leverage the brands, more commonly known as brand extensions. Unfortunately, the brand perception in the minds of people has a more important role to play because perception is the reality. Most of us try to change perceptions. It is an exercise in futility. Perceptions cannot be changed because it means trying to change the environment. People who have tried to do that have realized it at great costs. Instead of trying to change perceptions, we must deal with perceptions and try to change the product or service and try to meet the perception. As Al Ries & Jack Trout have said in their book 'Bottom up Marketing', if you are in a boat and it starts leaking, it is obvious you must plug the leak rather than trying to drain the lake. Brand extensions confuse the markets in terms of positioning. When you send out conflicting messages, your competitor gains. Even giant companies mentioned above can make such mistakes.

Let us take Appliances. Who is the leader in Food Processors? Who is the leader in refrigerators? Who is the leader in Washing Machines? Who is the leader in Electric Irons? Who is the leader in Blenders? Who is the leader in Electric Ranges?

What does Coca Cola stand for with so many variants?

Who is the leader in Super Computers? Who is the leader in mini computers? Who is the leader in micro computer? Who is the leader in desk top publishing? Who is the leader in main frames? Who is the leader in laptops and tablet PCs?

Now let us take the smaller brands.

There was a time when one had a bright smile with sparkling teeth; it used to be known as a 'Colgate Smile'. What does Colgate-Palmolive mean today? It can be a tooth paste, tooth brush, tooth powder, a shaving cream, a shaving brush, a bathing soap or even a detergent cake.

Xerox has become a generic name for photocopying. They have been trying to change the perception for years. They even threatened to sue people who used the term 'Xerox' for photocopying. They don't like it but that is a reality. They however launched a full range of computers, printers and other office products 25 years ago and failed? Why did Exxon try to get into office products? Why did Goodyear and DuPont acquire oil companies? Why did GE try to get into mainframes in the 1950s? Would it make sense if GE launches a cola? If you are looking for some consumer finance, would you look at GE Money or Citibank? Would GE Plastics have fetched a higher price if the brand name had been different?

There can be many more such questions, case studies and examples of companies trying to encash their brands by leveraging them. Only a handful has succeeded but majority have failed. You may as well ask how these companies survived such decisions. The reason is not far off. They all have enormous resources. They all have an overwhelming core competence in some field. Coca Cola maintains its leadership by enlarging the market pie. Others in the industry also benefit when the pie is enlarged but that does not matter. IBM maintains its leadership by its excellent service. GE maintains its leadership by excellent management and overall efficiency. Intel and Microsoft by innovation and superior technology.

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Mega Brands, Perceptions and Reality - To learn more about this author, visit Madhavan T Gopalachary's Website.

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