Using the corporate brand in pharma
pharmafile | March 6, 2012 | Feature | Business Services, Manufacturing and Production, Medical Communications, Research and Development, Sales and Marketing | Chris Marks, MSI, brand, branding, brands
In many markets the corporate brand can add significant value and values to the portfolio of product brands and franchises. This is particularly the case in consumer markets, yet in pharma it plays little or no role, other than in communication with financial markets.
When it comes to the brand that clinicians, payers and patients see, it is almost always about the product brand, and the corporate brand has little equity with these key audiences. And yet the pharma market is steeped in the values of heritage and trust. As product differentials become ever smaller, surely the corporate brand could be a powerful extra dimension to building competitive advantage.
Is this another area where our industry should sit up and take some learning from our fast-moving consumer goods colleagues?
In the last decade, corporate brands have become very strong influencers of financial value for corporations. Corporate brands in themselves have become valuable assets on the company balance sheet, with market values very often much beyond book value.
Look at the value attributed to the corporate brand in the Interbrand ‘2011 Ranking of the Top 100 Brands’: at number one was Coca-Cola with a brand asset value of nearly $72 billion; Google was fourth with a value of over $55 billion; and Apple ranked eighth at almost $34 billion.
So where are the big healthcare brands? The only one in the Top 100 is Johnson & Johnson, ranked 85 with a value of £4 billion – below the likes of Tiffany & Co, Adobe and Barclays. Although the pharmaceutical industry has had some major product brand successes – think Prozac, Botox and Viagra – demonstrating the integration of strong product branding into everyday practice, what about the image of the companies themselves?
Does the corporate brand in pharmaceuticals have no value? Obviously not – but it is not a vehicle that we, as an industry, have focused on in the past.
Brand architecture
Let’s first consider at how brand architecture is used in other markets, particularly consumer markets. Think of the brand architecture as its family tree or hierarchy – it is how an organisation organises the various named entities within its portfolio, and how they relate to each other. Ideally, the brand architecture is simple, with no more than two levels: corporate and sub-brands.
In fact, brand or sub-brand is the type of architecture most often used. It takes a number of forms, each of which will include one or some of the following:
Corporate brand
The corporate brand is the brand bearing the company name. It is always the highest in a brand hierarchy. Examples are Sony, Apple, Nestlé, Colgate and L’Oreal. It is the dominant, highest level brand in the hierarchy.
Master brand
A master brand is the brand that covers ‘ranges’, and can extend into more than one product category. It sits in the space between the corporate brand (if it is used at all) and the sub-brand. Examples include Listerine (a complete range of mouthwashes from Johnson & Johnson), McVities (the range of biscuits from United Biscuits) and Fairy (the range of cleaning products from Procter & Gamble); note that none of these overtly references the corporate brand.
Sub-brand
A sub-brand is a new brand that is combined with a corporate/master brand in the brand identity system. The sub-brand can make the corporate brand more vital and relevant to a new consumer segment or within a new product category. Examples are Nescafé (coffee from Nestlé) and Total (dental hygiene range from Colgate).
Product brand
A product brand is a product or service made distinctive by its positioning relative to the competition and by its own personality. Brands represent the tangible and intangible benefits provided by a product which can be identified with the entire customer experience. A brand includes all the assets critical to delivering and communicating that experience: the name, the design, the advertising, the product, the distribution channel, the reputation.
Endorsed brand
An endorsed brand is the primary name the consumer is intended to use to refer to a product, and is endorsed by the parent or corporate brand in the brand identity system. The parent brand is also identified with the product; however, the endorsed brand is given much greater visual weight than the parent brand. In this situation, the corporate or parent brand lends credibility or assurance to the endorsed brand without overpowering it with its own associations. Examples include Dasani, the water brand from Coca-Cola; and famously, immediately post the take-over, Skoda was endorsed by the new parent, VW.
The house of brands
The pharma industry is at a decisive point of change, as competition increases and product brands’ patent lifecycles get ever shorter. So I would argue that now is the time to revisit the relationship of our product brands with our longer-lasting corporate brands.
For years, pharma companies have followed the ‘house of brands’ strategy, focusing resources almost exclusively on building awareness and trust in product brands, often at the expense of the corporate brand. The result is that many consumers don’t even know the company that makes their daily prescriptions, as many corporations have discovered.
Yet pharmaceutical product brands don’t stay in the limelight for long – the patent framework means that few product brands from 20 years ago are still relevant today. The one long-term constant is the corporate entity behind the product (albeit that these have also evolved).
So, investment in and management of the corporate brand is essential.
Of course there are potential pitfalls in devoting more resources to developing corporate pharma brands. What is the impact on the corporate brand if a product causes significant adverse events – if that product carried the corporate brand prominently, what would be the impact on other product brands in the portfolio bearing the corporate brand – would they be damaged by more explicit association? Think Vioxx (but it happens anyway – look at the MSD share price).
If there was a production failure, what would be the impact on the corporate brand? Think Cerezyme and Genzyme. What if your products and services do not fit together under one brand promise, personality and position? Think about the role of Novartis (branded pharmaceuticals) and its subsidiary Sandoz (primarily generics and biosimilars) – actually a good example of the use of the corporate brand in our industry.
The problem is that corporate branding is a long-term project, in an industry that sees product sales peak and peter out in less than a decade. To build a corporate brand is time consuming. There’s what you say, then how consistently you say it and for how long. You have to be a fantastic company for at least five to ten years before people believe it – and you can lose that reputation in 30 seconds.
Corporate branding is a serious undertaking which entails more skills and activities than just an updated glossy marketing facade with empty jargon.
The advantages of a strong corporate brand
I sense that these potential pitfalls have been the things which have held back the pharma industry from giving its corporate brands a stronger role. Yet there are undoubted benefits from doing this, especially in an ever more rapidly changing marketplace.
A strong brand is no less or more than the face of the business strategy, hence portraying what the corporation aims at doing and what it wants to be known for in the market place. Think of HSBC, which has successfully implemented a stringent corporate branding strategy. They employ the same common expression around the world, with a simple advertising strategy based on the line ‘The world’s local bank’. This creative platform enables the corporation to bridge many cultural differences, and to portray many faces of the same strategy.
A strong corporate branding strategy can add significant value in terms of helping the entire corporation and the management team to implement the long-term vision, create unique positions in the marketplace of the company and its brands, and not the least unlock the leadership potential within the organisation. Hence such a strategy can enable the corporation to further leverage on its tangible and non-tangible assets leading to Branding Excellence throughout the corporation.
It also creates simplicity, as it always will stand on top of the brand portfolio as the ultimate identifier of the corporation. P&G has notoriously been known for a multi-brand strategy and yet again, the corporate brand P&G is still what encapsulates all activities by the company.
Depending on the business strategy (and the potential need for more than a one-brand architecture in the case of P&G which markets many different brands under their umbrella), a corporate brand can very often assist the corporation and the management to focus in on the core vision and values. Once this overall platform has been established and implemented, it serves as a great stepping stone for revisiting any other brands in the corporation’s portfolio, to adopt a new approach and look at the various brand identities.
A strong corporate brand instils trust and loyalty – extremely important qualities in the pharmaceutical industry. Such confidence can help propel a company through uncertain times.
However, keeping product brands at an arm’s length from the corporate brand (and the other products in its house) ensures a cushion should one product falter. It is also about building and maintaining strong perceptions in the minds of customers. This takes time to establish and many resources to keep.
Meeting new commercial needs
Our industry has recently experienced considerable M&A activity, downsizing, integration and diversification of portfolios. In the coming years, with patent expiry and loss of exclusivity on a number of the blockbuster brands that drove revenue streams in previous decades, end users will demand more targeted therapies.
I believe this has led to a significant change in the role that brand can and does play within our space, whether it be strengthening the product brand proposition or bringing the corporate brand into play for the first time. The role that brand plays at both a product and corporate level is rapidly changing to meet the needs of the newer commercial models. It is up to those leading the pharmaceuticals companies to challenge the current brand model.
The focus can no longer be solely on promoting product brands through a ‘house of brands’ approach. Rather, industry leaders should use brands – all brands (corporate, product, category) – in a smarter way.
And, in some cases, this may involve industry leaders changing their respective brand models altogether. Some of them will shy away from exploring alternative brand models due to the risks of linking the corporate name to the products.
But the proliferation and acceleration of traditional media, combined with the instantaneous consumer dialogue of digital/social media outlets, is making our world and our industry increasingly transparent. As such, the separation between product and manufacturer can no longer be artificially maintained.
Industry leaders should recognise that they can benefit from a more confident and assertive approach – one that elevates the role of the corporate brand and capitalises on the gains and loyalty such an approach can create.
The life of the enterprise
The founder of Sony, Akio Morita, once said: “I have always believed that the company name is the life of an enterprise. It carries responsibility and guarantees the quality of the product.” The core value of a brand is derived from its ability to drive demand, loyalty, retention and purchasing power.
Therefore, a strong and well-balanced corporate brand orchestrated throughout the corporation by a passionate chief executive and his team can lead to very successful and sustainable financial results.
In recognising corporate brand value as a strategic business and financial asset, leaders in pharma will be able to drive demand, loyalty, retention and purchasing power for their respective organisations – all of which will subsequently translate into the measurement of a balance sheet asset, earnings and shareholder value.
Let me finish by asking you some questions to enable you to assess the value of your current brands, and what role your corporate brand should play in the mix:
- How can your corporate brand create value for your organisation and its shareholders?
- Does your corporate brand promise match your long-term business strategy?
- Has your commercial model changed significantly in the last three to five years? Does your brand model properly align to any change in your commercial model?
- Are you maximising the revenue potential of your product, portfolio, and corporate brands?
- Are your people (employees) fully engaged with your corporate brand? Do they live the brand?
How you answer these questions – not in words but in actions – will go a long way in determining whether we lead the inevitable evolution of our industry, or lag behind. To avoid falling back, it seems inevitable that the corporate brand must play a bigger role in our industry.
Now is the time to be brave, show confidence and once again learn from fast-moving consumer goods.
Chris Marks is partner and brand services principal at The MSI Consultancy Ltd. He can be contacted at cmarks@msi.co.uk
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