Building a corporate brand other than based on a family name is a different challenge. We have seen in India over the last 2-3 decades the emergence of successful corporate brands built out of a single business with a product/business brand that does not mention a family name. Some of them rose above their origins by reducing themselves to a set of alphabets. Slippery and nebulous and constantly reminding you of the six visually impaired men and an elephant, brands are an alluring field of exploration, especially corporate brands.
Jindal Steel Works became JSW. Industrial Credit and Investment Corporation of India became ICICI, Narsee Munjee Institute of Management Studies became NMIMS, Indian Tobacco Company became ITC, British Broadcasting Corporation became BBC, Cable News Network became CNN and so on. The act of reducing their long name to a few alphabets liberated them from their origins to go beyond, go anywhere where they wished, where they saw opportunities.
Rising above origin
It is difficult to fathom why Jindal Steel Works will set up technology company but a JSW doing so does not raise eyebrows. JSW is now a sprawling conglomerate. From Management, there is now NMIMS College of Pharmacy, Physiotherapy, Engineering, Architecture, to mention the most famous. Originating in tobacco, ITC has business interests in processed foods, hospitality, among others. CNN sounds so much better than Cable News Network and has helped it grow beyond being a network of cable news, some successful and some not.
This act of cutting the umbilical cord is also the first step towards becoming a corporate brand as against staying limited to a product or service. These are alphabet brands, a unique ensemble of businesses united by a set of alphabets, which, by themselves, mean nothing to many. How many will know what ICICI stands for or JSW for example? The point is that it does not matter because these alphabets now lead a life of their own, building businesses very different from their beginnings.
Family name as corporate brand
Historically, in India, as probably elsewhere, a trusted family name yields multiple fruits. In the early days of India’s economic growth including prior to independence, we had the Tatas, Birlas, Mafatlals, Singhanias, Modis, Kirloskars, Bajaj, TV Sundaram, some of whom continued to flourish after independence and especially after the process of economic liberalization began in 1991. Some floundered after the process of economic liberalization created serious competition, which many were not accustomed to dealing with.
Often, families split creating serious problems one of which is the use of the corporate brand name. One of the most intense battles in this just two years ago was the House of Abhinandan Lodha, with an acrimonious quarrel over who gets to use the well-known brand name. The Bajaj brand became a subject of discord when they ventured into finance from two and three wheelers. Now Bajaj Finance is as strong as Bajaj Auto. A possible explanation lies in that often misused variable – subconscious beliefs, which includes trust. People trust the name and are happy to follow it even as it wanders into new territories. Such trust is not easily won.
Some families succeeded in creating a product brand which became a corporate brand such as Raymond. Born as a textile brand it morphed inro an apparel brand withaccessories and also in realty – Raymond Realty, a remarkable transformation.
A different kind of corporate brand
The most successful corporate brand created in India after independence is Reliance, not a family name, but again a name with deep subliminal roots. Legend has it that the late Dhirubhai Ambani requested a friend in Yemen where he was working to let him use the name. And what a choice it has turned out to be. It is debatable whether Reliance would have flourished as a corporate brand without the benefit of Dhirubhai Ambani’s larger than life image. The brand has traversed from textiles to petrochemicals to oil to telecommunications to entertainment to retail to ecommerce to healthcare! In India, until the advent of Reliance, this was the kind of trust that family corporate brand names were used to.
Reliance went one step further: created a similar success with Jio, once again a name with deep roots in our culture – Jug Jug Jio is a common blessing in India. Born as a telecom brand it is now extending its sweep across many different businesses.
Visible product brands but not corporate
There is also the phenomenon of a highly successful basket of product brands under one legal entity whose name is not so familiar to people (barring some exceptions) as their products: HUL is an obvious example with a vast array of successful product brands. It does say ‘a quality product from Hindustan Unilever’. So is P&G. Some may doubt HUL is a corporate brand except perhaps among a limited circle of knowledgeable people. P&G is another example, although, in India, HUL is better known than P&G.
Perhaps this is unique to fast moving consumer goods, where, by definition, there is a large number of products competing with many others not just in general but in specific categories of products catering to similar needs. This inherent multi-faceted competition probably is an obstacle to creating a truly corporate brand.
Premium pricing, cost of capital
A successful product fetches a premium price (subject to competition) while a successful corporate brand helps raise capital at a lower cost than otherwise possible. While a corporate brand lets a group move across vastly different fields, it would be impossible but for the ability to attract capital at a lower cost than available to others. In a similar fashion, such entities can raise debt too at a lower yield than others.
This is an advantage of enormous significance. As I have repeatedly mentioned, the single most significant characteristic of most businesses after 199 is the rise in the scale of businesses, including the minimum efficient scale.
As I have written in my article on ‘Conglomerates – the Kangaroo strategy”, this ability to raise large funds is what lets corporate brands build conglomerates which subsequently reinforces the strength of the corporate brand.
This is a fascinating world.
