SPECIAL REPORT

BRAVE NEW BRANDS

JOHN SCHOFIELD May 18 1998
SPECIAL REPORT

BRAVE NEW BRANDS

JOHN SCHOFIELD May 18 1998

BRAVE NEW BRANDS

Open the fridge and enter the brave new world of global branding. Thirsty for a sip of Canada Dry? The last time a Canadian company produced it was in

1931. The label is now owned by the British soft-drink and candy giant Cadbury Schweppes PLC, which sells it in 90 countries. Up in the freezer, the Pillsbury Doughboy that

adorns packages of frozen cookie dough answers to British masters, too. The trend extends beyond the icebox. In the den, the RCA trademark emblazoned on that big-screen TV belongs to Thomson C.S.F. of France.The car in the garage might be resting on Firestone tires, a famous U.S. brand now owned by Bridgestone Corp. of Japan. And if the vehicle is a Chrysler, even that venerable

American name will soon pass into the hands of I Daimler-Benz AG of Germany.

Big-name brands are in demand, and companies are I willing to pay huge amounts for the f instant recognition and market access 1 ^—• they afford. With the spread

of television throughout the developing world, brand-consciousness has become a global phenomenon. In the process, the premium that companies place on high-profile products is rising.

Above all, brands make good business sense, says Niraj Dawar, a

professor of marketing at the University of Western Ontario in London: “The cost of building a brand today is very high, so the value of existing brands becomes greater and greater.” The relentless push by multinationals to promote their brands globally is driven partly by a desire to spread product development and adver-

tising costs over a larger market, says Dawar.

As the costs go up, so does the importance of protecting brand identity. In some countries, multinationals are careful not to advertise their ownership of certain brands for fear of offending local tastes. In Italy, Buitoni food products do not display the name of the company’s owner, Swiss giant Nestle S.A. Where a local brand is considered weak, however, companies will replace it with a stronger multinational name. In Canada last year, for example, U.S.-based PepsiCo eliminated the Hostess potato chip brand in favor of its Frito-Lay moniker.

Increasingly, global firms are winnowing down their brands in favor of fewer names that target particular segments of the international market.The line that separates each is sacred. For that reason, the auto giant that emerges from the marriage of Chrysler Corp. and Daimler-Benz AG is unlikely to slap the Mercedes three-pointed star on low-end Chryslers. Mergers may be fine in the boardroom, but out on the highway brands work best when they stick to their own lane.

JOHN SCHOFIELD