Company versus product brands.

September 1, 2012

We seem to be confusing the two. It’s obvious that Procter & Gamble is a company brand, but what’s an Apple?

Like P&G, Apple is a company brand. But unlike P&G, the Apple co

mpany brand is a powerful motivating force for buying Apple product brands like the iPod, the iPhone and the iPad.

Every company should have a powerful company brand, but they don’t. Except for a handful of companies like Johnson & Johnson, most company brands influence very few consumers.

How many consumers go out of their way to buy Procter & Gamble products? Or Unilever products? Or PepsiCo products? Or General Motors products?

Not very many.

How do you build a company brand?

Many marketing pundits have a lot to say about this subject. Some typical approaches include:

We need to communicate our culture, our concern for the environment and our sustainability programs.

Our approach is purpose-driven marketing, based on social responsibility and standing for something that inspires consumers.

We believe in innovation, only launching new products and services that are on the cutting edge of design and performance.

All of these things are worth doing, but they don’t do much to build a company brand. The problem is the noise level.

It’s not just the Fortune 500 that are causing the problem. That’s just the tip of the corporate iceberg. It’s the Fortunate 17,509.

The 17,509 companies in America with more than 500 employees. These 17,509 companies operate out of 1,180,446 locations, employ 58.2 million people and have an annual payroll of $2.7 trillion.

There’s nowhere near enough room in the average consumer’s mind to file away facts about all of these companies, or even a tiny fraction of them. And frankly, most people don’t care about companies; they care about products and product brands they can buy.

And yet, a strong company brand can be a big asset.

Apple and Disney, for example. Both of these company brands are strong for the same reason two reasons.

(1) They are focused. (2) They were first.

Apple is focused on high-tech products. And Apple was first in high-capacity MP3 players, touch-screen smartphones and tablet computers.

Disney is focused on fun and fantasy. And Disney was first in animated motion pictures and fantasy amusement parks.

(And I hasten to add, first in the “mind,” not necessarily first in the “marketplace.”)

While most marketing people know the importance of being first, there’s less importance given to the concept of being focused.

Look at Procter & Gamble. Few companies have launched as many products that were first in their categories as P&G. Yet the company doesn’t have the same cache with consumers as Apple or Disney.

Procter & Gamble isn’t focused. The company markets everything from cosmetics to high-tech razors to low-tech soap and a lot of products in between.

And, if you haven’t noticed, P&G is taking a pounding in the media lately. Headline in The Wall Street Journal: “Angry analysts scorch P&G CEO.”

What’s a Yahoo?

Is Yahoo a product brand or is Yahoo a company brand?

Like General Electric, Coca-Cola, Toyota and many other famous names, Yahoo is both a company brand and a product brand. And that can cause confusion.

A lot of confusion. Yahoo has had six full-time chief executives in five years, including Marissa Mayer, the company’s latest CEO.

She has a problem. Yahoo’s share of online display advertising has fallen from 18.4 percent in 2008 to 9.1 percent this year.

“Yahoo, while not a dying company,” according to The New York Times, “has struggled to stay relevant after it missed the two biggest trends on the Internet: social networks and the move to mobile devices.”

Wait a minute. Yahoo did keep up with many Internet trends. But they did so by expanding their product brand.

Consider the power of keeping a product brand focused on a simple idea instead of expanding it to capture the latest Internet development.

• You go to Amazon to buy something.
• You go to Google to search for something.
• You go to Facebook to connect with friends.
• You go to Groupon for daily deals.
• You go to Twitter to send and read tweets.

Now why should you go to Yahoo?

Here is how Marissa Mayer explained her plan in The New York Times: “The most important thing is to give end users something valuable, inspiring and delightful that makes them want to come to Yahoo every day.”

In other words, you go to Yahoo for something “valuable, inspiring and delightful.”

The preference for soft attributes like “valuable, inspiring and delightful” instead of hard attributes like “search” is prevalent in the management community.

Short-term versus long-term success.

Yahoo was a short-term success because it built a brand around a hard attribute, search. But it is failing in the long term because it failed to differentiate the role of a product brand versus a company brand.

As a company, Yahoo should have jumped on every new development on the Internet with a new strategy and a new brand name and a new website using that brand name. Not by expanding the Yahoo product brand, but by expanding the Yahoo company brand with additional, narrowly-focused product brands.

The future belongs to multiple-brand companies, but with a caveat. A multiple-brand company still needs a focus. Compare the focused Apple company brand with other high-tech companies.

Microsoft is a software company that has gone sideways for years. Why? Because it has tried to get into hardware (Zune, Xbox, Surface), advertising sales (aQuantive), enterprise social networks (Yammer.) At one time, it even tried to buy Yahoo.

Google is following the same playbook. An Internet company that is trying to build hardware brands (Nexus tablet computers, Motorola smartphones.)

Look at Dell and Hewlett-Packard. Two hardware companies trying to get into the software business. Why is that? Because management at both companies have decided that they can’t make money in hardware.

I guess they have forgotten that Apple, the world’s most valuable company, makes only hardware.

If you want to build a strong company brand, you have to have a narrow focus. That’s the same principle that works for building strong product brands.