Product brand strategy without clarity on the corporate brand strategy…what AG Lafley & Unilever don’t teach us

On June 10, P&G’s iconic Chairman, AG Lafley, retired from the company. He had completed a successful transformation of the giant corporation after he took over in 2000 as CEO. In his various speeches, Mr Lafley has outlined an insider’s perspective on how he achieved what he did.

I wish to offer an outsider’s, a brand analyst’s, perspective on the reason for P&G’s success: one that emerges in the context of the competitor that it has always been benchmarked against, Unilever, I believe the comparison throws light on the relationship between product brands and corporate brands.

My hypothesis is that P&G the corporate brand is clear,  Unilever the corporate brand is confused.

For as long as we remember, P&G has stood for product innovation, Unilever…for what?

“I want my company to be brand-obsessed - from the board to the factory floor,” said Niall Fitzgerald, Chairman of Unilever, in November 2003.

So far so good. Brand obsession driven by what? Brand communication of course.

“We are in the branded content business.” he continued.

Brand communication? If the communication is good, the immediate corollary is it should drive the top-line, right?

In 1996, Unilever was £33.6bn, in 2006: £27bn. P&G, in the same period, doubled sales to £34.5bn.

And just how does the corporate brand Procter & Gamble live up to its single-pointed agenda of innovation? P&G spends almost twice as much on R&D ($2.2 billion in 2008) as Unilever ($1.3 billion).

Secondly, something else interrupted the Unilever differentiator of branded communication: the rise of the Internet. The first medium in the history of mankind to have the unique attribute of being simultaneously mass and individualised.

Advertising itself had become less effective.

And who caught on to this phenomenon first? “We must accept the fact that there is no ‘mass’ in ‘mass media’ anymore… or “Those who stay loyal to the past model will be left behind.” Said who? Jim Stengel of P&G (2004).

Third, taken to its extreme, ‘branded content’ of one brand starts militating against ‘branded content’ of another…in the case of Unilever, Dove’s stance against the manufactured beauty of TV commercials makes a mockery of Axe’s exaggerated claims of smell seduction…consumers of both Dove and Axe are equally confused. What exactly is the stance of the corporate brand Unilever that owns both these brands?
As one teases aside the words and the beliefs they represent, we return to the same theme: as a corporate brand, P&G is clear how it will become ‘part of the consumer’s day-to-day life’: through product innovation.

As a corporate brand, Unilever is unclear how it will achieve the same goal.

Creating brands through product innovation (P&G) sounds like a clear corporate objective; creating brands through ‘branded content’ (Unilever) sounds like taking a chance.

Analysis: To us brand analysts this is a case of an ill-defined corporate brand leading to poor top-line.

There are several instances where an ill-defined corporate brand will also have an impact on the bottom-line…but all of that must become the topic of another post.

Insight: The fundamental insight we share here is that product brands are today increasingly relying on the corporate brand that owns them (remember the consumer anyway shares the psychological ownership!)…and unless the latter defines itself, and then walks the talk, product brands will create less value than CEOs imagine. Good brand strategy always respects this basic tenet.

Is this too simplistic? I don’t think so. It’s simple, yes, but not simplistic…and that’s what great brands are all about.