The Homa Files

Excerpted from Brand Channel, “More Than a Name: Japanese Super-brands Diversify”, by Barry Silverstein, August 22, 2008

After World War II, Japan reinvented itself and developed into a global economic powerhouse.

Some believe a primary reason for this growth was the Japanese keiretsu system. Essentially, keiretsu were major families of affiliated corporations that had ties to a key bank, which both controlled and provided security to the companies. As a result, companies were “protected” financially, similar to the way Japanese companies protected their employees.

The keiretsu system spawned powerful conglomerates that for a time were insulated from economic woes. But  … “The [keiretsu] system is, in large part, to blame for Japan’s bubble economy of the 1980s that ultimately burst.”

Nonetheless, the keiretsu system was the basis for giant corporations that diversified to an extreme degree. Keiretsu could be vertical, such as Honda and Toyota, or horizontal, such as Mitsubishi and Fuyo (which spawned Canon, Hitachi, Nissan, and Yamaha, among others).

* * * * *

Mitsubishi is an excellent example. Mitsubishi started in 1870 as a shipping company. Today, this global giant has hundreds of companies under its loose umbrella, some of which do not carry the Mitsubishi brand name.

To bring some commonality to Mitsubishi companies, a corporate mark was created. It depicts three connected red diamond shapes. The word “Mitsubishi” is a combination of the Japanese words mitsu (three) and hishi (water chestnut). Hishi is traditionally used to denote a rhombus or diamond shape.

Companies with Mitsubishi in their names include Mitsubishi Chemical Corp., Mitsubishi Electric Corp., Mitsubishi Heavy Industries, Ltd., and Mitsubishi Motors Corp. Mitsubishi companies without Mitsubishi in the name include Kirin Holdings Company, Ltd., Nikon Corp., and Nippon Oil Corp.

* * * * *

Suppose two consumers have very different experiences with Mitsubishi-branded products.

For example, one consumer purchases a Mitsubishi automobile and has a good experience. Another consumer purchases a Mitsubishi television and has a bad experience. Will the first consumer look favorably upon and consider purchasing a television carrying the Mitsubishi brand name? If the second consumer decides to buy a car, will he or she be negatively predisposed toward a Mitsubishi-branded vehicle?

Emotionally, each consumer might transfer the positive or negative experience with the Mitsubishi brand from one product to another. These feelings about the brand could transcend product category.

Rationally, however, if a Mitsubishi-branded product is highly rated in a product category, it deserves consideration. If the consumer had a negative experience with the brand in one category, and wants to make an objective purchase in another product category, this creates a potential dilemma.

* * * * * 

Brand influence in the above example assumes the same consumer is the purchaser of both a car and a television. But what happens when the Japanese super-brand manufactures products with the same brand name in two entirely different and highly specialized categories?

Take Yamaha, for instance. On the one hand, this Japanese super-brand is renowned for musical instruments such as keyboards and drums. On the other hand, Yamaha is just as well known as a brand of motorcycles. Both corporate entities use the Yamaha name and mark.

Only if a musician playing a Yamaha instrument also rides a Yamaha motorcycle will the identical consumer come into contact with the same brand name in these specialized categories.

Nonetheless, the consumer’s experience with the brand in either category could influence overall brand perception. With a positive perception, the consumer thought process might be: “I bought a Yamaha keyboard and it was great… I bet their motorcycles are good, too.”

* * * * *

Bad product experiences not withstanding, brand diversification has another important benefit: Brand recognition can extend a consumer’s receptivity to other products in allied categories.

For example, a satisfied owner of a Honda automobile may seek out other Honda products. That consumer might become a buyer of a Honda motorcycle, a Honda snowblower, a Honda lawn mower, or a Honda outboard motor for a boat. The perceived quality of the Honda vehicle can lead to a satisfied consumer making other related Honda purchases.

While Japanese super-brands are not always regarded as great brand marketers, it is the quality of their products that creates the perception of great brands.

To the credit of the Japanese super-brands, they have almost uniformly built a reputation for quality, regardless of business category. This is one of the attributes that led to Japanese automakers dominating that industry.

* * * * *

Other Asian super-brands have followed the diversification strategy with success. The Korean companies Samsung and LG are good examples.

In some cases, diversifying a single brand name can have a diluting effect and may turn out to be a bad strategy. “Sony’s diversification not only drains the brand’s resources to a great extent but also diverts the brand focus from the core of the brand.”

For the most part, however, Japanese super-brands derive considerable benefit from diversification. In a world of ever-increasing options, a product with a Japanese brand name is often regarded as the best choice.

* * * *

Barry Silverstein is a 25-year advertising and marketing veteran and co-author of The Breakaway Brand (McGraw Hill, 2005).

Full article:
http://www.brandchannel.com/start1.asp?fa_id=437

* * * *

Want more from the Homa Files?
Click link =>  The Homa Files Blog

* * * * *

This entry was posted on September 5, 2008 at 6:47 am and is filed under Mktg - Brands, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.