Skin Deep

While there are countless people who would throw back their heads and yawn at the mere mention of pharma and corporate branding in the same sentence, we still have not really uncovered the reason why pharma just isn't that good at it.

This presents us with a mystery even Sherlock Holmes would struggle with - how can an industry that, generally speaking, has a stunning track record when it comes to product branding, be seemingly so far off the mark when it comes to branding its own corporate face?

Is it genuinely poor at corporate branding, or has it simply decided to plough all its efforts into product brands? After all, this method has proved to be successful over the years, so why change now?

It depends on how you define success, says Jim Gregory, CEO of US firm Corebrand. Yes, they are big and the financials are generally strong but so much of the success depends on the stars being aligned. The tremendous amount of money it takes to create a new drug is not well understood by the public. It is always scary when your most important audience doesn't understand what it takes to give them what they need.

Branding puts a little more control back in the hands of the corporation - at the very least, it is an insurance policy against what could go wrong, he says. Martin Roll, CEO of VentureRepublic, a corporate branding specialist, also believes that while few could argue with the double digit growth successes pharma enjoyed during the 80s and 90s, over the last five to 10 years this growth has slowed down. With a dearth of new blockbusters, continuing consolidation and more than 50 of the top blockbuster drugs due to come off-patent in the next five years, pharma is under increasing pressure.

One of the better ways to differentiate, create strong loyalty among customers and enhance shareholder value is through corporate branding. In fact, the need for strong corporate brands is much stronger now than ever before, Roll explains. The importance of corporate branding has increased tremendously over the last decade. The last 10-15 years has seen a heightened level of globalisation and many Asian countries have liberalised their economies.

Roll believes that this rapid expansion has put companies under increased pressure to optimise their resources. With the new business environment, diverse cultures and uncharted territories, companies entering these markets have been compelled to create strong corporate identities that can be trusted.

~

Keeping step

Pharma is probably not as far behind in the corporate branding stakes as some people would make out. There are a number of industry sectors, particularly in the world of FMCG where there is evidence of a more product-focused as opposed to corporate branding-led approach to business.

Unilever is one of the world's leading manufacturers of household products, food and health and beauty brands. This won't be news to many people though they might be surprised to discover just how many of the products under their sink, in the fridge and in the bathroom are made by the company: Cif, Comfort, Domestos, Bertolli, Flora, Sunsilk, Dove and Lux to name but a few.

As a company, it is probably best known for its product brands, not its corporate identity. Another such company (with a large consumer goods division) is Procter & Gamble (P&G), the maker of such products as the Aussie shampoo range. Yet, how many people working outside the world of marketing would know that, except for those who read the back of shampoo bottles when they are having a shower?

According to Roll, P&G is well-known for its multi-brand strategy - not dissimilar from a pharma company approach. However, despite ploughing limitless energy into product brands, the company's corporate brand still encapsulates all P&G's activities - not so similar to pharma.

The pharmaceutical industry has traditionally been more product-focused than most. Given the importance of R&D in the industry, pharma companies have leveraged their R&D prowess, their patents and their relationship with physicians to successfully grow their products, Roll explains.

However, increased competition from generic drug manufacturers, pricing pressures from Asian medicine producers and R&D expenses that can be anything upwards of $1.5bn are tightening the thumbscrews on the value of product brands and forcing pharma to concentrate on its corporate face.

Given the huge challenges the pharma industry is facing, going forward there will be heightened activity towards implementing corporate branding strategies, says Roll. Pharma companies have realised the importance of corporate branding and companies like Pfizer, Eli Lilly & Co and Merck have invested heavily in building very strong corporate brands.

Many observers have hinted that pharma's lacklustre performance when it comes to corporate branding stems from its wish to remain anonymous, fearing that a product calamity could bring an entire empire crashing down if it was clearly aligned to the corporate identity. However, if this is or ever was the case, calls for greater transparency of clinical trials data and marketing strategies from regulators on both sides of the Atlantic, a small but growing band of medical journal editors and the public in the wake of countless safety issues (most notably Vioxx) will put paid to any pharma companies' plans of getting lost in the crowd.

Pharma is never going to enjoy the relative simplicity of the FMCG market because quality alone is not the differentiating factor. Yet, this is not a reason to hide in the shadows of the corporate landscape like an awkward child in a school photo.

Corebrand's Gregory believes that the industry needs to be more open about the direction in which it is heading. The pharma industry, as a whole, is not going in a very clear direction and given the amount of bad publicity it is receiving, it is certainly warranted that a clear corporate brand strategy should exist at every company.

The problem is that everyone wants the next blockbuster drug so supporting a product brand is the primary focus. The company that can articulate consistently a clear and differentiated vision for the future will gain a tremendous competitive advantage, he notes.

Loyalty card

In the cut-throat world of business, customer loyalty developed through slick product and corporate branding is the currency that companies trade in.

There is a growing body of evidence that the corporate brand contributes to financial performance in meaningful ways, says Gregory. The leverage the corporate brand has on business performance has increased slightly over the past decade. In some industries, the importance has intensified and in others it has declined; it depends on the ebb and flow of the business climate.

As of the first quarter of 2005, pharma companies had an average corporate brand equity, as a percentage of market capitalisation, of 5.41 per cent, which is equal to $4.34bn.

Value for money

Companies across all industry sectors spend millions on ensuring that they attract and, more importantly, retain a large and diverse customer base. They spend millions on the customer-facing expression of their brand seen through naming, logos, marketing activities and corporate communications because they recognise the importance of getting it right.

However, while naming, logos and their design and colour scheme are important, corporate branding is a serious undertaking; one that requires a high level of skill and more than just a new marketing faÁade built on empty promises.

Pharma has many of the skills needed to perfect a corporate branding strategy already at its fingertips. Corporate branding applies the same methodology and toolbox used in product branding, but takes it one step further: into the boardroom.

Without board-level commitment and buy-in from the company, corporate branding will be nothing more than a pipe dream. Corporate branding strategies are designed to help the management team implement the long-term vision, create a unique position in the marketplace for the company and, crucially, establish stakeholder relations - none of which can be achieved without backing from the CEO. Indeed, the key is to understand that the corporate brand is leveragable for the savvy CEO, notes Gregory.

Branding is related directly to enhancing shareholder value, Roll adds. By creating relevant and resonant brand identities that customers can relate to and trust, companies can step up the value chain. Corporate branding, he notes, has become a dominant feature on the business landscape because it drives certain important advantages:

ï A strong differentiation in the market
ï Better brand management due to economies of scale
ï Builds a strong, credible brand that is trusted in all operating markets
ï Eases the introduction of new brands, as they can lean on the corporate brand
ï Provides a strong, clear presence across markets and segments
ï Increases the overall corporate financial value; and
ï Provides a clear signal to all stakeholders about the corporate brand's backing of all its product brands in terms of resources.

~

The corporate brand is in every communication coming out of the company, whether intended or not and for this reason Gregory believes that first and foremost you need a good communicator setting the rules.

You need a CEO who understands the value of the brand and how long it takes to build a good one - and it takes years. You also need someone who sees what the future will bring and builds the company towards that vision. This is what branding is about - not where you are today, but where you are going tomorrow.

Roll concurs that corporate branding is a continuous process, one which requires a considerable investment of resources, both financial and organisational.

What does pharma stand to gain from putting more effort into, or adopting and implementing a corporate branding strategy? Simple: A clear voice among the babble of noise going on in the industry today, says Gregory, who believes that it will help to improve brand image and bring economic advantages.

The crucial factor is gaining trust through corporate branding as, without it, pharma will become more vulnerable to generic competition and pricing pressures.

The Author
Claire Bates is editor at Pharmaceautical Marketing

10 STEPS for Successful Corporate Branding

1. The CEO needs to lead the brand strategy work

The starting point for corporate branding must be the boardroom, which also serves as the most important checkpoint during the project. The CEO must be personally involved.

2. Build your own model as not every model suits all

All companies have their own specific requirements, business values and a unique way of doing things. As such, even the best and most comprehensive branding models have to be tailored to these needs and requirements.

3. Involve your stakeholders, including the customers

Do not forget the valuable voice of your customers in this process. The customers, employees and many other stakeholders know a lot about your business. This is common sense, but many companies forget these simple and easily accessible sources of valuable information for the branding strategy.

4. Advance the corporate vision

The corporate branding strategy is an excellent channel for advancing the corporate vision throughout the company. It provides a guiding star and leads everyone in the same direction.

5. Exploit new technology

Modern technology helps to gain effectiveness and improve the competitive edge of the company. A corporate website is not only a must but rather a crucial channel for any modern firm, regardless of size. If the corporation is not accessible via the internet, it
does not exist!

6. Empower people to become brand ambassadors

The most important assets in a business are the people; they serve as the most important brand ambassadors. Make sure everyone is adequately trained in the corporate brand strategy and understands fully how the company wants to be seen.

7. Create the right delivery system

The corporate brand is the face of the business strategy and promises what all stakeholders should expect from the business. Think of the `cradle to grave' concept of a lifelong customer and the value they will provide in such a time span.

8. Communicate!

Bring the corporate brand to life through a range of well-planned, well-executed marketing activities, and make sure the overall messages are consistent, clear and relevant to the target audiences. They must be concise and easy to comprehend.

9. Measure the brand performance

A brand has to be accountable and things are no different for a corporate brand. How much value does it provide for the company and how instrumental is the brand in securing competitiveness? These are some of the questions that need to be answered and that the CEO will automatically ask as part of a commitment to running the strategy successfully.

10. Adjust relentlessly and be ready to raise the bar

The business landscape is changing almost every day across all industries, so businesses need to evaluate and possibly adjust the corporate branding strategy on a regular basis.

The Author
Martin Roll is CEO of VentureRepublic, a specialist firm in corporate branding