Branding and its role in profitability of holding Companies part 3

3- SBUs relations and holding branding

With the expansion of holding companies, their activities have become more competitive and the matter of core brand among them is more important which may cause the distinction of them from market situation. The more sponsorship plans of holding companies and SBUs conform, the more positive its effect will be in identity, feedback, common relations of holding brand and SBUs. Adversely, the weaker is the conformity of plans, the more negatively will affect the identity, meaning, and feedback and brand relations like barriers against holding brand management strategies.

Strong SBUs provide many strategic advantages to holding companies. These advantages are defined as brand capital. In contrast, famous holding companies introduce economic advantages and loyal customers to SBUs.

For instance, Emerson Company founded in 1890, in 2000 was converted to a global engineering and technology company from an electronic company by adopting a new strategy of the 3rd millennium, branding with changing the logo of the company for the first time from 1967 and shortening its name from Emerson Electric Co. to Emerson. In 2000-2001 it purchased the Jordan Industries Inc. Thus it provided access to markets of china, India and Malaysia. Then it purchased Avansys Power Co. at the price of $750,000,000 in October 2001 and it turned into the biggest foreign private company in China.

This investment retained the sales of 2001 as the last year. When other companies were in economic collapse, Emerson was obliged to reduce costs and make strategic investment for long-term growth. In 2001 it improved its 43-year revenue record.

Currently Emerson consists of 3 main companies: ABB Ltd., General Electric Company and Hitachi Ltd. And 33 other affiliate companies. Many of Emerson’s affiliate companies are not globally known, but with the global fame of Emerson Companies Group and its holding companies (Astec International Holdings Ltd. (United Kingdom), Fisher-Rosemount Holding AG (Switzerland), Emerson Holding Corp., Emerson Electric Holdings Ltd. (China)) the sales of affiliate companies enhanced.

With the depression in governmental investment in SBUs, holding companies in competition for acquiring the same capital, need to establish and retain the brand identity to reach the higher levels of brand capital by strategic locating and recognition in capital market.

On the other hand, holding companies and grouping of SBU companies’ value, SBU companies intensify and may successfully use the advantages of being brand. In this case, the strategic importance of the good definition of corporate branding of SBUs is clear and the alliance of these companies have positive effects on brand and reinforces the SBU companies of brand and help the stronger growth of loyalty emotion of customers and finally enhances the brand capital value.

The support of holding company of a brand or SBU, gives the opportunity of generation of brand holding, from a type of cooperation to a long-term cooperation and relation between two or more organizations and holding changes its position to brand. Holding and SBU activities both include a symbolic relation with transfer of inherent values of sponsorship to the activity. Development of this symbolic exchange in long-term period in a diversified area and range of activities forms the structural basis of common co-branding identity and the relation in between.

 

4- Results

  • As stated in this paper, we must think about the branding of holding companies as equity of partner brands.
  • The relationship between different brands and holding brand companies may develop cooperation and sponsorship and collaboration in holding. Holding brand tasks are the sources of value and establishment of a new sponsorship environment, research and study in collaborative cooperation identity.
  • Corporate brand management needs that the company’s values initially are shared and aligned so that the holding brand identity may be formed and fixed. The common start points may be the basis for marketing relations and advertisement. Brand companies cooperation in holding company may be continued in ideological, strategic, tactical and emotional levels.
  • If the banding of holding is successful, a new value is added to partner brands. Firstly with holding branding strategy (brands holding), the equity of holding is fixed, but with marketing relations, it merges with the existing brands.
  • The role of marketing relations in brands cooperation and sources of equity in relation to the nature of holding brand equity, need further study. These studies will indicate that how holding branding gives opportunity to partner brands to move beyond sponsorship and define brand identity and make holding brand equity.
  • The sponsorship of holding companies may be a strong tool for making brand in organizations. But all holdings do not have the same conditions and advantages and holdings may produce value for their brand by using sponsorship plans.
  • When the congruity of holding companies is high, customers experience the scientific and information adaptation and often give favorable feedback. When the congruity is low, customers’ experience of information non-adaptation that negatively affects their feedbacks will have weak effect.

 

Regarding the mentioned discussion, consequently we will have relations with high congruity:

  1. Reinforcement of band identity
  2. Reinforcement of brand meaning
  3. Enhancement of brand feedback
  4. Reinforcement of brand relation

 

In low congruity we will have the adverse cases.

 

Reference:

1.Batra ,R. and Homer, P.M(2011).the Situational impact of Brand image beliefs ,Journal of Consumer ,Psychology.

2.Smith,G.(2010).Brand Image transfer through Sponsorship :a Consumer learning perspective Journal of Marketing Management .

3.Keller ,K,l(2010).Conceptualizing ,Measuring ,and Managing customer based brand equity,

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4.Aaker ,J.L (2009) .Dimensions of Brand personality ,Journal of marketing Research .