When we live with something for a very long time we have a tendency to assume that it has always been around. So it is with brands, at least to some extent. Brands in some shape or form have been around forever but it is only in the twentieth century that we began to refer to them as such, and it is only since the late 1980s that branding has become a critical issue in business. Prior to that, branding was regarded as being the preserve of marketing departments in fast-moving consumer goods companies, typified by two giant businesses, Procter & Gamble and Unilever. Their 100 years’ war in the detergent market defined branding for many people. But in the late 1980s a number of high-profile takeovers catapulted branding to the top of the wider business agenda.
It was a time characterised by tooth-and-claw capitalism, an era of corporate raiders and asset stripping, with Margaret Thatcher belligerently dominant in the UK and Ronald Reagan pursuing an equally single-minded agenda in the US. It was a time immortalised in the film Wall Street by the line “Greed is Good”.
One of the most swashbuckling corporate raiders was the Hanson Trust run by the eponymous Lord Hanson. In 1986, it took over the Imperial Tobacco Group, a long-time pillar of the British business establishment that had more latterly become a little less confident as the anti-smoking movement gathered strength. In what was to become a pattern in takeovers of this type, the victor was judged by financial analysts to have paid over the odds but was significantly vindicated by the massive earnings generated b the brands it had bought. Two years later another corporate raider, Goodman Fielder Wattie, made an opportunistic bid for Rank Hovis McDougal, a company that owned a range of well-known bakery brands whose asset value was effectively ignored in its balance sheet. If the attempted takeover of RHM in 1988 alerted the financial community to the value of brands, it was the takeover of the venerable British confectionery manufacturer Rowntree Mackintosh by Nestle in the same year that caught the public imagination.
The impetus for all of these bids was not so much the traditional reasoning behind hostile takeovers, where a dynamic, determined group of managers feel that they could manage the assets of another company much better than the existing management; rather, the raiders had spotted an accounting anomaly whereby the value of their brands was not included in the balance sheets of these companies. There were long-established accountancy reasons for this, but the fact that the real value of brands was rarely represented in the share price of consumer goods companies meant that the share price was undervalued, often by a significant extent, and this enabled the raider to offer a price that was substantially greater than the quoted share price.
The accountancy practice row over valuation rumbled on – and to some extent is still rumbling on to this day — but the potential earning power of brands was left in no doubt. After the Rowntree takeover the entire business world began to re-examine its assets in a new branded light, and the concept of brands dominated not only the boardrooms but every other room as well.
During the 1980s businesses also realised that branding was not only relevant to fast-moving consumer goods companies; business-to-business markets were also affected by the branding issue. The famous catchphrase “No one was ever fired for recommending IBM was suddenly viewed in a new light. It referred to the fact that IBM was the biggest operator in the market, and although that was undoubtedly a factor involved in any purchasing decision, it was now recognised that it was also testament to the enormous power of the IBM brand. Suddenly companies began to consider themselves as brands. Retailers had no difficulty adopting this concept, which coincided with the expansion of their own brand offerings.
Banks, however, remained one of the last bastions of traditional practice and had resisted (and in some cases are still resisting) the concept of marketing for longer than most. For a long time they turned up their noses at the idea of being thought of as brands. However, even they finally began to see the light and the 1990s saw the launch of some highly targeted marketing campaigns by the leading clearing banks around the world.
At some point in the 20th century brands became all pervasive, the maintenance of brand image and value became the driving force for producers and brand owners and even global brand names began to dominate local markets.
By the end of the 1990s even places, politicians and religious orders were joining the brandwagon. The very idea of countries being referred to as brands was anathema to many, but consideration of Ireland as a brand had been the starting point for the highly successful Young Europeans campaign for the IDA in the 1980s. By the 1990s a number of countries and regions began to carry out formal market research in order to establish their brand image with a view to managing that image more systematically.