Identity in action.

IDENTITY IN ACTION

Getting the most from the marketing dollar is still a priority whether your market is made up of 20 countries thousands of miles apart or 10 towns, each within one-half hour of the other.

Meeting these and other challenges in the '90s requires that CEOs use identity to its full potential as an integrating force across three areas: strategy, marketing and culture. Looking ahead, it is reasonably safe to predict, based on experience over the past decade, that identity will serve a number of important purposes in this regard, specifically:

* Identity will provide a means of counterbalancing fractioned corporate images resulting from decentralized, far-flung global operations... it will be a mechanism for linking employees by establishing a common view of quality and reinforcing shared values that transcend different foreign languages and national customs;

* As the frenetic short-term mentality of the '80s subsides, identity will become a "best friend" to every CEO interested in reinforcing his company's commitment to the long-term and sending a clear signal to would-be raiders that the company isn't for sale;

* As traditional product brand loyalty erodes, identity will add a new dimension to consumer marketing that changes how goods and services are differentiated and even why they're purchased;

* Identity will become a recognized means of capitalizing early on economic trends which invariably lead to opportunity for some competitors and vulnerability for others.

In the 1990s, corporate identity will become a principal means of meeting the need for: swift, compelling communication; distinctive, transnational corporate images and greater management control in a more complex world.

Lessons from the '80s

In looking back over the past decade, there are many companies whose experience collectively has laid the groundwork for managing identity in the 1990s. Here are six useful examples:

BOC Health Care:

Think Globally, Act Locally 

In the midst of a burgeoning health care market, The BOC Group, a UK-based world leader in industrial gases, had acquired a diverse group of health care businesses--in anesthesia equipment, pharmaceuticals, disposable hospital products and home health care. Each operation marketed products and services under a different identity--some companies, in fact, used different names in different geographic regions. Fragmented identification practices were hurting business in important, highly competitive markets around the world. Customers who purchased more than one BOC product were now confused by multiple identities, employee performance was suffering because of uncertainty about the corporation's long-term commitment to health care and communication expenditures were being duplicated unnecessarily.

A three-part strategy was developed that addressed marketing and cultural needs simultaneously; In short: 1) create one "BOC Health Care" image that would span North America, Europe, the Middle East and Asia and become a global anchor for decentralized businesses; 2) streamline product and service identities from market to market and 3) create new names for merged operations where a unified identity would strengthen competitive position.

On the strength of this strategy, BOC Health Care has succeeded in building recognition and sales in some of the most attractive markets for health care worldwide. It has also managed to integrate numerous disparate cultures into four distinct organizations which today are the backbone of the enterprise.

Sara Lee Corporation:

Use Identity to Signal

Distinctive Value

"There will be less pressure (in the 1990s) on corporate managers to maximize (short term) shareholder value." This prediction was made by Leon Cooperman, chief executive of asset management at Goldman Sachs this past January. It reflects an era far different than that of the 1980s; a period when short-term stock value could dictate corporate survival.

In the mid '80s, John Bryan, chairman of Consolidated Foods, recognized the need to build stock value and, in so doing, preempt the notion that the company was fair game for takeover.

Consolidated Foods was virtually an unknown entity to all but those investors, customers and, of course, employees who had close, vested interests in the concern.

The main challenge in management's eyes was to reposition the company from being viewed as a broadly diversified food company, to being recognized as a brand-driven consumer products enterprise--a move which would focus attention on the value inherent in the organization and, if successful, spark growth in corporate reputation and stock price.

An analysis of price/earnings ratios among consumer products companies revealed that those which used a leading brand name as their corporate name had consistently higher stock prices. A study of Consolidated Food's many brand names--among them, Hanes, L'Eggs, Sara Lee--showed that the name Sara Lee, in particular, was gold in the marketplace. It had built an image that meant "overall quality," not just cakes and sweets.

The resultant name change to Sara Lee Corporation had striking results. The company's ranking in its category in the Fortune survey of corporate reputations jumped from number 7 to number 1 in a field of 10. A sustained increase in stock price also occurred. Nothing had changed but the name.

Fidelity Investments 

and Raytheon:

Exploit the Maker's Mark 

Different businesses. Different markets. Different challenges. Similar solutions. Fidelity Investments had achieved widely acknowledged success as a preeminent force in the field of investments. This success is manifest on several levels: As creator and producer of innovative mutual fund, asset management and transaction products and services; as the leader in taking advantage of multi-level distribution channels such as direct response retail marketing and partnership relationships with other financial institutions; as a provider of state-of-the-art investment management systems to corporations and institutions seeking proven, reliable investment opportunities for employee retirement plans.

With all of this success, however, Fidelity was losing capital to competitors when investors switched from one fund to another. To stem the flow of capital out of the family, management realized it needed to revitalize its institutional identity; the name Fidelity was being overshadowed by the names of individual funds such as Magellan which had become major brands in their own right. The value of the maker's mark had been lost.

Today, "Fidelity" is the focus of investor attention now that it is being used as the lead name with all funds. The performance reputation of the company is firmly linked to the name. New retail units are exapanding under the Fidelity super brand. The return on advertising and promotional dollars is greater. Precious investor capital, more often than not, now remains in the family.

Raytheon is a company of two minds: a leading defense and aerospace contractor and a major player in consumer white goods and general aviation. Amana and Caloric ranges, Speed Queen washers and dryers and Beechcraft aircraft are all products made by Raytheon.

Each of these brands had a strong identity in its own right. What Raytheon brought to the party, however, was an exceptional reputation for technology innovation and application. In effect, the Raytheon name provided unique leverage to the image of each of its branded non-defense business. The identification strategy employed the Raytheon name--the maker's mark--as an endorsement to the brands--a "transfer mechanism" in effect for communicating the enormous technological strength and commitment that underlay the character and performance of these valuable brands.

American Express:

Build, don't Change

The American Express card has come to be a status symbol whose value is captured in the slogan, "Membership has its privileges." There is no need for revolving credit. We trust that the bill will be paid on time, in full. As the '80s unfolded, the US and other industrialized nations underwent an unprecedented expansion in consumer credit. MasterCard and Visa both enjoyed the fruits of this expansion. American Express' market position, however, precluded their sharing the wealth since payment-in-full and on-time was the rule for "belonging."

To capitalize on this economic trend, Amex decided not to change the basic strategy of the American Express card, but to offer a companion card to "members only" whose track record qualified them as superior credit risks. The Optima card was born, the credit boom was penetrated, and the integrity of the "crown jewel," the American Express card, was preserved.

Launched in 1987, Optima has gained critical share in strategically important markets globally. In 1987, Optima was voted by Fortune magazine "One of the 10 best products of the year" in its annual survey.

Texaco:

Consolidate Identity,

Seize the Moment

Over the course of the 1960s and '70s, Texaco's petro-marketing position went from first to fifth. Operating division autonomy led to broad inconsistencies in how the famous Texaco identity was portrayed which, in turn, diluted the company's overall retail image. Gasoline through-put fell well below US national averages.

The early '80s were a turning point for Texaco. The decision was taken to consolidate the Texaco identity in domestic as well as overseas markets and, at the same time, establish a new, vital look for the entire retail operation that centered around the re-introduction of the Texaco star as the focal point.

Coincidentally, there was a marked trend in fast food and "convenience" store growth in the United States. Texaco's retail gasoline operations were prime real estate--superbly positioned to capitalize on this trend by adding convenience outlets--StarMarts--to the facilities.

The introduction of Texaco's "System 2000" led to a 77.9 percent increase in gasoline sales at redesigned stations where direct before-and-after comparisons were possible. Per site volumes rose, on average, from 28 gallons per month to 160 gallons per month in a two-year period. Texaco's stations had become magnets for consumer attention and dollars.

Summary

Each of these companies knew how to use identity as a catalyst of strategic success. Each is stronger today than before. Most importantly, each has put into place a framework for growth in the 1990s that builds off of inherent capabilities which identity has helped to communicate, in the final analysis, to exploit for economic advantage.

What, then can we expect of identity in the 1990s? In brief:

* It will be a means of structuring a unified image for global enterprises for whom consistency of reputation is paramount no matter where they do business;

* It will be a clear statement of executive commitment to building long-term value for customers and shareholders, alike; a signal of management's desire to stay the course;

* It will reflect the "maker's mark"-- the organization behind the brand, the highest form of competitive differentiation;

* It will become a standard way of exploiting nascent economic trends whose impact spells significant business opportunity for smart competitors.

In short, identity in the 1990s will be an essential means of creating value--delivered by employees, recognized by customers and funded by invetors for whom return on investment is the bottom line.

Laurence D. Ackerman is a principal, Anspach Grossman Portugal, Inc., New York.