Conglomerate sloganeering
Aside from the complications of managing varied business lines, conglomerates have a marketing problem: potential investors may not know what they do. Apparently, the stock prices of successful conglomerates often run well behind their actual performance simply because of investor confusion.
That's the argument of a recent Wall Street Journal article ("Conglomerates' Conundrum", 9/14/96). The story tracks the new branding program of United Technologies Corp. (UTC), a massive and very successful company made up of such well-known brands/divisions as Otis Elevator, Carrier (air conditioning), Pratt & Whitney (jet engines), and Sikorsky (helicopters). The company itself is unknown to many investors. So it is starting a branding campaign. It's a curious thing, a reconfirmation that stock market prices are significantly based on such ephemera, not just performance.
As the article points, UTC is following the footsteps of GE, Archer-Daniels-Midland, and BASF. (We believe that these are conglomerates, but focused ones with a few areas of concentration, They are not built in the seemingly random way that 1970's conglomerates like Gulf + Western and ITT were.)
The $20 million a year ad campaign uses the slogan "United Technologies. You can see everything from here," a vague feel-good line that seems a lot like BASF's "We don't make a lot of the products you buy. We make a lot of the products you buy better." But I suppose the company slogans like company mission statements or state tourism slogans all look pretty much the same. (The generic version, offered for free without consulting fees, is -- "XYZ Corp- we do stuff.")
The article notes that such branding efforts don't always have a great track record. UTC, for example, has tried it in the past (slogan: "This is Momentum." Remember that one?) And no slogan could save Tyco International (slogan: "You may not know everything we make. But everything we make is vital.")
These ads are aimed at investors not consumers unless you are currently shopping for an elevator or jet engine. Even so, you'd want an Otis elevator, not a UTC one. By contrast, the GE name is on light bulbs and appliances, so consumer recognition has direct benefits.
But most investors are institutional (they own 80% of UTC's stock), and they presumably know about UTC and don't need any warm-fuzzies about the company. So the campaign must be added at not very sophisticated investors who manage their own portfolios and buy stocks of Fortune 500 companies-- The kind, that is, who invested in Krispy Kreme because they loved the doughnuts or in Pets.com because they have a dog or they liked the sock puppet. Are there enough of these feel-good investors to push up the stock price? That's what the branding experts are saying.
Or maybe corporations just want to be loved?
2:08:39 PM 
|
|
