Diageo, Brand Management and Shell and BP

Interesting article on Diageo in The Times today. The brand management model they have seems effective. The trading title of a multi brand conglomerate is not really important and only really of significance to investors. The general public does not know or care that Guinness is part of Diageo – as with Unilever or Proctor and Gamble the corporate trading title is pretty much unknown to the domestic consumer.

Consumer brand driven corporations can apply good brand management principles to all of its products. The alternative approach, using the corporate brand on all its product and service offers (as Richard Branson did with Virgin) has its benefits but is much riskier. A problem in one area can damage the brand overall.

Diageo has economies of scale which means it can demand good deals from suppliers. It’s an impressive model allowing brand additions or deletions based on performance and prospects. It’s also good for employees who can broaden their experience by moving from one brand to another under the company’s umbrella.

The world of oil and gas, in which I worked for forty years with Shell, has always been mostly a mono-brand operation. That said my first employer, Shell-Mex and B.P. , had quite a few consumer brands – Shell, BP, National Benzole, Power among them. This added value I think. But later Shell failed to establish a Convenience Store brand under the “Select” brand name. This is quite an interesting brand management story.

The image on the top was what we tried to do in the 1990s. The image was “foody” rather than “oily” because Convenience stores were predominantly food item retail outlets. So though located on Shell branded petrol stations the idea was that we had to persuade the customer that we had an authentic C-store offer. Food basically. The problem was that we didn’t invest in the brand.

In most markets little or no advertising money was spent building the “Select” name and identity. The basic idea was a good one, but you’ve got to give the customer a reason to believe – and we didn’t do that. Over time the distinctiveness of the “Select” brand faded away and it became corporatised as Shell. The lower image shows where, in some markets, it ended up. “Oily” again.

The new model adopted by the oil companies is to partner with established C-Store operators and brands like Marks and Spencer. This I think works well for BP . It’s not multi-brand like Diageo – BP does not own or even manage the M&S brand on its sites. But the hosting arrangement seems to work well and for the consumer the brand offer is clear. BP under the canopy, M&S in the shop.