By having a clear brand strategy OE suppliers have an opportunity to capitalise on their good name and good will. The cost of developing a brand strategy is low, and the risk is all upside, according to research by SupplierBusiness.com.
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A strong brand gains recognition. It means a company is taken seriously in competitive bid situations, and it can open doors when trying to win new business with an OEM that the supplier does not already have a relationship with, according to suppliers.
For Delphi, for example, its corporate image is part of a process of educating OEMs that Delphi is not just a spin-off from GM, and that it has its own character, as a lean and high-tech company. It is all a part of defining and building the company both internally and externally.
“Over time brands will become more important because ultimately they are what people paint as a mental picture of your company,” said Bill LaFontaine, global director of marketing at Delphi, in an interview.
One of the more tangible potential benefits is that a strong brand can be viewed as an asset and valued as such on a company’s balance sheet; this can help raise finance for investment – a major issue for the automotive industry today.
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By GlobalDataMaintaining several brands
As suppliers consolidate they are tempted to consolidate their brands to simplify and maintain the clarity of their main brand. Mahle is one company that has consolidated brands. “It does not make sense for a company of our size to have different brands in different regions for different products, because all of our customers are meanwhile global companies and it does not make sense to talk to Mitsubishi in this country with the brand of, for example, Izumi Corporation, when they are developing and producing the same products as Mahle in Europe,” said Professor Dr Heinz Junker, CEO of Mahle.
“The same is not necessarily true for suppliers to the aftermarket,” said Susan Brown, author of the SupplierBusiness.com article.
When INA acquired FAG it decided to maintain the FAG brand name and try to leverage it. “The brand name will definitely be maintained because FAG has a great customer reputation and a great image,” said Jurgen Geissinger, CEO of INA.
Product technology brands
While the industry is losing some brand names with the wave of consolidation, some new brands are appearing to help describe new technologies or new businesses, and associate that new technology with a particular company.
Michelin’s PAX System, for example, is used to describe a package of innovative tyre technologies and features. It does so succinctly, and once Michelin has educated its target audience, the use of the term can aid communication.
In this case the terminology, and use of Michelin’s name is carried over into product literature for the cars it is featured on. Audi for example, cites the Michelin PAX System as a feature in its brochures.
But product brand names rarely filter through to the consumer level. For example, Delphi has trademarked the MagneRide name, but, when it is fitted on the Cadillac Seville, it is renamed Magnetic Ride Control, and Magnetic Selective Ride Control on the Corvette.
This could be changing, however. “Where there is significant brand differentiation there has been some excellent cooperation between Delphi and the OEMs to continue to utilise these brands,” LaFontaine told SupplierBusiness.com. An example of this is GMC and Chevrolet marketing Quadrasteer as a feature and naming Delphi as the supplier in their product literature.
