Branding and Promotion - Silicon Graphic Inc - Assignment Example

Silicon Graphic Inc. Ans The American Marketing Association (AMA) defines a brand as a term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers." Brand equity is a positive image established through recognition of company name and products. At times a company raises funds through equity sales and generates positive cash flow to strengthen its financial statements. Similarly, a good brand equity is encashed by the company to gain access to newer markets and broaden its customer base. Brand equity is not only about minting money but it means more than that. It is the value a customer places on the brand which results in a long term association of the company and the customer. It generates both tangible and intangible benefits for the company that a brand adds to a product/service. For Silicon Graphics Inc. the elements and characteristics of brand equity are; A positive brand equity in traditional workstation markets such as research, engineering, and entertainment. The brand has been associated in this field with favorable qualities like innovation, vision, fun, and customer orientation. An image of being a company dealing with high end users. This image got further boost with the taking over of Cray Research Inc. another super computer company. Its target markets comprised of scientists, engineers, animators and graphics professionals. A positive image in visual and 3-D graphics field. Silicon Graphics has been synonymous with the most powerful and advanced computer graphics capabilities in the industry since its inception. Association with Hollywood big banner films like 'Jurassic Park'. Association with UNIX and RISC based architecture. A company with technological edge in the field of high end computing, normally unreachable for general consumers. Premium Pricing company It is quite apparent that Silicon Graphics Inc. has not given due consideration so far to gain access to the mindset of existing and prospective customers a prerequisite for establishing the brand name. Advertising plays a critical role in building brand equity. It helps customers to differentiate a brand from competitors a brand from competitors on dimensions which are important to consumers. This Brand equity helps in stimulating growth in many parity products. SGI has long been associated with high end 'Hollywood like' products. That's indeed a big asset for SGI. But for long term sustenance the company will have to diversify to fulfill the requirements of other customers as well. SGI did try to enter this space as well, but without making any conscious efforts towards establishing a 'common man' user friendly image. Consistent and suitable media campaigns and visibility is required towards sustaining any brand equity. Ans 2: SGI realized the painful way in the year 1996-97 that everything is not fine with its business operations and brand imaging, when it started incurring losses. So the company started t take note and then accordingly set in a motion a number of short-term and long-term measures. The acquition of Cray also proved to be non-productive and company realized that the liabilities are on the rise after its acquisition. This led to parting of ways by SGI from most of the Cray business and the Cray brand to by handing over this business to Tera Computer Company on March 31, 2000. One of SGI's most glaring brand deficiencies was the under-leveraged master brand. For example the name Coca-Cola, is associated with cold-drinks, though there are over 400 products that the company produces in over 200 countries, yet the consumers measure up every product with Coca-Cola, the 'quality cold drink' at the back of their minds. Reason for the deficiency in SGI branding is the trend of ignoring the importance of brand equity, or perhaps this could be because of sheer overconfidence on the part of management. Otherwise how can we explain the absence of the Silicon Graphics typeface and its 3D-box logo from one print ad since 1995. SGI therefore started taking corrective measures after the financial debacle in 1996-97. By the year 2000 the company started adopting the "top-down" branding strategy by giving its Worldwide Marketing & Communications division the responsibility for all branding decisions, including advertising, product names, logos, and slogans. Till then the branding task was mainly handled at the lower end of hierarchy with little interest from the top end. By the year 2000 the company had changed its name from Silicon Graphics to SGI, to do away with the over-emphasis of the graphic tag. By 2000 therefore, the company had amend these problematic perceptions, and to better integrate its server, services, and supercomputer businesses within the master brand. The company also changed its logo to a three-dimensional cube with a three-color "SGI" logo printed lower-case in a custom font. Explaining the name change, the company reformulated the letters SGI to signify "Servers, Graphics, and Insight." In addition to the reformed master brand identity, SGI devised a new strategy for its sub-brands. Earlier SGI had over 500 distinct sub-brands, and over 200 registered trademarks, but there was no relation between the top brand and the sub-brands. Therefore by 2000 SGI started aligning its sub-brands under the master brand umbrella, by assigning each individual product to one of three product categories: "SGI" servers and services, "Silicon Graphics" workstations, and "Cray" supercomputers. Ans 3: In view of the branding and financial difficulties there were quite a few decisions that SGI consciously took towards retaining/ building its brand; SGI is an internationally renowned brand for its high end computing solutions. In fact after the success of the Hollywood movie 'Jurassic Park', it was being argued future belongs to SGI. But that was not be, though quite a few animation movies kept rolling out of Hollywood , and SGI's association continued with these big banner movies. In view of financial debacles, one particularly appreciable thing that SGI did was 'they did not panic'. In the light of continuing losses and brand equity crisis, SGI maintained the moral high ground of being an unmatched high end brand. SGI was even restructured twice with job cuts and closing of some facilities. The world at large continued to believe that SGI is a big company. The common user did not approach SGI even at that time for its computing needs only because of its continued association with high end. To ensure the highest performance possible, SGI computers kept using the most powerful technology available. In view of compounding losses year after year there were even suggestions to dump the name SGI, as was started to be taken as a sinking ship. Some of its top executives started abandoning this ship. But it goes to the credit of the company that it kept faith in itself, its brand identity and recouped from that position. Though the Hollywood tag definitely cost SGI couple of millions, as the general perception was that SGI technology for Hollywood, yet it preferred to continue with this tag as it was indeed a precious and glamorous tag. SGI products in a way fulfilled Esteem needs of customers, which is demonstrated by the way some customers used to treat SGI machines. The example of one heavy machinery manufacturer showcasing a single SGI workstation in a separate design studio, while keeping hundreds of less powerful HP machines filled in adjacent room amply sums up this trend. Such iconic brands have the highest ability to charge a premium as well as the highest segment share. Quality of the product in such cases is taken for granted SGI has been successful in earning the trust of its loyal customers over the years. Trust comes with quality, emotive attachment of customer, consistent behavior of the brand and a functional characteristic that makes it effective for the consumer. It was beyond doubt that any machine with SGI tag will prove to be a performer. Ans 4: The objectives that a good brand is supposed to achieve include: Delivering the intended message clearly Confirms the credibility of the company Connects the company's target prospects emotionally with customer needs Motivates the buyer to go ahead with the product Earns the customer loyalty To succeed in branding the company has to keep track of all these elements in order to sustain the business. SGI, despite having earned the Brand, made quite a few mistakes in the run up; It did not consider brand building as a crucial task towards business sustenance. For years together, in SGI, the top management was primarily concerned with the technological aspects of the company. The stewardship of the brand continued to be a low priority area, while the top management kept its focus on R&D, manufacturing and sales. No long term strategy was there for brand building. Branding is a premium activity and it deserves a top-down approach and not the 'bottom up' approach as has been the practice at SGI. Working principle at SGI has long been - "helping technical and creative professionals solve complex computing problems using a combination of our professional skills, system performance, and visualization technologies." The branding decisions at SGI too were largely governed by the engineers working on the products. Engineers, no doubt, are a talented and well qualified breed, yet the marketing and brand building requires that one should be in touch with the market, the changing buying habits of the customer and a thorough analysis of competition. Engineers had to spend most of their time in polishing the technical capabilities of the product. Since the engineering team had come out with technologically superb piece of machine after putting in lot of research work, so the technical aspect means to a lot for them. Therefore if an engineer is to take branding decision, he is bound to be biased towards giving the hype to a technical aspect and unintentionally the behavioral aspect gets ignored. For revenue generation and profit making we need to have 'mass brands' together with some flag bearing 'iconic brands'. Mass brands have only a moderate amount of trust as far as competence and behavior is concerned. However these brands are able to develop an emotional bond with a large section of the masses. SGI has so far been able to place itself as an 'iconic brand' only. Such brands become a very important part of social identity. Such brands can keep up the flag but they cannot make the financial statements full of cash flows. For successful brand building, the consumer insight needs to be studied from time to time, which SGI did not do, as it was too preoccupied in the R&D activities. Ans 5: It is said that brands that are well-nurtured, well managed and kept relevant to a newer audience have a longer life than companies. However old age can also take a toll on brands. Moreover in these changing times when IT and liberalization is driving the world economies too fast, variations in buyer preferences too are taking place accordingly. As per an approximate calculation, the value of a company's brand equity can be calculated by comparing the expected future revenue from the branded product with the expected future revenue from an equivalent non-branded product. This value can comprise tangibles, functional attributes, intangibles, and emotional attributes. SGI too did a brand audit and found itself lacking in many departments of brand building, accordingly it planned for re-branding itself. SGI realized that higher value brands generally possess a 'broader umbrella' effects allowing more successful brand extensions by transferring the brand values towards new products/ business entities. Therefore SGI decided; To increase the awareness level of its brands. To embracing the Wintel PC-based technology for making workstations which it considered inferior earlier. PC based technology has proved its popularity beyond doubt. To develop windows NT based workstations together with its own O2 desktops running IRIX. To officially change is name from Silicon Graphics Inc. to SGI with redefining the three letters as 'Servers, Graphics and Insight'. To devise a new strategy for its sub-brands. Servers now were designated by the SGI name with a product number of four digits The year 2000 was an important year of transition for SGI as it tried to reinvigorate the entire product line by introducing an array of next-generation solutions, and divested SGI of businesses that were not tightly focused on its core competencies. Equally important, there was substantial restructuring undertaken by the company with functionally centralizing operations and putting a new executive team in place. All these measures were initiated only after the company's market share started dwindling. Market researches showed that as compared to brands like Hewlett Packard and Sun Microsystems the awareness level about SGI brand is abysmally low, particularly amongst non-customers. Marketing mantra says that awareness level must be very high not only amongst the established customers but amongst non-customers as well, because non-customers of today will become customers tomorrow only when they feel attracted towards the brand. Analyzing the re-branding efforts it can be said that these efforts have not borne fruit to the extent SGI might have expected. But at the same time it must be kept in mind that PC computing machines were allowed by SGI to have a firm grip on the market. This grip cannot be easily loosened by SGI within a year or two. Therefore this effort will take its own time before translating into financial windfalls. Ans 6: Brand Stewardship calls for the leadership role of the brand in the marketplace together with accountability for the long-term well-being of the organization's brand equities. Up until late 8Bs and mid 90s branding was viewed as something of a phenomenon created by the company and then communicated to the customers. It was considered to be a simple world back then. A company created a product's brand image, brand attribute and brand promise. Then it communicated the brand, usually through advertising, directly to each of its target audiences. But later marketing professionals came to realize that "the company" is not the only holder to the brand key, it is influenced by market forces as well. We'd therefore like to recommend to SGI executives that; Brand stewardship involves realizing the potential of brand equity, nurturing it with professional zeal, communicating it to the masses in right earnest and then guarding it with all sincerity. In this process the Smart brand stewards keeps an influencer chart on the corner of his desk constantly updating it and making notes in the margins. The brand steward is also supposed to recognize the market influencers and then analyze them in proper perspective. SGI is indeed a premium brand, but in today's market driven economies just having a premium brand does not help in revenue earning. For survival profit making is equally important. SGI has the responsibility towards its shareholders as well. Falling share price doesn't in any way help in consolidation of the brand. It is therefore equally important that the brand image gets converted into cash flows. For this to happen, a periodic market analysis is required to be done to understand the preferences of the customers. A school/ college going youth of the day is a potential customer of SGI for tomorrow. It is therefore equally important that the brand must be seen as something of a potent force by this segment as well. Coca-Cola, Pepsi cola, HP, IBM etc are often seen endorsing the youth events. They don't expect that the expenditure incurred in such sponsorship deal will be returned immediately in the form of sale of products, instead they are trying to secure the future. Technical aspect is no doubt extremely crucial for a computing machine and it forms the backbone of any such device, but equally important is how to relate these aspects with customer needs. The brand steward will have to put his thinking caps and plan out different strategies for different segments, because each segment relates with the brands as per his her requirements and how the machine satisfies his requirements. References: 1. Laura Lake, "What is Branding and How Important is it to Your Marketing Strategy", available online at; http://marketing.about.com/cs/brandmktg/a/whatisbranding.htm [Nov. 3, 2006] 2. SGI, "2000 Annual Report", available online at; http://www.sgi.com/company_info/investors/annual_report/00/download/sgi_narrative_00.pdf [Nov. 3, 2006] 3. Karl D. Speak, Principal/Founder, Beyond Marketing Thought, Inc. "Beyond Stewardship to Brand Infusion", available online at; http://www.beyondmarketingthought.com/brandtoolbox/articles/Brand_Infusion_DMI.pdf [Nov. 4, 2006] 4. Steve Dahllof, "Expertise: 360 Degree Brand Stewardship", available online at; http://www.ogilvypr.com/expertise/360-brand-stewardship.cfm [Nov 4, 2006] 5. Philip Kotler, (1974) "Marketing Management", 2nd Edition, Prentice Hall Inc. 6. Aaker, David A. (1998), "Strategic Market Management", New York: The Free Press. 7. The case study Read More