The Importance of Branding in the Two Industries - Lego and Google - Case Study Example

How would you evaluate the importance of branding in the two industries represented in your chosen cases (e.g., motor vehicles with Porsche, energy with BP)? “Google was founded by Larry Page and Sergey Bin in 1998” (Quelch & Jocz, p.1). It has started their operations with the help of search engine business. Now they have diversified into many other areas such as social networking, mobile communications, operating system, e-commerce etc. The name Google is familiar to even a layman at present because of the extensive brand building strategies implemented by Google. Branding is so important in every industry and computer and communications industries are also not an exception. “Brands need to find a voice that resonates, that surprises and that entices. This means understanding better your client, which clearly means listening more to your client base” (Social Search: Getting Personal is Getting Evermore Important for Brand Marketers). In the case of search engine business, Google has a voice that resonates, but in the case of social networking, Facebook enjoys that voice. Google is facing stiff competition from many others such as Microsoft, Yahoo, Amazon, Apple, Facebook etc. In order to counter the threats from such huge companies, effective branding strategies are necessary for Google. Even though Google is the number one player in the search engine business, they are not so in social networking industry. Facebook holds the number one spot in social networking. Lego on the other hand is one of the prominent toy makers in the world. Even though they were the fifth largest toy maker in the world, they suffered lot of setbacks in the recent past because of the increased competition. “The Lego Group’s vision was to inspire the children to explore and challenge their own creative potential” (Lego Group: An Outsourcing Journey, p.2). However they failed to do so in a consistent basis and suffered severe setbacks recently. In order to regain its lost brand image, Lego is currently implementing many strategies. “The framework for LEGO’s branding effort expanded from its initial marketing focus into a company-wide reorganization that involved several change management programs and an ongoing initiative to create and manage global brand coherence”(Schultz & Hatch, p.6). Role of branding in the Business strategies of Google and Lego Branding holds an important place in the business strategies of both Google and LEGO. Globalization has brought immense challenges in the global market and it is difficult for even huge companies to survive in the market with the help of traditional brand building strategies. Diversification of business is inevitable at present and better brand image in one market segment may not help a company in other segments. For example, Google failed to become the number one in social networking or ecommerce even though they are so in search engine business. Same way Lego also failed drastically to hold their top spot in toy market because of their inability to diversify in to other areas. “The name LEGO is a combination of Danish words “leg” and “godt,” meaning “play well”” (Lego Group: An Outsourcing Journey, p.7). Lego was committed to deliver quality products to its children based clients. They concentrated too much on toy market alone which caused problems to them. Both Google and Lego should concentrate more on product diversification and brand development strategies in each segment. They should realize that better image in one business segment may not help them in other segments. For each business segments, they need separate brand building strategies. Threats to the brand equities of Google and Lego When started Google plus, Google thought that they can utilize their brand equity in search engine business in social networking also. They failed to realize that both search engine and social networking businesses are entirely different businesses and it is difficult to convince the customers using the brand image alone. At present the customer base of Facebook has crossed more than 800 million. Google never anticipated the importance of social networks in attracting customers. Now Facebook is causing huge challenges to Google’s brand equity. LEGO tried to diversify into some new business segments like computer games, television and clothing. (Lego Group: An Outsourcing Journey, p.3). However, they failed miserably in these segments. They thought that their brand equity in the toy market may help them to prosper in other business segments also. Current customers are more aware of the capabilities of each brand and they will never purchase anything without a proper evaluation. Mindstorms are an innovative product developed by LEGO capture global electronic toy market. “Few people are aware but Lego actually happens to have some competition in the Mindstorms market. FischerTechnik a German company sells construction sets that compete with the Mindstorms line” (Lego Mindstorms: What Went Wrong?) Actions necessary to protect brand equities Improving the quality of the product and service is the only way to improve the brand image of a company. It is not necessary that one better product or service may help a company to sell other products and services well. Current customers are more conscious about the quality of each product they purchase. Of course while selecting a product or service, they may compare the reputation of the company. At the same time they will never rely entirely on the reputation of the company alone. In other words, reputation comes only as a secondary thing whereas quality of the product comes in the first place. Both Google and LEGO should improve their services in business portfolios other than their core business segment. Innovation and constant improvement of service quality are some of the necessary strategies needed to protect brand equities. It should be noted that Nokia was once the leader in the cellphone market. At present Samsung and Apple pushed Nokia yards behind with the help of their innovative products such as Galaxy S2, iPhone etc. Google and LEGO also should learn lessons from the experiences of Nokia. Competitors are waiting for an opportunity to bounce back. Some of the recent reports show that Microsoft, Facebook, Amazon, Yahoo etc are thinking seriously about an alliance to counter the threats of Google and Apple. Google and LEGO also should think in terms of forming meaningful alliances to counter the threats against their brand equities. “Google recently announced that its Android software would include a free application offering voice-based driving instructions that, many argue, are superior to anything offered by incumbent manufacturers such as Garmin and TomTom” (Google Brand Continues To Stretch). Such new offers can be tested by LEGO also sustaining their brand equity. Works Cited 1. “Google Brand Continues To Stretch”. 2010. Web. 09 November 2011. 2. “Lego Group: An Outsourcing Journey”. 2010. Richard Ivy School of Business. “Lego Mindstorms: What Went Wrong?”. Web. 09 November 2011. 3. Quelch, John A & Jocz, Katherine E. “Google in China”. Harvard Business School. 4. “Social Search: Getting Personal is Getting Evermore Important for Brand Marketers”. 2011. Web. 09 November 2011. 5. Schultz, Majken & Hatch, Mary Jo. “The Cycles of Corporate Branding: THE CASE OF THE LEGO COMPANY”. CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003. Web. 09 November 2011. Read More