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Branding is not only a marketing tool for firms to direct their branding efforts to developing product and corporate brands. It is also an effective instrument which can be used in the area of Human Resource Management.
For the purpose of this study, the Literature Review will be in two parts. The first section will address the Marketing Management Concepts, which includes corporate level marketing, the marketing mix, branding concept, corporate branding and corporate communication. The second part will be based mainly on Human Resource Management concepts having sub sections such as Strategic Human Resource Management, culture, commitment, training and performance metrics.
Section 1: Marketing Management Literature Review
Corporate Branding is quite a new concept in the Marketing literature and academic research in this area is quite limited. However, although a new theory, many authors have encouraged managers and Chief Executives to integrate the brand of the organisation in their decision making because of the competitive edge a strong brand would give to the firm.
It has to be noted that there are different implications for product branding and corporate branding. As a matter of fact, for a firm to develop a good strategy for its corporate brand there are many elements to be considered.
Corporate Level Marketing
As Hatch and Schultz (2003) have observed, it is difficult to maintain credible product differentiation as businesses face imitation, homogenisation of products and services and fragmentation of traditional market segments. They argued that, in this era of globalisation, differentiation requires positioning the whole corporation, where the values and emotions symbolised by the organisation become key elements of differentiation strategies, and the organisation itself moves center stage.
From the past recent years, concern over Corporate-level marketing is gaining much magnitude. In point of fact, Balmer and Greyser (2003) have attempted to provide an understanding of Corporate-level marketing. According to the authors, a move towards corporate level concerns is evinced by several ascendant areas of marketing such as relationship marketing, services marketing, international marketing, marketing for non-profits, integrated marketing communications, corporate public relations and, more acutely, in relation to corporate and to services branding.
It is imperative to note that the "corporate-level" concerns strategic management and the CEO and the board of directors should be familiar with the scope and significance of this nascent area (Balmer and Greyser 2003, p.349).
Rethinking the Marketing mix: The 10 Ps of the corporate marketing mix
As said by Boyd et al. (1998), the traditional 4 Ps, the controllable elements of a marketing program are the product, price, promotion and place. Decisions about each element should be consistent and integrated with decisions concerning the other three (Boyd et al. 1998, p.19). The latter is the conventional marketing mix of a product. For Corporate level marketing, another set of marketing mix will be used. According to Balmer and Greyser (2003), there are three differences between the marketing mix and the corporate-level marketing mix:
The elements are broader than the traditional "4Ps" of the marketing mix.
The elements of the traditional mix require a radical reconfiguration.
The third is that the mix elements have distinct disciplinary traditions. They also transcend the traditional organisational boundaries.
Initially in 1998, Balmer attempted at articulating the traditional marketing mix to ten elements as depicted in Exhibit 1 and described in Exhibit 2 (Balmer 1998, p.963-996). However, it has been argued that it is difficult to operationalise and to recall the ten elements of the new marketing mix, when compared to the 4Ps (Balmer and Greyser 2003).
The 10 Ps of the Corporate Marketing Mix:
Exhibit 1: The "Ten Ps" of the corporate marketing mix
(Balmer 1998, p.963-996)
As can be seen from the above diagram, in addition to the 4Ps (product, price, place, promotion), the additional 6Ps are philosophy, personality, people, performance, perception and positioning.
The 10Ps of the marketing mix are further described below.
Philosophy and Ethos
What the organization stands for, and how it undertakes its work
The mix of subcultures within the organization which contributes to its distinctiveness
They represent the life-blood of an organization's identity. It is important to consider their interface with stakeholder groups and have a crucial role in product and service quality.
What an organization makes or does: its core business or businesses
What an organization charges for its products and services, including the goodwill element in the valuation of its corporate and product brands; the price of the corporation's stock, and staff salaries
Distribution channels, company's relationships with distributors, franchising arrangements
A concern with Total Corporate Communications also visual identification, and branding policies
How the organization's performance is rated by key stakeholders vis a vis the organization's espoused philosophy and ethos and how it is rated against competitors
Questions relating to corporate image and reputation. Perception of the industry/country-of-origin/corporate brand may also be important
In relation to important stakeholders, competitors, and the external environment
Exhibit 2: The original Corporate-level marketing mix
(Balmer 2001, p.248-291)
These 10Ps will allow management to focus on the organisation itself and help in the process of branding the organisation.
The Branding Concept
Over the past years, there has been considerable understanding of the nature of branding and in the formulation of effective branding strategies. For firms to develop successful and effective brand, it will need resources, effort and a belief in the concept of branding (Wong and Merrilees 2008).
Recent developments in the brand management literature have looked beyond the consumers' perception of the brand to consider how an organisation's employees approach the brand and make it a distinctive offering in the market place. De Charnatony (1999) points the fact that it is very crucial to take into consideration the values and corporate culture of organisation in deciding on the brand promises. Furthermore, brand management should be embedded in the whole company and should not be seen solely as a marketing development role. Hence, there is the emergence of Corporate Branding.
Knox et al. (2000) have claimed that the branding of product is not enough in contemporary competition. In other words, to ensure competitiveness and survival in the long term, firms have to go beyond branding only the products. Corporate branding allows the firm to come into play, involving the identity of the company (Ind 1997).
The basic concern is to integrate corporate activities into a coherent and consistent strategic framework which presents the company's functional and emotional values with a promised experience, i.e. the brand promise (de Chernatony 2002).
De Charnatony and Harris (2000) note that consumers are not the only stakeholders whose perception matter. They argue that employees of the organisation are influential contributors to the building and maintenance of an appealing corporate brand. As the corporation itself is in center stage as the brand, employees are pushed into an active mode. Their values, attitudes, professional and cultural identities become visible (Morsing and Kristensen 2001).
Hatch and Schultz (2003) have also pointed out the fact that the corporate brand contributes to the images formed and held by its stakeholders. These are listed as:
It follows that corporate branding is not only the concern of customers and management, but also different stakeholders. As mentioned above, one of the key elements of the corporate-level marketing is people - the employees of the organisation. As claimed by Harris and de Charnatony (2001), employees are essential to build relationships with all the stakeholders as well as contributing to the meaning of the brand.
Corporate Brand Characteristics
Balmer and Greyser (2003, p.303) enumerate five characteristics of a corporate brand:
Cultural: a corporate brand is a construct with "cultural roots". An organisation's distinctiveness finds its source in the mix of sub-cultures found within it. Personnel may be regarded as an organisation's key 'stakeholder group'. Personnel communicate an organisation's uniqueness through everything they do, say or 'make'. Human Resource need to appreciate their role in managing, maintaining and enhancing the corporate brand.
Intricate: a corporate brand is inherently intricate in nature, as evinced by the four other dimensions. The dimensions consist of a mix of 'soft' and 'hard' elements comprising the corporate brand. A corporate brand is multi-dimensional and multidisciplinary. It impacts upon many internal and external stakeholder groups and networks, transcending traditional organisational boundaries. Corporate brands are made known by 'controlled', 'uncontrolled', and by tertiary/ word-of-mouth communications.
Tangible: a corporate brand encompasses tangible elements such as business-scope, geographical coverage, performance-related issues, profit margins and so on. It also includes elements such as architecture (buildings), and graphic-design-features such as interior design and logos.
Ethereal: a corporate brand encapsulates a host of soft and subjective dimensions which evince an emotional response from stakeholders and stakeholder groups.
Commitment: An essential element of corporate branding is the need for total organizational commitment.
Framework for Corporate Branding
As suggested by Hatch and Schultz (2003), when a corporate brand works, it is because it expresses the values and/or sources of desire that attract key stakeholders to the organisation and encourage them to feel a sense of belonging to it. It is this attraction and sense of belonging that affects the decisions and behaviours on which a company is built. They note that a strong corporate brand taps this attractive force and offers symbols that help stakeholders experience and express their values and thereby keep them active. This is illustrated by exhibit 3 below.
Exhibit 3: Successful corporate brands tap the attractive force that draws stakeholders to the organisation
(Hatch and Schultz 2003)
As can be noted from the above exhibit, the organisation is built upon the key decisions which are made by stakeholders, namely the top management, employees and external bodies (customers, investors, regulators, suppliers).
Vision, culture and Image
According to Collins and Poras (1996), vision encompasses the brand's core purpose and its core values, which provides a system of guiding principle. They defined vision as "what the organisation aspires to be in the future" (Collins and Poras 1994). On the other hand, organisation's culture encompasses employees' values and assumptions, guiding their behaviour particular in novel situations (Wilkins and Ouchi 1983). Hatch and Schutlz (2003) have demonstrated in their study that the three elements Vision, Culture and Image form the foundation of corporate branding. This is better demonstrated through exhibit 4 below.
Exhibit 4: Successful corporate branding rests on a foundation of interplay between strategic vision, organizational culture and corporate image
(Hatch and Schultz 2001)
It can be noted from the above exhibit that the three elements vision, organisational culture and image are interconnected in the corporate branding process (Hatch and Schultz 2001). It has been recommended by the Hatch and Schultz (2001) that managers should respect the values of the organisation and beliefs supported by the existing culture. That would bestow coherence and authenticity.
According to Dubrin (1994) communication can be defined as the sending, receiving and understanding of messages. He mentions that it is the basic process by which managers and professionals accomplish their work and the purpose of communication is to gather process and disseminate information.
David Lawton (2007) claims that the most important thing one can do is to ''communicate well and early''. He believes that at the earliest possible opportunity, employees should be informed of:
Organizational strategy and business goals
Products and services
Values and ethos
Forms of corporate communication
Following Van Riel (1992), there are three forms of corporate communication. These are namely:
Marketing communication - oriented to sales support
Organizational communication - concerned with public relations, public affairs, environment communication, labour market communications
Management communication - persuade individual subordinates that the goals of the organisation are desirable, manage change process and motivate employees.
In order to represent the above considerations, Aberg's "Total Communication Sphere" will be reproduced in exhibit 5.
Exhibit 5: The Total Communication Sphere
From the diagram above, it can be argued that it is important to obtain a durable coordination between the different for forms of internal and external communication. According to Yamauchi (2001), a growing number of managers consider corporate communication as a corporate management issue rather than a simple information activity.
Corporate communication as a tool for the process of corporate branding
In view of the fact that corporate communication involves selectively communicating the organisation's vision, culture and image to those stakeholders regarded as important, it can therefore be described as a key management strategy (Yamauchi 2001). On the other hand, Balmer (1995) claimed that if there is mismanagement of communication, it can adversely affect the image of the organisation.
Harris and de Charnatony (2001) agree that communication at the organisation level help the employees to better understand their brand's identity and hence behave in a coherent way, enhancing their performance in delivering the brand promise. It has been suggested that the greater the two-way communication between the management and employees on branding, the more harmonious perception will the latter have with the brand (Harris and de Charnatony 2001).
Furthermore, it has been noted by Gilly and Woolfinbarger (1998) that employees' perception of the brand and service role is also influenced by the consumer advertisements. Thomson et al. (1999) claim that an effective internal communication of a brand with employees enhances their intellectual and emotional engagement with a brand.
Section 2: Human Resource Management Literature Review
Strategic human resource management
According to Hendry and Pettigrew (1986) strategic human resource management (SHRM) is the planning, designing and managing a coherent approach of personnel system which is based on employment policy and manpower strategy, underpinned by a "philosophy" and hence, seeing the people of the organisation as a "strategic resource" for achieving competitive advantage.
Baker (1999) has listed a number of key features of SHRM. These include:
The internal integration of personnel policies and their external integration with overall strategy
Line management responsibility for hr implementation and policy decisions
Individual rather than collective employee relations
An emphasis on commitment and the exercise of initiative, with managers donning the role of "enabler", "empowerer", and "facilitator".
Furthermore, Guest (1992) claims that in addition to the benefits derived from a sound human resource management (for example commitment, flexibility of the employees, quality), SHRM would allow an organisation to benefit from the following additional benefits:
High job performance
High problem solving, change and innovation
Low turnover, absence, grievances.
Personal commitment is important to effective organisation and creation of knowledge (Nonaka 1996). It has been stressed by Baker (1999) that employee commitment is considered as being a crucial way of securing SHRM, which requires the development of psychological contacts.
Theoretical Model of SHRM: Resource-Based Model
According to Smith et al. (1996) the resource based theory has emerged as one of the most promising theoretical frameworks of SHRM for analysing the sources and sustainability of competitive advantage. As Porter (1985) argues, competitive advantage has been the central tenet in the strategic management. Such competitive advantage is sustainable to the extent that the resources on which it is based are valuable, rare, inimitable and non-substitutable (Barney 1991).
However, while the Resource based model is an excellent tool for positively describing why some firms outperform others, it offers limited normative guidance to managers, it has received criticism from some authors (Sheehan and Foss 2007). According to Priem and Butler (2001), it is not sufficiently clear enough how resources contribute to firm-level value creation and that operationalization is therefore difficult.
It has been argued by Sheehan and Foss (2007) that resource based view analysis is phrased in very general terms and is in principle applicable to any resource anywhere in the firm. This wide generality is at the same time a strength and a weakness, the former because of the broad applicability of RBV analysis, the latter because the generality of the RBV also means a corresponding lack of specificity.
According to Balmer and Gray (2003) the RBV can explain why corporate branding imparts a long-lasting value and the fact that a strong and well-managed corporate brand does meet the criteria of being rare, inimitable and non-substitutable, it qualifies as a sustainable valuable resource. Another important resource is employees.
Social Identity Theory
As suggested by de Charnatony and Dall'Olmo Riley (1997), service branding relies on the employees' actions and attitude. Service employees become central to the delivery of a brand promise at each service counter and it is crucial that a service organisation ensure that their employees are delivering the service at the quality level promised by its brand (Punjaisri et al. 2009).
Drawing upon social identity theory, Ashforth and Mael (1989) have supported the idea that the social identification of the employees stems from the uniqueness and status of a group, and the salience of out-groups. According to Tajfel (1982) the social identity theory implies that people derive their own self-respect from their memebership in certain social groups. It can be argued that the better the match between the values of the organisation and the values of the employee, the more likely is the employee attracted to the organisation (Schneider 1987).
So, in other words, corporate branding will engender employee's brand identification, reflecting their sense of oneness because it is about communicating to employees the brand values, which are unique to a specific brand (de Charnatony 2001).
Corporate branding could shape employees' behaviour given that employees understand and are committed to the brand values inherent in the brand promise and, hence their performance will live up to the customers' expectations (Punjaisri et al. 2009).
Roles of brand identification, brand commitment and brand loyalty in the process of corporate branding
Corporate branding and its tools such as corporate communication and training induce employees' brand identification, brand commitment and brand loyalty (Punjaisri et al. 2009).
Brand identification could be defined as "the extent of psychological attachment of employees to the brand, which influences their willingness to exert extra effort towards reaching the brand goals" (Burmann and Zeplin 2005, p.284).
According to Armstrong (2001), commitment is an employee's "loyalty and attachment to the organisation."Generally, when committed employees make an effort to deliver the brand promise, they fulfil the expectations of customers towards the brand (de Charnatony and Segal-Horn 2003).
Reichheld (1996) conceptualises brand loyalty as the willingness to remain with the present company. As said by Punjaisri et al. (2009), employees' loyalty is critical to the capability of service organisations to respond effectively to customer needs.
So, it can be argued that if there exist a positive relationship between the brand identification, brand commitment and brand loyalty, the employees' brand performance in delivering the brand promise will be enhanced. This is illustrated in exhibit 6 below.
Exhibit 6: The proposed conceptual model by Punjaisri et al. (2009)
From the above diagram, one can understand that, with the tools of corporate branding (internal branding) such as training, orientation, group meeting and briefing, management can develop and secure the brand identification, brand commitment and brand loyalty of employees. In so doing, the employees, having a better understanding and having the sense of pride and ownership, will be performing better when delivering the brand promise (Punjaisri et al. (2009).
As Armstrong and Baron (1998) put it, "if you can't define performance, you can't measure or manage it". According to Otley (1999) performance can be defined as doing the work, as well as the results achieved. On the other hand, Rogers (1994) argue that performance should be defined as the outcomes of work because they provide the strongest linkage to the strategic goals of the organisation, customer satisfaction, and economic contributions. As purported by Armstrong and Baron (1998), performance is affected by the following factors:
Personal factors - the individual's skill, confidence, motivation and commitment.
Leadership factors - the quality of encouragement, guidance and support provided by the managers and team leaders.
Team factors - the quality of support provided by colleagues.
System factors - the system of work and facilities (instruments of labour) provided by the organisation.
Contextual (situational) factors - internal and external environmental pressures and changes.
To measure performance, there are several metrics which are found in the literature. Some examples are:
Kaplan and Norton's balanced scorecard method
BCG's brand value creation method
The path analysis method
The gap analysis method
The house of quality (QFD) method.
In this thesis, emphasis will be laid on the Kaplan and Norton's balanced scorecard method.
The Balanced Scorecard Method
In the balanced scorecard method, introduced by Kaplan and Norton (1992, 1993), different performance measures are evaluated at four perspective levels. These are:
The financial perspective (for instance ROI).
The customer perspective (for instance customer satisfaction/loyalty).
The process (internal business) perspective (for instance time, quality and cost of delivery).
The innovation and growth perspective (for instance percentage of sales from new products).
According to Olson and Slater (2002), not all companies will give the same weight or equal weight to the four perspectives. It depends on the strategy adopted by the organisation. Niven (2002), however, claims that although there may be a particular emphasis on some perspectives, all perspective measures should reflect a company's strategic direction.
The four perspectives are shown in exhibit 7.
Exhibit 7: Kaplan and Norton's Balanced Scorecard
It can be understood from the diagram that the four perspectives are linked to each other through causal or spurious relationships. According to Logman (2004), in case of a causal relationship, one variable has a causal impact on another variable (direct or indirect through a third variable). In case of a spurious (non-causal) relationship, the two variables studied are both affected by a third variable at the same time. This third variable may be controlled by or may be exogenous to the company.
Dinesh and Palmer (1998) state that the balanced scorecard is based on goal congruence throughout an organization and therefore is partly similar to the management by objectives method. It is based on the development of strategic measurements (linked to clear objectives) and on collaboration between all organisation levels.