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Marketing & Competing

Fortnightly Magazine - December 1995

testimonials. For all practical purposes, communication was a one-way process, with utilities telling the customers what it thought they should know about the company. All that is changing with deregulation.

But building corporate identity is not simply a communications challenge. Executives overseeing the marketing, strategic planning, and customer service functions will be challenged as never before to develop products and services (em even new lines of business (em that offer customers added value, make the company stand out from competitors, and build equity in the corporate brand. Failure to successfully brand a company could lead to a marginalization or elimination of any or all of these functions.

Some utilities have already begun their branding efforts. Columbus, OH-based American Electric Power has seven operating subsidiaries in as many states. CEO E. Linn Draper has reviewed a series of management changes "designed to give our seven operating subsidiaries a new, single-company identity under the AEP brand."2 Corporate branding

efforts are also under way at San Diego Gas & Electric Co. and Baltimore Gas & Electric Co.3 And most observers are familiar with UtiliCorp United's aggressive national branding effort, EnergyOne.

Is corporate branding just another emerging elixir for communicators? Absolutely not. In fact, corporate identity branding is a long-term enterprise. A 1993 Advertising Age study concluded that customers only begin to "hear" a message after 18 to 36 months of reasonable and consistent exposure. Following that, it can take up to an additional 24 months for customers to "believe" in the brand. After five years, assuming a good, memorable positioning statement has been chosen and the company maintains its advertising profile, a brand is "owned," meaning it has become synonymous with its product (e.g., KFC for fried chicken and Jell-O for desert gelatin).

Survey research has shown that the first brand to gain customer recognition, on average, wins twice the long-term market share of the next brand. During a branding campaign's multiyear incubation period, executives must resist the temptation to change the new positioning statement. Staying the course is a necessity: Modifying the positioning statement would be akin to digging up and replanting a crop before the harvest. The corporate positioning statement must be given time to grow.

One company that struggled with the transition to competition was AT&T. Despite years of litigation aimed at ending Ma Bell's monopoly over long-distance service, AT&T spent more time fighting potential new entrants than it did developing new programs, rates, or services (em much less positioning AT&T as the provider of choice.

Consequently, in the four years after U.S. District Court Judge Harold Greene broke up the long-distance monopoly in the early 1980s, AT&T lost an estimated 30 percent of its market share to hungry new entrants such as MCI, Sprint, and others.

To stanch its rapidly eroding market share, AT&T spent more than $400 million a year on advertising. By contrast, the new entrants each spent less than $50 million. The lesson: Stopping the loss of market share (em to say nothing of regaining lost market share (em is very expensive. Far better to invest funds prior