Saturday, December 10, 2011

Brands as a Facade

by Pearce Tibbles

Brands are often a symbolic badge and provide confidence for consumers when they make their purchase decision. But sometimes a brand can be a facade; the brand reality of the product is can be very different than what the consumer expects- or is led to believe! The following narrative illustrates this point.

Historically, the aerospace division of Rolls-Royce (which manufactures jet engines) was part of the same company as the auto brand by the same name. These two divisions split up and the car company that spiraled out was purchased by the British conglomerate Vickers. In 1998, Vickers put the Rolls-Royce automotive company up for sale and it attracted a bidding war between two German firms, Volkswagen and BMW, who were trying to expand their brand portfolios into the ultra-luxury market. Although BMW was the likely buyer (it had a longstanding supplier relationship with the company), Volkswagen ended up bidding close to £100 million more and won the auction. With the purchase of Rolls-Royce, Volkswagen received a well-past-its-prime aged factory where most of the assembly was done by hand. Rolls-Royce cars were still using a licensed 1938 Buick engine which was extremely inefficient as the company had not been able to afford an upgrade. After the deal had gone through, BMW came upon an interesting discovery. Rolls-Royce PLC, the aerospace division and an independently listed company, was the owner of the Rolls-Royce brand name and logo. BMW jumped on this opportunity and purchased the naming rights for cars at a bargain price of £40 million (much less than Volkswagen originally paid for the car company). BMW started fresh and built a brand new factory with state-of-the-art equipment, hired a designer to recreate the vintage look of Rolls-Royce cars, and gave the new vehicles an efficient BMW-made engine. BMW is now the sole legal manufacturer of Rolls-Royce cars and Volkswagen is stuck with an old factory capable of producing old, "unbranded" cars.

What this story highlights is the fact that from a consumer’s vantage point it is not always easy to see what stands behind a brand name. Most consumers likely have associations to Rolls-Royce that include legacy, timelessness, and elegance. Many may be startled and even upset to learn that Rolls-Royce, by most measures, is a new car company created by BMW. The only thing linking the Rolls-Royce cars of today and those of the early 20th Century is a trademark to the naming rights. With this example in mind, it is perhaps necessary for consumers to view brands in a different, albeit more jaded, light. Although brands can be useful as a symbol of brand values and legacy, they can also act as a facade intentionally set up by a parent company in order to exploit and leverage brand equity.


  1. Who would have ever known? No one has incentive to reveal the truth. Even those that own the "fake" RR would definitely NOT want to know.

  2. It's a fair point, Pearce, but I think the ultimate reality is that the majority of consumers (everyday people, working class or middle class) don't even consider these structure of a parent company or the effects of branding on their perception.

    More importantly, it's hard to decipher the line between reality and perception. If a consumer attributes particular characteristics to a product - if they believe that a product is "elegant," for example - they often enjoy the confidence-inducing benefits and happiness that they're paying for, regardless of the objective quality.

    A Rolls-Royce customer might be misled, but the fabricated and augmented value of the product that they buy still serves the same function with the same effectiveness whether or not it's 'fake' from a marketing point of view.

    This is where the added value of story-telling in a brand management strategy is not necessarily at odds with the integrity of the brand; the consumer is reaping the mental rewards regardless.

    -Aquil Virani