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 20^th 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.