Brand Splitting: Don’t Try This At Work

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Professor Anil Gupta of INSEAD and Haiyan Wang of The China India Institute get it mostly right when they tell us “How to Avoid Getting Burned in India and China” in BusinessWeek.

The solution they propose: do not tie your fortunes in these mega-markets to a single partner. Spread your business in these two mega countries around two or more partners, gaining in flexibility what you lose in efficiency. You only need to get booted out of a partnership once before you realize that these markets are too important to trust to a single partner. (I’ve used this with clients in the past, and it really does work.)

Where this strategy gets companies into trouble is when it damages the customer experience. They cite Toyota as an excellent example of a company that has gone and built separate partnerships for each part of their vehicle line, which is true.

What they miss is how screwy this makes it to go buy a Toyota in China. Toyota has three separate distributor and dealer chains, but the dealers are all branded the same. Imagine my chagrin when I pulled into my nearest Toyota dealer to talk about a Highlander, to find that all he had were Coaster minibuses. Or when I finally got to the dealer that sold the Highlander and wanted to compare it with a Landcruiser, only to be told that the Landcruiser line was sold by another set of dealers.

What is worse, the poor folks at Toyota have to manage three separate dealer and distributor chains, a problem that caught up with them last year when the company began fielding calls about arrogance, rudeness, and poor service at their dealerships.

The real right answer is to split partnerships around manufacturing, but own the customer experience. Toyota (and Volkswagen) need to wrest control of the dealerships back away from the local partners so they can control that experience at the front end, where their brand means the most.

Forging a partnership with one parter’s sales and marketing department is hard enough. Doing it with three is a terror, and trying to forge all three into a coordinated (I wouldn’t say “unified) whole is asking the impossible, especially when different partners have products that compete for the same markets.

You can split operations, but you should never try to split your brand.

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