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Student Number: 1108554
Module Code: MG5616
Module Title: CORPORATE BRANDING THEORY AND ISSUES
Module Tutor: BIDIT DEY
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STUDENT NUMBER: 1108554
LEVEL: 5
COURSE: MSc Management
MODULE CODE: MG5616
MODULE TITLE: Corporate Branding Theory and
Issues
MODULE TUTOR: Bidit Dey
WORD COUNT: 2572
SUBMISSION DATE: 21 March 2016

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Executive Summary
 Diageo plc is a global-leading beverage alcohol (i.e. beer, wine and
spirits) company (Diageo plc., 2016).
 Diageo’s macro- environment has been analysed using PEST analysis.
In addition, its micro-environment has been analysed using market
analysis.
 Also, various strengths, weaknesses, opportunities and threats relating
to Diageo have been highlighted. The PEST analysis influences the
opportunities and threats sections of the SWOT analysis.
 Additionally, the brand architecture, brand equity and challenges of
corporate branding of Diageo have also been analysed.
 Diageo went through corporate re-branding, which resulted in a
separation strategy and a ‘house of brands architecture’.
 Also, Diageo has been successfully building its corporate brand equity.
 One of the main challenges faced by Diageo was in creating a coherent
identity subsequent to its rebranding. Thus Diageo launched the
‘Diageo Way of Brand Building’, which is Diageo’s corporate
branding tool kit, in order to overcome this challenge.
 Overall, it is recommended that Diageo continues to push expansion
into emerging markets, through strategic mergers and acquisitions.

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Chapter 1: Introduction - An Overview Of Diageo Plc.
Diageo plc. is a global-leading beverage alcohol (i.e. beer, wine and spirits) company; whose
headquarters is in London, England (Diageo plc., 2016). Diageo’s purpose is to celebrate life,
every day and everywhere; this purpose links with the components of the name ‘Dia” [i.e.
Day] – ‘Geo’ [i.e World.] (Diageo plc., 2015; Diageo plc., 2016). Diageo operates in over
180 countries and employs over 33,000 people worldwide (Diageo plc., 2016). Their products
vary according to quality and price points; thus providing their consumers with numerous
choices (Diageo plc., 2016).
Diageo is a fairly young company that was formed in 1997, as a result of a Merger and
Acquisition between Grand Metropolitan plc and Guinness plc (Diageo plc, 2016); thus
creating a conglomerate that houses the biggest collection of premium drinks in the world.
It is a corporate brand, whose products brand portfolio include the following (Diageo plc.,
2015):

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Chapter 2: An Analysis of Diageo Plc. – Marketing Analysis
To provide a more in-depth overview of Diageo and the relevant factors that impact it,
marketing audit tools will be used to perform a strategic marketing analysis/ evaluation:
2.1 – Micro-Environmental Analysis: MarketAnalysis
The beverage alcohol market sells approximately 6 billion alcohol units annually; thus
generating £300 billion in net sales (Diageo plc., 2015). It is a profitable and growing market,
which is equally split between emerging and developed markets, in terms of net sales;
however, emerging markets experience quicker growth rates and are larger in volume
(Diageo plc., 2015).
Diageo’s Market Positioning:
Diageo operates in 21 markets worldwide - within the beverage alcohol market - because this
21-market model allows it to adapt to consumer needs, depending on their different
geographical-locations; thus, each geographical-location uses specially tailored local
strategies (Diageo plc., 2015).
Diageo is the global leader in spirits, owning 9.5% of the world Spirits total volume share in
2014 (Euromonitor International, 2015a; Euromonitor International, 2015b). Diageo
possessed 1.0% of the world beer volume share in 2014, making it the world’s12th largest
beer producer (passport wine and beer). Also, it is the world’s 23rd largest wine producer,
owning 0.4% of the world wine volume share in 2013.
2.2 – Macro-EnvironmentalAnalysis: PEST Analysis
PEST analysis monitors the broad macro-environmental factors that have an impact on
Diageo and on others within Diageo’s micro-environment (Jobber and Ellis). This PEST
analysis will focus on the UK and will also reference to global issues:

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2.3 – SWOT Analysis
The aim of SWOT analysis is that the internal resources/capabilities of a company and its
external possibilities should inform strategy (Agarwal, Grassl and Pahl, 2012).

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Chapter 3: Literature Review
3.1 – What is a Corporate Brand?
Brands provide differentiation between competitive offerings and encourage preference; thus
they are key to organisational success (Knox and Bickerton, 2003; Wood, 2000). Brand value
is one of the most valuable assets [i.e. intangible] of a company (Keller and Lehmann, 2003).
A corporate brand is a brand that operates at a corporate level, where the corporation itself is
branded with the aim to provide the corporation with a competitive advantage (Balmer and
Gray, 2003). Corporate branding strategy focuses on the core values of the corporation; with
the employees/management of the corporation communicating coherent values to an
organisation’s internal and external stakeholders (Hatch and Schultz, 2001; Balmer and Gray,
2003).
The role/function of a corporate brand will differ depending on the brand architecture
(Muzellec and Lambkin, 2009); which is an important component of corporate branding.
3.2. – Corporate Brand Architecture
Brand architecture is a valuable concept/framework that helps to plot or structure a
company’s brand-portfolio (Muzellec and Lambkin, 2009). A company’s brand architecture
defines the collaboration between its corporate and product/service brands (Muzellec and
Lambkin, 2009). This literature review will be focusing on the two categories of brand
architecture, which are a ‘house of brands’ and a ‘branded house’ (Muzellec and Lambkin,
2009).
In a ‘house of brands’ there is little-to-no association between the corporate brand and the
product/service brand; thus resulting in less risk of the corporate brand affecting the image of
the product/service brand and thus allowing the corporate brand itself to diversify into
different product markets without jeopardising its corporate brand equity (Muzellec and
Lambkin, 2009; Muzellec and Lambkin, 2006).
Contrastingly, a ‘branded house’ occurs when a master brand acts as an umbrella under
which all of the other products/service sub-brands reside. (Muzellec and Lambkin, 2009).
Thus, the master brand and the corporate brand are sometimes indistinguishable, with the
master brand pushing the sub- brand associations (Muzellec and Lambkin, 2009).
The brand integration strategy ties a company and its brands under a master brand; thus,
resulting in a branded house architecture (Muzellec and Lambkin, 2009). In contrast, a
separation strategy dissociates the corporate brand from the product/service brands; thus
resulting in a ‘house of brands’ (Muzellec and Lambkin, 2009).

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Another important component of corporate branding is the corporate brand equity.
3.3. – Brand Equity
3.3.1 - Corporate Brand Equity
In general, brand equity is used to describe the value of a brand (Heding, Knudtzen and
Bjerre, 2009). Corporate brand equity is defined by Keller (2000), “as the differential
response by consumers, customers, employees, other firms, or any relevant constituency to
the words, actions, communications, products or services provided by an identified corporate
brand entity.” Companies aim to achieve strong corporate brand equity, as it is an imperative
measure of the success of a brand and it signifies that stakeholders have favourable
associations towards the brand, thus differentiating it from its competitors (Shamma and
Hassan, 2011).
The corporate brand equity of a corporation can be measured by assessing the intangible
characteristics that add value to the corporate identity of an organisation, such as the
‘corporate image’, ‘corporation reputation’ and ‘corporate associations’ (Motion, Leitch &
Brodie, 2003, cited in Shamma and Hassan, 2011).
‘Corporate reputation’ is determined by the perceptions about a company’s
products/services, vision/leadership, workplace environment, social/environmental
responsibility and the financial performance (Fombrun et al., 2000, cited in Shamma and
Hassan, 2011). Additionally, ‘corporate associations’ comprise of corporate ability
(Muzellec and Lambkin,
2009)

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associations [i.e. R&D capabilities, industry leadership, etc.] and corporate social
responsibility associations [i.e. environmental/sustainability concerns, concern for local
communities, charitable giving, etc.] (Brown and Dacin, 1997, cited in Shamma and Hassan,
2011). Lastly, the ‘corporate brand image’ is determined by the common attributes of the
products and the attitudes towards the products, it also focuses on relationships, values and
the credibility of the organisation (Keller, 1998).
3.3.2 – Product Brand Equity – How it is measured and constructed
Brand equity also includes product brand equity, which is measured from a customer
perspective. Therefore, the total brand equity is an amalgamation of product brand equity and
corporate brand equity (Shamma and Hassan, 2011).
De Chernatony and McDonald (2002) formulated a framework to display how product brand
equity is constructed, called the evaluation of brand equity (see below). According to this
framework, a brand is first birthed and the brand name and positioning is selected; then brand
awareness and associations are created, through advertising/promotions; subsequently, as the
consumers are encouraged to repurchase the product/service and as they are continually
satisfied, positive perceptions of quality and value are developed; if the brand can satisfy
these perceptions then brand loyalty results; finally, the brand can then transfer the values,
qualities and reputations to other products in order to launch a successful brand extension (De
Chernatony and McDonald, 2002).

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Keller’s (1993) customer-brand equity model, measures the brand equity of a product from a
customer-based perspective. However, this does not measure the corporate brand equity,
which involves the perceptions of other stakeholders and it also does not look at the
associations that a corporate brand can have on a customer’s perception of a brand (Shamma
and Hassan, 2011).
Chapter 4: An Analysis of Diageo Plc.’s Corporate Brand Equity,
Corporate Brand Architecture and Challenges in Corporate
Branding
4.1 – An analysis of Diageo’sBrandArchitecture
Diageo implemented a corporate rebranding strategy as a result of a merger and acquisition
between Guinness plc. and Grand Metropolitan plc. (Jobber and Ellis-Chadwick, 2013).
M&A’s can affect the coherence in a company’s brand-portfolio, therefore Diageo enacted a
rebranding strategy in order to unify the company by giving it a coherent new corporate
identify (Jobber and Ellis-Chadwick, 2013; Muzellec and Lambkin, 2006).
Diageo’s name change from Guinness signifies a strategy of brand separation; therefore,
Diageo is now classified as a ‘house of brands’ (Muzellec and Lambkin, 2009). As a result of
the separation strategy, the image of the corporate brand and the product brands also become
separate; this can be seen as advantageous, as explained above (Muzellec and Lambkin,
2009).
Also, Diageo has a business brand identity, which is when the corporation has a strong name
that produces different images and associations, to different stakeholders, e.g. for example it
promotes an image of financial responsibility to its shareholders and corporate social
responsibility to the government and the public (Muzellec and Lambkin, 2009). As a business
brand Diageo also constantly adds new brands to their portfolio and new business units
(Muzellec and Lambkin, 2009).
An adaptation of Muzellec and Lambkin’s
(2009) corporate brand architecture
framework and business brand framework:

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4.2 – An analysis of Diageo’s Corporate BrandEquity
Corporate brand equity is built by sustained coherence over time and across all stakeholders
(Balmer, 1998, cited in Muzellec and Lambkin, 2008). This coherence is maintained via
continuous investment in the brand name (Kapferer, 1995; Keller, 2002, cited in Muzellec
and Lambkin, 2008). However, in recent years many companies have changed their historical
corporate name and have implemented new brand architectures (Muzellec and Lambkin,
2006).) Diageo is an example of this, as explained above.
It is argued that a change of brand name can result in a loss of values attached to the old name
and thus a subsequent loss in brand equity (Muzellec and Lambkin, 2008). As a result of this
change in brand equity, profit margins and consumer loyalty could be impacted (Muzellec
and Lambkin, 2008). Thus, Diageo may have lost brand equity when it changed its name
from Guinness.
As explained above, in order to build corporate brand equity; the corporate reputation,
associations and image must be strong (Motion, Leitch & Brodie, 2003, cited in Shamma and
Hassan, 2011). Diageo has a strong corporate reputation, being widely known as the global
leader in beverage alcohol and for innovation through investments in its R&D capabilities
(Diageo plc.,2016). In addition, both the corporate reputation and corporate associations are
positive as a consequence of its sustainability and corporate social responsibility strategies;
such as its ‘Alochol in Society’ and ‘DrinkiQ’ initiatives to prevent alcohol misuse, the
‘Diaego Water blue print’ to minimise environmental impact through its water-stewardship
strategy and its contribution to the socio-economic development of communities (Diageo

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plc.,2016).
Additionally, Diageo’s focuses on building a safe working environment with a welcoming
culture that supports human rights, diversity and development/training; which progresses the
corporate reputation (Diageo plc.,2016). Lastly, Diageo’s seeks a positive corporate image by
providing quality products through the setting of clear quality standards and by seeking to
build customer relationships through trust and through its values, exemplified above (Diageo
plc.,2016). All of these components help Diageo currently to build its corporate brand equity.
The re-branding of Diageo posed many challenges. This will be explained below.
4.3 – Diageo’sChallengesin corporate branding and Recommendations
4.3.1 – The Identity Approach
A corporate branding challenge is that a corporate brand must express a unified and coherent
identity [i.e. the Identity Approach] (Harris and de Chernatony, 2001; Heding, Knudtzen and
Bjerre, 2009). Corporate Branding relies on stakeholders possessing consistent perceptions
about the corporate brand nature, identity and values (Harris and de Chernatony, 2001).
Diageo faced the challenge of brand identity coherence because of its corporate re-branding.
(Jobber and Ellis-Chadwick, 2013). This is the main corporate branding challenge that
Diageo has faced. Diageo changed its identity; thus changing perceptions that if not well
managed could have resulted in incoherence and confusion, which can weaken the
organisational performance (Jobber and Ellis-Chadwick, 2013). However, Muzellec and
Lambkin (2008) argue that a small degree of misalignment is positive as organisations can
adapt the corporate brand message to each stakeholder, especially in the case of business
brands like Diageo (Muzellec and Lambkin, 2008).
Despite this counter-argument, coherence is recommended. This can be accomplished using a
corporate brand tool kit, which ascertains that successful corporate brand identity, requires an
alignment between strategic vision, organisational culture and stakeholder image (Hatch and
Schultz, 2001). ‘The Diageo way of brand building’ is Diageo’s marketing/corporate brand
tool-kit that is based upon its strategic vision and that embeds this vision within the
company’s culture through learning events and employee training programs run by Diageo’s
senior marketers (Coverdale, no date). Diageo also have a press kit, which helps to
communicate the images of the brand (Diageo website). All 3 align to form the ‘Diageo way
of brand building’. Hatch and Schultz (1997) argued that corporate brands gain full strength
when vision, culture and image are aligned; thus the alignment of these three components
produces brand equity, as strong brands are those which are brand-equity rich (Jobber and
Ellis-Chadwick, 2013).
Also, the REDS ACID Test Process can be used to monitor the alignment of the 5 dimension
of brand identity (Balmer, 1999).

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Chapter 5: Conclusions and Recommendations
To conclude, the corporate branding strategy of Diageo has been largely successful. Diageo
survived a big corporate re-branding strategy and it is now effectively building its corporate
brand equity. Additionally, Diageo is constantly building its product brand portfolio within
its ‘house of brands architecture’. This is accomplished mainly through strategic mergers and
acquisitions; with the purpose/objective of increasing its revenues from its emerging markets,
strengthening its position as the world leader of premium alcohol products and growing the
company (Diageo plc., 2015). Thus, Diageo is reinforcing its strengths, aiming/trying to take
hold of its emerging market opportunities and mitigating its weaknesses (for additional detail:
see SWOT analysis and PEST analysis).
It is recommended that Diageo continues to push growth and expansion in its emerging
markets, as its UK core market is declining as a result of adverse changes in the macro-
economic societal factor (Wisson, 2015). Also, with threats of uncertainty, such as political
and economic instability, it is best for Diageo to diversify in this way, in order to reduce risk
(Diageo plc., 2015).

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Chapter 6: References
1. Agarwal, R., Grassl, W. and Pahl, J. (2012) ‘ Meta-SWOT: Introducing a new
strategic planning tool’, Journal of Business Strategy, 33(2), pp. 1- 13.
2. Balmer, J.M.T., 1999. ‘The ACID Test of Corporate Identity Management’, Journal
of Marketing Management, 15, pp. 69-92.
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them?", European Journal of Marketing, 37 (7/8), pp. 972 – 997.
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14. Hatch, M.J. and Schultz, M., 2001. ‘Are the strategic stars aligned for your corporate
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28. Wood, L. (2000) ‘ Brand and brand equity: definition and management’, Management
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