the evolution of generic brands in industrial markets: the challenges to owners of brand equity

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The evolution of generic brands in industrial markets: the challenges to owners of brand equity John Low a , Keith Blois b, * a Sortex Ltd and Royal National Institute for the Deaf, UK b Templeton College, University of Oxford, Oxford OX1 5NY, UK Received 1 September 1999; received in revised form 1 March 2000; accepted 1 April 2000 Abstract The paper suggests that generic brands can develop in industrial markets as easily as they can in consumer goods markets. It briefly examines the issue of branding in industrial markets and then describes the problems that firms can face if their brand name becomes used in a generic manner. It suggests actions that such firms can take as responses to this situation. D 2002 Elsevier Science Inc. All rights reserved. Keywords: Brands; Industrial; Competition; Value 1. Introduction The issue of branding in industrial markets has received little attention relative to that accorded to it in consumer markets. It is therefore not surprising that the problems that arise in industrial markets when a brand name becomes used as a generic term are seldom discussed. However, they can be as significant for industrial firms as for a consumer goods firm as the case of Sortex illustrates. 2. Sortex Sortex 1 is a small (1998 turnover £14.3 million) British company, which was incorporated in 1947, and today is a leading supplier of optical sorting machinery primarily for use in food processing. This is a low-volume, high-margin, capital goods business that is highly dependent on inter- national markets. Sortex has built up a large installed base in literally every corner of the world and, even though many new competitors have entered the market over the past 15– 20 years, none has established such a strong name. The Sortex name has become very well established and has been applied to Sortex’s products with numbers used to differentiate between its products and product ranges. A 1997 survey showed that 81% of customers or potential customers interviewed were aware of Sortex while the next best known manufacturer was only recognized by 45% of customers or potential customers. However, not only is the name Sortex well known, but it has also become a generic term associated with the process of ‘‘optically sorting foodstuffs’’ — especially sorting rice. Indeed it has been known for rice processors to mark bulk sacks of rice as ‘sortexed’ as long as an optically sorting machine has been used. Furthermore, second-hand optically sorting equipment is commonly referred to as ‘sortex’ machinery regardless of the manufacturer. As a result, customers are often confused with regard to the name of the original manufacturer of a specific optical piece of sorting equipment and have been known to say, ‘‘I have a sortex machine, but I do not know which manufacturer supplied it.’’ Food retailers, commodity traders or others in the food chain, will often insist that their quality standards can only be met by the use of Sortex equipment and make this a contractual require- ment. Indeed various publications provide lists of prevail- ing world prices for rice, and these prices are higher for ‘sortexed’ rice. For example, the July 1998 price of ‘PB 5%’ Thai rice was US$295 per ton compared to US$310 for ‘PB sortexed 5%’ Thai rice. 0019-8501/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved. PII:S0019-8501(00)00131-0 * Corresponding author. Tel.: +44-1865-422700; fax: +44-1854- 422500. E-mail address: [email protected] (K. Blois). 1 Where a registered company or brand name is referred to, it will be in italics. Thus, Hoover will be used when referring to the Hoover Company and ‘hoover’ when referring to the generic use of the word. Industrial Marketing Management 31 (2002) 385 – 392

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The evolution of generic brands in industrial markets: the challenges to

owners of brand equity

John Lowa, Keith Bloisb,*

aSortex Ltd and Royal National Institute for the Deaf, UKbTempleton College, University of Oxford, Oxford OX1 5NY, UK

Received 1 September 1999; received in revised form 1 March 2000; accepted 1 April 2000

Abstract

The paper suggests that generic brands can develop in industrial markets as easily as they can in consumer goods markets. It briefly

examines the issue of branding in industrial markets and then describes the problems that firms can face if their brand name becomes used in

a generic manner. It suggests actions that such firms can take as responses to this situation. D 2002 Elsevier Science Inc. All rights reserved.

Keywords: Brands; Industrial; Competition; Value

1. Introduction

The issue of branding in industrial markets has received

little attention relative to that accorded to it in consumer

markets. It is therefore not surprising that the problems that

arise in industrial markets when a brand name becomes used

as a generic term are seldom discussed. However, they can

be as significant for industrial firms as for a consumer goods

firm as the case of Sortex illustrates.

2. Sortex

Sortex1 is a small (1998 turnover £14.3 million) British

company, which was incorporated in 1947, and today is a

leading supplier of optical sorting machinery primarily for

use in food processing. This is a low-volume, high-margin,

capital goods business that is highly dependent on inter-

national markets. Sortex has built up a large installed base in

literally every corner of the world and, even though many

new competitors have entered the market over the past 15–

20 years, none has established such a strong name.

The Sortex name has become very well established

and has been applied to Sortex’s products with numbers

used to differentiate between its products and product

ranges. A 1997 survey showed that 81% of customers or

potential customers interviewed were aware of Sortex

while the next best known manufacturer was only

recognized by 45% of customers or potential customers.

However, not only is the name Sortex well known, but it

has also become a generic term associated with the

process of ‘‘optically sorting foodstuffs’’ — especially

sorting rice.

Indeed it has been known for rice processors to mark

bulk sacks of rice as ‘sortexed’ as long as an optically

sorting machine has been used. Furthermore, second-hand

optically sorting equipment is commonly referred to as

‘sortex’ machinery regardless of the manufacturer. As a

result, customers are often confused with regard to the

name of the original manufacturer of a specific optical

piece of sorting equipment and have been known to say,

‘‘I have a sortex machine, but I do not know which

manufacturer supplied it.’’ Food retailers, commodity

traders or others in the food chain, will often insist that

their quality standards can only be met by the use of

Sortex equipment and make this a contractual require-

ment. Indeed various publications provide lists of prevail-

ing world prices for rice, and these prices are higher for

‘sortexed’ rice. For example, the July 1998 price of ‘PB

5%’ Thai rice was US$295 per ton compared to US$310

for ‘PB sortexed 5%’ Thai rice.

0019-8501/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved.

PII: S0019 -8501 (00 )00131 -0

* Corresponding author. Tel.: +44-1865-422700; fax: +44-1854-

422500.

E-mail address: [email protected] (K. Blois).1 Where a registered company or brand name is referred to, it will be in

italics. Thus, Hoover will be used when referring to the Hoover Company

and ‘hoover’ when referring to the generic use of the word.

Industrial Marketing Management 31 (2002) 385–392

Unfortunately, for Sortex, it has become acceptable to

classify rice sorted with an optical sorting system from any

supplier as ‘sortexed.’ Furthermore, confusion as to the

original manufacturer of installed equipment results in poor

performance and inadequate reliability being attributed to

Sortex even in cases where it is not their machine. Indeed

from time to time, firms operating competitors’ equipment

will telephone Sortex asking for technical support following

a breakdown!

3. The case for branding industrial2 goods

The case for branding in general is well established and

supported by a considerable volume of research. However,

the greater part of it has been concerned with ‘consumer’

goods and, in comparison, relatively little has been written

or researched about issues associated with ‘industrial’

brands. Indeed some writers have suggested that to indus-

trial marketers ‘‘the word brand connotes a gimmicky tactic

for a less serious consumer product’’ [1].

This view is, perhaps unintentionally, supported by the

suggestion [2] that, from the customers’ point of view,

branding offers three intangible but significant advantages:

1. Abrand is a summary of all the values associatedwith it.

2. A brand makes customers confident in their choices.

3. It makes customers feel more satisfied with

their purchase.

It has also been argued [1] that the issue of brands must

be viewed from the customer’s perspective, and it has been

asserted that brand value is comprised of four components

each of which involves tangible and intangible elements

(see Table 1). That is, that a brand name conveys to

customers that these components have certain values.3

Of course, brand value is difficult to analyze in a precise

manner and in reality these four components ‘‘blur

together’’ [1]. In addition, a distinction is also made

between ‘‘basic brands,’’ ‘‘augmented brands,’’ and ‘‘poten-

tial brands.’’ Basic brands, it is argued, depend primarily

upon the product component with the other three compo-

nents remaining relatively less distinct. With augmented

brands both distribution and support services gain signific-

ance. Finally, potential brands feature all four components in

a balanced manner.

It has also been claimed [2] that there are nine specific

benefits that an industrial company will derive from having

a strong brand image for its products:

1. Premium prices can be obtained.

2. The product will be demanded.

3. Competitive products will be rejected.

4. Communications will be more rapidly accepted.

5. The brand can be built on.

6. Customer satisfaction will be improved.

7. Power in the distribution network will be increased.

8. Licensing opportunities could be opened up.

9. The company will be worth more when it is sold.

It is not only claimed that owning a strong brand brings

benefits to a company, but that there are serious penalties for

those companies that do not develop strong brands [2].

Yet, these nine benefits are broad generalizations and the

applicability of each of them is contingent upon specific

circumstances within which a product is being marketed.

For example, the assertion that the third benefit of strong

branding is that ‘‘competitive products will be rejected’’

implicitly assumes that there is only one strong brand in the

market and/or the cost of purchasing the competing brands

is substantially higher. This is because if, as is the case in

many consumer markets, there is more than one strong

brand, then competitive products will only be rejected in

favor of a specific brand when that brand is the ‘‘strongest’’

and not just ‘‘strong.’’ In addition, a customer will only

switch brands when the difference between the cost of

purchasing the new brand and the established brand is less

than the difference in the value that the customer perceives

between the two brands.

4. The value of brands

Determining what value to place on a brand name has

been a problem for many years and has led to many disputes

Table 1

Examples of the components of brand value

Components Tangible Intangible

Product Number of defects; useable product life Perceived reliability

Distribution services Lead times; number of late deliveries Ease of ordering; responsiveness in emergencies

Support services Times and number of staff available Perceived service quality; rapport between service provider and customer

Company Profitability; market share Reputation; country of origin

Source: Based on Ref. [1].

2 To avoid being repetitive, in the remainder of this paper, the word

‘industrial’ is omitted, but where an issue refers only to a consumer product,

this will be indicated.3 It is important in the euphoria of discussions about the benefits of

brands to always remember that a brand may have a negative connotation.

For example, Skoda, at least up to the time that it was bought by

Volkswagen, had a very negative image.

J. Low, K. Blois / Industrial Marketing Management 31 (2002) 385–392386

about the value of those companies which own brands. There

is evidence that investment analysts recognize that a strong

brand name is an asset and this presumably affects their

valuation of a company. Indeed at least half of a sample of

investment analysts [5] rated a series of brand measures as

being useful information and 66% of the sample believed that

companies should publish more information on brand values.

However, there are still many debates about how a brand

should be valued. Indeed there are several consultancies

(e.g. Interbrand) whose major activity is to provide meth-

odologies to enable companies to evaluate their own and

other companies’ brands. A report [6], which used Inter-

brand’s methodology, sought to assess the value of brands

using a combination of financially reported data and a

mixture of quantifiable and intangible assessments of the

company’s activities. However, the report openly admits

that the value placed on a brand is dependent upon the

criteria used to judge it and that there is no commonly

agreed set of criteria for this purpose. Definitions of brand

value, such as: ‘‘A brand’s value equals the net present value

of its future cashflows, which are determined by future sales

volumes and prices and by the value of the option to create

brand extensions’’ [7], illustrate the difficulties. Certainly, it

seems that ‘‘(f)urther research is needed to shed light on the

way customers in particular industries actually value differ-

ent tangible and intangible attributes’’ [1].

Managers do express, through comments such as ‘‘Our

brand names draw the distinction between the standard item

for a particular business and the differentiated, and superior,

product’’ [3], a firm belief in the value of a brand name.

Indeed many industrial firms indicate that they believe that

‘‘brand names enhance company success and marketing

success, are a major asset to the company, and produce

many other important benefits’’ [4]. Nevertheless, how this

value is evaluated is still a matter of dispute.

5. The evolution of generic brands

One of the recognized problems with successful brand

names is that they can become used as generic terms. That is

they enter into everyday language and are used to describe a

product or a process without necessarily being associated

with the brand owner. In consumer markets, there are many

examples of this with brand names such as Hoover, Ther-

mos, Sellotape and many others all being used as a synonym

for or instead of the name of the original product category.

For example the word ‘hoover’ is firmly established in

everyday usage with people asking in shops to see an

‘Electrolux hoover’ and the verb ‘to hoover up’ almost

totally displacing the term ‘to vacuum up.’4

This type of situation has occurred even when the

company whose name has become used in this way and/

or reasonably large competitors have sought to resist such

development. Such attempts range from the serious and

costly through to the relatively trivial. An example of a

serious attempt that was only partially successful was Coca

Cola’s move to stop ‘‘Coke’’ being used as a generic term.

Interestingly, in so far as their defense of their brand name

was successful, it was in part due to the strength of another

brand, namely McDonalds. For Coca Cola’s insistence that

McDonalds told customers who asked for ‘‘a coke’’ that

they would not get ‘‘a Coke’’ attracted considerable press

attention and made an impact on large numbers of cus-

tomers, because of McDonalds’ own success as a brand.

However, it remains the case that many pubs, restaurants,

etc. continue to supply a non-Coke when asked for ‘‘a

Coke.’’ An example of a relatively trivial attempt of

a competitor attempting to slow the development of a

generic brand name was Electrolux’s action. This company

encouraged its employees and their families to use the verb

‘‘to vacuum’’ rather than ‘‘to hoover’’ with the use of the

word ‘hoover,’ other than to describe the competitor

Hoover, almost being a disciplinary offence!

There are also examples of generic brands in industrial

markets — though here, the brand name may not enter into

everyday language but only into the language of a specific

industrial situation. However, the essence of the situation

is still that the brand name becomes used as a word to

describe a product, process or service marketed by any

supplier in the industry. Brand names such as Caterpillar,

Styrofoam and Silastic are all examples of generic brand

names applied to industrial goods that have entered into

everyday language.5 Indeed, although the Oxford English

Dictionary does in the case of each of these three brand

names state the term is ‘‘a proprietary name’’ it also gives

examples of them being used without an initial capital

letter — thus indicating that they are also used in a generic

manner. In comparison, although Sortex has, as indicated

above, become a generic brand name, it is only known to

people familiar with a specific sector of the food process-

ing industry.

There is no clear understanding of why a particular brand

name becomes used as a generic term. It is often suggested

that in most cases, a generic brand name is that brand name,

which first established a clear and positive (remembering

that there can be brand names with negative associations)

brand, identity during the development of the product

market. However, there has been no published research that

would confirm this assertion. A second question that

requires examination is why generic names develop in the

case of some products and not others. Why for example is

4 Surprisingly, the Microsoft Word 95 Spell-Check accepts ‘Hoover’ as

a correct spelling, but rejects ‘hoover’ even though the Oxford English

Dictionary accepts it.

5 ‘‘Caterpillar’’ is of course the name of an animal and was first applied

to track-laying vehicles by the allied troops when they saw the first tanks in

World War I.

J. Low, K. Blois / Industrial Marketing Management 31 (2002) 385–392 387

there not a generic brand name associated with domestic

refrigerators? Again, there is no published research that

suggests an answer.

What is clear, however, is that where a brand name

becomes used as a generic term many of those benefits

listed above are no longer pertinent. This applies both to the

benefits to customers and to the producer whose brand name

it is. However, the effects on the benefits to the producer are

the greatest. From the producer’s point of view, there is a

risk that all of the nine benefits listed by Hague and Jackson

are either diminished or destroyed because the competing

brands may benefit from a halo effect associated with, say,

Caterpillar’s best points. Thus, it is not only difficult to

‘build on’ a brand where its name has become a generic

brand name but it is also risky. For whether the meaning of

‘build on’ is to add value to the brand or to extend the range

of products marketed under the brand name, it will be

difficult for the producer to ensure that such enhancements

are only associated with its products rather than all of the

industry’s products.

The risk, from the customer’s point of view, is that the

three advantages that Hague and Jackson suggest brands

bring to the customer may be lost. There is also the risk that

the generic use of a brand name such as ‘caterpillar’ will

result in the values that the customers associate with

Caterpillar being diluted to a more general average set of

values for the industry as a whole. Customers may then

question why they have paid a price premium to obtain a

Caterpillar if the competitors’ products are perceived as

possessing the same attributes.

6. The costs incurred when a brand becomes a

generic brand

As was indicated above, a strong brand name can be of

great value to a company. However, unless the company

continues to invest into it, the brand’s distinctiveness will

deteriorate. More seriously where the brand name starts to

be used in a generic fashion not only will brand equity be

lost, but additional costs will be incurred (see Table 2), and

these are discussed below.

A strong brand name is usually established as a result of

the expenditure of a considerable amount of time and effort

plus a sizable monetary investment. Where a brand name

becomes used as a generic term this can mean that the

expected return on such investment will not be achieved

because the name will now fail to differentiate the company’s

products against its competitors. This then destroys the

essence of a brand name for ‘‘(a) name becomes a brand

when consumers associate it with a set of tangible and

intangible benefits that they obtain from the product or

service. As this association grows stronger, consumer’s

loyalty and willingness to pay a price premium increases.

Hence, equity is in the brand name. A brand without equity is

not a brand’’ [8].

This view is clearly demonstrated by a spokesman for

Intel when justifying Intel’s legal action against the use of

the term ‘MMX’ by Cyrix and AMD (see Insert 1).

Moreover, the brand name owner may incur additional

costs (as distinct from loss of benefits) when its brand name

is used as a generic term. The most obvious is the risk of

being unfairly associated with the failure of a competitor’s

product. Thus, the statement: ‘‘The xerox has let us down

again!’’ could mean that a Xerox or some other manufactur-

er’s photocopier has failed. In the latter case, there is a risk

that Xerox is unfairly getting bad publicity. Indeed there

seems to be some asymmetry in such situations as problems

of poor product reliability and performance tend to be

focused onto the generic brand name rather than on the

manufacturer whose product is faulty. Thus, Caterpillar

might get the blame associated with the failure of a com-

petitors’ product. On the other hand, success stories seem to

benefit the industry as a whole.

Other costs incurred when a brand name is used in a

generic manner include demands from owners of compet-

itors’ equipment for technical advice and assistance, as well

as spares. An instruction, perhaps especially in overseas

markets where language problems may exacerbate the issue,

to ‘‘get the xerox fixed’’ may lead to an approach to Xerox for

help even where a competitor’s product is involved. In the

case of products for which a second-hand market exists (as is

the case for Sortex), this danger can be increased. Such

equipment, which may be sold without adequate documenta-

tion or even clear marking on the equipment itself, might have

been described as ‘‘a sortex’’ even though it is not ‘‘a Sortex.’’

Such misuse of the name can lead to a steady flow of requests

for: advice, spares, technical assistance, etc. A response to

these requests is required even if it is nomore than a courteous

reply indicating that the enquirer is under a misunderstanding

regarding the company’s responsibilities. Failure to answer

may lead to the company gaining a reputation for unhelpful-

ness and inefficiency while a civil response may provide an

opportunity for future useful contacts.

Unfortunately, the range of people who may use a brand

name in a generic manner is very wide and typically

Table 2

Costs and benefits associated with development of a brand and its

subsequent erosion to generic status

Stage Costs incurred Benefits obtained

Development of brand Brand building costs Product distinctiveness;

possibly a price

premium

Maintenance of brand

distinctiveness

Brand building costs;

monitoring usage of

brand name; litigation

Product distinctiveness;

possibly a price

premium

Erosion of brand name

to generic status

Loss of brand equity;

unjustified bad

publicity; requests

for help from

competitors’

customers

None

J. Low, K. Blois / Industrial Marketing Management 31 (2002) 385–392388

includes: the direct customers; the customers’ customers;

trade associations; and journalists. Such a list presents a

formidable challenge to a firm that is anxious about the

development of or the actual generic use of its brand name.

Thus, it is inevitably time-consuming and costly for a

company to monitor the situation with the intent of trying

to rectify any poor publicity and/or inappropriate use of its

brand name. In any case, even if a firm identifies that, say,

its competitors’ customers are using its brand name in a

generic manner action, it may be very difficult to take

action, which will dissuade them from continuing to do so

without incurring very considerable costs.

Of course, in cases of infringements of the use of a brand

name, legal action can be taken. However, there are obvious

practical difficulties and risks associated with such an

action. First, the legal costs can be considerable and, as

the Intel example (Insert 1) shows, may require legal actions

in several countries. Second, unless action is taken against

those who use the brand name in an inappropriate manner at

the earliest possible time, then the legal defense of the brand

name can become substantially more complicated as For-

mica discovered (Insert 2). Third, particularly where a

company is large or dominates a market such actions, even

if legally justified, can both bring adverse publicity to the

company and also draw attention to the existence of com-

petitors. Indeed challenging small competitors may enhance

their credibility for, if the industry leader sees them as a

threat, they must be good! Indeed a respected industry

commentator, while agreeing that MMX was not a generic

term, still questioned Intel’s wisdom in pursuing Cyrix and

AMD for labeling their product MMX stating: ‘‘I think that

sometimes Intel get so focussed on the legal issues that they

lose focus on the bigger picture, which is — why highlight

the fact that your competitor has developed a new tech-

nology?’’ [9].

Insert 1. Intel and the generic use of MMX

In March 1997, Intel filed suit against AMD(Advanced Micro Devices) and Cyrix for infrin-gement of its pending trademark MMX. The suitalleged that AMD and Cyrix were appropriatingthe name, possibly confusing consumers andimproperly leveraging Intel ’s investment in itsmultimedia technology product. That the suitwas merely over trademark rights to the termMMX and not over the technology was indicatedby the fact that AMD had the right, under alicensing agreement, to produce microprocessorswith MMX technology.

Intel sought preliminary and permanentinjunctions, along with unspecified damagesand fees. A similar suit was also filed in Ger-many, at the time the only country where thename was registered and Intel also applied totrademark MMX in Canada.

Cyrix and AMD contended that Intel wasattempting to trademark a generic, industry termfor multimedia extensions. Industry observerswere not convinced, however, and many agreedwith Intel’s claim that: ‘‘Their (i.e. AMD’s andCyrex’s) clear intent is to leverage our investmentin that brand equity associated with MMX. If westart letting people invade and turn our brands intogeneric names, then we’re headed down a slip-pery slope where we lose a lot of value (for) ourshareholders.’’

However, by the end of April, following a similarsettlement earlier in the month between Intel andCyrix, a deal was announced between Intel andAMD, which allowed AMD to use MMX to promoteits chips. A vice president of AMD said in astatement. ‘‘Our agreement with Intel secures forAMD and its customers the ability, on a world widebasis and in all channels of distribution, to con-tinue promoting the MMX capabilities of the AMD-K6 processor, including the use of the term in theAMD-K6 processor logo.’’ He also said the settle-ment meant that any confusion in the marketplacethat might have occurred had the litigation resultedin a protracted legal battle would now be avoided.

Insert 2. A legal threat to Formica’s brand name

As the range of products included in the For-mica brand product line increased, Formica deci-ded to build on earlier measures to protect theFormica brand name. However, on 31 May 1978,the Denver regional office of the Federal TradeCommission filed a petition with the TrademarkTrial and Appeals Board to cancel the registrationof the Formica trademark. The petition alleged thatthe trademark, which appeared on a variety ofplastic laminates and other products manufac-tured by Formica, had become the generic ordescriptive name for all decorative plastic lami-nates. The Formica managed to convince theTrademark Trial and Appeals Board that the FTCwas incorrect. However, as a consequence of thisthreat to their brand name, Formica took newsteps to protect the Formica brand. Theseincluded, as well as advertising directed at cus-tomers, aggressive advertising campaigns target-ing journalists with the straightforward messagethat Formica is a trademarked brand, not a genericname for high-pressure laminate, countertops orfurniture finishes.

J. Low, K. Blois / Industrial Marketing Management 31 (2002) 385–392 389

7. What to do?

When considering what action to take if a brand becomes

a generic term, it has to be recognized that in many cases, in

industrial markets, the firm did not make a definite decision

to develop a brand. This was not the intent and the evolution

of the brand name might be described as ‘‘an accident’’!

Indeed quite often the company’s name became the brand

name through the use made of it by the customers and not

because the company planned such a development. In such

cases, the company has not spent much, if any, effort on

creating a brand name. What it has done is develop and

market a good product. Therefore, any benefits that have

been received through the accidental creation of a brand

name might be regarded as ‘‘windfall gains.’’ Perhaps,

therefore, in thinking about the costs associated with

becoming a generic brand these can be regarded as the

opposite of a windfall gain and should be fatalistically

accepted as such! However, an estimate of the identifiable

costs (e.g. number of letters dealt with, number of phone

calls received, etc.), which are being incurred because of the

brand name’s generic use should be made and should be

incorporated into the process of determining what action

to take.

There seem to be three options open to a company if it

finds that its brand name is being used generically. First,

establish that it is the only company allowed to use the

registered name and take steps to defend that position.

Second, do nothing. Third, change the name of the product

and develop a new brad name distinct from that of the

generic brand. For convenience, these options will be

labeled: ‘fight,’ ‘accept,’ and ‘change.’ Yet, as will be seen

from the discussion of each of these options, a firm’s

decision as to which of these options to follow will be

strongly influenced by whether or not the company name

and the brand name are the same — as is the case with

Sortex. Indeed where they are identical then the change

option is almost certainly not feasible.

7.1. Fight

Inevitably, as the Intel example illustrated, the firm

fighting will incur considerable financially costs, not

infrequently bad publicity, and sometimes, perversely,

even provide beneficial publicity for those companies

being attacked! Furthermore, where it is necessary to

fight in several countries, the costs can be daunting, for

using the legal system in some countries often appears to

bring with it major problems. For example, in the case of

Thailand, it has been said that: ‘‘Litigation in Thailand

can be very costly’’ [10], indeed so costly that this is one

of the reasons why in Thailand ‘‘there are relatively few

Supreme Court precedents in international commercial

disputes’’ [10]. Therefore, before embarking on such a

procedure, some assessment must be made of both the

likely costs and the probability of winning. In general, to

‘fight’ is going to be very expensive and maybe unlikely

(even if legal victories are achieved) to provide much

benefit. Thus, any company seeking to defend its brand

name in Southeast Asia has to recognize that not all of

the various legal systems that exist in that region are, to

put politely, sympathetic to the concept of intellectual

property, trade marks, copyright, etc. It follows that the

probability of achieving a legal victory in some countries

in this region is low. Furthermore, even if a firm is

successful in obtaining an injunction restraining others

from using its name, actually achieving any action can in

some legal jurisdictions seem to be a matter of chasing

the ‘‘Will o’ the whisp.’’ Indeed even within a country

like Great Britain, it can sometimes be costly to get an

injunction fully implemented.

Even where there appears to be a point of leverage, the

true impact of a legal victory may be very little. Thus, even

if Sortex was able to insist that at auction, the term

‘sortexed’ should only be used for rice, which had been

through a Sortex machine (and not just rice, which had been

subject to optical checking), the auctioneer would still have

to rely on the honesty of his suppliers’ statements as to

which type of machines they had used.

It is particularly important for a company when trying to

assess the costs vs. the probability of achieving any effective

restraint on the use of its brand name to factor into its

calculations an allowance for management time. Briefing

lawyers and the necessity in some foreign jurisdictions of

senior mangers attending court can absorb substantial

amounts of management time. However, regardless of its

size, a company like Sortex has to consider ‘fight’ as a more

serious response than, say, did Dow Corning when its brand

name Silastic began to be used generically. This because

Sortex was the company name and thus negative publicity

about Sortex was potentially damaging to the company as a

whole and not just a part of it.

7.2. Accept

Should the ‘fight’ route not look attractive (and even for

large companies this is frequently the case), then ‘accept-

ance’ should be considered. Indeed it is arguably the only

alternative open in those cases where brand name and

company name are the same. ‘Acceptance’ does not of

course simply mean passivity. At the very least, a company

following this policy should have carefully prepared draft

statements available for issuing to the media in a variety of

foreseeable circumstances. For example, if a competitor’s

product suffers a disastrous failure and the media refer to

the product by the generic brand name, then the existence

of a draft press release could be invaluable in preparing a

speedy response. Other ways in which ‘acceptance’ can be

less than passive is by replying with some information

about the real brand to all those communications that are

received as a result of the use of the generic term about

competitors’ products.

J. Low, K. Blois / Industrial Marketing Management 31 (2002) 385–392390

7.3. Change

The policy of ‘change’ — that is changing the name

associated with company’s product to something distinct

from the now generic name — is obviously really only

open to companies where the brand and the company

name are separate. The reason being that most companies

find the prospect of changing their company names too

daunting a task.

Two cases where companies have changed the name of

their products are Silastic produced by Dow Corning and

Flowpak produced by Rose Forgrove. Silastic is now known

as RTV 732 within the industrial market. The case of Rose

Forgrove is more complicated because the brand name

Flowpak was easily converted into ‘flow pack’ (a term that

cannot legally be protected as it is simply two English words),

and it is interesting that at one stage, the company stopped

using the termFlowpack, but following a take-over, this name

was reinstated. It must be assumed that both companies had

evidence that the distinctiveness of their products was being

substantially eroded by the development of the generic name.

Perhaps for example, Dow Corning had evidence that dis-

tributors’ staff when asked for a container of Silastic were at

least as likely to sell a competitor’s product as the Dow

Corning version. Yet, in neither case, because their brand

names and their company names were quite different, did the

companies have the problem that Sortex faced. Therefore, for

example, onceDow Corning had recognized that Silasticwas

being used as a generic term, it could try to retrieve its product

from the association with the name Silastic without having

any impact on its company name.6

‘Change’ is of course costly as it requires, if the desired

impact is to be made, a special public relations campaign

plus new promotional and advertising material, new pack-

ing, documentation, etc. Because of this, it may only be

appropriate to implement it as a policy when other factors

require changes to be made. For example, if for some other

reason, the container needs to be redesigned, this would be

an ideal moment to rename the product.

8. Conclusions

The threat of a brand name becoming used in a generic

fashion is always present and so a company must take steps

to try to avoid its occurrence. This involves identifying the

problem and then determining what action to take. As

Table 3 indicates, it is necessary regularly to monitor the

use of a brand name so that action can be taken as soon as

there is any evidence of the name starting to be used

generically. However, it is apparent that, sometimes, evid-

ence that this is occurring is not noted or that the generic use

of the name develops a momentum that cannot be stopped.

Where this occurs, then the alternatives considered in

Section 7 above need to be evaluated.

Reaching the appropriate decision regarding a company’s

response to the use of its brand name in a generic manner is

difficult. Inevitably, a number of assumptions and ‘guess-

timates’ will have to be made. Even a large firm, which

might have the resources to carry out a thorough assessment

of the costs associated with each policy and the likelihood of

their being successful, will still have to reach a decision on

the basis of a high degree of uncertainty. For a small firm

with limited resources, the decision will necessarily be

based almost entirely on managerial judgement for the cost

of even the simple market survey proposed in Table 3 may

be too great for it to be undertaken. Again, even a large firm

may question the wisdom of defending a brand name, once

it has become a generic term, because to do so may incur the

expenditure of large amounts of time and money with

relatively little probability of successfully re-establishing

6 In fact, they seem only to have responded to this development within

the industrial market where they changed the name to TRV 732. However,

in the health care industry market where the name has also become a

generic term, they have taken no action.

Table 3

Identifying and responding to the generic branding threat

Identifying the problem Action

Check actual and potential customers’ usage of the brand name in If it appears that the brand name is being used in a manner which

communications with you. does not strongly associate the product with your company then require

sales staff to emphasize your brand’s uniqueness and develop a

communications program to support this activity.

Monitor articles in newspapers and trade press for use of the brand name.

(This is now relatively easy with on-line databases such as

ProQuest and Reuters.)

If the brand name is even beginning to be used as a generic term write to

the journalist involved stressing the name’s legal status. Also write to all

journals targeting similar audiences.

Monitor competitors’ publicity material. If there is any evidence of inappropriate use of your brand name instruct

lawyers to write to the competitor immediately.

If it appears that your brand name is being used generically Action

If monitoring customers, media and competitors indicates generic use

of your brand name by members of each of these categories, then

the situation is serious.

Undertake a survey to establish the extent of the acceptance of your

brand name as a generic term. For example, test what ‘‘sortexed’’ means

to managers involved in the rice market.

If the survey indicates acceptance of your brand name as a generic term. Consider the: fight; accept; change, alternatives discussed in Section 7.

J. Low, K. Blois / Industrial Marketing Management 31 (2002) 385–392 391

the integrity of the brand’s name. For a small firm, the costs

will almost certainly be too great.

In spite of this, it would seem wise to reach a conscious

decision. Then, at least, all staff will know the context

within which they are operating and know what the com-

pany policy is when confronted with any of the many issues

that can impinge on a company whose brand name is now

being use as a generic term.

References

[1] Mudambi SM, Doyle P, Wong V. An exploration of branding in in-

dustrial markets. Ind Mark Manage 1997;26:433–46.

[2] Hague P, Jackson P. The power of industrial brands. Maidenhead:

McGraw-Hill, 1994.

[3] Textile Outlook International. Face to Face: Alan Pedder of ICI Fibres.

May 1987, pp. 35–45.

[4] Shipley D, Howard P. Brand-naming industrial products. Ind Mark

Manage 1993;22(1):59–66.

[5] Institute of Practitioners in Advertising. The Brand Finance Report

(London).

[6] Badenhausen K. Brands: the management factor. Finance World

1995;22:50–69 (August).

[7] Desmet D, et al. The end of voodoo brand management? McKinsey

Q 1998;2:106–17.

[8] Court D, Freeling A, Leiter M, Parsons A. If Nike can ‘just do it’ why

can’t we? McKinsey Q 1997;3:24–35.

[9] Anderton P. Intel battles with Cyrix and AMD over MMX moniker.

Comput Can 1997;23(7):5–6.

[10] Seline C. The business guide to Thailand. Singapore: Butterworth

Heinemann Asia, 1998.

Dr. John Low was the Technical Director of Sortex Ltd and is

currently the Research Director, Royal National Institute for the Deaf.

Dr. Keith Blois in Industrial Marketing, Templeton College and

Deputy Director, the Said Business School, both within the University

of Oxford.

J. Low, K. Blois / Industrial Marketing Management 31 (2002) 385–392392