03.10.2003
vodafone: managing brand migration
Building a Pan-European Identity
Professor Philip M. Rosenzweig prepared this case as a basis
for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. / In early 2001, Vodafone put in place a new organization design that coordinated five activities on a global basis: Supply Chain Management, Product Development, Technology Standards, Global Key Accounts, and Global Brand.
Managing Vodafone’s brand on a global basis was widely recognized as critical to the company’s success. If Vodafone was to capture the full value of its global position--which was broader and wider than that of any other network--it needed a single, coherent brand with a well-developed campaign.
David Haines was hired as Global Brand Manager in December 2000. A UK national, Haines had started his career in sales and marketing with Unilever, then spent nine years with Mars in Germany and Sweden, before serving as Vice President of Marketing for Mars Inc. Europe and CIS. In 1998, he moved to Coca-Cola, where he was President and Deputy Chairman of the German operating company, Coca-Cola GmbH.
Haines recognized the importance of building a single, global brand. Yet the challenges he faced were great. At present, the Vodafone brand was used in the home UK market, as well as in New Zealand, Australia, and Hungary. In other majority owned markets there was a wide variety of local brands, including D2 (Germany), Omnitel (Italy), Airtel (Spain), Telecel (Portugal), Europolitan (Sweden), Libertel (Netherlands), Panafon (Greece), Eircell (Ireland), Click GSM (Egypt), and Vodacom (South Africa).
These brands were highly valued by customers, employees, and suppliers, and were a strong force for local identity. Indeed, the strength of local brands was attractive to Vodafone--so why now forfeit those brands in favor of a new and untested global brand? Yet as the company moved towards capturing the full benefits of an extensive global position, the attractions of a global brand were clear.
Copyright © 2003 by IMD - International Institute for Management Development, Lausanne, Switzerland. Not to be used or reproduced without written permission directly from IMD.
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One Example: Telecel of Portugal
Portugal was far from the largest market, but was rather typical in terms of mobile phone use.By the end of 2000, Portugal had a mobile phone penetration rate of 67%, less than Sweden (76%) and Italy (73%), but the same as the United Kingdom (67%) and the Netherlands (68%), and ahead of Germany (59%) and France (50%).
Vodafone’s network in Portugal was Telecel.Founded in 1992, Telecel had grown to become the second largest network in Portugal.Its founding executive, Antonio Carrapatoso, had built a strong organization of talented people, proud to work for a leading Portuguese company.Over the years, Telecel had tailored a full range of services and products designed for the Portuguese market.Telecel invested heavily in its brand, building high and positive brand awareness.It was the principal sponsor of Benfica Football Club (Sport Lisboa e Benfica), an official partner of Porto Football Club (Futebol Clube do Porto), and also sponsored athletics and motor sports.
Ever since Vodafone had acquired majority ownership of Telecel, there had been speculation about an eventual shift from the Telecel brand to the Vodafone brand.Initial reaction in Lisbon was, one manager recalled, one of “concern.”The benefits of changing brand were not obvious.Most of Telecel’s customers were local nationals who used their mobile phones within the country--being part of a global network was not obviously a benefit to them.On the contrary, Telecel was a well-known and much admired local brand, aPortuguese success story, closely associated with football and other local activities.Vodafone, by contrast, was scarcely known--and to the extent it was known at all, it was likely to be seen as a foreign company. Was the local identity being lost, to be submerged in a multinational company? Would local managers lose their autonomy? As if that were not enough, the word “Vodafone” was similar in sound to an obscenity in Portuguese. Why, Telecel managers reasoned, should an excellent local brand be replaced?
David Haines Visits Portugal
Shortly after joining Vodafone, David Haines traveled to many operating countries to discuss brand migration. In Portugal, he was scheduled to meet with Telecel president Antonio Carrapatoso. As Haines prepared for his meeting, he wondered what he should say.