Last month, McDonald’s announced they are ending their 40-year relationship with the H. J. Heinz Company, the leading ketchup brand in the world. “As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time,” the burger makers said in a prepared statement. Mickey D’s is apparently incensed that their longtime condiment partner has hired Bernado Hess, the former CEO of Burger King, to lead their tomato-based global enterprise. Must have really toasted their buns.
Had this been retribution for making those little ketchup packs so dag-gone hard to open, it would be easier to understand this move. But, nevertheless, Heinz crossed some kind of line, or violated some form of good faith. You would have thought, though, that they tried to pay at the second window of the drive through, when the operator clearly said to pay at the first. Now that’s a serious transgression. But Heinz is losing a big customer for hiring someone away from the wrong company.
Yet, while the ketchup leader loses a chunk of business and McDonald’s gets some corporate revenge, both brands lose their association with the other’s leading brand. And that’s a value that can be hard to come by and harder to replace.
Branding by association can be a powerful way to reinforce or add value to a brand. Carmakers have been doing it for decades by prominently featuring brands such as Goodyear tires, Bose sound systems, or even Eddie Bauer editions of certain models. Celebrities routinely trade on their brand recognition to develop exclusive lines for retailers. The intrepid Martha Stewart has become a serial brand partner for Kmart, Macy’s and JC Penney. The latter two store brands ended up in court last year fighting over which had the right to use Martha’s name for housewares, which was not a good thing for anyone involved.
The “Intel Inside” campaign was perhaps one of the best ever at what I call symbiotic branding, where the presence of the Intel Inside badge helped both the computer brands that used it and the Intel brand itself. Intel succeeded in building a highly profitable brand for its microprocessors, despite the fact that most people have never even seen one.
On the other hand, some brands that act in concert seem to provide little more than an efficiency of space utilization. Combining Baskin-Robbins and Dunkin Donuts (both owned by Dunkin Brands) into one location is slightly convenient for the consumer, but mixes two different brand experiences together in a somewhat clunky fashion. Presumably, donut sales are best in the morning and afternoon, and ice cream sales improve as the day goes on, but there seems to be little synergy between the two.
Some years ago, a national family steakhouse chain with franchisees in the central Pennsylvania area elected to end their soft drink contract with Coke, rejected an offer from Pepsi and chose Royal Crown Cola as their provider. R.C. offered a lower rate on their syrup and some other bonuses. But what was the message that their customers took from being served a soft drink brand that barely existed even then? At the time of this move, there were more than 600 locations for this steakhouse restaurant nationwide. Today there are 21. A third-rate soda brand was hardly the only reason for the decline of this franchise. But it wasn’t inconsistent with it, either.
McDonald’s and Heinz will likely feel no ill effects from their divorce after four decades of combining their products. The perennial leader in the burger wars saga relies on a far stronger marriage to Coke to reinforce their brand strength. And it’s hard to imagine breaking up that partnership for anything like what triggered the Heinz separation. “Is Pepsi OK?” Not for a leader like McDonald’s.
Burgers need ketchup and cars need tires, so deliberately or not, many brands end up developing close ties to brands that can convey a sense of added value or improve the brand experience for both. But the flip side can also take place. Choose a partner brand carefully and make sure both sides can benefit. And keep in mind that, once in awhile, it could be time to move on. No matter what the reason.
As published in the Central Penn Business Journal.