Masso Group

it didn’t always make for the most efficient or profitable business model.  

The keiretsu system spawned powerful conglomerates that for a time were insulated from economic woes. But this could not last forever. According to the article “Japan’s Own Brand of Corporate Governance: Shareholders Don’t Rule,” published by Knowledge@Wharton, “The [keiretsu] system is, in large part, to blame for Japan’s bubble economy of the 1980s that ultimately burst.”

Nonetheless, the keiretsu system was the basis for giant corporations that diversified to an extreme degree. Keiretsu could be vertical, such as Honda and Toyota, or horizontal, such as Mitsubishi and Fuyo (which spawned Canon, Hitachi, Nissan, and Yamaha, among others).

Mitsubishi, in fact, is an excellent example of one of the original keiretsu. Mitsubishi started in 1870 as a shipping company. Today, this global giant has hundreds of companies under its loose umbrella, some of which do not carry the Mitsubishi brand name. According to Mitsubishi, the companies “conduct their business activities independently” but “they cooperate in areas of common interest.”

To bring some commonality to Mitsubishi companies, a corporate mark was created. It depicts three connected red diamond shapes. The word “Mitsubishi” is a combination of the Japanese words mitsu (three) and hishi (water chestnut). Hishi is traditionally used to denote a rhombus or diamond shape.

Companies with Mitsubishi in their names include Mitsubishi Chemical Corp., Mitsubishi Electric Corp., Mitsubishi Heavy Industries, Ltd., and Mitsubishi Motors Corp. Mitsubishi companies without Mitsubishi in the name include Kirin Holdings Company, Ltd., Nikon Corp., and Nippon Oil Corp.

Two of these companies, Mitsubishi Electric and Mitsubishi Motors, are useful in exploring the original questions posed about Japanese super-brands. Mitsubishi Electric by itself is in the top 200 of Fortune magazine’s “Global 500 World’s Largest Corporations.” Mitsubishi Motors is a major corporation in its own right, with over 30,000 employees, 50 subsidiaries, and products sold in more than 160 countries.

While Mitsubishi Motors makes cars, Mitsubishi Electric is highly diversified, manufacturing such products as elevators, air conditioners, projectors, semiconductors, and televisions. From a branding perspective, both Mistubishi Motors and Mistubishi Electric employ the corporate name and use the three-diamond mark, which means the same name and mark appear on cars and televisions.

To the credit of the Japanese super-brands, they have almost uniformly built a reputation for quality, regardless of business category. This is one of the attributes that led to Japanese automakers dominating that industry. But suppose two consumers have very different experiences with Mitsubishi-branded products.

For example, one consumer purchases a Mitsubishi automobile and has a good experience. Another consumer purchases a Mitsubishi television and has a bad experience. Will the first consumer look favorably upon and consider purchasing a television carrying the Mitsubishi brand name? If the second consumer decides to buy a car, will he or she be negatively predisposed toward a Mitsubishi-branded vehicle?

Emotionally, each consumer might transfer the positive or negative experience with the Mitsubishi brand from one product to another. These feelings about the brand could transcend product category. Rationally, however, if a Mitsubishi-branded product is highly rated in a product category, it deserves consideration. If the consumer had a negative experience with the brand in one category, and wants to make an objective purchase in another product category, this creates a potential dilemma.

Take Yamaha, for instance. On the one hand, this Japanese super-brand is renowned for musical instruments such as keyboards and drums. On the other hand, Yamaha is just as well known as a brand of motorcycles. Both corporate entities use the Yamaha name and mark, although there are separately named series of products in each company’s product lines.

Only if a musician playing a Yamaha instrument also rides a Yamaha motorcycle will the identical consumer come into contact with the same brand name in these specialized categories. Nonetheless, the consumer’s experience with the brand in either category could influence overall brand perception. With a positive perception, the consumer thought process might be: “I bought a Yamaha keyboard and it was great… I bet their motorcycles are good, too.”

In both the Mitsubishi and Yamaha examples, it should be noted that a consumer’s interaction with the brand in any product category can lead to that person becoming an influencer—a brand advocate or a brand detractor. A happy consumer (advocate) may enthusiastically recommend a brand to friends. An unhappy consumer (detractor) may vocally condemn a brand to all who are willing to listen.

Bad product experiences not withstanding, brand diversification has another important benefit: Brand recognition can extend a consumer’s receptivity to other products in allied categories. For example, a satisfied owner of a Honda automobile may seek out other Honda products. That consumer might become a buyer of a Honda motorcycle, a Honda snowblower, a Honda lawn mower, or a Honda outboard motor for a boat. The perceived quality of the Honda vehicle can lead to a satisfied consumer making other related Honda purchases.

While Japanese super-brands are not always regarded as great brand marketers, it is the quality of their products that creates the perception of great brands. Other Asian super-brands have followed the diversification strategy with success. The Korean companies Samsung and LG are good examples. Of course, companies from other parts of the world pursue diversification strategies as well, but many seem to establish more uniquely different brand names than the Japanese companies, which tend to attach the company’s name to all of its products.

In some cases, diversifying a single brand name can have a diluting effect and may turn out to be a bad strategy. Martin Roll, author of the book Asian Brand Strategy, has this to say about Japanese super-brand Sony: “… Sony still seems to have stuck up in multiple businesses: consumer electronics, music label, online music store, semiconductors, a motion picture company and financial units to name the dominant few. This diversification not only drains the brand’s resources to a great extent but also diverts the brand focus from the core of the brand.”

For the most part, however, Japanese super-brands derive considerable benefit from diversification. In a world of ever-increasing options, a product with a Japanese brand name is often regarded as the best choice.