Delphi Tests Brand Strategy in Brazil

Automotive Industries, July, 2001 by Gerry Kobe

The divisions of Delphi Automotive Systems have spent decades establishing brand equity in names such as Packard Electric, Delco Electronics and Harrison Radiator. But in Brazil, a recent initiative launched in the aftermarket parts business may guide the company to a new strategy that will see Delphi market all of its products under the Delphi brand.

"We will promote the Delphi brand with advertising campaigns on television and in print," says Lucia Veiga Moretti, director of Delphi South American aftermarket operations. "Batteries that would be sold in the U.S. as Delco Freedom batteries will be called Delphi Freedom here. We will also market parts like injectors, ignition cables, CV joints and even air conditioning kits under the corporate name."

Moretti says her research shows that creating new brands and promoting them individually is expensive and unnecessary in a developing country like Brazil. She adds that if the experiment is successful, it might expand to include more developed markets, effectively bucking the multibrand approach taken by most suppliers and the cobranding trend that is the cornerstone of companies like Johnson Controls Inc.

"Given the circumstances, I think Delphi has a great idea," says Michael Schmall, managing partner at The Planning Edge, a Farmington Hills, Mich.-based marketing consultancy. "Brazil is a large market so it's a viable test balloon. If Delphi can promote a bunch of products under one name, the public gains an understanding of the Delphi brand and then it becomes meaningful. Right now when you hear 'Delphi Quadrasteer' it's confusing because it's branded at two levels. But if they can establish a Delphi halo, then they can talk with less confusion about what they make."

Moretti admits that a big part of her decision was driven by the fact that existing Delphi brands such as Monsoon audio or deCarbon shock absorbers have no brand equity in Brazil, but she says there is another part of the equation.

"The more products I can distribute under a single brand the better for Delphi," she offers. "We will also sell some products under store brand names for the biggest mass merchandisers, but that is just to enhance our volumes. Our real purpose in taking this approach is to gain recognition for Delphi products."

Reading between the lines, Schmall believes this approach could also be a golden opportunity for Delphi to shed the stodgy image that is attached to some of its brands.

"Our data shows that the Delphi brands that have good name recognition are recognized by a segment of the population that are not going to buy many more cars, Schmall confides. "Brands like Delco resonate with older people, but that is not necessarily the kind of recognition the company wants. It makes sense to consider starting fresh and create a modern image that promotes a new Delphi, consistent with a product line that is perceived as high tech."

Schmall is quick to add however, that Delphi's one-brand approach is not the answer for every supplier. For example, he applauds JCI's cobranding approach as being ideal for its product line and corporate identity. And for a young company like Visteon, co-branding is essential at this time.

"Delphi has one of the few opportunities left to become it's own brand," he says. "I'm curious to see how the public reacts."