How much of the family connection needs to go into the marketing of a family business? The argument in favour goes like this: a good corporate reputation is essential for success. The idea of ‘family’ suggests stability, which translates into quality service and high integrity. The result: trust and loyalty among customers and a better reputation.
Certainly, there are many family businesses now that promote the family status. Examples include Brown Brothers and indeed many of the more successful wineries around Australia like Casella Wines, Yalumba, De Bortoli, McWilliams, Angove, Tahbilk and Wingara. Another one is Linfox, which involves members of Lindsay Fox’s family in all facets of the business. Lindsay’s son Peter is chairman of the Linfox group. There is Myer with Myer family representation on the board, Solomon Lew, Harvey Norman, Dyson Bus Company, Wittner Shoes and Australian Pacific Touring (or APT) owned by the McGeary family.
IGA supermarkets don’t count as a family business. Run by the independent grocers, however, it comes across as a family business because families run many of the franchises. They even have ‘family friendly grocer’ as their tag line.
Overseas examples include Kodak, Rothschilds, Wal-Mart, Johnson & Johnson and food packaging processing company Tetra Pak.
But the picture is more complicated than that. There are family businesses that don’t promote the family connection. So where does it work?
Studies show that the family connection is sometimes excluded from the marketing plan. Research out of the University of Bern in Switzerland found that partly publicly-held family businesses were less likely to promote their family background than those that were fully privately-owned. This suggests that the less influence a family exerts on the company, or is able to exert, the less likely they are to promote the family being in that business.
Mellissah Smith, the founder and director of Marketing Eye, says it depends entirely on the business and its market.
“If you’re focused on Gen Y, then I don’t think it’s as important for the Gen X and baby boomers,” Smith says.
“The mind set and the psychological profiling of the baby boomers and Gen X is very different to a Gen Y. The importance of family and family business isn’t so important when you’re selling to a 20-year-old who really doesn’t care.”
She says this will have massive implications in the long term as Gen Y moves into the 40s and 50s. Marketing the family name will lose its power.
“As the years go by, it will die out,” she says. “It’s more about the brand, the performance and the affinity that someone has for the brand and marketability.
“You would need to extend your marketing strategy a lot further than a five year strategy today because it is going to change and if you want to be around for a long time you need to change with it. We are constantly seeing new brands come into the market and by surprise, they take up a larger market share than the more established companies would have expected because they are marketing differently and the way they approach the market is different.”
But Roger Powell, a family business advisor from Whiteplaces Services and Marketing Systems disagrees. Gen Y, he says, will become like their parents so companies will still be able to get that message across. “Don’t necessarily dismiss Gen Y in that context because what you will see is the Gen Ys becoming the baby boomers of the next 50 years,” he says. “They will be in their 40s and 50s and they will start to adopt similar profiles to what their parents had.”
He says it all depends on where the family sits in the remit of the product structure.
“Some families don’t even want people to know it’s a family business but with other companies like Brown Brothers, the name is strong and represents the product and ideals of that product. That resonates very much with the consumers on the whole,’’ he says.
It only makes sense, however, when it’s connected to the market.
“If you have a family business and it’s part of the community’s day-to-day activities you have a much greater chance of using your family business moniker as being important to your brand,” he says.
“I think the industries where the products are associated with family life, where the products are associated with your day-to-day activities are probably the areas where your brand in the industry would be strongest and would resonate. The name of your family and the name of your business have to resonate with the consumer so that the consumer sees that it has to do with their family.
“That’s the linkage that has to occur. If you have a family name and it doesn’t necessarily resonate with the product you’re selling and the consumer’s perception and there is no benefit in that.”
Examples of that include Dennis Family Homes, which uses the family connection to sell the most important acquisition every family makes. That contrasts with Grocon, established by the Grollo family, which is not in the business of connecting with the community by building family homes. It doesn’t have to market the family connection to be successful in its particular market. Marketing family status in a business has to relate to the consumer, otherwise there is no point.