IBM FOCUSES ON ITS BRAND GERSTNER'S BLUEPRINT MEANS DROPPING MANY SUB-BRANDS

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IBM Chairman Louis V. Gerstner Jr. continues his grand design to cut millions of dollars in waste by banking on a big brand-driven strategy.

In an internal memo dated July 21, IBM United States announced the "transfer of its remaining brand management marketing organizations to their respective product divisions to significantly increase speed-to-market and improve overall efficiency. Employees with brand management responsibilities will transfer to the product divisions."

This approach was tried first with the AS/400 and part of the IBM Personal Computer Co.

"We transferred the AS/400 brand team to the AS/400 Division in April and the results have been very positive," wrote Robert J. LaBant, IBM senior VP-group executive. That "convinced us to quickly move ahead with our other brand management functions."

Mr. Gerstner is "sincere about getting products out there that customers want," said an IBM employee who requested anonymity. In the "old" IBM, engineers handed products off to marketing and were not held accountable if customers weren't interested, the source said. "The significance of this move is that now there's accountability."

Significantly, one reason IBM consolidated advertising with New York-based Ogilvy & Mather in May was to focus on and preserve the IBM brand.

"Unlike some other companies where they have separate brands that are very important, by and large our brand is IBM, and our advertising needs to reflect that," Abby Kohnstamm, IBM's VP-corporate marketing, stated at the time.

John W. Thompson, general manager-marketing for IBM North America, said one magazine had 28 different representations of IBM. "We had a strategy of independent companies creating images for themselves."

The outcome likely will be far more emphasis in advertising and products on "IBM" and far less on specific models. IBM is expected to continue to drop many existing sub-brand names, as it did late last month when it announced it would close Ambra Computer Corp., a low-cost, mail-order PC business, within 90 days. The European version was eliminated earlier.

Ambra never was accepted by its target audience, despite millions spent on advertising.

Mr. Gerstner's push to protect the IBM brand represents his concern for the customer. "He's customer-centric," said Sam Albert with the Scarsdale, N.Y.-based consultancy bearing his name.

Ms. Jaben is editor of Business Marketing.

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