August 14, 2006
The "Branding Effect" of Deal Structure
Posted by Gordon Smith

I spent a good chunk of Saturday revising my comment on Vic's case study of the MasterCard IPO, with some references to his earlier work on the "branding effect" of deal structures. I am interested in the difference between the "branding effect" and other governance mechanisms. I wrote:

[B]randing may be a form of signaling, but the "branding effect" identified by Fleischer also has a function unrelated to signaling.... Brands in this latter context are not focused on the transmission of information, but on the creation of meaning. Thus, branding often is described by reference to emotional – or even religious – concepts. Brand meanings are created through stories, and those stories have many authors. Fleischer justifiably adds “deal structures” to the list of stories that contribute to a brand’s identity.

This seems right to me, but I would be interested in more thoughts about this.

Another example of a "branding effect" that jumps out at me is the use of coops by organic farms. See, e.g., Organic Valley. Why choose the cooperative form? My sense is that this decision has as much or more to do with branding (coops communicate certain values) as with governance.

The comment should be available for download shortly.

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