Lanxess Brand communication of a spin-off

Our credo is impact in place of image. At Lanxess, we understand communication and brand strategy as an investment, which has to contribute substantially to the company’s success. Mr. Sieder, Senior Vice President, Head of Corporate Communications

Bayer is known to be a traditional and global company, which experienced a lot of strategic changes recently due to a different and changing market environment. Bayer focused for a long time on its traditional lines of business of chemistry, agricultural products and pharmaceuticals. After taking the cholesterol lowering medicine Lipobay off the market in August 2001, its business plummeted dramatically. Under these circumstances Bayer had to undertake major structural and strategic changes. In the end, the company decided on a new strategic orientation of its product portfolio, which led to a spin-off of the chemical sector. Bayer founded a new chemical company in record time. In the beginning its business activities were carried out under the name of NewCo?. On 18th of March in 2004, on the occasion of the annual press conference, Lanxess was introduced as the new name resulting from an intensive development process by the board of directors, Corporate Communications and employees. The aim was to build within one year – with a lot of energy and motivation – an authentic brand for a new worldwide operative chemical company. On 1st of July in 2005, former Bayer Chemicals was officially renamed as Lanxess.

The second step to independence and autonomy was completed with the initial public offering. But the new strategic direction wasn’t without any risks, because some parts of the business were considered as rather poor in performance. Lanxess proved able to advance and push ahead sales and so far its ambitious plans have been realized, e.g., re-organisation of the company’s structure to improve overall efficiency and the IPO at the beginning of 2005. Lanxess proactive attitude is expressed throughout its corporate values within the Corporate identity “courageous, capable, and lively” and throughout the company’s brand promise “energizing chemistry”.

In order to guarantee Lanxess’ business success, cost efficient business processes had to be designed and implemented. The new company’s main goals were independence, competitiveness and profitability. Future corporate communications and thus future alignments of branding strategy had to follow these main goals in a value and market oriented manner. The company put a high emphasis on setting up a profit oriented corporate communication program. The different globally linked business units were more or less connected with coordinated communications – and marketing activities surpassing national and local boundaries. Thus the global situation and the economic situation of Lanxess made a central concentration of communication activities inevitable. This alignment assumed the coordination of all communication activities of the different countries under one central lead, the use of cross country synergy effects and the consideration of regional conditions, following the well-known principal “Think global, act local”.

As a structural solution Lanxess established communication hubs in Europe, USA, Asia, South America and India, where various national markets with similar influencing factors were combined under one region. This top down approach facilitated a dialogue on local levels to identify communication needs of individual entities and to communicate these to the headquarters. Vice versa the headquarters could inform local entities on communication content, processes and structures. Local entities could still align communication activities with other countries.

The Lanxess’ organizational approach allowed for a concentrated communication structure which guarantees a market and customer specific communication strategy. The company is now able to communicate easier to the different markets and to customer specific needs. After creating a high level of awareness, the branding strategy since 2005 focuses on essential market needs. Lanxess decided to conduct customer interviews in order to identify strengths, weaknesses and main challenges to compare to its main competitors. The identification of relevant strategic issues and a strategic image build up should help to strengthen Lanxess position in the future.

Lanxess brand positioning and its communication goals are carried out in three steps:

Analytical phase: Serves mainly to develop a first hypothesis for future brand positioning and to develop a communication focus. Strategy phase: Carries out an approximation of target positioning regarding core branding and brand attributes. Carried out are core messages for each target group. These have implications for planning and budget allocation. Roll-out phase: Develops a plan to implement measures and is followed by planning the detailed communication mix and the budget allocation. Today, Lanxess has carried out for most parts the roll-out phase. A quick build up of its brand awareness to relevant stakeholders such as investors, customers and the public already play an important and sustainable part. The brand still has to optimize its potential across various image dimensions and a highly diversified value proposition. Until now, customers’ brand perception is still affected by the company’s history. To become a leading brand Lanxess had to overcome a multitude of challenges:

 Worldwide aligned communications and marketing activities  Branding strategy in alignment with company’s goals  Creation of a worldwide consistent and integrated brand image  Performance-oriented brand strategy focusing on customer needs  Attainment of brand leadership

Corporate communications, which have been built up since the foundation of the company with great accuracy, has already helped Lanxess to attain brand leadership. Due to targeted PR-measures, such as international coverage of the spin-off, a first branding success was achieved within less than a year: brand awareness almost doubled. Public introduction and positioning of the new CEO helped stakeholders to affiliate an individual face to the company. Prompt creation of corporate design, conception of advertising campaigns and a webpage were further steps leading to brand uniformity and uniqueness. Lanxess is going to gain further expertise while systematically carrying out analyses processes on a regular basis. This guarantees a continuous feedback from target customers as well as a frequently optimized budget allocation. Lanxess Corporate Communication has already established an excellent mix between company’s strategy and market orientation and between globalization and local strategies. Further readings in:

Philip Kotler, Waldemar Pförtsch Business-to-Business Brand Management, Springer Heidelberg, New York 2006

USA http://www.amazon.com/exec/obidos/ASIN/3540253602/wwwpfoertscco-21/

Germany http://www.amazon.de/exec/obidos/ASIN/3540253602/wwwpfoertscco-21/ .