What price brand loyalty?

There has been quite a furore about certain online- retailers using differential prices in favour of new customers over loyal ones. In its simplest terms if you have the cookie to show you have bought from the site before, you get a different set of prices from a those presented to a new visitor.

The financial logic is quite straightforward and akin to new customer bonuses and loss leaders. Indeed, there have been various scenarios developed questioning the comparative values of brand-loyal customers who may spend small amounts compared to a disloyal customer who spends the occasional large sum. The arguments go back and forth, but there is also a psychological dimension that asks: ‘Why should I give my loyalty to a brand that values my loyalty less than the business of a new customer?’  Ultimately, any brand loyalty is devalued – but for the brand operator who has already made the decision that the ‘loyal’ customer is just a mug who buys for convenience and out of inertia, brand loyalty is obviously a low value commodity. They have already made that strategic decision, but it is naive to thing the customer will not arrive at similar conclusions.

The important factor here the cost of customer acquisition. It is a truism that it requires considerably less resource to get additional and on-going sales from a current customer than to acquire a new one. There should be a financial imperative to looking after loyal customers as well as a value driven one.  Of course it makes sense to offer bonuses and inducements to new customers, but it makes little sense to penalise existing ones. We have seen the results in the financial sector of advantageous new products not available to existing customers.  The outcome is a cynical churning of customers moving from one brand to another as soon as a more advantageous offer appears.

At least some of these other strategies are to a greater measure overt.  What dismay’s me about the online etailers’ approach is its underhand nature – customers like me feel we are being taken for a ride. It is also sobering to note that some of those embroiled in this mess include names from the UK’s top brands list published just a few weeks ago. All of a sudden their perceived and hard-won brand values have been lost.

Well, I’m off to Tesco now – at least their points indicate that they value my on-going custom – oh, that’s after I have deleted some cookies.

Promises… promises…

It’s that time of year again – Interbrand’s survey of global brands; and for the  first time the total value of the world’s top 100 brands fell – down 4.6% at $1.15 trillion.  Big depressers included the major financial brands (not surprisingly), including UBS, Morgan Stanley, Amex and others. The motor industry too saw big falls in brand values.

The interesting thing for me is that we are looking at brands that stood for reliability and stability. It is as much about broken brand promises as about broken economies. I would suggest that people no longer trust promises – financial institutions are built upon pledges and assurances. Even that most emotional of purchases, the automobile represents a compact… an affirmation (even the value of Audi VW’s brand slumped). The locus of trusted brands has shifted. It is not surprising then that brands that deliver by instant gratification, retail and food for example held up well, including McDonald’s and Coca Cola.

Perhaps this also explains why the other big trend beater, Google, did so well. It is right there in front of you on the screen: what you see is what you get; it delivers.

Techniques for evaluating emotional attachment to brands.

I’m working on a brand evaluation programme, particularly concerned with emotional attachment to brands. I have used various techniques in the past, including plotting emotional dimensions along pre-determined attributes, using brand cohorts, ethnographic studies and grounded theory. By its very nature, psychological  emotional attachment is not particularly accessible to high involvement processing so techniques are much concerned with overt attachment.

None of the techniques I have worked with so far have been very satisfying and those that seemed to approach the best results are time-consuming and costly. If you have experience of effective techniques or even just a theoretical approach worth exploring I would be very interested to hear.

Honesty is not an absolute… what does this mean for brands?

In a study released today at the British Science Festival at Surrey University, Guildford, it appears that opinions of honesty and dishonesty are not cut and dried. See the article in the Independent for more info.

The key finding is that people differ over their opinions – there is a discrepancy between how the sexes view honesty and dishonesty and how different generations view it. This then poses the question about how this affects peoples perceptions of brand values. Where such issues as probity are important, in finance for example some may be more tolerant than others about dodgy dealing. The same may be true of brand claims.

Perhaps this goes some way to explain why the Clinton brand was not unduly damaged by some of his dissembling?

The changing psychology of budget brands

There has been a wave of articles following the consumer trend towards budget brands.  In hard financial times this is hardly surprising, but what I do find interesting is the change in perceptions.  Shopping for budget brands and frequenting value outlets such as Poundland or Aldi is no longer seen as downmarket, but as ‘canny shopping’.

What this underlines for me is the unpredictability of customer psychology and the impotence of brand stewards.  I have long emphasised that brands are not ‘owned’ by companies, but by the public at large – no amount of marketing communications on behalf of brands can change public perceptions when they are not ready to change. This is not about pricing or value for money – it is about brand values.  Sure, we all need to stretch the pennies at this time – but it is the consumer convincing themselves that subtly they are not compromising their values by budget shopping.

It is also fascinating how this becomes a mass perception – almost a conspiracy of minds. I see parallels with psycho-economics. Budget brands have always represented good value: nothing has changed – but maybe in better financial times Maslow’s hierarchy of needs kicks in and for the affluent it is more important to be seen with a Waitrose carrier than save a few pence.

Marketers, researchers and psycholgists have long known that the connection between perception, intent and actual behaviour is a frustrating one.  As we see in the behaviour of stockmarkets, people are fickle, unpredictable and sometimes perverse. But in this case at least, maybe sanity has been freed by perception, economic reality and group dynamics.  Now I’ll just scatter my Lidl carriers ostentatiously on the back seat of the Porsche…

The brand United

“Manchester United have been rated the eighth most valuable sports brand in the world in a new study which for the first time has assessed the comparative worths of 200 brands across the sporting spectrum” (Guardian.co.uk 18 June 2009)

My mind goes back to being a small kid growing up in Manchester and being aware even then of the of how ahead of the game (no pun intended) Manchester United were in recognising the power of the brand. ‘The Red Devils’ and ‘The Busby Babes’ were already enjoying the benefits of a strong brand identity. It is easy now for fans of other clubs to dislike the success that the team and brand has had – unlike many other brands, loyalty does not engendered competitive polarisation: because I drive a Volvo it does not breed hostility to BMW drivers… nor because I shop at Sainsbury’s would I chant at Tesco shoppers (you only sing at the checkouts…). But that is the nature of sport – it is competitive. I have often usd the example of football clubs when explaining and discussing brand identities and their assets. Names, colours, badges, nicknames, songs and locations are all the trappings of identity – and importantly they are a means by which supporters define their own identities.

It is interesting to consider how the brand values of a team can transcend the issues and internecine struggles of brand stakeholders. It’s similarly interesting to reflect on how even the managerial failings of Woolworth’s owners and it’s ultimate demise could not fully erase the customers’ emotional connections and empathy. It is another example of how emotional investment in a brand can transcend the pragmatic understanding.

United are valued at $1.495bn: the valuation and the table was compiled by SportsPro Magazine. I’m not sure what methodology of brand valuation was used, but I’m sure that if a model based upon brand profile investment was used it would reinforce the power of United’s early recognition of the importance of the brand.

What is a brand?

It’s easy to come up with any number of definitions of a brand – as a simple online search will provide. Most often quoted is Philip Kotler’s: “a name, term, sign or symbol or a combination of these, that identifies the maker or seller of a product”.

I’m not totally happy with that as it is putting too much emphasis on the signifier rather than the signified in my opinion. I prefer a more experiential definition along the lines of : “a mental construct of the values, information and expectations an entity, created by experience”.

But whatever definition we use, the question of what we consider to be a brand remains. The term ‘brand’ is being used with increasing frequency in the media and is applied to all manner products, services, organisations, political parties, religions and even people.  But what do you think are the necessary and sufficient conditions for something to be considered ‘a brand’?

The signifier not the song

When looking at brand semiotics all the usual signifiers are there in the form of names, logos, colours etc. but sounds are rather less common. Perhaps the most ubiquitous use is in branding nation states – national anthems. Wally Olins noted this in his book Corporate Personality, where he pointed to the newly formed Confederate States, who in 1860 quickly assembled all the signifiers of a nation state, including a flag, corporate colour, capital… and notably a song. ‘Dixie’ immediately communicates a whole set of values.

Theme tunes are an intrinsic part of movie and TV series branding, and in radio and TV station ‘idents’,but in the more general world of consumer product branding sound and music is far less common.  Occasionally music from ads become brand assets, but due to the necessarily tactical nature of advertising, these are usually time constrained and short lived. Perhaps new technology will change this: two audio signifiers that spring to mind are the Windows sign on notes (Bill Gates’s door bell) and the Nokia default ring tone. With the spread of electronic devices, all it seems with in built audio capabilities, perhaps sound will move more centre stage when developing brand identities and their signifiers.

Slaughter of the Innocent?

So, Coca Cola buys into Innocent? I have heard the arguments by co-founder Richard Reid, and they are convincing from a business viewpoint.  But from a point of view of brand values… what were they thinking? I am a great admirer of the way Innocent took a business view and communicated and represented a distinct set of brand values. As a branding specialist I could say it was the most important thing they have done.  I look at that set of values; then I look at the values I associate with Coca Cola… and I bury my head in my hands.  Is it worth the sense (unfounded as Reid protests) of disappointment and ‘betrayal’ many consumers may feel, for 30 million pieces of silver?

Will people’s personal narratives change in tough times?

I have talked before about brands having narratives that are influential in our choices when we seek to use them to augment our personal narratives – like the 40 year old accountant who buys a Harley as it fits his personal narrative of being something of a rebel and maybe with a slightly ‘dangerous’ side.

But will the current economic climate drive us to change these personal narratives and thus our brand choice?  Will workers in the financial sector re-write their narratives as caring, hard working people and make choices with brands that suggest prudence and parsimony rather than overt opulence?

My only concern is that financial pressures my make us move the chapters on sustainability and eco-friendliness to the back of our narrative, slowing down the movement to brands with a sustainable narrative of their own.