Sentimental brand value

Financial markets may try to dictate the success or failure of certain brands, but when it comes to loyalty the City still has a lot to learn, says Hugh Pearman

‘We’re keeping our brand in demand with faster service, better-tasting and more contemporary food and beverage offerings, cleaner, more modern restaurants, attractive, everyday value, and hip, fresh marketing,’ says the president of Company A.

‘Why should new customers get a complimentary umbrella while everyone else just gets wet?’ asks the TV face of Company B, of whom a man described as a zeitgeist watcher says: ‘He is a spokesman for the inner dialogue of the customer. It is a first class act.’

‘Brands are still vital in the eyes of consumers and in the long term give real competitive advantage. We have seen that consumers are still happy to pay a premium for their favourite brand,’ says an industry analyst of Company C.

Who are these three companies, you may ask? What is their secret? Why are they doing so well? Not all of them are – or not as well as the barrow boys of the financial markets would like. But looked at another way – customer loyalty – they are doing very well indeed. So here are the quiz answers.

Company A is McDonald’s. The speaker is the chain’s president and chief executive Charlie Bell, reporting a massive global sales jump of 10 per cent in the second quarter of 2004, compared to the same period last year. The secret? Salads rather than grease. And some astute marketing.

Company B is BT, now represented by the ineffable Jeremy Clarkson. BT is also fighting back from a period of low esteem. The ‘zeitgeist watcher’ who approves of Clarkson is the ageless, obsessively dapper Peter York. BT’s successful sales pitch is consistency and reliability.

And Company C is Marks and Spencer. The City has had it in for the firm, with its supposedly lacklustre sales figures, for years. Vittorio Radice’s Lifestore homewares concept is ignominiously to close. Nothing and nobody seems able to cure the old lady of the high street. And yet the quoted analyst – Stephen Cheliotis, who is chairman of something called the Superbrands Council – has found that customer loyalty to M&S is deep and enduring. It has even been voted ‘top retail brand’ in a survey, ahead of such names as Gillette, BT (again), Duracell, Heinz, and Jaguar cars.

This is all very telling. The financial markets also, for instance, have it in for Sainsbury’s, because the supermarket chain not only lost market dominance to Tesco long ago, but it now runs third behind lowly Asda. But if you didn’t know any of that, and just looked at the profits Sainsbury’s is making, you would think it was one of the best-run grocers in the business. It is a hugely profitable enterprise. Profits and market share may have slipped, but as a consumer I’m inclined to say – so what? I don’t go to shops with a copy of a company balance sheet in my hand. I have a shopping list instead. And I’m prepared to bet that any survey of customer brand loyalty would rank Sainsbury’s pretty high.

Why is this? Because Sainsbury’s has been part of the high street for a very long time, certainly a lot longer than Tesco, which started life as an altogether brassier business with the slogan “pile it high, sell it cheap”. In the English provincial town of my childhood, Sainsbury’s was the middle-class act, while Tesco was the working-class option. They were regarded as being as different as an Austin Cambridge from a Ford Anglia. And Austin Cambridges were for civil servants and doctors, while Ford Anglias were for salesmen.

As a result, I still regard Tesco as being inferior to Sainsbury’s, and I would still never buy a Ford. The fact that Ford makes excellent cars these days, and Tesco runs excellent supermarkets, does not shake my ingrained brand loyalty. It is a very curious thing. But it explains why a company such as M&S should suddenly find itself voted the top retail brand.

What of the others – BT and McDonalds? The former is clearly in M&S territory, while the latter is more of a Tesco – a brand that has managed to rise from its cheapo roots, realised in time that a different attitude was needed, and so reaped the benefits. Somehow, a negative perception has started to fade. Never mind the realities of the situation: brand loyalty is a perverse phenomenon. The lesson is clear. Ignore anything that financial analysts say. And if you are designing for such a company, learn to be, in Peter York’s phrase, a spokesman for the inner dialogue of the customer.

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