In the `90s, having a strong brand is of the utmost importance. Think about it:
Standard Life developed such a powerful brand among intermediaries that it has been nominated for awards in areas where it has no products. Good branding can make average products sell more than their quality unbranded counterparts. A variety of qualities elevate a product, or company, to brand status. One is the trust and credibility it inspires among customers. Take the Volkswagen car group. It has a reliable image which buyers of the cars strongly believe in. However, although now owned by Volkswagen, Skoda is unable to completely shake off its often ridiculed image.
A brand also creates a differentiation from other products or companies. This is important for the purpose of product recall, especially in markets where there is very little to distinguish one product from the next. Scottish Widows has its glamorous black cloaked widow throughout its advertising and product literature; Legal & General uses a multicoloured umbrella; and BUPA has its health conscious You’re amazing advertising campaign. These images help to create a statement about what the company is offering, and make it instantly recognisable to the public.
Connected to the idea of differentiation is the importance of conveying a lifestyle statement through the brand. There is no right or wrong message but it is important that it does relate either to the lifestyle, or the dreams and aspirations, of the product’s customers.
Some companies have been very successful at building sales by considering what potential customers may find attractive. For example, back in the `80s, Lucozade was a glucose drink targeted at the sick. Today, following a considerable rethink on its brand and positioning, Lucozade appeals to a much larger audience, attracted by a more youth-oriented energy drink image.
The ultimate in branding is when a product is regarded as generic. Naturally, this has not been achieved by many, but Coca Cola, Hoover, Sellotape and Durex are all examples of products which have acquired this heady status. Within the private medical insurance market BUPA is an example of this. Despite the fact that other companies offer the same product, many people when considering PMI, especially when it is part of an employee benefits package, automatically assume that it is called BUPA.
Achieving this status is not easy, or cheap. Back in 1995 the PPP group invested £30m in a branding campaign. This budget was used for a variety of purposes to strengthen awareness of the company among the public. These included: an advertising campaign; redesign of the group logo; reassessment of the company’s infrastructure; and the launch of some new, easy to understand, products.
Ben Faulkner, media relations at PPP, explains: “The strategy focused on the provision of healthcare for life. One of the key messages which was to be expressed throughout all aspects of the campaign was that of support.”
The idea of support was represented in a number of ways. Advertising images were of people falling back into the supportive arms of PPP, and the claims department also became more supportive as it concentrated on its customer focus. For example, if someone rang to claim they could, if desired, have one person dedicated to their case. And even the design of the logo, going from a puce colour to gold and green, and incorporating a heart motif, was intended to strengthen this supportive image.
Spending £30m to achieve this appears costly, but it did pay off. According to research from NOP, the number of people covered by PPP increased from 23% of the market to 27% over the 12 month period beginning December 1995. Similarly 18 months after the campaign started, brand awareness among people within the ABC 1 bracket was at a staggering 71%, according to figures from Millward Brown. Although now that the advertising campaign has finished recognition has dropped to 60%, this is still a high level in a market once dominated by BUPA.
The acquisition of PPP by Guardian is another example of the significance of brand. One of the key drivers behind Guardian’s purchase was to build its presence in the health insurance market. So rather than push its own name, Guardian chose to buy one ready made.
There are many other examples of this within the financial services sector, particularly as a result of acquisitions which have taken place in recent years. Prior to this it was not uncommon for the identity of the smaller company to be lost as it was absorbed into the larger organisation. However, today much more significance is given to the value of the identities and brands involved, which has allowed many companies to maintain their names long after they have become part of a larger conglomerate. For example; Scottish Amicable lives on although now part of the Prudential; Clerical Medical keeps its name despite being bought by the mighty Halifax group; and Scottish Mutual and Pegasus remain distinct from their parent, Abbey National.
These parent companies are known among intermediaries, and, in some cases, it could be argued that their names are stronger than those of the companies they have acquired. However, there is an important reason why these companies have survived, virtually untouched by their new owners – the desire to have a strong intermediary brand.
The Abbey National situation is an interesting example of the importance of a brand. In 1992 Abbey National acquired Scottish Mutual to gain itself a presence in the IFA sector. A year later Pegasus became part of the Abbey National group, and it too, because of the strength of its brand among intermediaries, retained its identity.
Abbey National launched a PMI product in November 1997, under the its own name. The launch indicated how committed it was to maintaining the strength of the Pegasus brand among intermediaries, rather than making its products available direct to the public, and risking alienating its loyal customer base. Ironically, the timing meant that the product was a joint venture with Norwich Union, rather than its new stablemate. Gug Kyriacou, media relations executive at Abbey National, explains why the distinction exists: “We have two types of customers, IFAs and the public. While Pegasus is a well established name amongst IFAs it would be a new entrant to the retail market. Conversely, Abbey National is well known and many members of the public trust the brand and are happy to buy its products.”
Although within the financial services market there are some strong brands, when the status of any of these companies is considered on a global basis, concerns do arise. Of the 100 best-known companies in the world, only four operate in the financial services sector; American Express, Mastercard, Thomas Cook and Visa.
This could create problems for companies within the financial market. First, if they wanted to expand into new markets it could be expensive as name awareness and value would have to be created. And second, it makes their position in existing markets more vulnerable. There is always the threat that if a well-known company from a different market decided to enter the sector, the value of its brand maybe sufficient to guarantee it success.
This is not the stuff of theory – it has already been seen within the financial services sector with the entry of Virgin, Marks & Spencer, Sainsburys and Tesco. For example, although Virgin has built its experience in unconnected areas such as record companies and airlines, people trusted the brand sufficiently to invest in its products. . Today there is more than £ 1.5bn managed by Virgin Direct.
The health insurance market is also likely to attract brands from other sectors. Boots successfully entered the market in 1998 and has already been named Health Insurer of the Year at consumer magazine Zest’s awards. Similarly, product launches have not been ruled out by the supermarkets.
With this emphasis on brand, product providers may find that to survive, a change of image will be necessary, both to maintain current clients and attract new business.