Euro puts a tax on brand values

As the debate about the single currency intensifies, Europe’s marketing community is becoming concerned about the effect of major currency changes on consumer’s perceptions of brand.

Nowhere is this concern more apparent than in economically fragile France. Top brand marketing, retail and research professionals have been trying to address the problem of consumer brand disorientation that will almost certainly result from the new currency.

Among these is Olivier Geradon de Vera, the respected vice-president of research organisation Iri-Secodip. He argues that the introduction of a single currency will profoundly alter the relationship between price and brand positioning. To further complicate matters, the effect will be different from one country to the next, even when the whole of Europe has transferred to the euro.

Explaining his observations, de Vera uses an accordion as an analogy to demonstrate how the difference between product prices will be compressed in some countries, yet expanded in others.

In the UK, for example, where 1 will represent nearly 1.5 euros, the transfer to the new currency will emphasise the gap between prices and products. The consumer will become more aware of the relationship between price and brand.

By contrast, in Italy price differences will diminish considerably. The same will happen in France, where, for example, a 12FF (1.20) price difference between two similar products would become just two euros. In this case, the effect is like an accordion closing. The result is confusion as consumers perceive there is a smaller price difference, when in fact it remains the same.

One pre-emptive response, piloted by the Leclerc supermarket chain in France, is the development of “reference brands”. These, as their name suggests, act as brand reference points against which other brands may be judged and positioned. “It is not just by chance that Michel Edouard Leclerc establishes his brands as reference points with a great wave of publicity,” de Vera has told the French communications industry magazine CB News.

De Vera says Europe’s brand builders would be well advised to follow Leclerc’s example. He recommends that they use the time between now and the launch of the single currency to review their visual identities and invest heavily in brand-building communications programmes.

Instead of being the mechanism for undermining brands, the single currency can then be regarded as an incentive to reinvigorate them. By following this path, brand marketers will turn a potential threat into an ally.

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