Have faith in the true believers

For Tesco it was a bit of gimmick. When it announced it was selling Levi jeans at bargain prices, the fact that it only had a tiny stock of a tiny range of only men’s jeans in a few stores, mattered little. It was a PR triumph. One little press release plus a few well-placed ads and Hey Presto! Tesco had earned itself acres of favourable media coverage and a powerful boost to its brand image.

Whether Tesco ever finds another supplier – or persuades Levi Strauss UK to do a U-turn and start supplying direct – is almost irrelevant now. Its stunt has sent shockwaves through Levi’s entire marketing strategy. Spokesman Mark Elliott admits: “We are involved in transnational discussions about the implications.” These discussions no doubt include questions such as “do we have enough control over our distribution channels?” and “can we credibly maintain the same line about retail outlets’ ambience and service quality as the perfume companies did when similarly attacked by Superdrug?”

An even more unsettling question, however, will be about the Levi’s brand’s trajectory over the past decade. According to the IPA Advertising Effectiveness Awards between 1988 and 1991 Levi’s increased its UK retail price premium for 501s versus local market averages from 47 per cent to 70 per cent – helped by some stunning advertising from Bartle Bogle Hegarty. With similar price hikes across Europe, buying a pair of Levi’s in Europe became as much as five times more expensive than in the US, and the proportion of Levi Europe’s contribution to the firm’s global profits grew four-fold. First, the obvious query: are these margins sustainable? Second: who exactly is this brand for?

Over the coming years Levi’s will be one of very many brands forced to give these questions more thought than they have in the past. The underlying issue was pinpointed by BBH’s John Hegarty in a recent BBC2 programme about Levi’s. “People say,” he said,” ‘is it manipulation?’ Well, all communication is manipulation. I am trying to get people to see my point of view. We always shy away from this word. If it’s done with honesty and integrity then it’s fine. In the end, you the viewer decides whether you are going to be part of it.”

It’s a brilliant answer, but it’s rubbish. It was rubbish when he said it on the programme, and was rubbish when he first started saying it decades ago. All communication is not manipulation. Manipulation, as the dictionary says, is “unscrupulous exploitation of a situation or person for one’s own ends”, and brands are either using consumers for their own ends or they are not.

According to one school of thought, that’s exactly what they are doing, in the last analysis: the brand is there to serve the brand owner, not the consumer. Its job is to deliver superior margins and it does this by using marketing communications to “justify” premium prices by “adding value” to otherwise parity products.

This could justifiably be regarded as heresy. It is not good marketing, it is anti-marketing. And it’s coming under increasingly heavy fire from a growing band of new believers whose message to consumers goes something like this: “Not only will we offer you excellent value, we will actively look out for your interests, campaigning on your behalf”. Would-be contenders for this mantle include Asda, Tesco, the remaining mutual building societies and Virgin.

Don’t be misled by the superficiality of their gimmicks. Potentially, they represent a fundamentally different business attitude.

To caricature the difference, anti-marketers hold an “imperialist” attitude to business, believing it’s all about plundering the world’s natural resources with maximum efficiency for maximum profits. The marketing application of this attitude sees markets (consumers) as the natural resource and brands as the best means of exploiting it.

The new, more “ecological” approach first emerged in business-to-business spheres. It assumes companies only prosper long term by nurturing their ecosystems. Thus, according to Fred Wiersema, co-author of The Discipline of Market Leaders, marketers must abandon “the old us-versus-them mind-set” towards customers and accept that the best opportunity for profit growth lies in helping their customers prosper. “Customer intimacy doesn’t call for increasing customer satisfaction,” he writes in his book Customer Intimacy. “It requires taking responsibility for customers’ results.”

Thus, while anti-marketers believe brands prosper by sucking value from customers, true believers believe brands prosper by making value flow in the opposite direction.

This is not some namby-pamby proposition or a matter of rejecting premium pricing in favour of Every Day Low Pricing (EDLP) or discounting. It’s just empirical fact. Decades of PIMS research shows that the way to generate superior profits is by offering customers superior quality and value: sophisticated customers are happy to give handsome rewards to suppliers who deliver superior value.

In real life, of course, such clear distinctions are hard to find. Most companies embrace a complex and uneasy mixture of both approaches and day to day they probably can’t even tell the difference. After all, because anti-marketing is the mirror image of the real thing – apparently identical at first blush but fundamentally opposite – anti-marketers use all the same techniques, insights and words: consumer focus, value, differentiation. They just use them for opposite ends.

Increasingly, however, the new breed of true believers will force marketers off the fence. Hegarty’s bridge between the two sides – that manipulation is fine as long as it is done with “honesty and integrity” – is being tested to destruction. As the economist John Kay argues, a man who believes honesty is the best policy is not an honest man. As soon as circumstances arise when honesty is no longer the best policy, he may abandon it. He is, therefore, at root deeply untrustworthy.

That is what the Tesco/Levi’s fracas is about. True believers are realising they can seize new high ground in the heart of branding territory – trust – by “being on the consumer’s side”. And the best way to do this is by outing heretics. Get ready for some auto-da-fés.