The top is only for the toughest
To the layman – that is, 99 per cent of the general public – the heated dispute over who – Tesco Clubcard or Nectar – has the bigger membership must seem plain juvenile. All the more so since each side has been chopping and changing the statistics, at the margins, to promote its advantage. Even Boots has waded in, championing the improbable leadership of its own Advantage card.
Is this the sort of behaviour we should expect from grown-up brands? Well, yes it is, and for good reason. Market leadership confers more than a prestigious number in front of your name. There are exponential advantages in moving up the scale to pole position. These were memorably encapsulated in Professor Ted Levitt’s alliterative dictum: ‘One is wonderful; two is terrific; three is threatened; and four is…’, but we won’t go there.
While bigger is not necessarily better, the buying public may well choose to see it that way. More prominent brands tend to acquire a halo of reliability and good value, which help to persuade consumers to pay more for them. There’s an additional psychological element here which is difficult to quantify. Being a winner is a turn-on for a certain kind of consumer, who loves to be associated with prestige and success. It is also, by and large, highly motivational for staff. More crudely, margins benefit from sheer market power, in the form of economies of scale and the physical clout to beat down suppliers’ prices.
All of which helps to explain the terminological obfuscation, and no doubt other dubious tactics, which companies will use to maintain that lead. The fate of those brands that fall from grace makes such behaviour all the more intelligible. The slope of decline is slippery, steep, and exceedingly difficult to scramble up again. It’s a long time now since BA could meaningfully call itself the “world’s favourite airline” and the likelihood of it recapturing that status in the age of low-frills is a dim prospect. Similarly Sainsbury’s, though it has fought back courageously since it was ousted from top position by Tesco about five years ago, is now slipping inexorably into third place behind Asda. And Fiat, once one of Europe’s premier car-makers, seems unlikely to survive as an independent company. Only Marks & Spencer offers a glimmer of redemption, though it is doubtful whether it will ever recover its former lustre.
From this it might seem that brands should aspire to market leadership at all costs. There is, however, one evident disadvantage of leadership, and the more global the brand, the more evident is the disadvantage. Market leaders are increasingly finding they must subscribe to an extraordinarily expensive and sophisticated corporate social responsibility agenda, or suffer dire consequences to their prestige. Whether it’s child labour in the Far East, oil in the North Atlantic, obesity in North America, or perceived cultural and economic imperialism in France, this is not a responsibility to be taken on lightly.
