Modesty is not a salient quality of global brands and, among banks, it’s almost unheard of.
So it was a surprise to find of all people Chris Clark, head of marketing planning and brand strategy at HSBC, setting the tone at this week’s Global Brand Think Tank, organised by the International Advertising Association, with a mea culpa.
“We’re in the foothills,” he said, “of understanding what the customer expects of us. It’s no good being complacent, say, about the feel-good effect of a glossy global advertising campaign. What really matters is what people say about you when you leave the room. We have to ‘mind the gap’ between expectation and experience much better than we have in the past.”
That’s easier said than done of course. The influence of commercial bank marketers, however well paid, elevated in status, and well armed in the budgetary department, is strictly limited. Marketing, as senior bankers privately see it, is the flower-arrangement department; the millions of pounds expended hardly compare in importance with the tens of billions invested in, say, sovereign debt (or mortgage SIVs) – the proper business of banking.
Part of this arrogance towards the common customer – you and me – is due to the institutional strength of international banking and its cartel nature. But we also have ourselves to blame.
As retail customers, we are little more than cynical sheep: we bleat a lot about poor service, indifference and arrogance. But we do little to rectify it by performing the one act that would make bankers sit up and listen: withdrawing our custom. Though banks are much hated institutions, they can rest serene in their indifference when retention rates are commonly over 90%.
This point was picked up by one of the conference’s principal speakers, Insead professor of marketing Jean-Claude Larreché. Banks, for all their size, power and global distribution, are actually quite weak brands. Despite the huge awareness they can generate, their ability to differentiate themselves is very limited.
The Ferrari footprint
Going back to the ‘leaving the room’ test, people would – it might be imagined – desert their banks in droves if they perceived any viable alternative with better-tailored product and service attributes. They are held back by fear and lack of real consumer choice.
Correspondingly, banks see little need to innovate because the people in charge of them (to use Larreché’s own colourful language) are “managing a prison.” He is talking about a bureaucratic business culture averse to risk. He lumps banks together with the likes of Ford and General Motors which he ironically refers to as “some of the most charitable organisations in the world” – because through unionisation and bureaucratic muddle, they have lost the plot.
By contrast, the ‘momentum brand’ of the present and future is, in Larreché’s view, more like Ferrari. That might seem a surprising exemplar for a global brand because, as he himself says, probably only 50,000 of the prestige sports cars have ever been made. And, interestingly, there are still fewer owners – an estimated 20,000 (a substantial number owning up to four cars).
That doesn’t sound much of a global footprint, even if the company behind Ferrari, Fiat, does itself have a multinational presence (not an association that Ferrari plays on, as it happens).
Levitt was wrong
The point that Larreché is making, however, is about the people who do not, and never will, own a Ferrari. These, the petrol-heads and would-be arrivistes, he reckons run into tens of millions of people worldwide. It is this constituency which gives Ferrari its “power offer” and makes it a centre of consistent innovative excellence.
So size is not everything where global brands are concerned. Larreché went on to reinforce his point (and he was not unique at the conference in doing this) by castigating Unilever’s ‘disastrous’ strategy of downsizing from about 1600 to 400 power brands. The strategy misunderstood a fundamental point about global brands: their all-powerful local cultural context.
Surprisingly few so-called global brands have real global traction. This was the finding of another speaker, Nigel Hollis, chief global analyst at Millward Brown. According to MB BrandZ research, 84% of these brands have a significant presence in one country only.
Many brands, which may be massive in the US like Bud Lite or Jack Daniel’s, fail to travel well because their emotional appeal is alien to other local markets. Fine-tuning their appeal would be a massive undertaking.
Hollis foreshadowed Larreché’s critique of Unilever by pointing to the case of Bombril – a kind of brillo pad massive in Brazil – which the company jettisoned as part of its brands purge, simply because it had no traction elsewhere. A case, he implied, of casting out the baby with the bathwater.
His message, which in a way underlined the theme of the entire conference, was this. When professor Ted Levitt described “the world’s needs and desires becoming irrevocably homogenized” back in 1983, he got it wrong. Or at very least, he got his timescale entirely wrong.