T h e J o u r n a l of B r a n d M a n a g e m e n t

V o l u m e 4 N u m be r 2

Current accou nts and baked beans: Translating

FMCG marketing principles to the financial sector M ichael Levy Address: CLK, Lyric House, 149 Hammersmith Road, London W14, UK; Tel: +44 171 60 2 7272; Fax: +44 171 602 98 56

Received (in revised form): 17th July, 1996 Michael Levy is a graduate of Clare College, Cambridge. He has worked in advertising and brand development for blue-Chip clients in a di­ verse range of sectors from FMCG to finance and IT. Michael joined CLK in 198 1 and is now the managing director of this consultancy which is ackno wledged to ha ve founded an industry sector over 20years ago by pioneering the mar­ keting discipline of brand development. The con­ sultancy's financial clients include NatWest and Liverpool Friendly Victoria Society.

ABSTRACT

As an area that is s till experiencing a period of change and development, the financial sector is of particu lar interest to the brand marketer. While the more established and frequently analysed FMCG market clearly sets ground ru les for all types of marketplaces, the dissimilarities between the two areas creates very particular challenges with regard to the marketing of financial brands . This paper looks at the sector i n historical context and confirms its current status bifore exploring the limits of the FMCG model. Drawing conclusions from this exercise, the paper outlines how sound FMCG marketing principles must be adapted in their application to the financial marketplace and demonstrates this through a case study of the Nat West Small Business Adviser. TH E EVOLUTION OF A S ECTO R From the el ite t o t h e masses

Historically, the financial sector in the UK has enj oyed a privileged and elitist p osition within the marketplace, needing only to tar-

get a fraction of the general p opulation those with whom most of the country's wealth resided. Twenty years ago or so the lines of demarcation between different types of financial company were clear cut and none of the participants were under pressure to broach them: banks looked after current accounts and directed customers to building societies for savings , investment and mort­ gages, while insurance p olicies were ob­ tained from a broker. The situation fostered a paro chial outlook, and with such a tiny target audience - just a fraction of the pop­ ulation during the first half of the twentieth century - sophisticated marketing strategy was at best surplus to requirements. However, during the last thre e decades huge shifts in the economic landscape threw up a radically different environment and the pattern of wealth distribution altered con­ siderably. The financial sector had to change gear from servicing the elite to targeting the mass e s . Added to this were changes of a legal and c ompe titive nature that allowed the financial sector more latitude in the types of services and products it could offer. The boundaries between one type of finan­ cial institution and another were allowed to blur and as the barriers lowered the ground rules changed . The marketer began to ask: ' if a USP worke d for a Mars bar or Heinz Baked B eans couldn't it work for a current account?' The new landscape

Today the financial marketplace is based on many corporate brand personality types from

The Journal of Brand Management. Vol. 1996,

4 No. 2

pp 95-99.

© Henry Stewart Publications, 1350-23 1 X

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giants such a s Lloyds and C & G that have grown through merger and acquisition to the non-conformists such as Virgin Direct and M&S that are based on an ' alternative ' non-traditional positioning. The sector is no longer the homogenous universe it once was as the diversity of individual institutions and brands demonstrate. Retail and merchant banks , building societies, insurance firms, telephone banking, small business services, credit cards and p ersonal accounts all fall within the financial universe. In sum, the fi­ nancial sector has acquired a 'level playing field' that has allowed a highly c omp etitive environment to flourish. Just as the FMC G market has seen the evolution of increasingly complex and considered marketing tactics, so the financial sector is experiencing a similar development in its turn. The situation im­ plies a need to transfer knowledge and expe­ rience but it also then begs the question, ' Can the FMCG template exactly fit the sce­ nario of financial brands?'

TESTI N G T H E L I M ITS O F TH E F M C G MODEL Prod uct def i n ition

Packaged go ods brands normally have an obvious heart or c o re . At the very least they can anchor themselves in p roduc t performance. When there i s a need to 're­ s earch the product' everyone knows what is meant. With financial brands the picture is less clear. What is a current account: the chequ e b o o k , the c o nversatio n with the cashier, the midnight phone call to pay the gas bill? There may be a temptation simply to avoid the question by concentrating on the method of communication in the hope that this p ro c e s s will s erve to define the brand . However, adopting this philosophy distorts the marketing s trategy away from brand and product development towards communications development. I n fact a financial brand, unlike an

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FMCG brand, represents a product which is made up of a collection of disparate strands . To return to the example of a current ac­ c ount, the product is everything that has been mentioned, from the straightforward reality of a cheque book to the relationship and interaction of staff and customers . B rand differentiation

I n the FMC G market, much of the energy of brand development is directed at finding the competitive edge, the point of difference that ensures the launch will not be a me-too. While unique brands will evidently always have a place in any sector, the financial brand owner enjoys the added luxury of often ac­ . tively requiring the more straightforward tactic of a me-too. For a financial institution the long-term multi-product relationship with a single customer is key and a 'missing' prod­ uct in the portfolio leaves a gap that a com­ petitor can exploit. For instance, having sold motor insurance, Direct Line can penetrate other sectors based on the perception of value and initial bond it has established. Often, therefore, the need is for a product that is in the same league as the competitors rather than one with an intrinsic USP. The c omp etitive advantage is not within the product but linked to the channel of distrib­ ution. Millions of customers already have a relationship with the financial company convenience and/or apathy leads to the deci­ sion. Sometimes it is therefore necessary to concede that - while it may be sacrilege to the marketing purist - copying rivals is an appropriate response to the market. When, as in most financial categories, most c on­ sumers are not equipp ed to make judge­ ments based on product content or structure, it is also the logical answer. Consu mer motivation

In packaged goods, behaviour will often fol­ low attitudes. A consumer who is dissatisfied with the performance of a washing-up liq­ uid brand can easily purchase another one

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next time around - in FMCG, loyalty is both hard to win and to keep. For financial services the picture is altogether different. Firstly, the effort required to change and the disruption that might result are themselves barriers. Secondly, while there is theoretical choice in many sectors the differences are either small or not readily apparent hence there is little motivation to switch. The issue of consumer inertioa is one which is foreign to the FMCG market and presents its own challenges: Does the new brand have the capacity to overcome competing brands and inertia? Are there channels which can be ex­ ploited or connections with other prod­ ucts that would tap in to lower levels of inertia? Quantification

Most methods of FMCG quantification are based on product trial followe d by assess­ ment of propensity to repeat purchase. Fac­ toring in likely awareness and distribution levels and previous experience of how the particular method relates to actual market­ place results normally yields a sufficiently accurate prediction. For financial brands the picture is quite different as the concept of trial and rep eat purchase is mostly alien to the sector. Even where the repeat purchase occurs it will be at intervals measured in years not weeks or days. Furthermore, once the initial hurdle is overcome, brand loyalty, the keenly sought obj ective of FMCG, is won by default as in­ ertia begins to work in the brand's favour. Quantification is therefore less often an original research exercise and more often a question of looking at previous experience, qualitative findings and at data on the existing customer base. While the process would be most accurately described as informed guess­ work, its inevitable lack of accuracy is not as critical as for say, food products. Without the need carefully to judge amounts and timings

of raw materials to ensure profitability, finan­ cial brands are allowed a wider margin of error. Nevertheless variations from predicted levels representing orders of magnitude obvi­ ously have an impact on IT and human re­ sources - printing a few thousand extra leaflets is one thing but increasing call-han­ dling capacity can be another. Product benefits

Product features can often help to attract consumers to a brand but in both the FMCG and financial sector these can ever obviate the need for true brand values. CFC-free, stain digesters, or 1 00 per cent re­ cycled packaging may underline a decision to purchase or enhance a brand's positioning but it cannot be entirely responsible for ei­ ther. However, in some sectors, such as elec­ trical products, the temptation is hard to resist since product features abound. The fi­ nancial market also has this Achilles' heel and tends to succumb to a 'battle of features' the longest list being deemed to have won. Unfortunately, j ust as in the world of FMCG, this approach can lead to confusion and a lack of clarity about the true benefits of the brand. The financial market also bears the added burden of an uncertain and often wary consumer. Financial services are ac­ knowledged to be 'a serious matter' yet few want to sp end a long time considering a new offer. The consequence of saying yes is usually a more complex purchasing process than is the case with groceries so the con­ sumer often looks for reasons to say no. That extra feature may say 'it's not for me' and the consumer can rationalise that a re­ sponsible decision has been made.

CASE STU DY - NAT W EST SMALL B U S I N ESS ADVISER Identify i n g the opportun ity

In the first part of the eighties, NatWest (then National Westminster Bank) had

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considerable success i n the Small B usiness market. They recognised, however, that the sector was a highly attractive one to all the major clearing banks and even - for d e ­ posits - could app e al t o Building Soci­ eties . NatWest's commercial need to defend and build their market share led to the de­ cision to develop a new financial brand. Given that at any one time, around 20-25 per cent of small businesses are less than one-year old, gaining a disproportionate share of start-ups would soon lead to a sig­ nificant growth in market share. Addition­ ally, this segment was more likely to have common needs and attitudes; the business owners would be united by the fact they were starting up rather than , as later, sepa­ rated by whether they ran a newsagent or a computer consultancy. B e cause of the low level of interest in fi­ nancial services the critical task was to iden­ tify which area would prove most fruitful as a basis for distinctiveness. Three areas were identified as suitable platforms:

right market area on which to focus develop­ ment. The results gave a clear message: cur­ rent accounts and lending were welcomed but were also categorised as a natural part of the bank's business and not an area where dis­ tinctiveness could be achieved. New service developments were, however, seen as differ­ ent in kind. While current accounts and lending were viewed by consumers as simple income-generating activities for the bank, ad­ vice services were understood to be almost altruistic : a chance to help customers and small businesses succeed - or simply cope with difficulties better. The best option was therefore to focus on the area of service since this would allow the new brand to achieve differentiation within the marketplace. Rather than a 'me-too' proposition it could b e seen as a distinctive offer and would have one of the key attrib­ utes of a strong brand - the capacity to form a direct relationship or bond with the consumer. Defi n i n g the natu re of the n ew brand

the current account: the movement of money is a key need and acquiring a separate business account is an important symbol of being a 'real' business for the owner; lending: at the time around half of small businesses started up with some kind of loan or overdraft and most of the rest predicted a need for some kind of bor­ rowmg: serv i c e : small businesses often n e ed a high level of advice and help whe n starting up. Del i n eati n g the n at u re of the new brand

The new brand could have three possible forms and, in order to pinpoint the most suc­ cessful route, a programme of qualitative re­ search was carried out. The aim was not to identify the specific properties and compo­ nents of the brand but merely to identify the

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' S ervice ' has many possible executions with differing resource demands and consequent practical and cost implications, it was there­ fore vital to relate the next phase of brand development to the level and type of re­ source which NatWest could envisage com­ mitting given realistic market share and profit levels . These parameters resulted in a short list of brand concepts which were ex­ plored through a further qualitative research exercise. In essence, the stimuli allowed the research to look beyond the communication of the concept to the heart: the interaction required between bank and customer. The objective was to discover the kinds of questions which the customer would ex­ pect to have answered, those that would not n e ed answering immediately, the level of security he expe cted and so on. This focus on the core rather than the veneer revealed an interesting area of customer need. Contrary to received wisdom, start-up

Levy

businesses did not want initial contact with a senior decision maker such as a manager. The manager was seen as someone who would decide on a loan application; start­ ups feared exposing their ignorance to a de­ cision maker and preferred the idea of someone who would help them put a better case together and increase their chance of success with the decision maker. Crysta l l is i n g the offer of the small busi ness adviser

A filtering of the options therefore resulted in a final ' residue ' of critical attributes and components that constituted the Small Busi­ ness Adviser brand. Specifically targeted at a precisely defined audience - the newly started company - it established a clear USP through a carefully differentiated ser­ vice: advice and assistance from an interme­ diary who had the credibility to 'make things happen' but a title which carried less formal­ ity than that of the bank manager. Soon after launch the brand became an important part of NatWest's overall portfolio and acted as a stepping stone to related, income-generated products such as loans and accounts.

CONCLUSION

In a sector frequently dominated by rounds of mergers and acquisitions , it is p e rhaps

easy for the financial brand owner to be distracted by internal corporate changes and lose sight of the b rand development 'ball ' . Many may b e tempted by a quick and easy 'me-too ' solution or even post­ pone the day of j udgement altogether. However, the one ove r r iding lesson to learn from the FMCG market is that delay allows competitors to claim territory that should have already b e e n conqu e red . B rand share can slip while marketing is­ sues are overlooked and this is a particular danger in the financial s e c tor which is fre ed from the logistical limitations of production lines . Some marketing practitioners have clung to the belief that the financial brands are j ust like baked beans while others have spurned even the most basic FMCG princi­ ple of targeting a clearly-defined consumer group. It is more helpful to recognise both the similarities and differences between the two sectors and to use the marketing rule book with discretion. The financial market­ place is still in an active state of flux and changes such as the retreat of the welfare state will throw up a raft of new brand de­ velopment opportunities from PEPs to pen­ sions . Knowing when and how to use the FMC G ' template ' is therefore destined to become an increasingly vital skill for the marketer to acquire.

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