All change in the battle of the brands

ANYONE among the 1.5 million people expected to join in the VE Day celebrations next weekend in Hyde Park will find that the only cola on sale is Virgin.

Richard Branson's soft-drink product is only five months old, but it has won the exclusive right to be sold in the 40 kiosks in the park, alongside other soft drinks from the Ben Shaw range, which has a tie- up with Virgin.

The irony is that Mr Branson is doing very much the same thing Coca-Cola did during the liberation of Europe: by sending millions of bottles of Coke to the American troops, it associated the liberation with the drink. Coca-Cola became a symbol of freedom. Of course, Virgin was not around at the time: indeed Mr Branson himself was not born until 1950. But Virgin was chosen instead of its rivals because of its "new, refreshing image".

Consider the implications of this. Coca-Cola is the most widely recognised brand name in the world. So with one bound, Mr Branson has managed to create a new brand which is self-evidently a credible challenger to the world's number one. If this says something about Mr Branson's genius for publicity, what on earth is the message for brands in general?

Until a few years ago it was always thought that brands carried considerable intrinsic value, but that it was hard to be specific as to what that value might be. Then a series of takeovers in the 1980s - like the bids for Distillers and Rowntree, where the portfolio of brands was the principal target - led to a series of attempts to acknowledge the real value of long-standing brands. Most recently there has been a reassessment, with think-tanks asking such questions as, "Do major brands have a future?"

The history of brands is quite remarkable. Johnny Walker Red Label has been our best-selling scotch since the mid-1960s and in fact received its Royal Warrant from King George V in 1933. New perfumes are launched every week but Chanel Number 5, launched in 1921, continues to be one of the world's best-sellers. Some brands are even older: Kit-Kat and Mars Bars are more than 60 years old; Cadbury's Dairy Milk nearer 100.

This is why the Virgin Cola conquest is so stunning. Virgin is not only a new brand name; it is evidently one which can be transferred between completely different products. There is no generic link between pop music, where the brand originated, airlines, where it matured, and the two new applications of financial services (with Personal Equity Plans) and soft drinks. Indeed if you had to try and find four completely different categories of human endeavour, it would be hard to beat that bunch.

This experience raises two grand questions. Are brands becoming less important? And what can the established brands do to fight off newcomers?

Viewed historically, brands were developed in the last part of the last century to try to provide a guarantee of consistent standards. Remember that the consumer product industries were very fragmented; that there were considerable problems of quality and, worse, adulteration; that there were no national retailer chains; and that advertising was in its infancy and accordingly was hunting for ways to tell people that they would get guaranteed quality. Brands achieved a premium price for their products because they gave that guarantee.

We do not really need the guarantee of consistency to the same extent in established products. We certainly want consistency, and the emergence of branded hotel chains is a recent example of an old solution being applied to another area of business. But because our retailers are so strong, they can supply an alternative guarantee - in effect becoming an alternative brand name themselves. (The other new recent British entrant into personal financial services aside from Virgin is Marks & Spencer.)

Cola drinks are a good example of this trend. We no longer place so much emphasis on Coke or Pepsi, because Sainsbury's Classic seems to convey an equally strong guarantee of quality. These guarantees clearly do pass across product ranges: M&S is as famous for its Chicken Kiev as for its underwear.

The conclusion that emerges is surely not that brands no longer matter much. Rather it is that it is probably easier to create new brands (like this newspaper) to challenge old ones than it was 30 years ago; and that it is probably at least as easy for a distributor to create a new brand as for a manufacturer. In the case of retailers, the distributor is the brand.

This still leaves a problem for the manufacturer-owned brands. What can they do to fight back?

This was the topic of a recent paper by Professor Kamran Kashani at the Lausanne-based International Institute for Management Development. Professor Kashani pointed out that there were two main forces hitting the brands: market change (which included better educated consumers, faster competition and better retailers), and poor brand management. Brand-owners can do little about the first, but they can tackle the second.

Professor Kashani had a five-point plan. This started by slimming the cost base so that brands did not have to be sold at a large premium to generic products, and not loading the costs of weak brands onto strong ones. Second, it meant innovating, so that established brands really did retain some quality advantage over new ones. Third, it meant listening to market signals (something, incidentally, that the supermarkets are good at doing) for signs of changes in taste.

Fourth, he argued that brand owners should be bold, and he cited the creation of the Swatch brand of cheap watches which, in effect, saved the Swiss watch industry. And last, brand-owners should think globally, by taking products that showed innovation in one area and selling these to the world. The best example there was the Vidal Sassoon combination of shampoo and conditioner in the same pack: Wash & Go. This was a European product given a world marketing push by owners Proctor & Gamble. (By the way, did you know P&G owned that name?)

Is this enough? I suspect not. Or, rather, I suspect that the speed at which brands rise and fall will continue to increase as consumers become better informed, but also become more price-conscious.

Given the increasingly adverse age structure of all developed countries, it is going to be quite hard to continue to advance living standards over the next generation. People whose living standards are hardly rising are going to be less inclined to buy principally on the strength of the label. You can even argue that this drive for value for money is consistent with the success of two of those Virgin ventures: the airline which gave something close to first- class service for a business-class ticket; and the new cola. A blind test in the London Evening Standard last Thursday ranked it above all others, including Coca-Cola.

The good news for all consumers is that the brand war is making all producers - manufacturers, retailers, franchisers - work harder. In a way, what is happening here is merely one example of the drive for better performance, which is affecting everything from car manufacturers to schools.

The idea of the brand, to guarantee quality, was nearly corrupted in that the ownership of a good brand name almost became an excuse for laziness: an excuse not to innovate or improve. That brand names no longer give so much protection to the mediocre should not obscure the fact that it is possible to build a new brand name far faster than ever before, even if a five-month-old product, celebrating a 50-year-old victory, must constitute some sort of record.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Sport
Steven Fletcher scores the second goal for Scotland
cricketBut they have to bounce back to beat Gibraltar in Euro 2016 qualifier
News
news
Arts and Entertainment
Chris Evans is the favourite to replace Jeremy Clarkson on Top Gear
TV
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing