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JY&A Consulting
https://jya.co
The euro will be good for branding
The advent of the euro zone means that companies will have to try harder to win the hearts and minds of audiences through branding. There is a unique opportunity for anyone in or selling to the euro zone to get their branding into order—which in turn will lead to demand for the branding profession.
Jack Yan1
Jack Yan is founder and CEO of Jack Yan & Associates and
president of JY&A Consulting.
MONETARISTS have argued the pros and cons of the European single currency—the
euro—since the Maastricht Treaty was signed in 1992. What has not been
discussed in great depth is the euro's effect on branding.
Free-market supporters can easily point to increased competition
and better prices for consumers. Those who have opted not to join, they say,
will experience higher transaction costs for dealing with companies in the euro
zone.
The most easily identified "victims" in this will be higher-cost
producers. The common currency removes, most importantly, a psychological barrier.
A firm in Germany can happily purchase from one in Italy, for example, without
having to go through currency conversion difficulties. Of course, this has been
happening for many companies already and financial institutions have had a few
years to become accustomed to the euro. What January 1, 2002 has brought to
the euro zone is a consumer push for the currency, bringing the concept into
the mainstream. And this is where it matters for the European nations: consumers
and small businesses outnumber larger ones.
For commodities in particular, an importer in France may choose
to purchase Product X from Italy rather than Germany, if the Italian producer
is cheaper. This is more than likely, with pressure brought on high-cost labour.
It is here that the justification for branding comes in.
No one will make a decision based on hard facts alone. They
consider informal relationships, the reputation of the producer, even the image
of the purchaser on staff or even the family members of the person in charge.
There are sentimental reasons that transcend mere economics.
It is why some of us in the branding profession find solely
economic reasons hard to fathom, principally because people are not solely economic
creatures. The heart plays as much a role, if not greater sometimes, as the
head. Therefore, an argument that, for instance, New Zealand could not have
succeeded as a producer of automobiles—an idea entertained in the late
1960s—because of its relatively higher costs falls on deaf ears. For if
it were true, then no one would purchase Mercedes-Benzs or Jaguars and the world's
population would have turned to the transportation which emerged from East Germany
or the Soviet Union between the 1960s and the fall of communism in eastern Europe.
Arguments that a country would not have been able to create
a marketable brand in a short time are also nonsense, when one considers Acura
and Lexus. MG and Jaguar didn't take that long to become established in the
United States.
These thoughts now apply to the small- and medium-sized businesses
throughout Europe that should provide a boost to the branding profession. The
discipline is partly about creating those additional emotional reasons for product
purchase. But branding a product alone is useless without consideration of the
organization behind it. Branding, as has been said in this publication over
the years, encompasses all the ways the organization communicates and symbolizes
itself to all of its audiences. That means that higher-cost German producer
of Product X isn't going to win the French importer's share of mind with a recognizable
good. Everything about the German company will have to be genuine: it must communicate
its values honestly to the importer, it must behave in the right way, it must
be customer-oriented—as well as putting out the right product.
How the process takes place has been discussed in our other
studies, but a quick recap is in order. The German company gets its vision in
line with what it's really like. It finds out how to bridge the gap between
that and the audiences. It brings the brand into line, taking the opportunity
to get staff on side. Then it communicates the brand externally, leading to
a better image, improved chances at sales and improved performance.
The contest for the importer's heart and mind is going to
be fought by the Italian company, too. What strategies could it adopt? It could
include the low-cost nature of its production into the branding. This
may hurt the chance at earning premiums on the profit but it may prove successful
given the right type of firm during a recession. It might stress, if the country
image is complementary, Product X's origins. Aiming for an image of a futuristic
producer or other strategies could come into play.
For both firms, branding studies will be required, not only
to understand themselves, but to understand the requirements of the customer.
How will things be perceived by a French industrialist aged 45 from Rennes making
the decision? The questions need not be that specific, but an understanding
of industry behaviours—much of which might already lie in the producers'
existing knowledge—and what and how designs have traditionally influenced
that industry through a competitive and historical study of that sector will
be necessary.
Already it's clear how extensive branding can become.
Further, the need for companies to incorporate branding properly into their
systems has become greater with the euro zone's arrival.
Brand experts themselves need to begin differentiating. For
instance, advertising agencies, often champions of the brand, are regularly
indistinguishable. The winners will exercise, just as branding believes, a mixture
of economic and emotive factors. To win this great promised clientèle
of European firms—or any firm wishing to sell into the euro zone—the
identity and branding companies will need to practise what they preach. The
New Year is going to be either a bonanza or a death-knell, depending on how
the profession approaches this unique opportunity. •
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References
Official euro site
European Central Bank
Yan:
‘Branding in the early 2000s: the new forces at work’, CAP
Online, October 18, 2001.
Yan: ‘Brands transcend
economics (and The Economist)', CAP Online, September
25, 2001.
Yan: 'The business of identity',
CAP Online, vol. 4, no. 3, spring 2000.
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Kettell: What
Drives Currency Markets: After the Euro. London: Financial
Times–Prentice Hall 2000. $36 |
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Promeuro (ed.): The
Euro for Europe: from National Currencies to the European Currency.
London: B. T. Batsford Ltd. 2001. $11·96 |
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Spahn: From
Gold to Euro: on Monetary Theory and the History of Currency Systems.
Berlin: Springer-Verlag 2001. $59·95 |
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Duff (ed.): Understanding
the Euro. London: Kogan Page 1999. $19·95 |
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Jaffe and Nebenzahl: National
Image and Competitive Advantage: the Theory and Practice of Country-of-origin
Effect. København: Copenhagen Business School Press
2001. $19·60 (save $8·40) |
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Luca: Trading
in the Global Currency Markets. Paramus, NJ: Prentice Hall
Press 2000. $19·95 |
