Archive for September, 2014

Microsoft’s latest acquisition

September 15, 2014

Having bought Nokia’s mobile phone business,Microsoft have made another acquisition in Scandinavia.  The logic behind them taking over the developers of Minecraft seems clear enough, given the popularity of this particular virtual world, but the statement by Minecraft’s creator makes very interesting reading.

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Brands, coffee, banks, and reputation

September 15, 2014

Over the last couple of years there has been consternation in Crouch End, and worry in Whitstable – all caused by the emergence of a chain of coffee shops.  The branch of Harris and Hoole in Crouch End has a distinctly independent feel to it, with chunky chinaware, a blackboard advertising events in-store, and sort-of-local boys the Kinks on the sound system when I was there a week or so back.  But head further into London, and the next branch of the same chain (though not for much longer) is within the small Tesco Express store near to Highbury Corner.

Which is a clue to some curious issues around ownership and branding.  Harris and Hoole, it turns out, may have been the brainchild of three cool young siblings but just under half of it is in fact owned by Tesco.  In fairness to the business, their website is quite candid about the Tesco involvement although my recollection is that this wasn’t the case when Tesco’s stake first attracted media coverage.   Moreover you could argue that the owners of Costa Coffee, which does look and feel like a big chain, don’t expect anybody to believe seriously that their whole enterprise, including sponsorship of a literary prize, was built up by two brothers who started from scratch.  In fact, looking at the development of the coffee business over time, one might wonder why it took 24 years for the Costas to sell out to Whitbread.  So what should we read into brands and reputations?  Should it matter, if a coffee outlet looks and feels right, who owns it?

As I alluded to above, the Highbury Corner store is on its way out – although whether this reflects any sort of broader malaise surrounding the supermarket sector is debatable.

TSB brandingBranding and ownership has also been an issue in the banking sector.  The principal retail banks have used a variety of brands for many years: most notably First Direct was created as a telephone banking offshoot of the then Midland Bank (long since subsumed into HSBC) 25 years ago as a reaction to the parent company having a perceived poor reputation.  This was in a more innocent age, when banks’ reputations suffered because of weaknesses in customer service, and not because of careless governance putting the world’s financial systems at risk.  First Direct has evolved into an Internet bank, but there is still a sense that its call centre is the principal channel for customer contact, and the one into which First Direct puts most effort.  This isn’t something I’ve tested scientifically, but I’ve long suspected that there is a correlation between the prominence of the HSBC logo on First Direct’s advertising and stationery, and HSBC’s overall reputation.  So when there is bad news about HSBC in the media, their logo, and the wording about First Direct being part of the HSBC group, are as tiny and inconspicuous as possible.  When HSBC is doing well, then First Direct advertising gains more of an HSBC look.

First Direct formed a template for a couple of other Internet banks.  Famously, some of the same people involved with setting up First Direct went on to work on Egg, the Internet banking brand which has successively been operated by the Prudential, then Citi Group, and now the Yorkshire Building Society.  It was followed by Smile, which set out to move the Co-op Bank from being a rather staid but worthy bank to a more contemporary ethical institution.  Though Smile seems to have been troubled by customer unrest even before its parent company’s problems came to light.

Ironically, the Co-op was involved with the other significant change in bank branding lately – the re-emegence of the TSB brand after 18 years, as some former Lloyds TSB branches have been hived off into this separate business.  At one time the intention was for the Co-op (when it looked stable and financially solvent) to take over the Lloyds TSB branches that became TSB.  In fact TSB has been set up as a separate busines, though with a logo not dissimilar to the one that was around in the 1990s before the merger with Lloyds.  And TSB is branding itself as a more accessible, less corporate, bank than its rivals.

Of course a small, artisanal, bank is a less plausible notion than a small, artisanal coffee shop.  But TSB’s ‘local banking’ strapline, and its positioning as a bank which deals with individuals and large corporates (a position which has echoes of the role historially occupied by building societies in the UK) suggests something distinct from the large corporates.  And it’s another instance of the importance of the presentation and positioning of a brand.