Brand equity can damn as well as aid you

A few years ago, I was working as a consultant for a luxury brand. After a long and fruitful week of branding meetings across Europe, we ended the week in Paris and I visited the brand’s biggest boutique with one of its senior executives. Enamoured after five days of working for this lovely brand, I decided to buy one of their nice bags for my wife.

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Unfortunately, when I went to pay for the bag, my HSBC credit card was rejected. The immaculate sales assistant tried to process it several times but eventually, as a queue formed behind me, I was politely informed that my card had been stopped by my bank.

It was a horrendous moment made worse by what happened next. My executive friend insisted, in a flurry of French bonhomie, to buy the bag for me. He explained that when I had the money in the bank I could repay him. I exited the boutique with as much grace as I could muster. By the time I turned the corner I had my head in my hands. Quelle horreur!

I went back to my hotel room and immediately called HSBC Premier. I had a perfect credit rating, a £5,000 limit and nowhere near that balance on my credit card. Why had HSBC blocked it?

Politely I was informed that as I had been in four countries in the past five days, my spending had set off an alarm. As a result, my card had been temporarily stopped. The staff-member assured me that this was standard banking practice and explained that, having confirmed that my card was in my possession, she would remove the block and all would be well.

But all was not well. As I explained to the implacable woman on the end of the phone, I was with HSBC because they were “The World’s Local Bank”. That statement did not just resonate with me, I lived it - spending 20 weeks of the year overseas working for clients. I wanted, and needed, a bank that understood the whole international thing. I didn’t care if it was standard banking practice for four countries in five days to set off a card alert - I was not with a standard bank. I was with HSBC and expected it to be different. That was why I banked with it.

Or rather that was why I had banked with the brand. Soon after the incident I switched my accounts to another bank and gave up on HSBC.

The key point in all this is that if I had been banking with one of the bog standard, Identikit brands that had no differentiation in my view - Lloyds, Barclays and the rest - the same experience in Paris would not have caused me to switch banks. I would not have expected anything other than average service and my reaction to the blocked card incident would have been less severe.

But my relationship with HSBC was different. I believed in the brand. And when it let me down in a manner so contradictory to its positioning, I felt betrayed. HSBC lost me not despite, but because, of its brand strength.

I remembered this saga while reading about Apple’s tax disclosure this week. According to its annual tax statement, the world’s most valuable company earned £23bn from overseas sales last year but paid only £446m in tax. Theoretically, if the world were a simpler and fairer place, Apple should have paid corporate tax of £8bn on these profits. Instead it paid a tiny fraction.

Avoiding billions in tax is surely morally worse than avoiding millions. Logically, doesn’t this revelation make Apple an even worse organisation than Starbucks, which received a backlash about its perceived lack of international tax payments? Won’t this damage Apple’s brand equity even more than Starbucks’?

Actually no. Shame on Apple for not doing the right thing but the brand will not be damaged as much as Starbucks and the reason for this disparity is brand.

Starbucks is positioned on being a fair, community-inspired organisation. Its mission statement speaks about “human connection”, “community”, “responsibility” and “accountability”. Even worse, Starbucks is one of the few brands to activate this positioning and turn it into customer-based brand equity. Consumers bought into these values and Starbucks’ subsequent tax shenanigans will hurt the brand badly in the UK as a result.

Apple is a different case. Like its late, great founder, this is a brand that is wholly driven by far more introverted goals. It wants to make beautiful, simple things and crush its competitors. This is a brand that makes no comment about society or communities or anything else. Apple has no corporate social responsibility policy and happily manufactures its beautiful products in very ugly places.

In tax paying and societal terms, Apple is a much worse company than Starbucks. But in branding terms, it is in the clear. That might sound like bias on my part towards Apple. It’s not. I am not surprised Apple is not paying its full tax threshold. In the same way that I was surprised that Starbucks was not paying more.

And I’ll be working on my iPad in Costa Coffee from now on.

Readers' comments (5)

  • Largely concur, but believe the statement about Apple is a little glib and misleading, probably in order to support Mark's stance and emphasise an artifically binary comparison between the two brands.

    "This is a brand that makes no comment about society or communities or anything else. Apple has no corporate social responsibility policy…"

    Um, this page seems to suggest they have a fairly comprehensive public CSR policy…

    http://www.apple.com/supplierresponsibility/

    And almost every Apple keynote or product intro video temphasises the use of their products' benefits for community or educational purposes. This goes back to the late 90s as far as I can remember…

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  • Fair pushback from Joby

    But let me push back on the pushback

    Apple do have a stated set of community objectives but the point I was making was that no-one, especially Apple, believes any of it actually matters a toss. They are literally going through the motions.

    Everyone has made the same point over the past 12 months but my fave is:

    http://www.triplepundit.com/2012/05/5-reasons-apples-csr-strategy-doesnt-work/

    Does anyone with an iPhone think Apple is a caring or societally engaged firm? Nope.

    Do Starbucks customers, some of them at least, buy into the strong community and responsibility message of the brand? Yup.

    Or at least they used to.

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  • Joby you are right, and as Mark mentions above, Apple do have some form CSR policy, though in the realms of brand behavior it merely exists to tick the social responsibility requirement rather than actually live the values it portrays.

    Starbucks on the other hand turned this up to 11 and lived and breathed social responsibility. You don't need captain hindsight to tell you that the Starbucks tax issue was in direct conflict to their values and was always going to cause friction.

    Do you think a company as awesome as Brewdog will have a CSR policy one day? Probably if they keep growing just to tick that box...but boy they wont give a ****!!

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  • Nice post from Mark re HSBC - really shows them up. Totally agree about the public's ambivalence to Apple, not least cos you can't get Apple from anyone but Apple but you can get a coffee from anywhere. This tax issue amazes me - I am surprised that the consumer has not started a boycott campaign yet, at least I've not heard of one. There are already Facebook sites out there e.g. http://en-gb.facebook.com/starcoffee whose founders saw thru the glib and insincere marketing posture years ago but there's been no kick-back yet. And have you also noticed how their coffee loyalty card requires you to store £££££s on it - so they have our cash in credit to use as they wish. Contrast this with the best and simplest coffee loyalty scheme I think, Nero's, which rewards you for repeat custom and must cost just the print of the paper cards.

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  • Both of these incidents highlight something that is often forgotten. A brand is a promise. When you define what you stand for and tell the world about it you need to make damn sure you can live up to it.

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