BRAND MANAGEMENT AND
MARKETING RESEARCH UNIT
(BMMRU)
THE CHALLENGE OF FINANCIAL
SERVICES BRANDING: MAJORING ON
CATEGORY OR BRAND VALUES?
Leslie de Chernatony and Fiona Harris
August 2000
00/6
ISBN 0 7492 3535 7
 Open University Business School, 2000
The Challenge of Financial Services Branding: Majoring on Category or Brand Values?
THE CHALLENGE OF FINANCIAL
SERVICES BRANDING: MAJORING ON
CATEGORY OR BRAND VALUES
Abstract
Research suggests that emotional values are more sustainable than functional values. It is
argued that in the services sector the key to sustainable brand differentiation is a unique set of
emotional values. This paper examines the nature of financial services brands’ values and
finds that they tend to focus on functional category values rather than unique emotional brand
values. A lack of congruency between brand team members’ perceptions of their brands’
values and a lack of correspondence with their brands’ espoused values were also noted.
Keywords: brand values, services brands, financial services
1. Introduction
A brand is a multidimensional construct involving the blending of functional and emotional
values to match consumers’ performance and psychosocial needs (de Chernatony and Dall’Olmo
Riley, 1998). One of the goals of branding is to make a brand unique on dimensions that are both
relevant and welcomed by consumers (de Chernatony and McDonald, 1998).
One of the problems marketers face is going beyond the values that consumers consider
when they want to buy the benefit of the category (e.g. insurance is about protection and peace
of mind) to position their brand with unique values (e.g. Brand X really understands my
changing needs so every year it can adapt to me). Research with brand consultants suggested that
many brand managers had only a superficial understanding of brand values and tended to focus
on functional values that others could easily copy (de Chernatony and Dall’Olmo Riley, 1996).
The aim of this paper is to assess the nature and uniqueness of brand values in financial
services. Branding in financial services is undergoing substantial changes, owing to the
dramatic increase in competition following deregulation (Denby-Jones, 1995; Jones, 1999)
and the threat posed by new entrants with retail branding experience (Watters and Wright,
1994; Cleaver, 1999). Success in what is fast becoming an overcrowded market will depend
on effective brand differentiation, based on the identification, internalisation and
communication of unique brand values that are both pertinent to and desired by consumers.
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2. Differentiating services brands through value management
Branding in services marketing is about the blending of functional and emotional values (de
Chernatony and Dall’Olmo Riley, 1999). Free (1996) proposed that services branding was about
values, which “represent the heart and soul of a company” (p.31). Emotional values in particular
are becoming increasingly important in differentiating brands. Previous research indicated that a
brand’s emotional added values are more sustainable than functional added values, which may
be easily copied (de Chernatony, Harris and Dall’Olmo Riley, 1999). Levy (1996) noted that, in
common with fmcg marketing, financial services brands tended to focus on product features
rather than true brand values. In discussing the future of banking, Jones (1999) observed that
greater focus would need to be placed on emotional rather than rational brand values.
Rokeach (1973) defined a value as “an enduring belief that a specific mode of conduct or
end-state of existence is personally or socially preferable to an opposite or converse mode of
conduct or end-state of existence” (p.5). Functional values in services branding do not just
relate to what was delivered, but to how it is delivered (Grönroos, 1990), which is one of the
fundamental differences between product and services branding. Powerful brands
communicate their values through every point of contact they have with consumers (Cleaver,
1999). However, the involvement of staff in brand delivery engenders problems of a lack of
consistency in service delivery standard (Zeithaml and Bitner, 1996).
One way to overcome the service quality problem is to put more emphasis on brand
management as values management. Values guide behaviour, particularly in novel situations
(Wilkins and Ouchi, 1983). A key element of services branding is strong leadership (Free, 1996).
This involves specifying the brand’s values and aligning staff’s values with them. Collaboration
across departments to deliver and satisfy consumers’ needs is also required (Watters and Wright,
1994). Successful services brands attract, develop and retain staff who can translate the brand’s
values into actions and behaviours perceived by consumers as appropriate and distinctive (Free,
1999). Examples of services brands which have used internal marketing programmes to
communicate with staff about their brands, to motivate them and help them appreciate their roles
as their brands’ ambassadors include BUPA (Mistry, 1998) and Railtrack (Hemsley, 1998).
Having devised the cluster of internal values, managers then need to develop and promote the
service brand to achieve alignment between the brand’s, staff’s and consumers’ values. However,
financial services branding faces a number of challenges. For consumers, choosing a financial
services product is an important decision entailing high risk without the scope for trial or sampling
alternatives (Jones, 1999) and they promote intangible benefits (e.g. security from insurance). Yet
financial services products are considered uninteresting (Levy, 1996), representing a means to an
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end, rather than an end in itself (Denby-Jones, 1995; Free, 1996). Emotional values thus offer a
powerful means of brand differentiation, whereas functional values may be quickly copied.
Financial services brands have, historically, exhibited little brand differentiation (Watters
and Wright, 1994; Jones, 1999) and have been considered almost a commodity (Free, 1996),
with a lack of perceived differences between suppliers (Levy, 1996) and numerous suppliers
offering ‘similar’ products focusing predominantly on costs or financial benefits. Hence our
research tested the following hypothesis:
H1:
The values of financial services brands are not unique brand values, but rather
generic category values.
The early evolutionary stages of branding focus on the brand as a positioning device,
drawing strongly on functional values (Goodyear, 1996). Branding in financial services is still
a fairly recent development. The following hypothesis was therefore tested:
H2:
Financial services brands will have more functional values than emotional values.
Successful values management requires understanding and agreement about a brand’s values
by those responsible for brand strategy, before they can be cascaded to staff and consumers.
However, previous research has indicated that managers’ perceptions in the same firm may
differ (de Chernatony, Daniels and Johnson, 1993). We therefore also tested the hypothesis:
H3:
Services brand marketers’ perceptions about the values of their brand differ.
3. Methodology
Thirteen financial services firms that offered retail financial brands to consumers participated
in the research. Brand information, including the brand’s values, was supplied by these
organisations. This was also used to tailor postal questionnaires, which were sent to members of
each brand team, defined as those responsible for designing and developing the brand strategy.
The number of members in the brand teams varied between 5 and 13. The questionnaires were
used to elicit brand team members’ perceptions about their brand. This paper reports the findings
relating to the brand information and managers’ perceptions of their brands’ core values.
The brand values in the brand documents and the brand values cited by members of the
brand teams were classified independently by the two researchers as either functional or
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emotional values and multiple citations of individual values were noted. Rokeach’s (1973)
previously cited value definition was followed. A functional value was defined as: a value
relating to the way in which something works or operates and can be evaluated through
rational deduction. An emotional value was defined as: a value relating to a person’s emotions
and derived from a person’s circumstances, mood or relationships with others, and being
instinctive or intuitive or based on feeling, as distinguished from reasoning or knowledge. The
supporting information in the brand documents was used to ensure correct interpretation of the
values and The New Oxford Dictionary of English (1998) to help identify synonymous values.
Comparison of the two researchers’ classifications yielded concurrence scores of 79% and 95%
for the brand documents and brand team statements respectively. Disagreements were resolved
through discussion and reference back to the brand documents and dictionary definitions.
4. Results
Of the 13 financial services brands, two brands had no formal list of brand values. Analysis of
the 37 values supplied by the other 11 brands revealed that only 16 values were unique to any one
brand (as shown in Table 1). Consistent with H1, these findings indicate that these financial
services brands were not being clearly differentiated on the basis of unique brand values, but
were being built upon values common to other brands in the financial services category.
Brand
A
B
C
D
E
F
G
H
I
J
K
Total
No. of values
6
19
4
9
3
4
12
4
4
5
5
37
No. of unique values
2
5
0
1
0
0
3
2
0
1
2
16
Table 1. Analysis showing the low number of unique values of financial services brands
Of the total 37 values, 22 were functional values and 15 emotional values (as shown in Figure 1).
To preserve the brands’ anonymity, the actual values cannot be identified. Consistent with H2,
this shows a greater focus on functional rather than emotional values, with just seven unique
emotional values.
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functional values
brands
1
2
3
4 5
6
7 8
emotional values
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
A
B
C
D
E
F
G
H
I
J
K
Figure 1. Financial services brands’ functional and emotional values (black squares)
As Table 2 indicates, the brand values cited by brand team members of the 8 financial services
brands for which brand team data were available revealed a substantial lack of congruence among
brand team members, with no value cited by all members of a team. This is consistent with H3.
no. of
total no. of
brand members values cited frequency with which brand team members cited individual values (shaded = 'official' values)
A
8
14
5 3 3 2 2 1 1 1 1 1 1 1 1 1
B
11
16
8 6 4 4 3 2 2 2 2 2 1 1 1 1 1 1 1
C
13
15
9 6 6 5 4 3 3 2 2 2 2 1 1 1 1
D
7
22
4 3 3 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1
E
6
11
5 4 4 2 1 1 1 1 1 1
F
9
17
6 5 3 3 2 2 2 2 2 2 1 1 1 1 1 1 1
L
5
21
3 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 no 'official'
M
6
12
4 3 3 2 1 1 1 1 1 1 1 1
values
Table 2. Analysis showing the lack of congruence between brand team members
Comparison between the values cited by brand team members and their ‘official list of brand
values’ (for the six brands for which both brand team data and an ‘official list’ of brand values
were available) revealed a notable lack of correspondence, as show in Figure 2.
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re s p o n s e s c o rre s p o n d in g to 'o ffic ia l' b ra n d va lu e s
re s p o n s e s n o t c o rre s p o n d in g to 'o ffic ia l' b ra n d va lu e s
100%
percentage of responses
90%
11
21
27
80%
55
70%
61
62
60%
50%
40%
89
79
73
30%
45
20%
39
38
D
E
10%
0%
A
B
C
F
b ra n ds
Figure 2. Correspondence between brand teams’ responses and brands’ ‘official’ values
5. Conclusions and implications
The findings indicate that in spite of the intense competition among financial services
brands, these brands were failing to differentiate themselves on the basis of unique emotional
values, but were instead focusing on functional category values. This indicates a continuing lack
of differentiation among financial services brands noted by Watters and Wright (1994) and
Jones (1999). The focus on functional values is consistent with Levy (1996). These findings
also confirm financial services brands’ position on the early evolutionary stages of Goodyear’s
(1996) brand spectrum. Furthermore, the most frequently-occuring values on the official lists of
brands’ values resembled Herzberg’s hygiene factors (Robbins, 1991) in that they were values
that consumers would expect financial services brands to demonstrate, so would result in
dissatisfaction if contravened, but their mere presence would be unlikely to result in
satisfaction. The implication is that in this increasingly crowded market not all of these brands
may survive, unless they refocus their efforts around emotional values that enable them to
differentiate themselves from their competitors.
The notable lack of congruence among brand team members concurs with previous
research by de Chernatony, Daniels and Johnson (1993) in which differing perceptions
between managers in the same firm were also observed. A worrying lack of correspondence
with the brands’ ‘official’ values was also revealed. Financial services organisations need to
ensure their brands’ values are correctly understood by members of their brand team, before
attempting to communicate their brands’ values to staff and subsequently consumers.
The second stage of this research involves collecting data from staff and consumers to
compare their perceptions about these financial services brands with those of brand team
members. As previously stated, it is important to differentiate brands on dimensions that are
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both relevant and welcomed by consumers. Whether the unique values of these brands are
found to be relevant and welcomed by consumers will be reported in due course.
6. References
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de Chernatony, L., Dall’Olmo Riley, F., 1999. Experts’ Views About Defining Services Brands
and the Principles of Services Branding. Journal of Business Research 46, 181-192.
de Chernatony, L., Daniels, K., Johnson, G., 1993. Competitive positioning strategies
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Cleaver, C., 1999. Brands as the catalyst. The Journal of Brand Management 6, 309-312.
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Grönroos, C., 1990. Service Management and Marketing. Lexington: Lexington Books.
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