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Monday, June 28, 1999 Published at 15:38 GMT 16:38 UK

Business: The Company File

Banks turn to branding

After the merger comes the makeover for Lloyds TSB

Can a new logo save a failing business? As banks like Lloyds TSB unveil a new branding, BBC News Online looks at how companies jostle to create the best corporate brand.

Lloyds TSB unveiled its new logo on Monday and marks the occasion with a TV advertising campaign featuring the Corrs hit, What Can I Do?

But unlike adverts extolling the virtues of various financial products, Lloyds TSB is the latest High Street bank to concentrate on promoting its corporate image.

HSBC is in the middle of a campaign to highlight the changeover from the Midland Bank name - the last of the Midland plaques on the company's 1,700 branches were removed over the weekend.

'Trendy and friendly bank'

NatWest's current ads are a quirky mix of animation and real people, ostensibly pushing the bank's cashpoint services, but also positioning it as a trendy, friendly institution. In a few weeks' time, Barclays will unveil its first corporate-wide campaign for some years.

Branding is the big thing in banking at the moment. Although never the sexiest of industries, two banks top a new list of businesses with the most valuable brand.

Barclays is first, with its brand estimated to be worth £5.3bn, followed by Lloyds.

Further evidence that financial services have shaken off their dry image can be found in the startling success of Egg, Prudential's new banking arm.

[ image: Egg : Experts say it is the branding success of the decade]
Egg : Experts say it is the branding success of the decade
"It has been the branding story of the last 10 years," says Peter Sampson, chairman of branding consultancy Corporate Edge. "It has had unprecedented success, which probably reflects people's concerns over traditional banking services."

So the pressure is on the big banks to maintain their share of an ever more competitve market. Although Lloyds and TSB announced their merger in 1995, it was only last year that the deal received Parliamentary approval.

Mike Fairey of Lloyds TSB on what the changes will mean for customers
The group has had a while to decide the new look for its 2,550 branches. So what is the verdict? Peter Sampson is fairly underwhelmed.

"What's interesting about the logo is that it's really still the mark of Lloyds," he says. "The black horse is a strong image, but I think they have weakened it a bit - it doesn't have the gravitas or stature it did.

[ image: Lloyds' old logo had more gravitas, says Peter Sampson]
Lloyds' old logo had more gravitas, says Peter Sampson
"You need to feel that it's a new entry in the sector, stronger than the previous two companies and a forward-looking bank."

As an example, he cites the branding for CGU, which created a strong new image without relying on the heritage of either of its components, Commercial Union and General Accident.

Ian Farnfield of the Dragon branding consultancy points out that organisations such as banks tread a fine line between creating a radical image and alienating existing customers.

Evolution not revolution

"People don't want so much change that they think the bank doesn't believe any longer in its principles of the past," he says. "It's a case of evolution rather than revolution."

But it can achieve results. Just a few years ago, there was little to choose between the big supermarket chains. Now there is clear blue water, achieved as much by their images and outside activities as by their core business.

The aim is to mark a company out as being different, which can be tricky when the products are all pretty much the same.

"Customers and clients like to feel involved with the companies from whom they buy, and it's hard to form a relationship with a tin of baked beans," explains Ian Farnfield. "You have to create the maximum difference through the company that produces the beans."

Standing out in a crowded market can involve some element of risk, says Peter Sampson. "Every company would like to be a Virgin or an Orange. They were different when they burst on to the scene, but they were high risk strategies.

"Unfortunately, many companies start out with that intention, but get worried and back off. They're more concerned with not getting it wrong."

Even companies with strong brand images must not be complacent. Shell and BP are among those which have made several barely noticeable changes to their logos over the years. But Ian Farnfield says those slight adjustments all add up.

"Any company with a strong visual mark would be updating it on an ongoing basis to see that it's in step with the audience expectations and doesn't look old-fashioned," he says.

No wonder big corporations take every opportunity to preserve and polish their image. The world's top brand, Coca-Cola, is said to be worth £52bn.

Brands hatch new products

It is that kind of brand recognition which prompts many manufacturers to extend their brand rather than developing totally new products. They are building on an established name, so success can be quicker and cheaper.

[ image: Kit Kat has built on its success as a brand]
Kit Kat has built on its success as a brand
Nestle has used Kit Kat's position as Britain's most popular confectionery to create mint and orange flavoured versions and now a chunky Kit Kat bar.

And the same company's Polo has capitalised on the success of its Supermints to launch new flavours including orange and butter.

However, even this strategy is not without its dangers. "There's always the possibility that if you get it wrong, you can damage the equity you have from that brand," says Peter Sampson.

[ image: Bradford and Bingley has replaced its bowler-hatted gents with a bright new version]
Bradford and Bingley has replaced its bowler-hatted gents with a bright new version
But ultimately, style is not everything. Bradford and Bingley's bright new logo might suggest that it is a modern, forward-looking company, but its performance and products must match that claim.

And Sainsbury's branding overhaul of new logo, colours and uniforms will be successful only if it is accompanied by practical changes which meet customer expectations.

"Rebranding is really not that much to do with the look," believes Peter Sampson. "It's about communicating what you are doing and why you are doing it to your various markets."

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