Value is paramount to UK consumers. Premium brands, once aspirational, have lost their sheen, as the public looks instead for quality and clear value for money in a single purchase.
These are the findings of this year's Promise Index, a survey that measures whether the UK's top brands live up to their reputation, by comparing consumer expectations, driven by the brands' image, with their actual experiences.
Jaguar and Audi, car marques renowned for their style, exclusivity and top-notch engineering, have nevertheless been nudged out of the top 10 image list this year, replaced by those models of egalitarianism Argos and Amazon, accessible to every level of consumer. Argos also makes its debut in the top 10 brands by experience, where it is joined by eBay and Toyota.
The average image score across the 110 brands involved in the survey this year fell by 6%, from 6.26 out of 10 to 5.88, which confirms the suggestion that consumers are now less impressed by the aura of premium brands, according to Clare Fuller, director of Promise, the consultancy behind the research.
Promise used independent research agency Populus to survey 1000 representative adults from across the UK for its second annual index. It terms the difference between a brand's image and the reality of the customer experience 'the promise gap'. While a negative promise gap - created when the reality does not live up to the image - indicates that the company needs to work on the quality of its product and service, a positive gap suggests that the marketing department needs to step up the brand's communication effort. A small promise gap is acceptable, but a bigger gap, whether positive or negative, could be a harbinger of trouble in the long term.
This year, like last, the index suggests that service delivery in two-thirds of the UK's top brands fails to meet consumer expectations, with the worst offenders in 2005 including the BBC, BT and British Gas. Brands that are delighting their customers, on the other hand, include Hilton, eBay and More Th>n. However, the size of the average negative gap has increased over the past year, suggesting that consumers are less happy with what brands are delivering.
What Promise describes as 'the perishing of premium' is partly explained by consumers tightening their belts. 'Against a backdrop of declining consumer confidence we would expect the public to focus more heavily on value and less on the intangible benefits of premium brands,' says Fuller.
However, there may be other, less cyclical, trends at work. For example, consumers are more knowledgeable and cynical about institutions, including the big businesses that create brands. Also, the internet has brought more choice to more people, more quickly and at keener prices, making them more careful shoppers.
The better and more consistent quality of goods and services these days means shoppers no longer need look to premium brands for quality assurance.
'The fact that you no longer need to pay a premium price to get a good-performing product has led to more savvy consumers, who are happy to mix and match from both ends of the brand spectrum,' says Fuller. 'A consumer might buy a £6 pair of Tesco jeans and team it with a £200 Dolce & Gabbana belt, or take a £9 Ryanair flight to stay in a luxury hotel in Europe.'
She believes that the elevation of Argos, Toyota and British Airways into the top 10s exemplifies this phenomenon. 'BA has successfully recalibrated its value proposition over the past year, developing and marketing a low-cost offer to complement its more expensive service,' she says. 'Argos clearly has a strong value proposition, while Toyota, which has added enormous style to its long-term reputation for reliability, represents great value for money.'
Other brand consultants dispute Promise's argument about 'the perishing of premium', though. 'While you would expect people to be tightening their belts during a period of high interest rates, there is a difference between what consumers say and what they do,' says Peter Shaw, director of Corporate Edge. 'They like to think of themselves as more sophisticated and brand-savvy these days, so are probably less willing to admit they are swayed by a brand's image and reputation.'
Martin Hayward, director of consumer strategy and futures at dunnhumby, also argues that the apparent shift away from premium brands can be overplayed.
'Consumers are not, and have never been, interested in 'brands', only in their emotional or rational benefits,' he says. 'Consumers are becoming more rational in terms of what they expect, but they still have emotions too, and I believe people would choose to wear Armani rather than Top Shop and fly BA rather than Ryanair if they could afford it. And whatever the chattering classes say, the young are still very susceptible to trends, fame and fashion.'
However, results in the automotive sector in this year's index appear to back Promise's argument. Premium marques BMW and Audi both have big negative promise gaps; Mercedes has fallen from pole position to nine in the image rankings, though it has risen from 10 to three in terms of experience; and Jaguar has dropped from three to 13 in terms of image. Toyota, meanwhile, has been turning the industry on its head by shooting up to seven from 43 in terms of experience, even though its image still lags some way behind.
Patrick Fuller, publishing director of Auto Car magazine, admits that luxury car brands do suffer to some extent from this 'pain of premium'.
'Brands such as Audi, BMW and Mercedes, are, in a sense, victims of their own success. Their track record of quality creates such high expectations that when they do drop the ball, customers are doubly disappointed.'
BMW's highly successful 3 Series has proven so popular, for example, that 80% of consumers who buy one never take a test drive. However, its very success has become the cause of a certain disappointment in owners, as 'the sheer number of cars bought has compromised its reputation for exclusivity', according to Fuller. What's more, the i-Drive technology in the 7 Series proved too complicated for many customers and had to be made more user-friendly.
Mercedes has also suffered in the image stakes due to an overabundance of its cars on the road. After easyCar, Stelios Haji-Ioannou's no-frills rental service, flooded the rental market with hundreds of its A-Class vehicles, users' experience of the marque deteriorated as it reduced the costs (and therefore the quality) of its cars and expanded the range.
Toyota, though, appears to be getting everything right. 'It has terrific products with great quality, style and engineering, which allows it to charge a premium price because the cars represent such value for money,' says Fuller.
Leisure was the strongest sector in this years' index, with a positive promise gap of 0.23. Two surprise results were Hilton's positive experience score compared with a relatively low image score and Travelodge's significant fall on both the image and experience rankings - though a small promise gap indicates customers' expectations and experience are consistent.
Tony Orme, director of brand development at Hilton, says the Promise findings are entirely consistent with the hotel group's UK strategy over the past two years. 'Our focus since 2003 has been very much on winning the hearts and minds of our staff in order to improve the guest experience and become a leading service provider in the sector; we have spent very little on brand advertising,' he explains. 'Our customer satisfaction data last year showed a huge improvement.' However, he agrees that communications now need to catch up. 'I would prefer customers' experience of Hilton to exceed their expectations, rather than the other way around; our challenge is to reach out to a younger and more female audience.'
At Travelodge, however, sales and marketing director Guy Parsons does not recognise the picture painted of his brand by the Promise Index. 'The findings contradict all the research I have seen over the past 12 months on Travelodge, including the annual independent BDRC British Hotel Guest Survey conducted by NOP, which this February ranked us joint number one hotel brand in the UK, number one budget brand and most improved budget brand.'
Parsons believes the Promise findings reflect people's views of the old Travelodge of before its relaunch in March with a new logo and business model - though he admits that budget hotels are not yet as acceptable as budget airlines, for example. 'There is still a lot of snobbery around budget hotels, particularly among business travellers, but I believe that will change. Why pay £126 for something you can get for £26? After all, when the lights are off, all hotel rooms look the same.'
His hunch is backed by the fact that demand is outstripping supply for budget hotel rooms in some key locations, and Travelodge has embarked on a dramatic expansion plan that will see the creation of an extra 15,000 rooms in the UK by 2010.
Excluded last year because they tend not to spend much on advertising, Promise included the online sector in this year's survey because, as Fuller puts it: 'E-commerce is now getting toward critical mass, and brands such as Amazon are having a profound effect on what consumers expect from other brands.'
Amazon went straight into the image index at number 10, ranking only marginally lower, at 11, on experience. But while eBay came equal ninth on experience, it came in at 49 in terms of image, a discrepancy Fuller explains as consumers' more realistic expectations of the auction site. 'Much of what happens when you transact on eBay is the result of the actions of other "people like me" rather than a big corporate,' she explains. Nevertheless, she thinks that brands with a strong sense of 'community', such as eBay, Amazon and Smile, will play increasingly well with consumers.
That said, online bank Smile fared poorly in the Promise Index this year, exhibiting the biggest negative promise gap. Fuller believes that Smile's low ranking could be attributable to a lack of familiarity - although this does not necessarily reflect badly on the company's marketing efforts. David Newmann, the bank's director of marketing, explains that while Smile spends very little on advertising, it takes a very targeted approach to communications. He adds that independent customer satisfaction surveys show that 93% of Smile's customers would recommend Smile, and the online bank's most successful recruitment campaigns are 'customer-get-customer'.
Six of the brands with the biggest positive promise gap are online, which shows, says Fuller, that 'you don't have to offer face-to-face contact to exceed expectations'. Perhaps the most important message, though, is that online brands listen to their consumers. 'Innovation is the very essence of online brands; offline brands often have a vested interest in keeping things the way they are - they could learn something from the web.'
TOP 10 BRANDS BY IMAGE
Brand Sector Image score 2004
(out of 10) Rank
1 BMW Automotive 7.32 2
2 AA Financial services 7.31 8
3 Asda Supermarket 7.25 5
4 Tesco Supermarket 7.15 6
5 Argos Non-food retail 7.05 17
6 Nokia Phones 7.01 9
7 Boots Non-food retail 7.00 3
8 British Airways Travel & leisure 6.99 11
9 Mercedes Automotive 6.96 1
10 Amazon E-commerce 6.95 n/a
TOP 10 BRANDS BY EXPERIENCE
Brand Sector Experience 2004
(out of 10)
1 Tesco Supermarket 6.98 9
2 AA Financial services 6.93 4
3 Mercedes Automotive 6.88 10
4 Jaguar Automotive 6.81 7
5 BMW Automotive 6.71 1
6 Nokia Phones 6.67 5
7 Toyota Automotive 6.64 43
8 Hilton Travel & leisure 6.63 17
9 Argos Non-food retail 6.62 12
10 eBay E-commerce 6.62 n/a
WHO'S BEATING EXPECTATIONS
TOP 10 BRANDS BY POSITIVE IMAGE GAP
Brand Sector Size
1 More Th>n Financial services 0.99
2 easyJet Airlines 0.78
3 eBookers Travel & leisure 0.73
4 Egg Financial services 0.67
5 Hilton Travel & leisure 0.66
6 eBay E-commerce 0.55
7 Carphone Warehouse Non-food retail 0.54
8 Direct Line Financial services 0.51
9 First Choice Financial services 0.46
10 Marriott Travel & leisure 0.45
WHO'S DISAPPOINTING CONSUMERS
TOP 10 BRANDS BY NEGATIVE IMAGE GAP
Brand Sector Size
1 Smile Financial services -1.12
2 BBC Financial services -1.02
3 Asda Supermarkets -0.90
4 Audi Automotive -0.90
5 British Gas Utilities -0.83
6 Alliance & Leicester Financial services -0.81
7 Visa Financial services -0.73
8 B&Q Non-food retail -0.66
9 BMW Automotive -0.61
10 BT Phones -0.57
PROMISE GAP BY SECTOR
Image Exper- Gap
Travel & leisure 5.40 5.63 0.23
E-commerce 5.43 5.66 0.23
Financial services 5.64 5.61 -0.03
Airlines 6.33 6.27 -0.06
Phones 5.68 5.57 -0.11
Automotive 6.18 6.06 -0.12
Supermarkets 6.63 6.38 -0.25
Non-food retail 6.16 5.90 -0.26
Public sector 5.92 5.61 -0.31