Of all the subjects that have baffled and bamboozled the financial services marketing community over the years, none has created bafflement remotely to compare with the issue of brands and how you build them.

To put the simplest of financial measures on the scale of the problem, over the past 20 years retail financial services firms in the UK have spent at least £5 billion, and arguably a great deal more, on activities specifically intended to help them build strong brands in their marketplace. Yet 20 years on, if we look at all the biggest firms in all the biggest sectors of the market, we find that consumers are almost completely unable to distinguish between them – and when they can, it's usually for reasons that had nothing at all to do with the branding efforts. Often, in fact, the perceptions they have are precisely the perceptions the expenditure was intended to overcome.

Of all the money that the financial services industry has spent over that kind of period, it's extremely difficult to think of an equivalent sum that has achieved so spectacularly little. You could hardly believe that such a lot of money could deliver such meagre results, and you can only conclude that there must be something – or more likely quite a few things – horribly wrong in the thinking that has shaped the spending of it.

This is bad for the industry, but it's also bad for consumers. Especially in markets that they don't understand well – and where levels of engagement are low – brands act as very important signposts, or heuristics (shortcuts), for consumers, enabling them to make decisions quickly and with reasonably high levels of confidence in achieving at least a satisfactory outcome. (For example, among users of price comparison sites, it's often said that one of the commonest behaviours is to choose the cheapest brand with a name they know.)

A Financial Services Forum focus group participant says:

At the point of sale when you're offered three different products doing the same thing, you're generally going to go to the brand you've heard of.

One of the biggest problems is that so much bullshit is spoken and written about brands that most people tackling the subject quickly find themselves horribly confused. This chapter aims to cast some light on what is and what isn't possible in brand development, and how what's possible can be achieved. First, we feel the need to try to clean up some of the bullshit, debunking some of the myths and delusions that permeate the subject.

SOME BRAND MYTHS DEBUNKED

We said much earlier in this book that ‘marketing’ is a slippery term, and that no generally agreed meaning can be taken for granted. The position is even worse with the words ‘brand’ and ‘branding’. Defining the term is the least of your problems. Almost every idea about brands, brand strategy and brand development is either contentious, or incomprehensible, or just plain wrong.

You might think, in such an uncertain area, that your best starting-point might be a dose of academic rigour. There are many books that can provide you with an introduction to the subject, including some from authors with impeccable academic credentials. The inestimable Professor Leslie de Chernatony has written two, Creating Powerful Brands and From Brand Vision to Brand Evaluation. Both are well worth reading. But we think Leslie would certainly accept that both are based on academic research and literature, which doesn't always reflect real-world issues and experiences. This chapter, on the other hand, reflects our own views as practitioners on the key issues and challenges that we see.

The first of these arises right at the outset. The moment you start to engage with the subject, you have to overcome the fundamental problem that the word brand has (at least) two meanings, which you might call a small one (brand with a lower-case b) and a big one (Brand with an upper-case B).

Lower-case brand means the identifying mark, or marks, which enable people to recognise something as what it is. (By the way, for the avoidance of doubt, this lower-case/upper-case thing is metaphorical. We don't really spell the two meanings like that, although it might be helpful if we did.)

As everyone knows, this meaning arose from the world of livestock farming. A farmer's brand was the mark he used to identify his sheep or cattle. In a commercial context, these identifying marks are usually an entity's name and/or logo. The brand Barclays enables you to recognise the bank of that name. When you see a can carrying the Coca-Cola logo, you know what drink will be inside it. When a television interview features Donald Trump you know what to expect – or rather who to expect – if you tune in.

Upper-case Brand means something much bigger – the totality of what that thing stands for in your mind, and in the minds of other people encountering it. If the brand perceptions in people's minds are clear, consistent, positive and serve to distinguish the thing from other things, then the brand is a good or strong one. If they're unclear, and/or inconsistent, and/or negative, and/or give the impression that the thing is the same as one or more other things, then the brand is a bad or weak one.

Any thing that has created any level of shared perceptions in people's minds can be seen as a brand (although not necessarily a strong or positively perceived one). The M25 motorway is a brand. The golden retriever is a brand. The game of chess is a brand. You are a brand.

From now on, in this chapter, we're talking only about this second, bigger, upper-case meaning of the word.

In a marketing context, brands have two key characteristics that the M25 and the game of chess don't. First, there are people who take responsibility for them, and who are aiming to build the brand's perceptions in the minds of a defined target market or markets. This target market could be very big and loosely defined, like ‘everyone’, or very small and precise, for example, ‘people who want a great Chinese meal in Taunton’.

And second, obviously (but nothing is completely obvious in the strange and slippery world of brands), those responsible must have decided what perceptions they're trying to build. Marketing calls for a purposeful approach. You have to decide on the perceptions you want, and make and execute a plan to go about achieving them. This, in turn, is part of a bigger set of decisions about your business, starting with the definition of its purpose discussed back in Chapter 11.

To be honest, once you've mastered the two-meanings issue (which, it has to be said, a lot of non-marketers never do), so far none of this is sounding very confusing or difficult. How do things start going wrong?

One of the early-stage problems is that all sorts of people who ought to know better, many of them consultants, have come up with stupid and unhelpful definitions of the word that serve only to put people off the scent. Here are a few examples.

• The author is unknown, but one of the best-known definitions says that ‘a brand is a promise that is kept’. What the hell does that mean? If you tell a friend you'll see her in the pub next Tuesday at 6, and then on the day you're there on time, does that make you a brand? Of course not. (Although, at risk of overthinking this, if your personal brand happened to stand for meticulous punctuality, then arguably being there on the stroke of 6 would reinforce your friend's brand perceptions.)
• There's an equally ridiculous thing about single-mindedness, which someone called Al Ries expresses as ‘a singular idea or concept that you own inside the mind of the prospect’. Why does it have to be singular? You can usually boil the richness and multi-facetedness of most great brands down to a single idea, but in doing so you'll risk losing much of its value and distinctiveness. Single-mindedness is a good thing in a 30-second TV commercial (and an even better thing in a 20-second commercial) but it has nothing to do with brands.
• At the moment, stories are in. Every brand has to be able to tell its unique story. This is quite good news for copywriters, because there's good money in brand story jobs, but it doesn't really mean anything. Richard Cordiner, planning director at ad agency Leo Burnett, says: ‘A brand is nothing more than a story wrapped around a product or service’. What does he mean? You tell us.
• It's often said that, whatever brands are, they're about added value and emphatically not about low prices. Someone called Waqar Riaz says: ‘In today's world, differentiating a brand on technology is very similar to playing purely on price – there's always an end to it’. This isn't right either. Many strong brands stand in large part for low prices, and continue to do so indefinitely. Try telling Ryanair, Aldi or Walmart that their strategy's going to run out of road (or indeed air).

But it's not just sayings about brands, or definitions of brands, that are unhelpful and untrue. The same can be said of many other ideas or beliefs about brands and brand building.

For example, it's often said that you can't build a brand without a very large advertising budget. Completely untrue. It depends entirely on your target audience, and what opportunities you have to influence their perceptions by other means. Some of the strongest brands in financial services – the Queen's bankers, Coutts, to name but one – have scarcely advertised at all.

Vice versa, these days (perhaps even more dangerously), people make the exact opposite point – that in these digital times, and with an unlimited amount of social media available at no charge, it's now possible to build a brand at zero cost. Again depending on your target audience, and on the interest and distinctiveness of what your brand aims to stand for, this may be theoretically possible. But in a low-interest category like financial services, we wouldn't bet on it. For every brand that achieves a degree of fame and distinctiveness by blogging, tweeting and using Facebook, there are at least a hundred that will sink without a trace. The cruel truth is revealed by many of the analytics readily available on the Internet. One particularly depressing statistic is the number of views achieved by the videos on financial services firms' YouTube channels: while Kim Kardashian or an amusing cat video can easily clock up 20 million or more, the average asset manager speaking to a camera rarely reaches 500. (Perhaps the average asset manager should appear with a cat. Or with Kim Kardashian.)

As far as measurement is concerned, sadly one of the less helpful and least defensible parts of the entire brand industry is the so-called science of brand valuation. A few firms specialise in this dark art, and have developed complex statistical methodologies to come up with their numbers. It has to be said, though, that on a simple commonsense basis, a glance at their findings tells you in seconds that these methodologies don't work. One of the leading proponents publishes a list of the world's most valuable brands every year. In the 2016 listing, a firm called Brookfield Asset Management, for example, occupies a place some distance ahead of Rolls-Royce, and niche US insurer Aflac is some way ahead of Volvo, Southwest Airlines, Ralph Lauren and Prada. As the editor of Private Eye once said in a very different context, ‘If that's justice, I'm a banana’. There probably is a science to be developed in the area of brand valuation, and when it's properly developed it would be extremely valuable to marketers who, for the first time, would be able to put a hard commercial value on this aspect of what they do. But to say that it's currently in its infancy is an insult to infants.

Even one of the most commonly repeated and apparently least controversial observations about brands and how to build them doesn't stand up to much scrutiny. Few people will disagree with the statement that in service businesses like financial services, brands are built experientially – in other words, it's what brands do, not what they say they do or say they are, that forms brand perceptions.

A member of a Financial Services Forum focus group says: ‘Your brand is your reputation, and that's delivered by what people see and what you do, and how you behave’.

It's an idea explicitly acknowledged in a major brand development initiative on the part of NatWest, launched in 2016, around the strapline ‘We are what we do’.

There's obviously a lot of truth in this, especially for organisations like NatWest whose huge existing customer base makes up their most important target market. But clearly, by definition, experiential marketing can only work among those who have experience, and therefore it doesn't help much when you're trying to reach out beyond your customer base. To do this, it's necessary to go beyond experience into allegation, usually by means of some kind of advertising.

There's also the considerable problem that for many people, both their actual customer experience and their perceptions of customer experience have not been positive. In an interview in Marketing Week, NatWest's Chief Marketing Officer David Wheldon says: ‘Over the last nine years, I cannot think of a single financial brand that has even nodded at the fact there were serious problems in the past. It annoys people’.

He's right about that – financial services companies have managed to find a remarkably large and diverse range of ways to annoy us over a very long period. As an obscure example, one of your authors remembers logging on to the websites of the UK's top 10 High Street financial institutions at the height of the 2008 crisis looking for help, for reassurance, for some kind of counterbalance to the frantic media headlines of that period. He searched the terms mortgage crisis, credit crunch and one or two others then appearing in every news broadcast and on every paper's front page. Without exception, every single one came back with a code 404, ‘credit crunch not found’. It was hard to believe that not a single institution had heard of a single one of the terms he searched.

In short, it's certainly true that especially among large organisations with many customers, managing customers' experience is an absolutely central and critical part of the marketing mix and the brand-building effort. But it makes no sense to think of it as the whole story.

So amid such a lot of disinformation, confusion and misunderstanding about brands and how you build them, what are we saying? What we're saying is this:

1. A strong brand (that is, a brand that is well known and is perceived clearly, consistently, positively and differently among a target audience) is a hugely valuable asset. When all other things are more or less equal – and in service sectors like financial services all other things are very often more or less equal – people tend to make choices on the basis of their awareness and perceptions of brands.
2. The essential requirement for building a brand is a clear, simple and credible differentiating idea. This doesn't necessarily need to be objectively unique, but it doesn't half help if no-one else owns it yet. (Having worked in packaged goods marketing, we have little time for financial services marketers who bemoan the lack of ‘hard’ differentiation between their firms and others. In some of the most strongly branded FMCG markets – lager, washing powder, toothpaste – consumers are hard put to make any kind of ‘hard’ distinctions between one product and another.)
3. Especially in service businesses that offer a large number of different touch-points and customer experiences, it's important to layer some distinctive secondary characteristics onto this central core idea. A brand built on only one idea will be somewhat two-dimensional (or indeed one-dimensional).¹
4. It is important that people find the truth of the central idea, and indeed the secondary or supporting ideas, confirmed to a greater or lesser extent, and certainly never contradicted, whenever they encounter the brand. (This is one of the few clichés of financial services brand building that is actually true.)
5. If you want perceptions of your brand to extend beyond your customer base, you're going to need to spend some money on building those perceptions. This is likely, although not certain, to involve advertising. Whatever it is, there must be enough of it, and it must be engaging enough, to become well-known among your target group.

Of these five simple ideas, by far the most important – and the one with the biggest implications – is the second. It's worth repeating: ‘The essential requirement for building a brand is a clear, simple and credible differentiating idea’. If you can identify one of these, you're in with a chance. If you can't, you aren't. You're just creating name awareness. That might be what you want to do, and on the whole it's a good thing to do – having name awareness is generally better than not having name awareness. But don't kid yourself, you aren't building a brand.

And quite frankly, if yours is a big, long-established, complex, multi-line, multi-site financial services business that has evolved over time without any such idea having informed its development, we don't think you'll be able to do it.

Of all the myths about brand-building, probably the most unhelpful has been the idea that it's possible to back-fit a brand into a big, complicated, long-established business that has previously displayed no trace of the idea that's now claimed to lie at the heart of it. People aren't stupid. They can see that it's just something that's been made up by an ad agency or a brand consultancy, that it could just as well have been applied to any of the organisation's major competitors, and that within a year or two a new marketing director will be launching a new strategy and saying that in hindsight the old one was all wrong.

Some say that things are different when an organisation has a CEO – or, even better, an entire management team – genuinely committed to delivering on the new brand promise, and ready to make big changes in the organisation in order to do so. We can't see it. We can't think of a single large, long-established, complex financial services firm – and only a very small handful of firms outside financial services – that have deliberately achieved rapid and significant change in brand perceptions as a result of management actions. If you can, please let us know – we'll change this section in the next edition.

This is not to say that no large, complex, long-established firms have the makings of a differentiated brand idea. A few do.

As the last big building society, Nationwide is different, and should be immune from consumers' fierce hatred of fat-cat bankers and their grotesquely large bonuses. (However, Nationwide has played the mutuality card so feebly over a long period that this strength is very much less well known and understood than it could be by now.) The same can be said of Royal London as the last large mutual in insurance, although again it's a card the firm rarely chooses to play.

It's very strange that these two large mutuals, as well as other medium sized and smaller ones, have chosen over such a long period to make little or nothing of this fundamental difference in their structure and ownership. We know many have carried out consumer research that tells them that in itself, the fact that an organisation is owned by its customers doesn't mean much or make much difference to people. But as Nationwide's recent Building society, nationwide initiaitive has shown, it isn't beyond the wit of good marketing people to express mutual ownership in ways that make it meaningful, and to link the principle of mutual ownership to hard points of difference that people do value. Especially in the world since the 2007–2008 global financial crash, it seems to us that a huge opportunity has existed for a mutual organisation to demonstrate the benefits of its difference: we think it's extraordinary that so few have chosen to do so.

A notch or two down from the real, substantive difference of mutuality, a couple of large firms have what you might think of as the next-best thing – namely, a carried-over heritage from past times that somehow makes them feel a bit different, especially among older consumers who remember them as they were. Prudential and Halifax come into this category, the Pru thanks to its long-disbanded bike-riding ‘home service’ sales force, and the Halifax thanks to its building-society past. Organisations with a lot of heritage are typically unsure about what to do with it, and such is the case with these two: over the years both have alternated between embracing and trying to modernise their heritage, and discarding it in search of something new.

What else? HSBC seems a shade more international than other big UK banks, so maybe its brand propositionThe World's Local Bank has a bit of credibility, although it's difficult to explain precisely why it's good for people. (To a small audience segment of international travellers it may mean something, but to the huge majority of its retail customers around the world it's hard to see a real benefit.)

And talking of internationalness, organisations operating outside their home market always have the option of building a brand around consumer perceptions of their country of origin. Conceivably, for example, Santander could be Spanish, Allianz could be German and AXA could be French. Oddly, it's difficult to think of a financial services brand that takes this option, even though for many the home market these days accounts for only a small percentage of their overall business. In other sectors of the consumer economy many do, either as a core brand positioning or as an important secondary attribute. It's not difficult to think of examples – Audi and Vorsprung Durch Technik bringing German-ness to automotive; any number of wine brands, Kronenbourg and, oddly, Grey Goose vodka bringing French-ness to alcoholic drinks; Levis spending decades bringing American-ness to apparel, and so on.

As the saying mysteriously has it, you can't make bricks without straw, and beyond these few exceptions it's difficult to see anything much for most large, complex, long-established organisations to build on. As a focus group respondent says:

If you're trying to combine this idea of reaching a very wide audience with a consistent sense of differentiation, that becomes a massively difficult challenge – especially retrofitting into an organisation that wasn't previously known for this or that, or that had lost its way over decades from where its roots were.

We'd agree, except only that we'd go one step further than ‘massively difficult’. We think it's virtually impossible.

If that's right, then inevitably the question arises: what does it mean, first for those big, complex, long-established organisations, and second for everyone else?

For the big, complex, long-established organisations, it means that they face a clear choice.

1. The first option is to forget about building a distinct brand, and go for the lesser but still worthwhile objective of developing and maintaining a well-known name. Name awareness is, so to speak, semi-skimmed milk compared to the full-fat of distinctive brand awareness, but it still has value. The old marketing proverb ‘familiarity breeds favourability’ has much truth in it (and in case you doubt it, clever behavioural economists like Richard Thaler have recently provided confirmation). It's particularly true in markets where consumers are lacking in confidence and worried about the implications of making a mistake. We may not particularly need the reassurance of a well-known name when we buy a box of matches, a litre of screenwash or a 5-amp fuse, but it's a bit different when our long-term savings are at stake.

   Financial Services Forum members, it must be said, are not so convinced that a well-known name is an acceptable alternative to full-fat brand awareness. In our online research, we asked whether they thought a strong consumer brand was important for their businesses. Even though over half of them told us that less than 50% of their customers bought from them direct, 93% said that a strong consumer brand was either ‘important’ or ‘increasingly important’, and 52% thought their organisations currently have a strong consumer brand, which as we said back in Chapter 2 shows either touching faith or perhaps just a lack of reliable metrics.

   Two participants in one of our marketing director focus groups shared the following thought-provoking exchange:

   Participant 1:	I'm not saying brands aren't important, I'm saying a lot of people think they have them and they don't.
   Participant 2:	Exactly, I'd agree with that – but in fact, is our definition of a brand wrong? Is a brand something with which you have a deep and meaningful relationship, while what we have is something else – just well-known names?

   The second comment introduces a new dimension to the subject, to do with the importance of relationships between customers and brands. ‘Relationship’ is another of those slippery marketing words that means very different things to different people. At one extreme it can simply describe any kind of sense of emotional connection more or less regardless of the level of actual contact between brand and customer, whereas at the opposite extreme it's defined specifically by the amount of interaction that actually takes place. (In between, of course, many would argue that the measure of a strong relationship requires some kind of combination of the two.)

   • Another participant says:

     Name recognition is infinitely much more important than a brand that doesn't have a depth of experience associated with it.

   • A third spells out the point even more clearly:

     Everyone says they're in the business of brand-building, and I say no, 90% of you are in the business of name awareness building, because you don't have a brand. You don't have anything that differentiates you from anyone else.

2. There is a second option available to big, complex organisations, although it's one that has become increasingly unfashionable in recent years. If you can't build a genuinely strong and distinctive single master-brand out of a fragmented, disparate collection of businesses with nothing that really holds them together, the alternative is to break them up into a deliberately separate, segmented, strategically managed portfolio of brands – a ‘house of brands’, as this approach is generally known.

   Among the largest UK financial services providers, Lloyds Banking Group has for many years stood out as the main proponent of the ‘house of brands’ approach, with a portfolio that currently includes Lloyds Bank, Bank of Scotland, Halifax, Scottish Widows, Black Horse, Lex Autolease, LDC, AMC, Colleys and Birmingham Midshires.

   On the other side of the argument, another very large institution, HSBC, favours the single master brand – in the UK, its only distinct sub-brand is its remote banking business First Direct.

It's notable that both Lloyds Banking Group and HSBC, and indeed most other large financial services groups, have grown very largely by acquisition, and acquisition forces brand strategy issues on firms whether they care about them and have a strong philosophy on the subject or not. As usual, actions give a better indication of firms' strategies than words. Lloyds has generally tended to retain brands that it has acquired, at least when it has been able to do so. HSBC, on the other hand, as a strong proponent of the master brand approach, has dropped virtually every acquired brand and applied its own identity to the acquired businesses.

For many years in financial services, proponents of these two approaches jockeyed for position, with both groups proclaiming the superiority of their approach. (The same struggle has continued in other parts of the marketing world, for example between a confectionery firm such as Cadbury, which believes in a strong Cadbury master-brand prominently applied to all its confectionery products, and a rival like Mars, whose house of brands includes Snickers, Bounty, Milky Way, Twix and all the others.)

Recently, though – arguably since the 2008 crash – it seems that a winner has emerged, at least in financial services. We're not suggesting that brand strategy had any effect on the unfolding of the meltdown or its aftermath, but the fact is that among the big UK banks the two that had more or less adopted a master-brand strategy – HSBC and Barclays – were widely agreed to have had a relatively good crisis, while the two on the house of brands side – Lloyds and RBS – were badly damaged.

This may well have been a coincidence. But as we emerged from the depths of the crisis into the ongoing Age of Austerity, the fact that maintaining a single master-brand is a lot cheaper than maintaining a portfolio of separate brands loomed large in marketers' minds. Even if for this reason alone, it seemed that the long struggle was over, and the master branders had won.

This point about cost isn't by any means just to do with brand communication, and how many brand advertising budgets you need. It's a much more fundamental point about organisational structure, and the major trend in recent years toward centralisation of resource. Back in the pre-crash era, if you'd looked below the surface of many, if not most, groups operating a House of Brands model, you'd have found a large number of functions deployed separately and therefore duplicated across the range of business units. Many of these groups ran an essentially federal model, with some central controls especially in risk, compliance and finance, but a very high level of autonomy at business unit level. Clipping business units' wings and centralising functions offers big cost savings, and also arguably much better control and risk management: could the catastrophic pre-crash corporate lending decisions made within Halifax, which nearly destroyed the bank, have been prevented in a group with strong central controls?

In the past decade, almost every large organisation has been involved in this process of centralisation at least to some extent. And the more aggressively an organisation moves in this direction, the more likely it is that the new structure will be reflected in its brand strategy. It's no coincidence, for example, that a group like Royal London, which under the leadership of a new CEO moved in a short period from a federal model to a highly centralised model, moved at the same time from a house of brands that included Ascentric, Bright Grey, Caledonian Life, RLAM, Scottish Life and Scottish Provident (and, in the recent past, a host of others including Co-operative, Royal Liver, United Assurance and Scottish Mutual) to a single Royal London master brand.²

Anyway, while these kinds of cost and organisational pressures have been driving a clear move toward master brands and away from houses of brands, going forward we wonder whether the victory of the master brands has been quite as decisive as it may appear.

The key point, we believe, is that so few proponents of the house of brands had ever made very much of the opportunity available to them. Far too often, far too many of the ‘brands’ in their house aren't really brands at all: they're just well-known names. Consider that list of Lloyds Banking Group ‘brands’. Lloyds Bank has a horse. Halifax, as we've said, has a faint echo of its building society past. Bank of Scotland is, well, Scottish. Scottish Widows has a funny name and advertising featuring an attractive woman. But apart from the connotations of these names and logos, how do we really understand them to be different? What do you expect from Scottish Widows that you wouldn't expect from a major competitor?

Vice versa, as noted above, HSBC maintains a ‘house’ with only one brand in it, First Direct. But First Direct is a proper brand, with its own young and affluent target market and its own distinct idea that a remote bank can be more accessible and responsive than a bank with thousands of branches. And HSBC has said that it intends to take another step along the house of brands road in the near future, rebranding its UK retail branch network (possibly reverting to the Midland name, dropped when they adopted HSBC in 1999. This will happen at the insistence of the regulator, requiring this UK retail part of the bank to be ring-fenced from the rest. But then that's what brands are good at, creating a sense of things that are separate from other things.

As marketers, your authors are instinctively drawn to the house-of-brands model. We like the way that it's possible to create focused, coherent, distinctive brands out of focused, coherent, distinctive business units. We think that master brands backfitted to large, complex, unfocused, incoherent business will almost always become an exercise in lowest-common-denominatorism, and will never mean as much to consumers or be worth as much to their owners.

We accept that elsewhere in the marketing economy there can be exceptions, when large, long-established, complex businesses do in fact possess a strand of DNA that runs through everything they do. Returning to our Cadbury example, Cadbury stands for chocolate. Cadbury can provide a wide range of products that fit within its master brand, provided they're made with chocolate. We struggle with Cadbury's chewing gum, or orange juice.

A Financial Services Forum focus group participant puts the case to revisit the house of brands in this way:

In insurance, brand differentiation is driven by price points. I don't think we've ever gone beyond demographics and price points and really gone into goals, motivations and behaviours. There's a lot of opportunity there – it would take a multi-brand approach to do that.

To sum up, at the time of writing the house-of-brands approach is at something of a low ebb in financial services, and master brands like HSBC, Barclays, Aviva or AXA³ seem to represent the preferred option for large organisations. But a bit like supporters of communism who believe the trouble with its track record to date is that it's never properly been tried, your authors believe that the same is true of the house of brands. The occasional flicker of positive evidence suggests that it may get a second wind.

None of these complications arise for small, focused, young businesses (whether genuinely independent or spun out from larger groups). Many of these, especially the independent ones, may lack the resources to make their brands famous, but apart from that everything else is in their favour. When one of your authors was closely involved in the early stages of developing the MORE TH>N brand, representing the direct insurance activities of its parent company Royal SunAlliance (now RSA), extensive research was in place to measure how perceptions of this fledgling brand compared and contrasted with its parent, founded nearly three hundred years earlier. On a range of a dozen or so measures, from simple awareness to a number of image attributes, the newcomer overtook the parent on every one within four years.

It's no coincidence that the strongest and most distinctive brands in financial services are to be found among smaller, simpler, more focused and generally (though not always) younger businesses. Bearing in mind that the important thing is the strength of the brand among their most important target audiences (almost always including customers who could do more business with the brand more often), a list of examples would certainly include:

The important thing about this list is the way that all the organisations included deliver a brand proposition to their target markets that they can only offer because of their focus on those target markets. No big, multifaceted master brand could credibly follow any of these examples. It's the focus that makes them possible.

A focus group participant says:

You know, I think it's incredibly much easier with smaller and more focused businesses. If you look at banking, you know, no question, First Direct is a brand.

Financial services is an industry that offers big players huge economies of scale, which work enormously to their advantage and to the disadvantage of small and young players. We strongly believe that brand is one of the most important business attributes – perhaps the most important – where the balance of advantage swings the other way.

BRAND ARCHITECTURE AND PRODUCT BRANDING

Having discussed the subject of corporate branding at some length, we now move on to the next level down. This is to do with building brands at specific product or proposition level, and it's a subject on which there is much less to say - for the simple reason that in financial services, remarkably little of it goes on. Whether master brand or house of brands, in financial services the very large majority of efforts, and budgets, are deployed at corporate or business unit level, and as a result the very large majority of products and propositions at lower levels in the brand hierarchy carry simple generic and descriptive names – Instant Access Account, UK Equity Fund, Buy-To-Let Mortgage, Guaranteed Income Plan, Personal Loan.

This is obviously in sharp contrast to the marketing of consumer goods, and to a lot of the marketing of services, too. Although emphasis is quite often placed on corporate brands (as in our Cadbury example), in consumer goods the main brand focus is usually at the product or category level. Even when a master brand is as strong as Cadbury, individual brands like Bournville, Dairy Milk, Wispa, Fudge and Flake are still important, embodying different propositions and targeting different sectors in the confectionery market. And among competitors like Mars, the investment is almost entirely at product level: the eponymous Mars Bar arguably bestrides corporate and product categories, but most consumers are unaware which firm actually makes Twix, Snickers, Bounty, Milky Way and the rest.

Corporate brands are generally more important in services – customers are never in any doubt that they're flying on a British Airways plane (although of course these days there are other brands, including Iberia, Aer Lingus and the truly dreadful Vueling within the group). But at the same time BA has made great efforts for years to develop Club and First as lower-level sub-brands, representing particular propositions and indeed price points, and targeting particular consumer groups. And the fact that some people – mainly business travellers – are willing to pay up to 20 times more for seats in these parts of the plane indicates they've been reasonably successful.

The same is also true in hospitality, where the large French-owned group Accor lays claim to a truly enormous collection of brands. The list currently includes Raffles, Fairmont, Banyan Tree, Sofitel Legend, Rixos, So Sofitel, Sofitel, Onefinestay, MGallery, Dhawa, Cassia, Pullman, Swissôtel, Angsana, 25hours, Grand Mercure, The Sebel, Novotel, Mercure, Mama Shelter, Adagio, ibis, ibis Styles, ibis budget, JO&JOE, hotelF1 and Thalassa sea & spa - a list long enough to make you wonder whether any hotel where you might choose to stay doesn't in fact belong to this extremely extended family.

Against this background, it's odd that more financial services providers haven't tried harder to develop sub-brands enabling them to tailor propositions to particular market sectors (and, equally, that when they've acquired businesses that could provide sub-brands they've tended, as we've seen, to fold them into the parent brand).

There are exceptions. One of the brands listed in the previous section, Coutts (acquired by NatWest which was then acquired in turn by RBS) is used in exactly this way to represent its proposition in the high net worth private banking sector.

But there are plenty of other financial services sectors that seem on the face of it to be crying out for product- or proposition-level branding. Investment funds stand out as an example. There are over 3,000 investment funds domiciled in the UK, but as far as branding is concerned the brand of the fund manager dominates almost all of them, with the individual funds carrying generic descriptive names shared with most of their competitors – US Equity Fund, Emerging Markets Fund, High Income Fund and so on. It's notoriously difficult to find any kind of corporate positioning or brand identity that can make any sense or provide any coherent differentiation across what will often be a range of fifty or more funds, investing across a wide range of investment markets and with enormously varied investment processes, risk profiles and performance objectives.

To go to the opposite extreme and seek to establish clear sub-brand identities for every individual fund would be equally problematic (and prohibitively expensive). But surely it must be possible to establish groupings that make sense as a brand, in much the same way that an automotive firm like BMW creates groupings of vehicles around sub-brand identities like the 3-series, 5-series, 6-series and 7-series. It's inconceivable that firms in this industry would adopt the same generic approach as fund managers, all naming their vehicles Family Hatchback, Five-Door Family Hatchback, Faster Family Hatchback, Large Estate Car and so on.

There is no single right approach to brand architecture, and the right solution for any firm will depend on the way it is structured and organised, its target market or markets and the range of propositions it intends to offer. At the moment, though, despite huge expenditure on brand consultancy and brand promotion, the situation across UK financial services is a shambles, with only a very small minority of providers having brand strategies which are (a) fit for purpose and (b) successfully executed.

This, like so many other instances of poor marketing in financial services, is bad for companies but bad for consumers too. For companies, it represents probably the biggest and most widespread failure to build value. Most consumer goods companies think of building brand value as their principal purpose: few financial services companies recognise it as an objective at all. And for consumers seeking to find an appropriate path through complex and crowded markets, brands are one of the most important navigational aids available. Brands help consumers to find their way, and to recognise what might be relevant to them, and what probably isn't. Brands don't tell consumers what to do or buy, but they certainly play a big role in pointing them in the right direction.

As we move further into an era in which consumers are going to need to get better at this, brands and brand strategies could, and should, be doing a great deal more to help them.