What’s in a name?

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What is a brand? Sometimes it is a quality certificate and sometimes, simply part of the product itself. It matters which.

What is a brand? A rose by any other name, Shakespeare pointed out, would smell as sweet. There is a difference between a name and a brand. You are reading an article by John Kay. But John Kay makes the transition from name on the masthead to brand only when attaching it to the contents persuades you to read the article, or pay attention to it – and if you would ignore the same piece if it appeared under someone else’s name. Once that happens – but only when it happens – I have a brand with a value.

You will not admire the scent of a stinging nettle because I label it a rose, and that is why rose is a description of a fine product, rather than a brand. You use electricity because it illuminates your light bulb, not because it is called electricity: you go to Euston Station because that is where the trains for Birmingham and Manchester are, not because it is Euston Station. Roses, electricity and Euston Station all have values, but not brand values.

A brand is worth more than a functionally equivalent product. You pay far more for a bottle of Chanel No 5 than for a bottle of liquid whose smell is indistinguishable. And that is what makes clear to us that roses, electricity and Euston are not brands. No sensible person would shell out cash to be allowed to describe a nettle as a rose, to label coal as solid electricity, or to call a bus depot Euston Station. But you would like to be able to call your fizzy soft drink Coca Cola, to offer legal advice under the brand name of Linklaters and Paines, and to put up a Hertz sign outside your car hire agency. People can and do pay money for access to these brands. The brand adds value even if the product is unchanged.

So what gives a brand that value? Why would people pay more when they can get the same for less? Most often, marketeers will tell us, because they do not think it is the same. You feel seductive when you splash on Chanel No 5, but you will never derive the same confidence from a whiff of anonymous scent, even if you would need a trained perfumier to tell the difference.

Perhaps. Perfume is certainly a commodity that appeals to irrational instincts. And there are goods where the brand encourages people to make statements about themselves to others. I am irresistible, I say, as I put on my designer fragrance. I am a merchant banker, I say, as I climb out of my BMW: I am a juvenile lout, I say, as I down a glass of extra strong lager: I am handsome, I say, as I don my Levi jeans.

Some brands are of this kind. Mostly, these brands apply to commodities like clothes, drinks, cars and cigarettes which you consume consciously in the presence of other people. And as with any signal, the brand as signal has its value eroded when people use the signal in misleading ways. Since the shop will sell you Levi’s whether you are handsome or not, the illusion that you will be handsome if you wear them is hard to sustain. To survive, the brand as signal has to remain exclusive. Either because not everyone wishes to give the signal – football fans drink extra-strength lagers, the Queen Mother does not. Or because the signal keeps people out by of its expense. The most enduring of such brands are symbols of affluence – Rolls Royce, Moet et Chandon, Hermes.

But while you certainly need to be affluent to enjoy the services of a city law firm, not many people use Linklaters and Paines in the hope that their friends will be impressed when they see them coming out of their offices. Or hire a Hertz car in order to display the discreet No 1 logo in the rear windows of their Fiat Panda. You go to Linklaters because you think you will get good advice. You hire from Hertz because you don’t expect that their car will break down and you know that they will fix it if it does.

The most important function of brands is quality certification. Other lawyers may give you equally good advice, but you can’t be sure. Other firms may rent reliable cars, but when you visit a foreign city for the first time, how do you know? For goods where it is difficult for consumers to judge quality for themselves, the reputation associated with a powerful brand may have considerable value. Most of the brands that command large price premia are of this kind. They are found in industries where product quality is important to consumers but is not easy to assess, as for legal services, medicines, or financial services. Or where people care about the quality of the goods concerned but don’t like discussing that with their friends, as for toilet paper, contraceptives and sanitary towels.

And that is the mechanism by which names turn into brands. No doubt Mr Linklater and Mr Paine were fine lawyers in their time. Other good lawyers realised that they could make the level of their skills known to potential clients by attaching themselves to the coat tails of Mr Linklater and Mr Paine. And Mr Linklater and Mr Paine themselves could make a turn by selling out the services of such lawyers for more than they had to pay them. This process enabled the reputation of Mr Linklater and Mr Paine to outlive the individuals concerned.

A solicitor can turn with confidence to Halsbury’s Laws of England, not so much because he trusts the integrity and reliability of Lord Halsbury – who has been dead for the best part of a century – but because the publishers have an incentive to maintain the value of the brand Lord Halsbury established. As the Financial Times have an incentive to maintain the quality and reliability of the material which appears on their pages. And John Kay has an incentive to keep up the standard of his columns. That way, he might turn a name into a brand.

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