Beware the ripple effect

LONDON - Marketers must tread carefully when a rival's troubles are affecting society.

When one of a brand's biggest competitors is being described as lying on the ground with a 'boot to (its) throat', there must be a temptation to contribute a blow or two of its own.

Yet, with BP having been accused by President Obama of responsibility for the 'greatest environmental disaster of its kind in our history', the timing of Shell's latest advertising campaign is open to question.

The company is keen to remind observers that its 'Let's go' campaign, created by JWT London and intended to portray the brand as forward-thinking, has been the best part of a year in the planning and is not a response to the woes of its rival.

'Although the situation in the Gulf of Mexico is ongoing, (we) decided to "go to air" with the campaign as planned because we believe that now is an important time to engage with customers and other stakeholders,' says a Shell spokesman.

Exploiting dissatisfaction

There have been plenty of occasions recently when the travails of a competitor have provided an opening for brands to exploit. Although no car makers explicitly marketed their engineering prowess at the time of Toyota's global vehicle recall earlier this year, at dealership level, marques will have been looking to capitalise on the situation.

Similarly, in the travel industry, with airlines and rail companies suffering of late from the effects of industrial action and Icelandic ash clouds, brands such as easyJet, bmi and National Express have all attempted to acquire disgruntled consumers from rivals.

In the case of BP, however, the oil leak has become a problem not only for the guilty party, but for the entire sector. The danger of this happening is more acute in the case of commodity products, such as those provided by utility companies, where consumers may find it harder to distinguish between individual brands.

'We have found with big price rises and cuts that it affects the whole market,' says Npower marketing director Kevin Peake. 'In commodity markets, people don't differentiate our products, so I would certainly change our marketing depending on any external factor.'

The danger of being tarnished by the problems afflicting a competitor is not restricted to the utilities industry. The banking bail-out in 2008, when the government spent £37bn propping up Lloyds TSB, HBOS and Royal Bank of Scotland, generated a dramatic shift in high-street banks' marketing behaviour.

In October that year, HSBC postponed a TV campaign flagging up a major product launch - its HSBC Plus subscription current account - due to uncertainty about how consumers might respond. Low-key press and digital activity went ahead as planned, but the TV ads did not roll out until a month after the account's launch.

Richard Exon, chief executive of RKCR/Y&R, says brands should take a cautious approach when a corporate crisis is having a wider impact. 'You need to be very careful when human lives are affected, in particular, that you don't seem to be trying to profit from disaster,' he adds.

Reassuring customers

While above-the-line communications may risk provoking a wider public backlash, Exon points out that a reputational catastrophe for a competitor may be the perfect time to use direct marketing techniques to reassure and strengthen relationships with existing customers.

Tom Knox, joint chief executive at DLKW, agrees there is nothing wrong with a company such as Shell showing leadership. 'You have to start any decision with the customers,' he says. 'But big issues such as oil are not going to go away, and Shell has a responsibility to its customers, shareholders and employees, so in that sense its campaign is perfectly legitimate.'

Even in commodity sectors, in which a blow to one can soon become a blow to all, a crisis such as that currently being experienced by BP need not preclude competitors from advertising. If marketers are prepared to weather some short-term criticism for doing so, it could even deliver long-term benefits.

$990m
Clean-up cost of Gulf oil spill to date for BP
$69m
US bill to BP for clean-up expenditure
34%
Biggest dip in BP share price since spill on 20 April
$50m

Estimated cost of BP's apologetic US ad campaign, launched last week to help protect its reputation.

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