FOCUS: PAN-EUROPEAN PR - Counting the cost of European brands/Greater UK consumer awareness of how to get a good deal presents brands with cross-border challenges, says Stephanie France

As European integration continues apace, international organisations which do not have a consistent European corporate reputation are being held to account by a savvy public.

As European integration continues apace, international

organisations which do not have a consistent European corporate

reputation are being held to account by a savvy public.



While new EU legislation is being considered to help iron out

country-to-country discrepancies in consumer deals, it has recently

emerged that certain companies have been happily exploiting loopholes in

the law in the areas of price fixing for years.



Although firms may be operating within the law, reputations can still

take a hit if they are seen to be acting unfairly or ’ripping-off’

customers.



Esme Page, chief executive of Herald Europe, says: ’Companies which

operate across Europe need to have a single corporate reputation.

Communications barriers are crumbling, distribution channels are

becoming more integrated, consumers and pressure groups are more aware

of what’s happening outside their own boundaries. The internet is making

everything transparent - it’s communications sans frontieres.’



Chris Genasi, CEO of Shandwick’s corporate division, believes consumers

are increasingly focusing on the company behind the business. ’They want

to know whether they can trust that company. Is it ethical, how does it

treat its employees, does it employ Third World labour, is the chief

executive a fat cat?’



He adds that quality of products is also an important element of

corporate reputation.



Car manufacturer Skoda has suffered from a negative corporate image in

the UK for decades, as PR manager Eilish O’Shea admits. ’In the 1970s,

Skoda was a music hall joke. But since its re-branding (following the

take-over by Volkswagen), there has been no problem with image in

regions such as Scandinavia, where Skoda didn’t have a history,’ she

says.



O’Shea says it is an uphill struggle in PR terms in the UK, but adds

that ’huge inroads have already been made. In communication terms, the

company’s corporate message - that Skoda cars are value for money,

robust and a reliable means of transport - has a pan-Europe an

focus.



Value for money is a key factor in European reputations and other car

manufacturers are finding their reputations coming under increasing

attack.



Brussels-based NGO the European Consumer Organisation (ECO) is working

towards equity in pricing and service for consumers in Europe.



Joanna Dober, head of communications, says loopholes exist in current EU

legislation which allow manufacturers to legitimately inflate their

prices: ’Manufacturers use the block exemption on EU legislation to

justify car price fixing in the UK. Although there is no actual proposal

yet to change EU law, British MEPs are keen this loophole should be

removed.’



Herald’s Page believes companies which operate different pricing

structures are harming their reputation in the short-term. ’Certain

European car makers have been raided by European Commission inspectors

investigating obstructive sales and pricing practices. The consequences

include a lack of faith in list pricing - with consumers delaying new

car purchases because they’re convinced that prices are about to fall

sharply,’ she says.



But in response to allegations that car manufacturers exploit loopholes

to fix car prices, John Gardiner, manager corporate affairs of Ford in

Britain responds: ’Customers are free to negotiate the best deal they

can from any Ford dealership in the EU and Ford can help them with any

necessary information.’



He adds: ’The UK is one of the most competitive marketplaces in the

world for new vehicles. Customers receive a fair deal compared to

continental consumers when the transaction price is taken into

account.’



However, Page believes price fixing will become a dead issue in the

medium-term. ’The marketplace simply won’t allow manufacturers to

operate differential pricing policies in different countries for much

longer. Although some price differential may be justified by local

differences in taxation, transport and distribution costs, the media is

now more European in its outlook and has stoked the public’s

considerable appetite for stories comparing lifestyle, wages, pricing,

living standards and working hours within Europe. The euro will help in

this task, allowing consumers to tell at a glance when they are being

’ripped-off’ in one country.



In the meantime, the European Parliament is considering making

amendments to several laws to make life fairer.



The EU Trade Mark Directive, for example, currently allows brand name

manufacturers to fix their prices across Europe at a higher level than

in other regions of the world by default, since they control the

distribution.



MEPs have yet to decide whether to amend the law and open up

distribution channels. Yet, depressingly for UK consumers, it appears

there exists a widely-held belief that the UK is a captive audience and

prices can be hiked that bit further than anywhere else.



’It’s all about what the market can bear,’ adds Dober. ’If the law lets

you get away with it, then why not? But consumers are becoming wise to

this kind of abuse, so reputations will suffer.’



Like the motor industry, the airline industry has come under fierce

scrutiny in recent months following allegations that UK consumers are

being ’ripped-off’. Under the 1976 Bermuda II agreement, four airlines

(currently British Airways, Virgin, American Airlines and United

Airlines) enjoy the right to fly transatlantic services from Heathrow

Airport. This monopoly has led to higher transatlantic air fares being

levied against UK customers, compared to their continental

counterparts.



Charles Barker BSMG is co-ordinating the biggest ever PR campaign for

’excluded’ airline British Midland. It hopes to harness public support

for its challenge to the monopoly held by the four and thus bring about

cheaper transatlantic air fares, and to persuade the Government to

renegotiate the agreement.



If it succeeds, British Midland will emerge as a consumer champion,

boosting its corporate reputation. However, the time frame for success

is just six months - before Washington goes into ’meltdown’ in the run

up to the next presidential election.



Campaign co-ordinator at Charles Barker BSMG Toby Nicols says: ’Getting

an open-skies agreement is fundamental to British Midland’s growth over

the next 15 years. We announced our plans in February 1998, but after 18

months of behind-the-scenes negotiations with airlines and Government,

we were no further forward.’



All elements of the campaign, including advertising, are being

co-ordinated by Charles Barker BSMG.



In the case of Levi Strauss, wholesale prices across Europe are more or

less the same, but the company has had to deal with criticism about the

wide difference in prices between Europe and the US. The company has

worked within the British Branding Group to produce a report on the

issue, and has also been involved with UK and European government

debates.



Head of European Communications Mark Elliot says: ’We don’t recommend or

set retail prices - that’s down to retailers. We are working on a number

of fronts to explain to jeans buyers that there is more than meets the

eye when it comes to label prices. US stores are eight times bigger than

European stores and they buy in bulk, but make the same overheads as

stores in the UK.



Unlike other areas, where manufacturers are under fire for exploiting

prices, tobacco companies have been very active in letting consumers

know the problem is directly linked to taxation, and they are doing

something about it.



’On a pounds 3.80 pack of cigarettes, three pounds goes to the

government in tax,’ says Philip Morris UK and Ireland public affairs

manager Martin Liptrot. ’Our consumer is being asked to pay more and

more, and the level of tax is astronomical compared to European

countries. ’



But while tax on tobacco continues to escalate, there has been some

success, with the Government recently appointing a ’smuggling tsar’ to

look into the tobacco black market.



Tari Hibbitt, chief executive of Edelman, believes there is a dichotomy

at the very heart of managing a corporate reputation across Europe, no

matter the industry. ’In certain sectors, business practices and modes

of behaviour must be seen to be local in order for consumers to identify

with the brand,’ she says. ’However, these organisations still need

international credibility.’



Stuart Handley, director of Europe for hi-tech specialist Text 100

mainstream spin-off August.One, agrees. ’At an international level,

organisations must articulate their corporate message, but the smarter

ones use it as a starting point to give it a national spin.’



Pointing to the success his client Microsoft has had in this field,

Handley adds: ’There is no such thing as a European consumer -

international companies must be aware of the cultural differences which

exist between countries.’



The challenge is to manage the reputation of a global brand in a local

market. Hibbitt believes brands cannot afford to ignore criticism -

about prices or otherwise - in a small market. ’Global brands can’t say

’no one will notice because it didn’t happen in our main market’. The

reverberations are quickly felt for a global business when something

happens in any corner of the world,’ she says.



The pitfalls of managing a single corporate reputation throughout Europe

are many. The role of PR is to help steer organisations through the

difficult times ahead leading to European integration.



Key to this is helping them wise up to the fact that politicians and the

media are scrutinising their behaviour. If there are genuine reasons for

discrepancies, in price, for example, it is the job of PR to explain

them to the public and the media.



’There is a considerable risk the ’Rip-off Britain’ mantra will reach

unreasonable volumes,’ says Gareth Zundel, group PR manager at

Harvard.



Price wars have a nasty habit of undermining product quality and the

public is capable of making a balanced purchasing decision on the basis

of price, quality and service. But it can only do so if it is properly

informed. This is the real task for PR.’



AUDITING HELPS BRIDGE THE GAPS PRIOR TO EUROPEAN INTEGRATION



Company-wide audits can help firms protect their reputation from the

pitfalls which line the route to full European integration.



Chris Genasi, chief executive of Shandwick’s corporate division, says he

has noticed an increasing number of businesses requesting audits in

recent months.



’Audits help companies understand what is expected of them from

governments and the media. The risk assessment carried out gives an

organisation an idea of where it may be exposed in the light of further

European integration,’ he says.



’It also helps us to envisage scenarios which might occur. It’s all

about closing up the gaps where a risk is exposed.’



In the early stages, Genasi says desk research is carried out on key

factors which may have an impact on the organisation. These include

areas of EU policy, such as price, labour rates, employment policy,

health and safety, and environmental issues.



A numerical rating is then carried out into each area of risk, revealing

how exposed the company is. Following this, key stakeholders, such as

pressure groups, journalists and ministers are identified.



The final stage is proactive and involves bridging the gaps

identified.



This includes establishing contact with key stakeholders and attempting

to transform them into advocates.



TESCO TAKES ON ’RIP-OFF BRITAIN’ CAMPAIGN



’Not so long ago, there was this myth that we lived in Great Britain,’

says Mark Dober, joint managing director of APCO Brussels, ’and that we

had great prices and a reputation for fairness, supported by great

standards.’ That myth is now in shreds. The Sunday Times has arguably

done more than most to expose the myth with its ’Rip-off Britain’

campaign, spearheaded by the paper’s Insight Team.



Paul Nuki, deputy editor of the team, explains that the campaign is a

continuation of the hard-hitting exposes of the early-1990s, under the

then-editor Andrew Neil.



The ’Rip-off Britain’ campaign began in April 1997, when Nuki was

consumer affairs editor, with an expose of the UK electrical

industry.



Since then, journalists have upped the ante by exposing ’rip-offs’ in

the motor industry, supermarket trade, alcopops, sports and watch

industries.



The car industry investigation was particularly successful, according to

Nuki, since it ’hit a chord’ with readers. Journalists posed as

retailers offering manufacturers the service of supplying cars bought on

the Continent to UK customers. Not surprisingly, manufacturers rejected

the offer because of the substantial price differentials between cars

manufactured in the UK and those manufactured in mainland Europe.



Most recently, the Insight Team revealed that UK businessmen and women

pay almost double the prices for air tickets to the US compared to their

continental counterparts. The story has since been picked up by other

newspapers.



Nuki promises there will be more exposes in the future, but only ones

which are relevant to the Sunday Times’ readership.



’Our readers are generally well-off, but they are concerned about

getting value for money,’ he says. ’Our aim is to inform them when they

are being ripped off.’



Nuki adds that although the response of the Government has been

reasonably positive, ’the bureaucracy of the DTI, in particular, makes

any change slow going’.



But Bernard Hughes, who runs the Government and EU unit at Tesco, argues

that the ’Rip-Off Britain’ tag is tarring all UK retailers with the same

brush.



’Accusations that UK food retailers are charging more than their

continental counterparts just do not tally with the facts,’ he says.



Tesco commissioned market research company AC Nielsen to compare the

prices of 133 of its products with those charged by continental

retailers.



Hughes says this independent research concluded that the prices were

broadly similar, although he does point out the strong pound gives the

perception that goods are more expensive in Britain.



’We take our reputation very seriously and through an ongoing public

relations programme we have been informing the Government and the media

that we are not ripping off our UK customers. Clearly it is a careful

balancing act between knocking down the myth and giving the story

oxygen,’ he says.



Hughes adds that far from short-changing customers, Tesco has been

championing consumers’ rights in Europe for the past two years on a

campaign with public affairs agency APCO to support changes to the Trade

Mark Directive.



If amended, the ruling would see supermarkets given the green light to

sell goods bought on the grey market at lower prices in their own

stores.



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