Magazine article Marketing

Mark Ritson on Branding: Is Breaking Bread with the City Wise?

Magazine article Marketing

Mark Ritson on Branding: Is Breaking Bread with the City Wise?

Article excerpt

Antonio Carluccio seems to have discovered the recipe for marketing success. In 1987 he became a successful restaurateur when his brother-in-law, Sir Terence Conran, invited him to take over his Neal Street restaurant.

In 1991 Carluccio extended the business by opening a small Italian delicatessen next door to the restaurant. In 1999, with the help of some investors, the first Carluccio caffe launched.

Today, Carluccio's brand equity is well established. With a chain of 23 successful outlets, the company has an estimated value of pounds 50m Next month Carluccio will make another bold move by going public when he floats his caffe business on the AIM. The switch from privately owned brand to publicly listed company is an ambitious move, but also one fraught with danger. Brand-building and the financial markets are often uncomfortable bedfellows and there are a number of potential pitfalls.

After flotation you usually lose the founders of the brand, who are now too rich (thanks to their shares) and too constrained (thanks to the new plc structure) to take a day-to-day role in the business.

Founders are important because they embody the brand and possess an instinctive grasp of brand strategy. When they leave and are replaced by generic executives and standardised decision-making, the results often prove disappointing.

No matter how good the Unilever marketing machine is, it will never build its Ben & Jerry's brand as well as its eponymous founders did.

And what about the City's quarterly expectations of growth? Brands are built over decades; shares are traded hourly. Even the strongest brands can falter when forced to dance to the brutal, repetitive rhythm of the City.

When Pizza Express went public in 1993 it became the darling of the market thanks to constant expansion and increasing like-for-like sales. After eight years of aggressive expansion, however, the once-exclusive chain had become little better than an upmarket Pizza Hut. The share price had increased tenfold, but brand equity had been seriously eroded. Sales began to decline and the share price went into free fall. Pizza Express then launched a series of ill-advised brand extensions, such as Pizza Express To Go, and sold its branded pizzas through major supermarkets in a misguided attempt to appease its investors. …

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