Branding Instead of Product Innovation: A Study on the Brand Personalities of the UK's Electricity Market

• Author: Fiona Lettice,Richard Rutter,Stuart Roper,Konstantinos J. Chalvatzis
• Published date: 01 June 2018
• DOI: http://doi.org/10.1111/emre.12155
• Date: 01 June 2018

Branding Instead of Product Innovation: A

Study on the Brand Personalities of the UK’s

Electricity Market

RICHARD RUTTER,

1,2

KONSTANTINOS J. CHALVATZIS,

1,3

STUART ROPER

4

and FIONA LETTICE

1

1

Norwich Business School, University of East Anglia, Norwich, UK

2

School of Business,Australian College of Kuwait, Kuwait

3

Tyndall Centre for Climate Change Research, University of East Anglia,Norwich, UK

4

Huddersfield Business School, University of Huddersfield, Huddersfield, UK

This study extends understanding of and demonstrates the importance of corporate branding in the energy

sector. We analyse the relationship between branding and consumer switching behaviour among the UK’sBig

Six electricity providers. Since privatization companies have competed against each other, but to the consumer

they often appear to have very similar product offerings; firms also face criticism from consumer groups regarding

confusing and difficult to compare pricing schemes. This study examines the use of corporate branding to enhance

differentiation and specifically examines the influence of brand consistency and brand personality on the retention

of customers. Consumers, who find it difficult to compare tariffs, may be influenced by more demonstrable factors

like branding. We demonstrate the importance of longitudinal brand consistency, as well as the personality

dimension excitement, which when communicated strongly has the greatest influence on customer retention levels.

This work contributes to branding theory, demonstrating that brand personality does differentiate otherwise

homogeneous (and low-contact) services. Managerial implications are presented for brands seeking to improve

consumer retention.

Keywords: energy sector branding; energy branding; brand personality

Introduction

Consumer energy markets are complex (Gangale et al.

2013) and it can be extremely difficult for consumers to

directly compare offerings between the main energy

providers (Chioveanu and Zhou 2013). It is difficult for

customers to accurately compare tariffs and prices with

many customers not signed up to the package that is

cheapest for them andoften unwilling to switch providers

(McDermott 2013). Since the UK energy sector’s

privatization, marketing and branding have become

increasingly important as methods of promotion and

differentiation for providers (Shippee 1999; Hartmann

and Apaolaza-Ibáñez 2007). Energy companies are

confronted with the threat of customer defection, as well

as having to compete against each other, poaching each

other’s’customers being the prize (Walsh et al. 2006).

The complexity of UK energy tariffs and the lack of

transparent package comparability have been criticized

by the media and government (Richards and White

2014). Energy companies have responded by focusing

on corporate marketing and branding in order to attract

new consumers, but also to improve existing customer

satisfaction (Payne and Frow 1997).

The energy sector provides an ideal landscape for a

brand-basedapproach since energy as a productor service

is indistinguishable between providers. We focus on the

residential electricity market because it is larger (in terms

of the number of customers) than the commercial and

industrial energy markets. Commercial and industrial

customers also have access to bespoke energy services,

whereas residential energy services are more generic,

allowing for mar ket-wide comparisons. The

anthropomorphizing of brands in general aids consumer

emotional engagement with services(independent of their

technical characteristics) and construction of a brand

Correspondence: Richard Rutter, University of East Anglia, Norwich

Business School, Norwich,UK. E-mail: r.rutter@uea.ac.uk

European Management Review, Vol. 15, 255–272, (2018)

DOI: 10.1111/emre.12155

©2017 European Academy of Management

personality provides a useful heuristic device. The aim of

this research, therefore, is using the UK residential energy

sector as an example, to test the robustness of brand

personality theory upon consumer loyalty. The research

questions driving this researchare: (1) does a well-defined

and consistently communicated brand personality

enhance the brand of energy providers and mitigate

homogenization of their services? And (2) can a more

demonstrable brand personality prevent consumers

switchingto rival providers? To the best of our knowledge

this is the first time that market-wide switching data are

used in relation to branding research for the UK power

market.

Privatization and branding in the UK

electricity market

Consumer behaviour research highlights that consumers

resist making difficult decisions between products or

services which are difficult to compare, opting for

comparisons within dimensions which can be more easily

compared (Ariely 2009). Consumers are more likely to be

influenced by factors that they can easily relate to, for

example the energy provider’s brand (Hartmann and

Apaolaza-Ibáñez 2007), and in particular the brand

behaviour and personality (Clancy and O’Loughlin 2002;

Hartmann and Apaolaza-Ibáñez 2012). A brand personality

helps to create a level of intuitive appeal and synergy

between a brand and its customers (Plummer 1985).

Although well researched in many areas, such as

automobiles (Fetscherin and Toncar 2010), cosmetics

(Guthrie et al. 2008), education (Rutter et al. 2016),

fashion (Rageh Ismail and Spinelli 2012), health (Pinto

and Yagnik 201 7), luxury (Sung et al. 2015), politics

(Rutter et al. 2015), sport (Braunstein and Ross 2010)

and tourism (Opoku et al. 2007), brand personality

research is underdeveloped in the energy sector, despite

brand management becoming increasingly important in

practice. Existing energy research (e.g. Müller et al.

2007, Kaenzig et al. 2013 and He and Reiner 2016) has

emphasized the importance of price and tariff data, rather

than branding strategy, as a means to attract and retain

consumers. More recently limited research has emerged

on marketing and branding in the energy sector. For

example, Herbes and Ramme (2014) explored the

strategic marketing differentiation of renewable power

suppliers in Germany. Paladino and Pandit (2012)

classified the renewable energy utilities in Australia as

service providers and focused on their approach to

residential consumer recruitment and retention on

renewable energy tariffs. Finally, it has been identified

that identity signalling has positive effects in renewable

energy demand in the Swedish residential electricity

market (Hanimann et al. 2015).

While renewable (or green) energy clearly provides a

means of service differentiation, regular power utilities

have much less to differentiate on. Power sector branding

research has beentriggered in the past by the privatization

and liberalization initiatives that reformed formerly state-

owned and controlledutilities to competitivecorporations.

Early branding campaigns during the mid-1990s in

Sweden aimedto ease public perception thatthe electricity

firms were bureaucratic and inflexible organizations and

only targeted prime customers (Summerton 2004).

Trustworthiness as a branding feature has been identified

by Apaolaza-Ibáñez et al. (2006) as one of the main

drivers for customer loyalty in the Spanish residential

electricity market. For the same market, Hartmann and

Apaolaza-Ibáñez (2007) suggest that brand trust is as

important as customer satisfaction for customer loyalty.

The UK energy sector is particularly interesting

because it was the first liberalized energy market, a

precursor to similar moves in many other countries,

including the US (Giulietti et al. 2005). Until the 1980s,

the UK energy sector was under national control, and its

privatization was (and it could be argued, still is) a

controversial political decision (Hammond et al. 1985;

Kay and Thompson 1986). Throughout the, 1990s, the

UK’s energy sector went through a series of

consolidations and mergers, which have given rise to the

current structure (Leggett 2013), in which the Big Six

energy companies account for over 90% of the UK

residential market share (BBC 2013a). The Big Six are

British Gas,SSE, E.ON UK, Scottish Power, EDFEnergy

and npower. The first two companies are the largest in

terms of customer base and are British owned (House of

Commons Work and Pensions Committee and Rooney

2009); E.ON UK and npower are owned by German

investors (E. ON and RWE respectively), whilst Scottish

Power is now controlled by Spanish parent organization

Iberdrola (Leggett 2013). EDF Energy is owned by the

French state-controlled EDF, who also own British

Energy, making EDF the largest producer of energy

within the UK.

The UK’s residential energy market claims to have the

largest number of consumers to have switched supplier,

although there has recently been a steep decline in

switching (Bawden 2015). Electricity utilities are

frequently part of the political discourse where

mainstream political party manifestos feature radical

proposals for capping energy prices (Landale 2017;

Milligan 2017). Energy utilities do not engage in

innovative actions either in production (Zafirakis et al.

2015) or consumption side (Pothitou et al. 2017, 2016)

and are often criticized for their tariff policies and

underinvestment. The latter makes the UK power market

uniquely constrained between low production margins

and the necessity for the extensive reforms required to

meet strict environmental targets.

256 R. Rutter et al.

©2017 European Academy of Management