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
DOI:http://doi.org/10.1111/emre.12155
Publication Date:01 Jun 2018
Branding Instead of Product Innovation: A
Study on the Brand Personalities of the UKs
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 UKsBig
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 sectors
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
otherscustomers 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, 255272, (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 providers brand (Hartmann and
Apaolaza-Ibáñez 2007), and in particular the brand
behaviour and personality (Clancy and OLoughlin 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
UKs 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 UKs 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

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