One hesitates to take issue with Mark Ritson, the esteemed marketing consultant and columnist on Marketing Week but he does seem a little confused in his latest fulminations about BP.
According to Ritson the recent RBS “buy” notice on BP shares is bizarre, because the brand is in “negative brand equity.” Yet he later maintains that BP is in such a poor position that it will be broken up or acquired, in which case now is exactly the time to buy the shares and bank a tidy little profit in the next year to 18 months.
Secondly his notion of “negative brand equity” is confused. He cites as examples Tesco in the 1970s and Skoda in the 1990s, when as he says, consumers would go anywhere for groceries and cars than these two tarnished brands.
Yet BP is only marginally a consumer brand. Petrol is a commodity and motorists buy their fuel according to price and convenience e.g. how close the petrol station is to their home or their location when they need to refuel. Few people are going to change their brand because of green issues — they believe that all the oil companies are pretty much the same in this regard, anyway.
Furthermore BP will probably get rid of its downstream activities. It makes very little money from selling petrol and will no doubt feel it has more important things to worry about than the forecourt on the high street.
To BP’s real customers, the banks and the rest of the financial community, the company is still a massively-resourced, knowledge-rich expert in global oil and gas exploration. It is by no means the first oil company to suffer a drilling disaster so once it gets the leak plugged, the clean up started and, most importantly, a lid on the costs of the disaster, the City will be happy to continue to reap fat fees and commissions on investments and other forms of doing business with it.
And as long as BP can offer governments assurances about health and safety combined with a good financial deal, they too will be happy to work with the firm and enter drilling agreements.
It may need restructuring but BP’ s underlying brand equity is extremely sound and it will be in good health in two years time.