By David Kidd, BPR
Gerald Ratner is a British businessman and motivational speaker. He was formerly chief executive officer of the major British jewellery company Ratners Group.
Ratner joined the family business and became CEO in 1984. He quickly built it into a company with 2,500 stores, 25,000 employees and annual sales of 1.2 billion pounds. The shops shocked the formerly staid jewellery industry by displaying fluorescent orange posters advertising cut-price bargains and by offering low price ranges. People loved his stores because they offered affordable products to the working class. In fact, it was generally known as the place where working-class boys bought rings for working-class girls.
All was going along brilliantly for Gerald….. expensive cars, houses, boats, high society events and rubbing shoulders with Margaret Thatcher at Number 10.
That was until 23 April 1991. On that day, he made a speech addressing a conference of the Institute of Directors at the Royal Albert Hall attended by 6000 business people and journalists.
During the speech, he commented:
“We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, “How can you sell this for such a low price?”, I say, “because it’s total crap.”
Poor old Gerald compounded this by going on to remark that one of the sets of earrings was “cheaper than a Marks & Spencer prawn sandwich but probably wouldn’t last as long.”
As you can guess the media had a field day with this and ran the story so many times that any working-class boy buying his working-class girlfriend ‘crap’ from Ratners would not be “getting lucky tonight’. The customers knew the products weren’t high quality but don’t spell it out for them!
People deserted Ratner shops. The value of the Ratner group plummeted by around £500 million…. yes half a billion pounds….which very nearly resulted in the firm’s collapse. Gerald lost his playboy lifestyle as well as his job and the company had to do a phoenix and rename themselves ‘Signet Group’.
Today, Ratner’s speech is still famous in the corporate world and is referred to as “Doing a Ratner” which equates to really screwing it up. It is an example of why business leaders not only need to choose their words carefully but also reinforces the value of brand image over quality.
This relates to radio stations too. My recent series on Radio Promotions That Didn’t Go According to Plan shows just how easy it is for successful stations to Do A Ratner and go from market leader to cellar dweller.
Furthermore, researchers have found that people will overlook quality issues if they love the brand experience…. the emotional connection. Low brand image is much more damaging than low brand quality. A strong brand image can overcome negative quality issues. Gerald’s “jokes’ destroyed the company’s brand image.
The same goes for radio stations. There are many successful stations that don’t do things absolutely perfectly…but they don’t do them badly either. The one thing they do have is a powerful positive brand image in the minds of the listeners which provides a “halo effect” or an “emotional bond” which can overcome any perceived quality issues in the product.
In BPR’s Strategic Studies we always measure a station’s brand image to test its strength… its emotional bond with the listeners.
So, how strong is your station’s brand image?