By Fiona Maciver
▪ The latest edition of Fund Brand 50 highlights the importance of pulling power for groups enjoying improvement in their brand rankings.
▪ A product offering fit for difficult market conditions draws fund buyers towards Invesco.
▪ BlackRock widens the gap with its rivals thanks to widespread high levels of brand awareness
With more information at our fingertips than ever before, we are all becoming increasingly empowered in our purchasing decisions in both our personal and professional lives, while sellers are working harder to cut through the noise and grab our attention. In this new normal, asset management brands need to broaden their appeal with professional buyers and end-investors alike.
Push or pull?
Push and pull activities have been embedded in sales and marketing strategies for many years. While there is a clear distinction between the two approaches, in reality the marketing tactics employed by many companies cover a mixture of both with the aim of building initial awareness and converting that into sales.
Push brand – A brand with a level of awareness that is greater than its brand preference. Needs an active sales process to win over potential clients. Pull brand – With a brand preference score greater than its brand awareness score, a pull brand is actively sought out by fund selectors, often in response to demand from their underlying clients. Brand preference – In contrast to the more rational measure of awareness, brand preference has a strong emotional characteristic. Scores are derived from asking selectors: ‘Which three provider brands are your personal preference?’
Fund Brand 50 2016 (FB50 2016), the latest edition of the annual European asset management brand study by Fund Buyer Focus (FBF), employs the push and pull categories to provide a distinction between the relative attractiveness of asset managers’ brands, based on the score differential between brand preference and awareness levels. This is based on data derived from a rolling programme of interviews conducted with professional fund buyers.
Pull brands, having achieved a certain level of interest in their business, are sought out by their customers, who consequently need less persuasion to do business with such groups. One of the world’s most recognisable brands and once again the top company in Interbrand’s Best Global Brands 2015 report, Apple, epitomises the pull brand. The firm’s products meet with eager demand even ahead of launch. Of course, this level of attraction doesn’t spring from nowhere – successful companies like Apple have invested heavily in their brand. They support and deliver across all touch points, generating awareness of and desire for their products, and, often, extreme customer loyalty.
In the asset management industry, pull brands equate to managers that are actively demanded by fund selectors. Pull brands span the whole gamut of asset manager sizes from big global players to domestically focused boutiques; propositions are clear, differentiated and appealing – regardless of size. The draw of these managers varies from the comfort of a big stable brand to the attraction of successful single niche strategies. More recently, price has become an alluring factor in local markets that have adopted a commission ban. While boutiques lack the scale or budgets of their larger competitors to build brand awareness and conversion levels through mass marketing, they are often in a better position to tailor and deliver a more comprehensive level of support to a smaller client base. Combined with the attraction of their specialist skills, thriving boutiques exhibit the qualities of pull brands.
The law of attraction
In FB50 2016, 24 managers demonstrated pull characteristics, including five companies in the top 10. BlackRock, reaffirmed as the overall brand leader, clearly demonstrates the features of a pull brand, its brand preference score exceeding that for brand awareness. Interestingly, BlackRock widened the gap with its closest competitors in 2015, with market volatility driving many buyers towards the perceived safety of larger brands offering products for all market conditions. Invesco was one of only two top-10 brands to improve its ranking over the course of the year, appealing to fund buyers with its strong product palette suited to the challenging investment environment, and increasing buyer engagement, both of which fed into growth in its overall brand preference score. Like many large groups, Invesco took a hit to its sales during the opening months of 2016 though outflows were from fairly traditional products. Meanwhile its more flexible Global Targeted Returns funds have continued to bring in pleasing inflows in the face of the storm and the latest selector comments gathered by FBF relating to the firm have been almost exclusively positive.
Despite a difficult year for M&G, which endured severe haemorrhages from flagship funds, the firm clung onto its brand ranking and pull status, highlighting strong loyalty among fund buyers. This will be severely tested in the year ahead if performance issues are not resolved.
Conversely, push brands proved less likely to improve their rankings in 2015. Of the 20 firms in this category, only six companies climbed, while 10 fell. Is this a significant trend? Market turbulence, particularly in the second half of the year, certainly drove investors towards recognisable ’safe brands’. But looking at previous brand reports, there has been a gradual shift since 2013 towards pull brands – in that year, 20 managers belonged to this category. This is an unsurprising trend when looking beyond the asset management industry and changes to buyer behaviour. In the digital age, the purchaser is well equipped to undertake more research in the decision-making process.
Naturally, this phenomenon has spread to all aspects of our life including B2B decision-making. In the asset management industry, investors have become more involved in the fund-buying process, with many distributors wanting recognisable brands to support their recommendations to clients. Some clients are even requesting the inclusion of specific asset managers in their portfolio – they have perhaps read about them or received a recommendation from family or friends. There is also the mass market and the small but growing direct-to-consumer channel. Familiarity is important – visible and trusted brands are essential. The implications for fund managers, particularly those targeting retail channels, are that they have to focus on both consumers and intermediaries to raise awareness and engagement levels.
Regulation and mistrust of the industry have also encouraged a gradual shift away from the historical product push of funds. Many managers are now recognising the needs and benefits of adopting a softer approach to building better quality relationships, founded on an understanding of distributor and investor needs. That said, they still have to sell their product capabilities, too, in order to achieve commercial success.
Knowing and liking
Arguably, push brands have to work harder to generate sales – high brand awareness doesn’t automatically equate to future new business. A strong brand preference and pull characteristics are by no means a guarantee of future new business either, but they certainly make for a more comfortable position from which to operate. The status of pull or push brand is not fixed for life. Companies can and do move between the two or achieve a state of equilibrium in the ‘balanced’ category. Changes are mainly driven by fluctuations in brand preference, which are inevitable as the success of managers is often dictated by market conditions and changes to asset allocation. Specialist managers, or those that have built a reputation around a specific asset class or region, are more susceptible to change. In recent years, PIMCO has moved from pull to push, its fixed income bias and management changes denting its relative appeal. Meanwhile, the fall in emerging markets in 2015 had a negative impact on Aberdeen’s overall brand ranking. Despite a lackluster year in terms of sales relative to its competitors, JP Morgan switched from push to pull in 2015, reflecting not only the strong overall brand but also its unrivalled marketing and sales support.
FBF has found that the two measures of current and future success (most used provider, and future business growth) are strongly correlated with brand preference. This is particularly true among the top groups. BlackRock, the leading brand, demonstrates an almost perfect correlation between brand preference and usage, while for some such as Pictet and Invesco there is a slight disconnect. These groups rank higher for brand preference – a reflection of fund buyers’ asset allocation preferences swaying overall brand appeal. Whether a push or pull brand, brand preference or advocacy necessitates a base level of name awareness among the different distribution channels and local markets, be it for a specific product or overall investment expertise. With the exception of Franklin Templeton, the top-five cross-border brands in FB50 2016 have all improved their unprompted awareness levels in Europe over the five-year period to the end of 2015, the brand leader, BlackRock, doing so particularly successfully.
The fund-selection process is a complex purchasing decision with buyers measuring and reviewing many factors for doing new business with a company or expanding an existing relationship. Selectors’ brand preferences are influenced by multiple factors including company size, product strategies, stability of management team, and sales and marketing support, but if an asset manager can develop and maintain a pull brand, it could be a real boon to client acquisition and retention. Media visibility is a new brand-perception measure introduced by FBF in 2015, which captures fund buyers’ awareness levels of both advertising and PR activity in print and online. At a cross-border level, BlackRock, M&G, Fidelity and Carmignac scored highest for this in 2015.