Do we choose credit cards the way we choose soft drinks? Does American Express “taste” different from, say, Discover? Does a prepaid credit card carry a stigma that reflects on the parent company’s brand?

Few of us like to think that we’re affected by marketing in general, and branding in particular. Instead we prefer to see ourselves as rational players, making calculated choices over what we buy. Research shows that most of us are kidding ourselves.

Branding on the brain

The extent to which that’s true was revealed in a recent study carried out by the Baylor College of Medicine, and reported on the American Association for the Advancement of Science’s ScienceNetLinks website. Researchers used Magnetic Resonance Imaging (MRI) scanners to monitor subjects’ brain activity while the latter were drinking Coca-Cola and Pepsi-Cola.

When given unidentified colas, the neural pleasure centers of all subjects became stimulated. But when they thought they were drinking Coca-Cola, 75 percent experienced additional stimulation in two other parts of their brain, while only 25 percent of those who thought they were drinking Pepsi-Cola experienced the same added stimulation.

This is weird, because virtually the same number of Americans claim to be Pepsi people as Coke consumers. So why should brains favor Coke to such an extent when minds are fairly evenly balanced? Writing on the 60 Second Marketer website, Andy Goldsmith, vice president of creative and brand strategy for the American Cancer Society, suggests a possible reason:

Ask people about Coke imagery and they’re likely to come up with Mean Joe Greene, Polar Bears, and a slew of other iconic imagery. Ask people about Pepsi, and the imagery isn’t quite as deeply rooted – they might associate Pepsi with a hot celebrity or with “young generation” appeal, but they probably don’t link it to the kind of emotional American icons Coke has successfully linked to.

Credit card companies and brands

One possible definition of a brand is an emotional attachment in the mind of consumers that creates a willingness for them to pay a premium price for a product or service that’s over and above its intrinsic value. Clearly, any enterprise would love to have a brand as deep-rooted and successful as Coca-Cola’s, though few, if any, do. But how many credit card companies have viable brands?

Your blogger sees analogies between the credit card sector and the personal computing market. There was a time when people would pay extra for the badge on their PC. Manufacturers such as Compaq could command higher prices for their products.

More recently, there’s been a trend towards PC makers’ brands becoming devalued. Most people buy — providing certain quality and performance thresholds are met — solely on price, meaning that personal computers have become commodities — the very opposite of brands.

The obvious exception is Apple, which still commands a premium even over the superb quality and performance of its products. Another might be Sony, though you could argue that that’s mostly the leveraging of its home entertainment brand.

Some marketers would see credit card companies in a similar way. Many consumers “buy” card services on price: the payback from rewards credit cards, the generosity of sign-up bonuses, the appeal of balance transfer deals, the absence of annual fees, the savings from low credit card rates and so on. For them, the issuer’s name emblazoned across the front of a piece of plastic isn’t worth a cent.

The obvious exception to this (the Apple of credit cards, to continue the PC analogy) is American Express. Some consumers are happy to pay more in annual fees for the prestige of having American Express credit card as one of its cards. As the old ads used to say, “American Express says more about you than cash ever can.”

American Express risks its brand

Given the strength of its brand, it’s surprising that American Express is considering diluting it. Its new Serve prepaid cards appeal to a much more downmarket group than its existing customer base. Does that matter? Well, imagine Cadillac or Rolls Royce launching a middling-quality sub-compact model, or Apple bringing out a cheap, low-tech, low-price PC. It’s pretty much bound to rub some of the shine off the brand for its existing core customers.

Of course, American Express employs some of the smartest marketers in the world, and they’re acutely aware of this. That’s why the American Express name appears only in small letters on the Serve website, and on the back of its prepaid cards. But is that enough? On Dec. 21, MarketWatch quoted Dan Schulman, who heads up American Express’s enterprise growth group:

There’s a large segment of the population that would love to be an American Express customer but for whatever reason felt they couldn’t qualify and therefore didn’t apply, or did apply and just didn’t have the credit history to be able to do that.

That implies that the company intends its new Serve customers to be attracted by the main brand’s prestige, which is largely based on exclusivity. And it’s hard to see how you can make that sell without at the same time signalling to existing American Express customers that you’re watering down that exclusivity — the very quality that many of them value most highly.

Brands are fragile things, and it’s easy to kill them stone dead. Remember Oldsmobile, MBNA and Digital Equipment Corporation (DEC, which was once second only to IBM in computing)? Few expect American Express to follow these into marketing’s answer to Arlington. However, many marketers are going to be watching closely to see how easily the company negotiates this particular tightrope.

Let’s hope they stride across it confidently. If they do, they’re going to deserve a whole case of vintage Dom Perignon. Or, at the very least, a crate of big-name cola.

Published 01/09/12 (Modified 05/13/14)