Any observers expecting Ron Sandler, who was installed as executive chairman of Northern Rock two months ago, to deliver a plan for the Phoenix-like recovery of the beleaguered bank will have been disappointed by the strategy for survival he announced last week.
The headline figures were that, following a £167.6m hole in its 2007 finances, it would also be 'significantly loss-making' this year. To meet the objective of repaying its government loan by 2010, Sandler wants to dispose of 60% of its mortgage customers by encouraging them to move their business when their fixed-interest terms end.
This apparent downsizing and negative tone, so that the bank can focus on its savings business, does not make for an easy marketing message or inspire much confidence in a brand that is, at best, battered, and, at worst, disgraced.
While some would have considered this a perfect opportunity to jettison the Northern Rock name for good, the bank declared that it intended to re-establish the brand and revitalise its marketing. At first glance, this might appear to be misplaced bravado, but several marketing experts believe the retention of the name could be a prudent move.
Mark Mullen, marketing director at First Direct, argues that an expensive rebranding exercise might not be the most tactful strategy to pursue. 'The cost of rebranding is substantial,' he says. 'Given Northern Rock's financial circumstances, it would be difficult to justify, especially as it is now taxpayer-owned.'
Scottish Widows marketing director Mike Hoban agrees that retention of the name is appropriate and says that while it is still possible for Northern Rock to salvage its reputation, speed is of the essence. He advises a two-pronged strategy of 'theme and scheme' to tackle the crisis. 'Theme' would involve reminding customers why the brand is necessary and how it is different from anything else on the market, while 'scheme' would focus on its promotion through market-beating offers and mass advertising. 'The key thing to do when brands have problems is to get people trying the brand and talking about the product again to raise awareness,' says Hoban.
Peter Gandolfi, head of brand strategy at Nationwide, expects Northern Rock to be privatised in a couple of years. 'At that point a rebrand is likely and would be a more fruitful exercise,' he says.
Northern Rock is currently running a national press campaign promoting the savings rates for its Tracker Online account, but in the medium term, at least, it will be prevented from challenging for placings in the 'best buy' tables to avoid accusations that it is abusing its state subsidy. Retaining the brand name may be sensible, but attracting customers while being prevented from offering the best deals will prove a particularly tough marketing challenge.