Wednesday, November 23, 2005

Royal Warrants as a Marketing Tool

Royal warrants have existed for a few hundred years in several European countries.
Originally, it was a “formal recognition” for tradesmen who supplied goods and services to a royal household.
It has developed into an effective marketing tool – a special version of endorsement.
Companies such as Steinway and Harrods successfully use the royal warrant as a unique selling point.
Unlike traditional celebrity endorsements, brands that are warrant holders are associated less with the royalty to which the crest belongs, and more to the traditional way of life and luxury in that particular country.
Royal warrants are predominantly issued by royalty in the United Kingdom, Denmark and the Netherlands to local and foreign companies.

How does it work?
A warrant links a product to a royal household.
Since advertising the warrant in any way is forbidden, it cannot be actively promoted.
Its power lies in the fact that the small crest “speaks for itself.”
It is perceived as a “quality guaranteed” label, with the added cachet that goes with a royal family.

How effective is it?
A small ad hoc survey of British customers confirmed the image of quality and prestige the warrants add to brands.
British customers perceived a royal warrant as a quality assurance sign.
Especially luxury items showing a royal warrant are perceived as reassuringly British, of fine quality and traditional.
The price tag can be higher than the price of similar goods.

In order to apply for a royal warrant, a company must take the following into consideration.

  1. Does it fit the target audience? Are potential customers interested in the attributes royal warranty products stand for? Do potential customers like heritage and tradition?
  2. Does royalty work as a unique selling point? How are the royals perceived by the target audience? Do they only like their own royalty or also foreign royalty?
  3. Will the royal warrant work for the brand? Will it help the brand to develop?
    Will it create brand recognition and loyalty in both domestic and foreign markets?
  4. Does the company meet the criteria for the royal warrant?
    In general, a company must show that it has existed for some time (in the Netherlands, over 100 years), have an impeccable reputation, and follow a stringent procedure in order to qualify. The process is most of the time difficult, inflexible, and sensitive.
  5. Is the company willing to invest time and part of its PR budget into this unquantifiable endorsement?

There is one group for which royal warrants work very well:
the “business royals.”

Queen Margaret of Denmark sells 150,000 bottles of her own vintage wine yearly to french restaurants.
Britain's Prince Charles is manager of organic products food brand Duchy Originals, which makes US$ 77M. in annual sales.
King Carl XVI Gustaf of Sweden and his wife are marketing their fragrance Solliden worldwide, hoping to sell one million bottles per year.
The success of these brands lies in production and promotion of good-quality high-end products that match the royal’s own stature.

Displaying a royal warrant can be a powerful marketing and PR tool.

But companies must be aware of the following.Compared to other celebrity endorsements, it’s much harder for royal brands to attract consumers than “common” brands.

  1. Celebrities gain their attributes through achievement and behavior and thus tap into the target audience. Royalty exists purely through position.
  2. Customers seek brands that they can identify with. Celebrities can match the aspirations of the target audience.
  3. Achieving royalty endorsement is harder to get than celebrity endorsement.
  4. Royal warrants have a limited lifespan. In some countries, there is a renewal procedure every 5 years. In all cases, a royal warrant expires once the royal is deceased.
  5. Royal warrants cannot be actively promoted.

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