Earlier this month, troubled Malaysian carrier, Malaysia Airlines (MAS) reported a staggering RM2.52 Billion (US$850 million) loss for 2011. Despite the tough economic climate, a number of competitor airlines – British Airways, Singapore Airlines and Cathay Pacific all reported a profitable year.
Soon after, Group CEO of MAS Ahmad Jauhari announced that he will implement ‘strong and immediate measures to stem the flow of losses with staff redeployment, improved productivity and efficiency, further cost controls and more route reviews’ whilst at the same time, he also promised ‘an aggressive sales and marketing strategy’.
Marketing budget doubled
Then MAS announced that it has doubled its marketing budget for 2012. The marketing budget is reported to be as much as 2% of revenue which on 2011 revenue of RM13.90 billion (US$4.63 billion) equates to about RM278 million or nearly US$100 million.
So if the marketing budget is doubled, it means that MAS has more than RM550 million or US$190 million to rebuild it’s battered brand. That’s a tidy sum.
Details of what marketing initiatives the company has in mind are sketchy. Although the company has announced it will provide ‘better and more branded customer experience and embark on a major advertising and promotions campaign in 2H/2012′.
This morning I read that the airline has appointed Ogilvy and Mather Advertising as its master creative agency. I also read this comment on the appointment from Al Ishal Ishak the senior vice president for marketing and promotions, “2012 will be a breakthrough year for Malaysia Airlines on our path to recovery. We recognised, however, that we could not achieve financial success without clearly defining our brand positioning.”
He went on to say, “Ogilvy understood this and throughout the pitch process were best able to translate our message into a powerful campaign idea. An idea that is big enough to help us transform our business and truly engage our customers like never before.”
Before I go on, I have a confession to make, I am a loyal Malaysia Airlines passenger and fan of more than 20 years. During that time I have been on the receiving end of more positive than negative experiences with the airline. So I want the airline to succeed.
But if this is the last chance for this iconic brand, Al Ishak and his team have to get it right. Any advertising campaigns will need to reflect the culture of travel and consumers today and not try to use the traditional high gloss beautifully presented images and TVCs so favoured by the airline industry to ‘clearly define our brand positioning’.
How will MAS spend the marketing budget?
I appreciate it is early days but I have noticed a digital campaign selling the new A380. The style would suggest MAS is going the traditional route using glossy images and slick advertising with high production values to attempt to position the company in the minds of its consumers.
The ad features an image of the A380 in the very attractive new MAS livery and a tagline about the journey which I assume is related to the A380 and one about the aircraft being the pride of the nation. Let’s hope Ogilvy improves on that. Anyway, clicking on the ad, you go to the existing MAS site where you are greeted with the same, larger image of the A380 and the same taglines.
Below the fold there are two black and white images with click through options. The one on the left entitled, Behind the scene (sic) links to still images of the making of the new commercials which look very traditional and my first reaction was what a pity they haven’t changed the cabin crew uniforms. The image on the right links to a video entitled ‘The pride of our nation”, a predictable and uninspiring video of an MAS A380 being painted!
Throughout, the copy is uninspiring.
Below the images are social media options. I had a quick look at the twitter feed and it looks very collaborative with plenty of discussions although efforts to build the brand in the social context can be improved.
But I have a sneaking suspicion that the bulk of that US$190 million is going to be spent on advertising. And as Singapore Airlines learnt with it’s A380s, you can no longer rely on developing a position and using advertising to communicate that position in the hope that it will work and consumers will buy.
The problem is that positioning is a throwback to the mass economy that no longer exists. What advertising agencies tried to do was create a position that reflected the strengths and weaknesses of the offering. Ideally, this position was based on being first in a particular category.
If someone was already first in a category, then companies attempted to redefine themselves in a new category to be first. In the airline business, this tended to be related to passenger comfort or service. The effectiveness of positioning depended on the ability of advertising to drive branding perceptions in the mind of consumers.
To do this, airlines often made promises they were unable to keep (admittedly, often due to third party issues out of their control), failed to meet traveller expectations, often because dynamic competitors moved quickly and so raised the bar, which in turn led to brand disillusionment.
Positioning was ideal for the mass economy. It was also ideal for advertising agencies and marketing departments because it gave them enormous power without the responsibility of accountability. Al Ries and Jack Trout invented the concept of positioning. The preface to one of their books states, “Positioning has nothing to do with the product,…. (it) is what you do in the mind of the prospect.” So, essentially this means that the consumer can be made to believe, through extensive advertising and PR and via the right conduits to consumers, and other vehicles, what an offering means to them.
Well I’m sorry, this might have been true in our parents day, when consumers were more predictable, more trusting and had less choice but in today’s mean spirited world, a world in which only 4% of Americans and 14% of Malaysians believe what they read in adverts it is going to be very, very difficult. And of course the problem with using positioning to build a brand is, if it doesn’t work, the money is wasted, time is lost and you have to repeat the process again, with a new position!
So how can MAS save its troubled brand?
1) Research. Your existing customers are your best source of information. But they are not all the same. I would be interested to know which, if any customers MAS talked to when they were configuring the aircraft. MAS is talking about flat beds and big TV screens in first and business. Well that is so last year and who doesn’t offer them so why should I change? What about Internet access? I hope the A380 offers it throughout the aircraft.
2) Mass market branding and the old model of developing a position and communicating that position across for mass media repetatively for as long as possible is no longer effective. Brands today are built on relationships, access, personalisation and relevance. Before MAS marketed to segments of 18 – 34 year olds, businessmen and so on. Today, MAS must deliver economic, experiential and emotional value to to everybody and on their terms.
3) MAS must focus on developing more profitable relationships, not a more profitable product. Brands evolve when companies start buying for customers instead of selling to them.
4) Branding is an organisational not a departmental responsibility. And the organisation is the responsibility of the CEO. MAS is charging about a 100% premium for an economy class ticket on its A380 in July over the price of an economy class ticket on a 747 for the same route. Throw in all the other airport fees etc and it’s going to have to be a pretty good product to charge such a premium.
5) Retention is key to brand building. Companies no longer sell a product, customers buy a product. And those customers have plenty of choice, especially in the airline business. Sadly too many companies spend lots of money on acquiring a customer but very little on retaining them. MAS is one such company. Once a consumer buys the product, companies should do everything possible to hang onto those customers, build relationships with them, learn about them and leverage them.
Bonus tip. This is the social era. As I said MAS is working hard on social media but there is room for improvement and integration. It would be interesting to know how they leverage their social media efforts to get more business.