Month: November 2014

I hate Thailand

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Tourism accounts for about 10% of the Thai economy, employs hundreds of thousands of people and generates as much as US$65 billion in foreign currency.

But the ongoing political crisis that saw the military junta’s National Council for Peace and Order (NCPO) take power and the brutal murder of two British tourists in Phuket has seen arrival figures plummet.

According to Reuters tourist arrivals dropped 10.3% in the first 9 months of this year and 2014 will see negative arrival growth for the first time in years. The authorities have moved fast to stem the hemorrhaging with a crackdown on widespread crime, corruption and inflated costs encountered buy all but the most savvy visitors to the country.

In Phuket many of the illegal buildings, sunbed conmen, intimidating food and drink vendors, dubious boat operators and unscrupulous taxi operators have been yanked off the beach and a certain calm has returned.

Initial attempts to get tourists to come back included ramping up mass advertising and a travel insurance scheme that provided visitors who couldn’t get insurance because the country was under martial law, with insurance.

Unsurprisingly these didn’t have much of an impact. The Tourism Authority of Thailand (TAT) changed tack and came up with what it calls “A romantic comedy short film.” TAT initially released the video as consumer generated media but soon found itself having to explain the film was actually an advertisement for Thailand even though TAT wanted to create an ‘unbranded’ advertisement because ‘they receive more interest than conventional commercials.’

The spot is a counter intuitive attempt to show a more hospitable Thailand by featuring a young British tourist who has had his bag stolen and does the British thing of ranting at everyone as a result and finally declaring “I hate this place. I hate Thailand.”

Then he meets a beautiful Thai girl and a bunch of other people who rally round and help him. Sure enough, after some beautiful sunsets, scenes with kids and wonderful encounters his bag is returned with his passport and money still inside.

Counter intuitive differentiation is a brave model to use to sell a destination. But it’s also a model from a different era. An era when brands controlled the message and pushed it out across billboards, full page ads with tear offs in the corner and press releases. An era when consumers took those ads at face value and believed what brands told them. An era without the Internet.

The video is a fun piece that has received 1,500,000 views in 10 days with 21,000 Likes on YouTube. But here’s the rub. TAT should have been upfront about the video. As it is, they have given the impression it is consumer generated and that is wrong.

The video has also received more than 1,625 comments and the majority of them are not very complimentary. In fact some of them are downright hostile, talking about robberies, threats of violence, policemen that don’t speak English whilst others say the video is a scam and wrong.

One Thai commented, “Its too good to be true. No one would come by and give you a drink like that and Thai people wouldn’t give you sleepover at their house, especially in the tourist area.”

Another focused more on the deception, “How you will discover the truth by watching a fake video where the first words are already a lie. His name is not James. His name is Oliver Smith and he got paid by TAT to make this video. Look around yourself and consider how many real friends are left if you are out of money. This is not a Thai related issue it is everywhere around the world the same story. No money no honey. Same same but different. I love Thailand but I definately hate liars. And using lies to portrait (sic) a countries (sic) image is a mistake and an insult to all the honest Thai citizens. If they just made a short statement at the end of this clip that this is a TAT promotional video I would give my congratulations for that nice pink tinted heart moving clip.”

TAT is going to have to work harder than creating a video and passing it off as genuine consumer generated media to restore faith in the country.

It’ll need to work out a strategy and communicate that strategy effectively with multiple proof points. And if it wants to use social media and create influencers it needs to do it properly. There are no shortcuts in branding.

Real world examples of how to cost effectively use Social Media to build your Brand

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To build a brand you need to get a number of things right both internally and externally. And then you need to develop a long term profitable bond between your offering and your customers.

The best way of doing that is by delivering economic, experiential and emotional value to those customers and on their terms. That’s universal and there are no shortcuts. Of course how you go about delivering that value depends on your firm, your industry and your customers.

Historically firms have tended to try and use creativity to communicate a corporate driven message to as many people as possible, whether potential or existing customers in the hope that enough of them will see/hear the message, respond to it and buy into it so that the firm can get through the year.

Does it make sense in the social economy?
Outdated and doesn’t make sense in the social economy.

According to Harvard Business Review and many other respected institutions, this model is obsolete. It’s also incredibly expensive with one expert saying it requires US$10 billion and ten years to build a brand in Europe this way.

Sadly that doesn’t stop millions of brands spending billions of dollars on an outdated and ineffective model that few of them can afford to sustain. This is particularly true of brands in Asia.

Nevertheless, there are some smart brands out there and social media provides an excellent platform to showcase their tactics. Instead of wasting marketing dollars on expensively produced and immediately forgetable advertising campaigns, these smart brands are investing more money on retaining customers than acquiring them.

Of course this makes branding a bit more complicated because it means these brands need to get to know their customers and their needs and not just shove a message down their throats and expect them to accept it. Unsurprisingly making such an effort isn’t that popular with many brands, especially here in Asia. Sure they talk about how they want to understand their customer needs, some even say they love their customers but those claims rarely translate into reality. As a result Asian consumers tend to be less loyal to brands.

OK, rant over! A couple of great tactical campaigns have come to my attention recently and there are a lot of brands around the region that can learn from these activities. They required an investment in researching customers, understanding them personally and then providing simple solutions that resonated with those customers. The investment was minimal but the exposure is exceptional and ongoing.

The first example is from Canada’s TD Bank. For a week in July, Automated Teller Machines (ATMs) in branches across Canada became Automated Thanking Machines and in addition to dispensing money, they spoke to and engaged customers, thanked them for banking with TD and delivered personalized gifts.

The bank gave out flight tickets to one customer so that she could fly to Trinidad to visit her daughter who had cancer. Another lucky recipient won savings accounts for her children each with C$1,000 deposited in the account.

Another customer won a trip to Disneyland and a Baseball fan won the right to throw the first pitch at a Toronto Blue Jays match, lots of merchandise and met one of the players. Phone and online customers were also given deposits directly into their bank account.

The response was phenomenal and four months later it continues to gain valuable coverage in social media and in the mainstream media with the UK’s Daily Mail covering the story in August.

In the first 4 months the video was viewed 17,500,000 times on Youtube, gained 50,000 Likes and 5,000 comments that generated extensive conversation that is still ongoing. On Facebook the TD Bank page has generated almost 550,000 Likes.

More recently, KLM wanted to reach out to customers travelling through the world famous Schiphol airport in a personalized way by giving friends and family the chance to say an extra goodbye. Working with the airport, the carrier identified families saying goodbye to each other at the airport and approached them with the chance to create a nice surprise for the traveller by personalizing the cover on their seat headrest.

In the first week the video on Youtube has already been viewed 208,000 times with 150 Likes and 30 comments. On Facebook the campaign has generated 16,500 Likes, nearly 2,000 shares and 550 comments. As the campaign gains momentum those numbers will, err soar skywards.

Social media allows brands to engage customers and allow them to participate in the development of the brand narrative in a way that those brands using a traditional approach can only dream of.

It’s very hard for a lot of brands to understand they can no longer control the message and instead they must pass on some of the control to consumers and let them develop it.

Once the campaign gains traction other consumers share it across the ecosystem and with the right management and before you know it, a minimal investment has generated far more brand goodwill and sales than any traditional advertising campaign is ever likely to do.

Brands have a responsibility to tell consumers the truth about their products

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Numerous papers have been written on the influence of advertising in developing countries. Most of the papers suggest that historically advertising influences consumers more in the developing world than it does in developed countries.

This probably stems from a ‘traditional suspicion towards the ‘middleman’ as opposed to a belief that manufacturing or production is more ‘honourable’ or ‘respectable’’. Malcolm Harper “Advertising in a developing economy”. The assumption being that the manufacturer’s message has an air of respectability about it whilst the sales pitch of a salesman or middleman should be viewed with suspicion.

Firms, especially Western firms spend a lot of money on advertising in Asia to convince consumers to buy their products. The problem is of course that far too many consumers have been let down by products that fail to live up to the promises made in the advertising. This is one of the reasons quoted for the advertising fatigue across Asia.

In fact many experts suggest this is also why Asian consumers are so obsessed with discount and, perversely Western luxury brands with a clear evidence of a quality heritage. Clearly, if brands want to continue to have an influence on consumers, they must be honest with those consumers.

One firm that always spends big on advertising is Proctor & Gamble (P&G). According to Ad Age P&G spends an incredible US10 billion per year globally on advertising. In the first 9 months of 2014 P&G spent US$48 million on traditional media in Thailand and often its ads are dubbed to be shown across national borders.

The ad above was shown in Malaysia but looks as if it was produced in a different language. The ad shows a family all working together to get the son through his exams. However, the dad appears to have a cold and although the mum stops his sneeze with a pillow, the voiceover tells us that germs can spread through fabrics which the wife complains are hard to wash.

Cue voice over claims that Fabreze Ambi Pur eliminates flu viruses and odours, 99.9% of germs and freshens fabric, leaving a light scent behind”. The ad closes with the son getting an A+ and the line “Odours and flu virus go, freshness stays.”

I think that based on the ad, a lot of possibly gullible consumers are going to think that by using this product they won’t have to wash big items like blankets, carpets and cushion covers.

Air fresheners and in particular Fabreze Ambi Pur are very popular in South East Asia. Get into a car in Malaysia, Singapore, Indonesia or Thailand and the chances are you’ll see a Fabreze Ambi Pur product placed in front of the air conditioning vent.

Many government offices have machines on the wall that squirt out similar products at regular intervals. And the Malaysia Ambi Pur Facebook page has 90,000 Likes and the Thailand Facebook page has nearly 160,000 Likes.

That’s an impressive following. But can Ambi Pur really eliminate flu viruses? Can it really eliminate 99.9% of germs? And what are the effects on humans of the chemicals contained in these products?

According to the sustainable baby steps website, Fabreze is a dangerous product. The site claims it contains a total of 87 chemicals, many of which are supposedly dangerous to humans. It suggests that Fabreze doesn’t clean the air but instead masks the odours with chemicals. The site goes on to provide a number of natural, inexpensive ways to keep a home smelling fresh and healthy.

Another site that claims to ‘set the standards for safe self care’ says that Fabreze contains phthalates which are ‘hormone-disrupting chemicals that have been linked with childhood asthma.’

P&G doesn’t share any of the apparently harmful ingredients in Fabreze. Oddly, the Ambi Pur ad is filed under education on Youtube.

P&G is a global brand and an influential advertiser in South East Asia. It maybe that spraying chemicals on a cushion is not harmful. Whatever it is, P&G has a responsibility to educate consumers properly, truthfully and in a transparent manner. Otherwise, it will lose its respectable tag.

Slashing prices has not helped rebuild the MAS brand

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Since the twin disasters of MH370 and MH17, Malaysia Airlines has slashed prices on just about all its fares, offered travel agents in Australia Rolex watches and free flights to promote the carrier and attempted to discount its way out of trouble. And it has tried to do this with a series of ill conceived and poorly executed ads and PR campaigns that I wrote about here.

At the same time, it continues to ignore those passengers who have supported the airline during this difficult period.

MAS has also sent out the same poorly thought out post flight survey to passengers that asks questions that can offer little actionable data to be used to save the iconic brand. An example of the survey is this question below:

Good to know but how useful is the data?
Good to know but how useful is the data?

As an example, question A is about value for money. If a passenger has paid RM50 for a RM400 ticket then he will probably consider the flight to be good value for money. But if he has paid RM400 for the ticket and the person next to him has paid RM50, he probably won’t consider it good value for money. So how can MAS use the results?

I also wrote here that MAS should not be slashing prices because it was not going to work and once you’ve slashed prices, it is very hard to increase them.

Many people disagreed with me. Commenting on the article, Bob said, “At this time, the last thing they need is branding. They need to fill up seats for revenue so I don’t see any issues with the ads to be honest.”

I disagreed and said instead that MAS should focus on rebuilding its brand and offer more value rather than slash prices. Well if rumours from Reuters are to be believed, MAS is about to announce that the 3rd quarter 2014 was its worst quarter since it began operations 70 odd years ago. Reuters reports that despite the promotions and cheap flights, passenger numbers and yields were the loweest ever.

I’ll say it again, slashing prices does not work. This is what MAS needs to do NOW to save the brand. It’s time to stop reacting and start planning.

Can a cynical Christmas TV commercial save a luxury brand?

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Luxury brands are beginning to feel the effects of slowing economic growth in Asia, political protests in Thailand and Hong Kong, political confrontation in Russia and Ukraine, political instability in the Middle East and the threat of Ebola.

Demand from Asia for luxury goods, especially expensive bags and other leather products appears to be on the wane. Struggling more than many others is Mulberry, one of the finest British luxury brands and manufacturers of exquisite leather goods that are actually made in England. In fact, as many brands look to increase profits by outsourcing their manufacturing to China, Mulberry is increasing production in the UK.

60% of Revenues from the UK
Mulberry generates more than 60% of its revenue from the UK but has been trying hard to grow sales outside of the UK, particularly in the US and Asia. In its quest to become a global luxury brand it has made some disastrous strategic decisions including raising its already high prices to differentiate itself from more affordable luxury brands.

For the British Mulberry was always an aspirational brand that offered affordable luxury but by going after the rich in Asia and America, it may have priced itself out of the segment it once dominated in the market it makes the most money.

At the beginning of 2014, the Chief Executive Bruno Guillon announced that he intends to bring ‘more excitement’ to the brand. From the outside this seemed to be nothing more than trying to create ever more expensive handbags that competed head on with Chanel, Hermes and Louis Vuitton. Bags that had once cost £500 got a makeover and were back on the shelves at £900.

The core customers were upset and drifted to other brands. By March 2014 Guillon was on his bike and Chairman Godfrey Davis returned to take the reins. In the summer of 2012, Mulberry’s share price topped £25 (RM140). By the time Guillon left it was around £6.40. Today it has regained some value at £7.30 (RM40) but is still off its peak.

Deserting middle England
Guillon was accused of deserting ‘middle England’ the middle classes that made the brand. Judging by the Mulberry 2014 Christmas ad it looks like the brand is trying to regain its relationship with that loyal segment.

Christmas in England is commonly associated with Santa Claus and reindeer, over eating, cottages covered with snow, a tree with lots of presents in front of an open fire, carols and goodwill to all men.

But in some families there is a darker side to Christmas that is rarely spoken about. The competition to give the best possible present, often to the most annoying and spoilt family member, can be intense. With this in mind, Mulberry has created a cynical but lovely parody in what I think is their first ever Christmas commercial.

33% of annual sales generated in November and December
In the west, retailers generate over 30% of annual sales during November and December and Mulberry will be hoping this ad will kick start the recovery of the business. Longer term they need to work on rebuilding their core values and create a Mulberry narrative that resonates with their target markets and once again become a successful aspirational brand.

But in the meantime, it’s Christmas morning, somewhere in middle England…