The only brand worth having is a profitable brand (even if it means losing customers)


Looking through the ‘archives’ of some of our early branding blog posts, I came across a reference to an article in Fortune Small Business.

The article talked about three companies that had for years pursued a traditional sales and market growth approach that saw them investing more in acquisition than retention whilst paying little attention to profitability.

One case study was of Skelton Tomkinson (now known as Skelton Sherborne), a heavy-machinery shipper based in Brisbane, Australia. At the time the company had one office in Brisbane and one office in the U.S. where Caterpillar was a major customer.

In 2000, because he was seeing little growth using a traditional sales and market growth approach, the owner deliberately raised fees on his least profitable customers, hoping they would leave. Some of them did and revenues dropped dramatically, from US$20 million per year to $8.2 million.

But profitability increased 98% and total revenues slowly returned to $20 million. Tomkinson’s motto: “I run my company with this saying: Volume is vanity, and profit is sanity.”

And it must be working because today, the company has 11 offices, up from 2 in 2000. The new offices are in South East and North Asia, with one in the Arabian Gulf.

Far too many companies believe that they must pursue sales or market growth and this generally means ‘spraying and praying’ – basically the act of spending as much money as possible trying to reach as many people as possible.

What they should in fact focus on is profitable growth, which most often results from identifying and retaining profitable customers and not trying to sell to evey Tom, Dick and Harry.

Another mistake companies make is wasting valuable resources finding out what their customers are doing and then wasting even more valuable resources fighting or trying to block or undercut those competitors.

This is an exercise in futility because in today’s dynamic, always on, constantly evolving world, the only focus should be on identifying the right prospects, creating the right customers (and getting rid, yes getting rid of unprofitable customers) and delivering value to profitable customers through engagement and personalisation.

The great branding graveyard in the sky is full of brands that played the volume game – think Rangers FC, Viyella, Blockbuster, Silverjet, Swissair, Habitat, Mobikom, MegaTV, Pelangi Air, PanAm – they all took a traditional approach to building their businesses yet they all ended in failure.

Seeing your name on billboards or in print ads everywhere and reaching lots of people may make you feel good but focussing on profitability will keep you sane.

Top 10 airline brands for 2012


Skytrax, the UK based research company that specialises in research for commercial airlines, has just announced the winners of the world airline award for 2012.

Skytrax parent company, Inflight Research Services work has been used by the UK government to determine the UK government policies on air transport.

The Skytrax Awards are one of the benchmarking tools for the air industry. They measure passengers’ satisfaction levels by surveying passengers in all cabin classes.

The award is announced after a 10 month telephone survey with 18 million airline customers from 100 countries. That’s right, 18 million airline customers from 100 countries. This must be one of the largest surveys ever attempted.

That’s 1.8 million participants a month or based on a 20 day working month, its 90,000 calls per day which equates to, assuming an 8 hour day, 11,250 calls an hour! Many of which are international, in different languages and probably, if they use my carrier, many of the calls cut off half way through the conversation.

I’ve managed some large brand audits that required a lot of calls but not 18 million in 10 months! So Skytrax should be commended for managing such a logistical nightmare. But I digress.

As I mentioned, the survey takes 10 months and covers 200 airlines, both domestic and large international airlines. The survey measures standards across 38 key performance indicators of airline front line product and services.

The study focuses on customer satisfaction related to experiences right across all touch points including check-in, boarding, onboard seat comfort, cabin cleanliness, food, beverages, in-flight entertainment and staff service.

According to the World Airline Awards website, product and Service factors ranked by customers
in the survey included the following elements:

GROUND/AIRPORT
Standard of Airline web site
Online Booking service
Online check-in services
Airport Ticket Counters
Waiting times at Check-in
Quality of Check-in service
Self Check-in options
Boarding Procedures
Pre-boarding for families
Friendliness of Ground staff
Efficiency of Ground Staff
Transfer services
Arrival services
Baggage Delivery
Handling Delays

ONBOARD: PRODUCT
Cabin Seat comfort
Cabin Cleanliness
Toilet Cleanliness
Cabin Lighting / Ambience
Cabin Temperatures
Cabin Comfort amenities
Reading Materials
Airline magazine
Inflight Entertainment standards
Audio/Movie programming
Audio Video on demand (AVOD) options
Quality of Meals
Quantity of Food served
Meal Choices
Selection of Drinks/Pay bar formats

ONBOARD: STAFF SERVICE
Assistance during Boarding
Friendliness of Staff
Service Attentiveness/Efficiency
Consistency of Service across different flights
Staff Language skills
Meal service efficiency
Availability thru Flight/Cabin presence
PA announcements
Assisting families with children
Problem solving Skills
General Staff Attitudes
Staff Grooming

This is an enourmously complex project and it doesn’t end there. Follow up research includes back up interviews and the data is weighted to ‘provide nomination equity when evaluating airlines of different size.’

Anyway after all that, here is the list of the top 10 airlines for 2012

The World’s Best Airlines 2012

1. Qatar Airways
2. Asiana Airlines
3. Singapore Airlines
4. Cathay Pacific Airways
5. ANA All Nippon Airways
6. Etihad Airways
7. Turkish Airlines
8. Emirates
9. Thai Airways
10. Malaysia Airlines

It is interesting to note that 6 of the top ten are Asian brands and the other 4 are Middle Eastern Brands.

Looking back over the last 10 years, the list has always been dominated by Asian and Middle Eastern brands. With the exception of 2006 When British Airways came first, no European Airline has ever appeared in the top 3.

New BMW 6 series


The Malaysian Automotive Association has forecast total vehicle sales in Malaysia will be 615,000 units in 2012, up 2.5% over 2011. If this figure is reached it will be a record for Asia’s largest passenger car market.

This bullish forecast for 2012 is despite the fact that vehicle sales in Q1/2012 dipped 12.6% to 138,544 units from 158,432 units in Q1/2011.

Various reasons have been put forward to explain the drop in Q1 including the Lunar New Year and new credit policies. I was under the impression the Lunar New Year was an annual event and always in the first quarter so I don’t know how that would be a problem this year.

Personally, I think the main reason for the Q1 drop is that the global economic situation is having an impact on the number of loans approved by local banks wary of a repeat of the Asian financial crisis of 1998.

Whatever the reasons, it is good to see that BMW is doing what it can to sell its new six series with an extensive digital campaign.

I clicked on the link and was pleased to learn that the Bavarian giant will be offering wheels with the new 4 door coupe.

The BMW 6 series coupe, now sold with wheels

This should help increase sales for 2012.

Destination branding for small cities


Back in 2007, Destination Branding consultant Bill Baker released one of the best ‘how to’ books for city branding practitioners, mayors, planners, governors and anyone else tasked with or interested in the branding of cities.

‘Destination Branding for Small Cities: The Essentials for Successful Place Branding’ was so successful that he has updated it and you can find the updated version on amazon here

Bill Baker, defining the city branding process from the trenches

Bill understands better than most that city branding is much more than a logo, tag line or a communications exercise. With more than 30 years experience branding destinations, Bill outlines and explains the complexities of developing a place brand, the research needed, the stakeholders involved and the importance of developing a well defined strategy.

With plenty of case studies and comments from other practitioners (My contribution is below), this book should be required reading not only of practioners and government servants but also of students of marketing and branding.

Here’s my contribution to the book:
Singapore and Hong Kong have built internationally respected brands. This was achieved not by using creative taglines or cool advertising campaigns, but through their holistic approach to the process of branding.

Other Asian cities can benefit by emulating their practices through a better understanding of the elements required to build a destination brand and by having a more customer-centered approach.

Unfortunately, when it comes to destination branding, too many Asian cities have a top-down focus with a fixation on taglines or a brand essence or a one size fits all communications campaign that develops what it thinks is an interesting message that tries to speak to everyone, but really speak to no one.

As an example, in an attempt to boost tourism, the State government of Perak in Malaysia announced that the state capital, Ipoh would be known as the ‘City of White Coffee’.

Ipoh – city of white coffee. Would this tempt you to visit Ipoh?

A State executive said at the time, “Ipoh should have its own identity and branding just like Shenzhen (China) that is known as the “Shoe City” and Paris which has long been known as the “City of Fashion”. This shows a lack of understanding of what is destination branding and is an unrealistic expectation and hardly a concept to drive significant tourism growth.

I wrote an article about how to brand Ipoh, a beautiful city with massive potential and only a couple of hours north of Kuala Lumpur at the end of 2010. You can read the article here.

Similarly, the large Indonesian city of Surabaya has developed the tagline, ‘Sparkling Surabaya’ in an attempt to communicate the sparkling of the city as a centre for jewelry.

Surubaya tagline

In addition to being rather naive, the idea was controversial because citizens felt that the concept did not fully represent their city. A more thorough branding process might have helped avoid this situation.

On the other hand, the branding of the city of Zamboanga in the Philippines as ‘Asia’s Latin City’ has gained wide endorsement because it speaks well to the city’s culture and strong Latin influence, and appeals to external audiences as well.

The globally accepted principles of place branding are certainly valid in Asia however, the level of their application is very patchy at best.

Few demonstrate what can be considered ‘best practice’, and too many are influenced by basic misunderstandings concerning the practice and processes required, and how a city brand should be communicated and perform.

In general, too many see city branding as simply a tourism driven creative advertising campaign or a new slogan pushed out across traditional media.

British luxury Brands need to take notice of Malaysia


Despite, or because of tough global economic conditions, the retail sector in Malaysia appears in rude health. Development of new malls continues at a phenomenal pace with at least 3,500,000 square foot of additional retail space becoming ready this year in the Klang Valley alone. This will bring the total amount of retail space in the Klang Valley up to about 55 million square feet.

Passing almost unnoticed is the proliferation of international luxury brands in many of those malls. Familiar international names such as Giorgio Armani, Prada, TOD’s, Van Cleef and Arpels to name but a few, have all entered the local market in recent years, encouraged by the success of exclusive names such as Bulgari, Cartier, Hermes, Louis Vuitton, Rolex and other famous names long familiar to Kuala Lumpur shoppers.

Established luxury brands in Malaysia

Unusually for a Malaysian mall, The Pavilion has clustered its luxury boutiques into a high profile area facing Bukit Bintang. Globally, this clustering of stores is nothing new.

For centuries stores have organized themselves into districts based on what they sell – think Saville Row in London (tailors), Faubourg Saint-Honore in Paris (designer boutiques) and Deira in Dubai (jewelry).

Clustering similar stores in the same location is not a new concept

The cluster approach allows the rich and famous to be surreptitiously dropped off in front of a mall, rush in and make a purchase that would make a small African country drool and then rush out into the safety of the limousine without having to rub shoulders with us mere mortals.

With its double story street facing façade the luxury section or ‘couture precinct’ of the Pavilion was an exciting development in the evolution of the retail sector in Malaysia.

A section of the luxury couture precinct at Pavilion Kuala Lumpur

Just across the road, Star Hill Gallery has battled gamely to become a luxury mall with an eclectic mix of exclusive boutiques and lifestyle outlets. Meanwhile, over at Sentral, the Gardens, after a slow start has attracted one or two luxury brands.

The KLCC mall, at the base of the Petronas Twin Towers on the site of the former Selangor turf club had a rough start but has since attracted a number of luxury brands including Jimmy Choo and Chanel but has traditionally preferred them to be scattered throughout the mall.

However this has changed with the new extension that features a new Giorgio Armani store that also has an Armani Cafe as well as new Chanel and Cartier stores.

One thing all these malls have in common is a distinct lack of luxury British Brands. Sure there are some – most recently Anya Hindmarch and Thomas Pink, Burberry and Aquascutum made the move a few years ago but considering the long association with Britain and the importance of the luxury segment, there aren’t too many.

Thomas Pink opened in Kuala Lumpur in 2008 and now has one store at Pavilion

According to the ten best, the ten best British brands are:

1. Rigby & Peller: A family-run lingerie and corsetry firm awarded a Royal Warrant in 1960. It has a sterling reputation for expert bra fittings and beautiful designer swimwear and lingerie and a made-to-measure service.
2. Burberry: Famous for the iconic trenchcoat, this classic British company revels in its distinctly British attitude. Founded in 1856, the company’s core values are luxury, quality and timeless style, expressed in a modern way.
3. Mulberry: Luxury English fashion, “inspired by the cool of the city and the craft of the countryside”, is Mulberry’s speciality.
4. Barbour: Boasting three Royal warrants, Barbour is that rare entity, a family-owned, women run company. Since 1894, when it was established to provide waterproof oilskin jackets to sailors and dockyard workers in South Shields, this quintessentially British brand has created durable country-style clothes with impeccable attention to detail. Its wax jackets are known to last a lifetime.
5. Aspinal of London : This 10 year old company, or should I say upstart is dedicated to producing impeccably high quality and beautifully designed handmade leather products that draw much from traditional craftsmanship.
6. Asprey: Asprey has employed the best craftsmen to design and the best materials to produce exceptional jewellery, leather goods, silverware, homewares and timepieces since 1871.
7. Smythson: Frank Smythson opened his first shop in 1887, selling exquisite stationery and leather goods. In the digital age, the shop’s collection of beautiful diaries, handbags, purses, wallets and stationery continue to be in demand.
8. Aquascutum: Wonderfully understated British elegance at its best. Famous for inventing waterproof cloth and the raincoat, the company makes clothes that combine fine craftsmanship with luxurious tailoring.
9. Dunhill: Alfred Dunhill’s legacy continues to cater for the discerning man who wants to wear elegant clothing and fine fragrances and match it with luxury kit such as pens, lighters and timepieces.
10. Loake: Family-owned since it was established in 1880 and with a Royal warrant from the Queen, this quintessentially English boot maker employs traditional craftsmanship to produce fine, handmade footwear for men.

Of these distinctly British retail brands, only Burberry, Aquascutum and Dunhill are here. Of course there are some pretenders to this list who have set up in KL, notably Thomas Pink and Anya Hindmarch but we’re still a little light on British luxury brands.

Anya Hindmarch is a relative newcomer to the Malaysia luxury scene

Which is surprising really because although the United States remains the world’s largest consumer of luxury products (by a country mile), burgeoning middle classes in developing countries are creating new opportunities for luxury goods providers.

According to the MasterCard Worldwide Insight report, the value of the market for luxury products and services in the Asia Pacific region will be US$258.7 billion in 2016, up from US$83.3 billion in 2007. Not a bad category.

What’s more, there’s already a ready made market because the largest number of tourist arrivals to Malaysia is from ASEAN countries, followed by Japan and China with India and the Middle East not far behind. And the burgeoning middle classes from these countries are notoriously brand conscious.

And this interest almost obsession with brands is likely to continue according to Radha Chadha, author of “The cult of the luxury brand”. She believes that the Asian interest in luxury products is because of the massive changes – social, cultural, economic and political – that have been affected by the traditional attitudes to who you are and where you are in the societal food chain.

She believes that over the past 50 or so years, many of the traditional cultural indicators of social standing in Asia – profession, family, clan, caste have been eroded by the onset of globalization, migration and education.

Free of rigid social hierarchies, mass migration and the development of urban areas, more people are making money and making it faster. The way to differentiate oneself is by purchasing a luxury product that shouted, “I’ve got money, respect me.”

Displaying one’s status through outward appearances of rank and wealth is nothing new but Asians seem to have taken to it like the proverbial duck to water.

And those LV bags, Chanel suits, Jimmy Choo shoes aren’t simple female indulgences, they are part of a new world order that identifies the wearers position in society. Indeed, these luxury brands are a modern set of symbols that Asian consumers are using to redefine their identity and social position.

Jimmy Choo, technically a British brand

The Japanese have been devouring brands for years. 94% of Japanese women in their twenties own a Louis Vuitton bag. Visit the Louis Vuitton shop on Bukit Bintang and the chances are you will see a group of Japanese shoppers being fussed over by staff.

Asia now accounts for a third of Louis Vuitton sales worldwide whilst Cartier depends on the region for half of its worldwide sales.

Louis Vuitton achieved organic revenue growth of 12% in 2012, mainly due to demand from Asia

And what of China? According to the China Brand Strategy Association, 250 million Chinese people can now afford to buy luxury products, up from 175 million 3 years ago.

Already, Chinese consumers are responsible for about US$10 billion of global luxury sales. According to McKinsey, that figure is expected to grow to US$27 billion in 2015, accounting for about 20% of global luxury sales.

And although a lot of those Chinese are travelling to Europe, only 147,000 Chinese visited the UK in 2011, compared with 1,250,000 who visited Malaysia in the same year.

But it is not only the Chinese who are buying luxury products. Indians and consumers from the Middle East, are prepared to splash out on high-end goods and will often save for months to buy an expensive handbag. And Malaysia is on the radar of more visitors from these countries.

So as traditional European and US markets stumble through the economic quagmire, the time is ripe for luxury British brands to establish themselves not in the UK, but in Malaysia and use it as a gateway to developing markets.

The new Malaysia Airlines Brand identity is stunning


Malaysia Airlines has had a torrid couple of years. Bitter court cases and weak management have led to record losses and low morale which in turn have caused the reputation of the brand to diminish in the eyes of the vast majority of Malaysians and other stakeholders.

All this despite huge sums spent on global positioning strategies using one size fits all advertising and other marketing broadcast across traditional channels.

However, in a couple of weeks time the beleaguered national carrier, once considered one of the finest airlines in the world will start scheduled flights of its new Airbus A380 on the potentially lucrative Kuala Lumpur – London – Kuala Lumpur sector.

The new look Malaysia Airlines identity

Looking at the press images, it is hard not to miss the beautiful new identity of the aircraft. Personally I think the new look is stunning – bold colours, sweeping lines, very contemporary yet true to Malaysia’s heritage.

Although there were discussions late last year about new uniforms, I haven’t seen any official announcements to confirm it but one can only assume this new identity will also be reflected in the uniforms of the A380 cabin crew and throughout the rest of the airline as well as in all the collaterals, training of the staff and across all the other brand touchpoints.

The Malaysia Airlines cabin crew uniform has hardly changed since it was introduced in 1982

After all, it wouldn’t make sense to create a new identity for a new plane without integrating it across the whole organisation, right?

Bentley looks to extend its brand


At the Geneva Auto show in March 2012, the ultra luxury automotive brand Bentley admitted it was considering adding a luxury SUV to its range of vehicles.

A month later at the Beijing Auto show the CEO announced that the firm expects to sell 3,000 of the SUV annually once production starts in 2015.

You have to admire the speed at which they make decisions at Bentley, especially as they also showcased a blue concept car and introduced a range of models, from a 4.0 liter V8 twin turbo to a 6.0 liter W-12 monster at the Beijing event.

Bentley is on a roll at the moment and has just reported 37% increase in sales in 2011 with China driving demand. Crucially, this upsurge in sales helped the brand become profitable for the first time since 2008.

At the Beijing event the CEO also announced that the target market for the SUV was the developed SUV markets of the US, UK and China. Bearing in mind the first two are reining in spending and will be doing so for about the next 20 years, one would imagine that with the exception of a couple of US based rap artists, China alone will drive demand for this new SUV.

Which is probably why the company took the unprecedented step of asking Chinese users of Facebook and China’s most popular Twitter like platform Sina Weibo what they thought of the SUV concept.

The Bentley Weibo page (Is that a typo at the top right?)

Questions asked were related to the design and the interior and opinions on what sort of engine should be used and whether or not Bentley should actually launch the SUV.

Other general questions are asked about driving and vehicles. Incentives for completing the survey are wallpaper for a mobile device or computer.

The Bentley SUV seeks data

Crowdsourcing is nothing new but bearing in mind that the firm has already announced the launch of the car and the models and the nature of the questions, it is questionable how this particular data will be used to drive the brand forward.

Nevertheless, despite the unusual research methodology, it makes sense for Bentley to go down this path. After all, the luxury SUV segment revived the fortunes of other automotive companies such as Porsche.

Porsche, previously known as a manufacturer of high performance sports cars, made the SUV move in the mid 1990s after years of stagnant sales following the stock market crash of 1987.

Since then, the Porsche Cayenne has become their best selling automobile ever and despite the global economic uncertainty, global sales are expected to rise 40% to over 52,000 vehicles by 2017.

Back in 2003 Porsche sold a meagre 138 cars in the whole of China. By 2011, Porsche was selling 8,629 units of the Cayenne alone, making it the Stuttgart company’s largest market for the SUV.

In 2009, Cayenne sales represented 83% of Porsche sales in China. With each Cayenne costing up to US$300,000, that’s not a bad business to be in.

The Porsche Cayanne responsible for 87% of Porsche sales in China

Purists argue that the core brand – that of the two seater, meaty, macho sports car – is being diluted but with luxury and performance still core attributes, this is a weak argument, especially as Porsche continues to build the SUVs in Germany.

Range Rover is another luxury SUV manufacturer that is seeing record sales in China. Last year the company sold 50,994 vehicles in China, a remarkable 76% increase over the previous year. However Range Rover is also seeing significant growth in Europe where sales are up in Russia, France and Germany and even Spain has seen an 18% increase in sales despite the recession.

The recent success of the Range Rover Evoque has encouraged Porsche to launch a smaller SUV called the Macan in 2013.

The Lamborghini Urus, coming your way soon

So with Range Rover and Porsche already entrenched in the China market and with Lamborghini due to launch a luxury SUV (the Urus) by 2017, it makes sense for Bentley to extend the brand.

Branding, corporate or political, is an organisational issue


One of the problems faced by brands and branding are the attempts to simplify it. Fortuitously this approach has yet to gain traction with the aviation industry!

The business of building brands takes time. And as the business of brands and branding has evolved and the waters have become increasingly muddied, the only constant has been the influence consumers now have over the success or failure of brands.

As a result, the role of the brand manager is increasingly irrelevant because her attempts to control everything related to the brand are obsolete and pointless because consumers are crafting the messages that are heard not the marketing department or the advertising agency.

These are lessons that need to be learned in the political space as well. In Malaysia, the Prime Minister DS Najib Razak has a powerful personal brand but he cannot be expected to single handedly win an election. The key is to get all the other elements on brand. And anyway, as Tun Abdullah Badawi knows too well, a high approval rating is no guarantee of a big election win.

Historically, creating clearly defined messages and broadcasting them across traditional media was enough to build a brand or political party but today, this model alone, can no longer be relied on to educate, inform and convince.

Today, the first thing a consumer will do, assuming they hear the message through all the clutter, will be to determine if the message fits in with their own experiences. If it doesn’t, they will discard the message immediately. Secondly, consumers will discuss the message with others who they know and respect and explore their experiences and perceptions. Thirdly, consumers will seek the opinions of those they may not know. This is normally done across social media.

Only once consumers have absorbed all the information will they make a decision. If the promises defined by the organisation, whether it be a political or corporate one do not match the consumers own experiences or those of her friends or acquaintences, the message will be discarded. No matter how much money is spent.

If the response is favourable, the consumer may seek to experience a physical interaction with the brand, perhaps through a retail outlet, website or political rally. If any of these experiences are negative, the consumer will walk away from the brand, and it will take a superhuman effort to get them back.

A brand, whether political or business, requires every division, department, individual – from the tea lady to the CEO, or from the branch leader to the state leader to the divisional leader etc – to know and understand what they have to do to achieve clear strategic goals.

Only then will the brand survive and thrive.

Advertising sells


I’m often accused of being anti advertising which I’m not. I’m just anti the use of advertising to solve all branding problems. And I’m anti the use of advertising as the only tool to build a brand. Oh, and I’m anti the use of advertising to communicate one corporate defined position to as many people as possible across as many channels as possible, simply because this was a solution fifty years ago and is therefore the solution today.

And to prove I’m not anti advertising, here is a link to what is possibly one of the most stunning ads I’ve seen.

I don’t know if it was allowed to be shown on TV (it’s from the UK) and I’m still trying to work out whether it is shockingly effective or effectively shocking, but it certainly grabs and keeps your attention. What do you think?