Adding value to Malaysia’s commodities & making the move from original equipment manufacturer (OEM) to original brand manufacturer (OBM)


This morning, I read with interest Sarawak Deputy Chief Minister Datuk Amar Douglas Uggah’s comments about the price of pepper.

You can read the full article here but the crux of it is that he’s talking about the dramatic price drop and appears upset (rightly so) that the solution offered by the Primary Industries Ministry and the Malaysian Pepper Board (MPB) was to plant more pepper.

He said that he had asked for the Federal government to provide subsidies for pepper farmers but no allocation was included in the Federal budget so the State government would have to provide the bail out instead.

Unfortunately the Minister’s solution isn’t right either. Sure, it may assuage the farmers in the short term but in the long term, the problem will return every time the price drops.

And with pepper production rising in many countries, the price is likely to remain depressed which means the farmers will require more handouts next year.

Black pepper sold as a commodity only RM8,820 per ton

This leads to a dependence on the government because farmers will grow used to being bailed out. This is not effective use taxpayer’s hard earned cash and will slow the state growth, let alone build a globally competitive industry or for that matter a self sufficient industry.

Mature economies look to add value to their commodities. So that when the price of the main ingredient fluctuates, they have a buffer. One potentially lucrative way of adding this value is building global brands.

Sarawak Pepper is acknowledged as the best in the world and 90% of Malaysia’s pepper comes from Sarawak yet it is basically sold as Malaysia Pepper. Sarawak pepper still has some existing brand equity but it is rapidly being eroded.

Black pepper ‘brand’ sold at Kuching airport RM41,950 per ton

The commodity business is a zero sum game. It’s like the Original Equipment Manufacturing (OEM) business, whereby firms manufacture equipment for other firms who then use their branding skills to sell the product at a premium.

This has proved to be a popular business model in Malaysia but as the country is now finding out the hard way, you can make money in the short term, but in the long term OEM is little more than a commodity business with very low margins and little growth potential.

But the biggest drawback is that there is always a competitor somewhere who can produce the same thing as you at a cheaper price and who can get it to market quicker.

Because the only relationship is a contract based on a cheap price, customers have few qualms about moving to those competing companies or countries offering cheaper deals.

We’re already seeing how Malaysian commodities such as Palm Oil, Rubber, Timber and Pepper, as well as OEM, especially in the electronics sector are finding it ever harder to compete in the face of competition from aggressive challenger economies such as Vietnam, Indonesia and Myanmar.

Black pepper sold as a European brand in a Malaysia supermarket RM379,000 per ton

The time has come to start adding value to the commodity and OEM sectors in Malaysia. Companies in more mature Asian markets, such as Japan and Korea saw the lack of a future in competing on price.

In the late 1990s, when Eric Kim was executive vice president of global marketing at Samsung, he saw the writing on the wall, “We were nobody. We were down at the commodity level.” Samsung understood that they had to make the move from OEM to Original Brand manufacturer (OBM) and make it fast.

Moving from a commodity grower or Original Equipment manufacturer to a grower of ingredients for a global brand or becoming an Original Brand manufacturer (OBM) has huge benefits not only for the company but the country as well.

Today, Korea is admired and Samsung is imprinted on consumer DNA as one of the world’s leading brands. In flat-panel screens, Samsung is the market leader. In smart phones, Samsung sold 300 million units in 2017, compared to Apple’s 200 million.

Huawei, Haier, LG Electronics, BenQ, Lenovo and other firms have accomplished what many Malaysian firms need to do – make the jump from OEM (original equipment manufacturer) to OBM (original brand manufacturer).

The motivations are clear. Brands are more profitable. According to one report, the world’s top 100 consumer goods and retail companies generated sales of US$3.6 trillion recently and profits of US$228 billion.

Meanwhile, the top 100 OEMs in the Asia Pacific region that supplied products to those top 100 companies reported a relatively meagre US$85bil in sales, with total profits of US$4bil in the same year.

A pepper brand in Europe selling at RM581,000 per metric ton, compared with RM8,800 in Sarawak

Making the move to OBM will also help with Malaysia’s bold attempts to move the country up the value chain to developed status. Other advantages include greater national employment and influence, increased opportunities for strategic alliances and leverage to open new markets.

Compared to the brutally competitive world of OEM, OBMs also have greater control over their destiny. How many Malaysian OEM’s have folded in the last 10 years after a major customer has sought lower costs elsewhere?

What happens to Sarawak’s pepper farmers if the Koreans and Japanese confectionary manufacturers source from Vietnam?

The good news is that thanks to long-established relationships with such major Western brands as Motorola, Dell, Texas Instruments, Ralph Lauren, Airbus, Tommy Hilfiger, Marks & Spencer and many more, Malaysian OEMs have the manufacturing, logistical and quality control potential required to compete in world markets.

But more Malaysian firms have to take the plunge otherwise they will lose out. And the government needs to focus not on bailing out farmers but showing them how to build brands that can conquer the world.

However, making the jump from commodity producer, the global branding dominance or from OEM to OBM is not as simple as spending millions on advertising.

A USA brand of pepper that could be from Sarawak sells at RM251,000 per metric ton, compared with RM8,820 in Malaysia as a commodity

It requires a substantial commitment of time and resources to establish channel relationships and share-of-mind in target markets. And the move is not without risk. Remember when Acer tried to breach the US market but had to withdraw, wasting an investment of almost $10 billion.

Key success factors include:

Change government & corporate thinking: Although Asian consumers are the most brand-conscious in the world, Asian Ministers and business owners devote much more time to advertising and discounting than branding.

Branding is seen as a cost, not an investment, and branding initiatives don’t get much further than billboards, TV commercials and annual sales (4 times a year).

Think long-term: There is no quick fix. It took Samsung five years to move from commodity to brand. Five years is a minimum, although specialty B2B markets may only require three.

Understand branding: Many Asian leaders believe that a new logo, large discounts and heavy advertising is branding. Actually, branding requires the ability to develop emotional and experiential as well as economic relationships with customers.

Ensure execution: Quality is a given. But is the distribution broad enough to support a national branding campaign? Where do consumers call for support? Are staff trained to deal with unhappy customers? How are returns handled?

Commit the resources: Consumer branding doesn’t come cheap. In 2016, Samsung spent US$10 billion on marketing its brand and products to consumers all over the world.

Bertolli, the global Virgin Olive Oil brand regularly spends US$10 million on advertising in the USA where its brand holds a dominant share (37%) of all the olive oil consumed in America and a market worth over US$1 billion. You do the maths.

Start with niche markets: Haier tried to break into the US market using a traditional advertising campaign. After a fortune in advertising driven branding was wasted, they carried out a brand audit as recommended by Fusionbrand.

After the audit, Haier spotted a gap in the hospitality and student markets and started selling small refrigerators to college students and hotels in the US. Now it sells all types of white goods, and in 2017 paid US$5.6 billion for GE Appliances.

Understand targeting and segmentation: The mass market is dead. Now there are as many markets as there are satellite TV channels, ranging from Chinese, Malay, English to Islamic. As a result, one-size-fits-all branding campaigns will not work.

Learn from failure: Honda’s first effort to export motorcycles to the U.S. ended in failure when Americans didn’t like the design. It carried out a brand audit, incorporated the feedback and successfully re-entered the U.S. market.

Invest in design and innovation: Copying existing products is a ‘strategy’ destined to failure as it faces pricing and branding obstacles. We all know how Apple became the biggest company in the world but it didn’t invent the smartphone or for that matter the tablet. But it made them good through innovation and design.

Malaysia is at a monumental cross roads. It has to move from grower and exporter of commodities and from OEM to producer of some of the world’s greatest brands.

The Deputy Chief Minister of Sarawak could save the tax payer a lot of money, make the Sarawak farmers very rich and do his government a big favour. Not by giving hand outs to farmers. But by helping them make Sarawak pepper a global brand.

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Marcus Osborne is CEO of Fusionbrand, Asia’s leading data driven brand consultancy headquartered in Kuala Lumpur.

These videos suggest there is a disconnect between what Malaysia Airlines says and what it does


In the mid 1980s, I was working in the Middle East and when it came to taking leave, we had 2 travel options. Head West for Europe or East for Asia. Whichever direction, the airline recommendations were always the same – try to fly on Singapore Airlines, Cathay Pacific or Malaysia Airlines.

Why, because those airlines offered top quality service. Something the European carriers, with the exception perhaps of Swissair, were unwilling or unable to do.

Emirates arrived in 1985, Oman and Qatar Air in 1993, Etihad in 2003. Prior to that, the only Gulf carriers were Saudi Airlines and Gulf Air. Thanks to their owner’s deep pockets, Emirates, Etihad and Qatar accelerated the establishment of their brands with massive investments in brand experiences.

Since then, Singapore Airlines and Cathay Pacific have done their best to compete but Malaysia Airlines (MAB) was left far behind and today, is a mere shadow of the great brand it once was.

To many, if it wasn’t for the Business and First class offerings, it’s essentially already a low cost carrier. Nevertheless, in its communications at least, Malaysia Airlines continues to give the outside world the impression it sees itself as a world-class carrier.

In March 2018, Malaysia Airlines launched a campaign titled “Malaysian Hospitality Begins With Us”. The campaign aim was to ‘reinstate and demonstrate MAB as the national icon and represent Malaysian hospitality on behalf of the nation to all its guests and customers.’

MAB’s group CEO Izham Ismail said during the launch “that the airline’s diversity, heritage and culture are the foundation and reference of the brand promise, and that MAB aims to provide a Malaysian experience in travel through Malaysian hospitality.”

These bold and practically impossible to live up to statements were supported by the usual professionally produced advertisements and videos shot in high definition with smiling cabin crew in brand new aircraft telling us about ‘Malaysian Hospitality’ and how it is a culture that ‘runs through the organization’.

The website, the first destination for many potential passengers has a special section for ‘Malaysian Hospitality’ and in this section announces “Welcome’, or as the locals would say, ‘Selamat Datang’. That’s how it begins, the experience that is our hospitality. Warmth and generosity are the hallmarks of how we treat anyone we meet. That’s what we’re known for as Malaysians, and more importantly as an airline.”

It goes on to say, “Our hospitality begins with our experience. As we strive to deliver the best experience possible, everything we do is guided by our principles of hospitality.”

Now in some ways I think this is quite clever. Because if Malaysians are known for their warmth and generosity, then they only need to leverage on the natural capabilities of employees to deliver a potentially world class experience.

But it also means that every crew on every flight, will have to be on top of their game non stop if they are to deliver a high level of service at every touch point, every time. And that delivery must meet the very diverse needs of very diverse passengers.

And of course, the concept of ‘warmth and generosity’ may be difficult to deliver. Warmth yes, but generosity? What does that mean? Do you hug every passenger and give them a US$100 bill? Or do you upgrade everyone who asks?

Don’t forget, the aim is to ‘represent Malaysian hospitality on behalf of the nation to all its guests and customers’. With such a promise, there can be no half measures. And of course you can be sure plenty of people will be waiting for the first fail.

Is Malaysia Airlines delivering on the promises above? Despite the glossy high-end corporate videos, two videos have emerged recently to suggest it isn’t.

On their own, these videos could be dismissed as ‘one off’ rants by disgruntled customers but watched together and added to the explosion of negativity on the MAS Facebook page and a pattern seems to be emerging.

This suggests to me that whatever training cabin crew are receiving is not linked to the big promise and whoever is responsible for measuring the effectiveness of that training, isn’t doing their job properly.

Let’s take a look at the videos. The first one was uploaded to YouTube on November 20th 2018 by travel and aviation vlogger Josh Cahil who is based in Germany and has 23,000 followers on Instagram and close to 10,000 followers on Twitter.

His YouTube video where he claimed he was bullied by “extremely unfriendly” MAS cabin crew on a flight from Kuala Lumpur to London has been viewed more than 280,000 times and generated more than 2,600 comments.

International media in the UK and Australia picked up the story as well and in Malaysia it was covered by Says.com not to mention other news portals.

The second video was circulated around Malaysia via Whatsapp towards the end of November 2018. This video was created by controversial travel hack, entrepreneur and author of “Don’t You Know Who I Think I Am?: Confessions of a First-Class A**hole” Justin Ross Lee.

I have a suspicion this video was created some time ago because it features the Malaysia Airlines A380 and as far as I know, they aren’t using that aircraft on the London sector any more.

But what both these videos do is show how Malaysia Airlines is unable to deliver on the bold promises it makes in its marketing. They also show the futility of spending large sums of money on big ideas and not linking that promise to the departments responsible for delivering on that promise when all it takes is one passenger to have a bad experience and share that experience across social media and the whole expensive, one size fits all campaign is ruined.

This mass economy approach more suited to 1988 than to 2018 is built around the belief that with a large enough investment, an airline can make potential and existing passengers believe each bold statement it makes and that if it doesn’t deliver on that statement during their particular interaction with the brand, the passenger should just be grateful anyway.

Following the Josh Cahil video, Malaysia Airlines initiated an investigation and according to Cahil, the group CEO sent him a template apology and offered him a refund, which he asked them to donate to a charity supported by them.

The problem was that by this stage, the story was dominating social media conversations. Even corporate driven tactics on social media were being ambushed with negative comments.

In fact the majority of MAB’s attempts to use social media in a positive way are being hijacked by negative comments. And when this happens, the firm doesn’t seem to grasp the link between what the commentators are saying online and what is happening offline.

Malaysia Airlines attempts to build brand equity on social media
However, brand experiences are not meeting expectations & negativity is hijacking campaigns

This is the dangerous spiral many brands are finding themselves on today. They don’t invest in the right training to deliver the experiences consumers demand offline.

There are a variety of reasons for this and some of them sinister. Most common is that the scope of work for a campaign is created in isolation and by people who don’t understand the importance of delivering a ‘best in class’ customer experience.

Which means that if the scope of work for the project is wrong, it is doomed to failure before it even starts.

In despair or because they now have a channel in which to express their frustrations, consumers go online where they passionately vent those frustrations. And often they do it in the very space the company thinks it owns such as on a Facebook page, further diluting the ability of the brand to deliver on the brand promises made in the very expensive corporate driven messages it believes are defining its brand in the way it wants to be defined!

And if that wasn’t bad enough, when passengers vent those frustrations online, the people tasked with representing the brand simply don’t have the skills or for that matter the responsibility to respond in a suitable manner.

This exasperates the negativity around the brand, causing brand equity to plummet to such an extent that it can be almost impossible to escape the spiral into brand obscurity.

So what can Malaysia Airlines do? If they are serious about building a national brand that can compete with Asian and Middle Eastern competitors then it needs to understand the following

1) Forget about the big idea
Smart Brands understand the concept of the big idea belongs to the 1970s and much as the world has changed significantly since then, so should the way brands engage. Malaysia Airlines must focus budgets not on telling people they deliver Malaysian Hospitality but on showing people they deliver Malaysian Hospitality.

This requires a comprehensive overhaul of the marketing, advertising, customer relationship and social media strategies. Fusionbrand recommends this be carried out through a brand audit as soon as possible.

2) The right experience training
Judging by these videos and the comments across Social Media, Malaysia Airlines see training as a box to be ticked. A review is required to identify if there is an understanding of what constitutes world class service.

If the training providers have been hired for the wrong reasons and don’t have the skills to deliver the type of training required to compete with sector leaders, how can Malaysia Airlines cabin crew and for that matter ground crew, deliver a world class service?

3) Social Media
There’s no escaping social media but too many brands don’t give it suitable attention. Malaysia Airlines must start investing funds in social media instead of big idea promises it cannot keep.

I don’t know what’s happening at MAB, but too many companies think social media is the perfect place for interns because they are young and have an Instagram account themselves. After all, what could be hard about posting on Facebook and Twitter, right? Wrong.

Social Media is about many things. For brands, it’s about cultural, social and other nuances. Being responsible for a brand online is not something you do, it’s something you are.

Malaysia Airlines needs to link what it says and does offline with what it says and does online. Quickly, before it’s too late.

Does it make sense to rebrand Kuala Lumpur’s taxis?


Taxis are ubiquitous in Kuala Lumpur, just as they are in most cities in around the world. Unfortunately, years of poor public transport, viable alternatives, ineffective regulation and little or no oversight has created an industry that is a Frankenstein monster that has lost sight of it’s actual purpose. In other words, it has grown fat and lazy.

Generations of visitors to Kuala Lumpur have put up with a terrible product. Drivers would stop at taxi ranks and ask each person in the queue where they wanted to go.

Once the driver found someone going where he, the driver wanted to go he would quote an (inflated) fare and the potential passenger could take it or leave it.

If none of the waiting passengers wanted to go in his direction or refused to accept the quoted fare, he would drive off, only to sit in traffic with an empty cab. (That particular stunt always baffled me.)

KL taxis waiting to take customers to a place the driver is happy to go

Getting a receipt for a journey was an exercise in futility. Meter rules were flouted, tourists and residents ripped off and on more than one occasion, this writer was driven by a Pakistani native who’s long beard and salwar kameez did not match the clean shaven, tie wearing Malay in the id on the dashboard identification.

There were exceptions but they were few and far between. A vast majority of the drivers appeared oblivious to the concept of customer service or for that matter, safety, personal hygiene, honesty, integrity and warmth.

And then in 2014, the uber disruptor Uber opened in Malaysia. You’d think that with the arrival of such a dynamic competitor, the Kuala Lumpur taxi business would think to itself, ‘well we’ve had it good for years but now serious competition has arrived so we better up our game’. Alas no because a year later, Kuala Lumpur came top in a poll for the city with the worst taxi drivers in the world.

To celebrate this accolade, taxi drivers complained to the government and rioted in the streets, attacking the vehicles of Uber drivers and in some cases dragging customers out of Uber cars and into taxis. Who needs customer service when you’ve got brute force and violence?

KL taxi drivers think the way to impress customers is by destroying the competition with violence

Citizens voted with their feet and despite being more expensive, Uber became the preferred mode of transport for most KLites.

All it took for this revolution was a taxi business that did what it said on the tin – ie picked people up when they wanted to be picked up and sent them to where they wanted to go at the agreed price in a nice, pleasant environment, normally delivered with a smile.

Recently there has been talk of rebranding the KL taxi business? Can this issue be fixed with a rebrand and if so, how? The short answer is that done properly, a rebrand has a very strong chance of success but if the wrong approach is taken, it’ll be an expensive and futile exercise.

And why is that I hear you ask. Well we need to first understand what constitutes branding. Only then can we appreciate what constitutes a rebrand.

To answer this, we first need to look at what isn’t a brand. In a nutshell, a brand is not a new logo or brand identity. Imagine the Apple logo. Would changing the logo from an Apple to say a sausage change anything about the brand? Of course not.

And rebranding is not launching the new logo or brand identity with a new website, new tagline and new advertising campaign that makes outrageous claims that are almost impossible to live up to and more importantly will be viewed with scepticism by consumers.

A rebrand is a three stage process that begins with a comprehensive review of the business. In this case, it will probably be painful but it needs to be done to benchmark future effectiveness of the brand strategy.

It’ll look at processes and systems related to the brand. What’s good and bad about it, explore segment specific perceptions, the technology used, communications, experiences and much more while identifying areas for short, medium and long term improvement.

Once this brand audit is completed, the findings are used to develop the internal and external brand strategy.

The internal strategy will improve dated systems and processes related to hiring, training and firing of drivers, define driver rules, develop codes of conduct and develop best practices for key touch point linked to customer requirements for value.

The adoption of technology will play a key role in providing a better product and in due course, contributing to the process of changing the perceived professionalism of the taxi industry. Tools are already on the market that allow the sharing of the resources of Grab and taxis to the benefit of both businesses and users.

The external strategy will focus on activities around 6 core attributes necessary for the success of any brand. Those attributes are warmth, humility, integrity, competence, accessibility and transparency.

Disruption is the scourge of every business today and actually has been for many years. Think how the hospitality, banking, aviation and retail industries have had to keep reinventing themselves.

KL’s taxi drivers shouldn’t be frightened of change. By using these attributes as the pillars of their industry, they have a lot going for them.

The external strategy will also leverage weaknesses in the Grab model. A narrative needs to be developed around what taxi drivers contribute to the economy, as opposed to what Grab doesn’t contribute to the community.

If there are questions about how much tax Grab pays, the taxi model will be extremely transparent and the amount of tax paid by taxi drivers will be developed as a societal narrative.

The carbon friendly London taxi, voted the best in the world

If insurance and safety are key concerns when it comes to using Grab, the taxi industry can use this to it’s advantage by inculcating a culture of safety with the drivers (instead of the often blatant abuse of traffic rules) and water tight insurance policies that cover passengers.

If Grab has a weakness when it comes to passengers with disabilities, the taxi industry will specialize in working with such groups. If the Grab pricing models are contentious, the taxi models will be clear, fair, transparent and impartial. At all times, taxis will be well maintained.

Some European cities have used regulatory vetoing to block disruptors. But in KL there was a serious market failure when it came to the needs of the customer.

So with the damage done, the free market has already decided so such action won’t work in Malaysia and the taxi drivers should stop trying to force the government to take the same approach or for that matter by trying to force the government into action with random acts of violence.

However, KL’s taxis can rebuild trust and belief in the brand. But they’ll need to adopt an organizational approach to a rebrand. If they do so, over time, perceptions of taxis and taxi drivers will improve.

A service driven culture will increase the revenue of taxi drivers while making KL a better place to live.

Ironically, taxi drivers have the potential to become the disruptors they fear, to influence cultural and political change in KL, Malaysia and possibly the region.

So yes it does make sense to rebrand KL’s taxi business. And just like the Malaysian people have proven to the world there is still some mileage left in democracy, Kuala Lumpur’s taxi drivers can prove to the world that this ancient industry has plenty of miles left in it.

 

Fusionbrand is Malaysia’s only Strategic Brand consultancy. You can reach the author Marcus Osborne on marcus (at) fusionbrand (dot) com or call 03 7954 2075 and ask for Gurmeet.

Branding in Industry 4.0


We had a great time today with creative writing, advertising and journalism students at the International Islamic University Malaysia. The discussion revolved around “Branding in the era of industry 4.0” and we talked about what Malaysian brands must do to to thrive in new economy and more relevant perhaps to these guys, how the advertising industry is changing and what they need to do to help those brands stay relevant.

Fusionbrand would like to thank you for having us over & thanks for the lunch too!

Marcus Osborne of Fusionbrand wrapping up before the Q&A session

Overtourism is coming to a destination near you


Overtourism is putting immense pressure on destinations around the world. From Bali to Phuket and from Venice to New Orleans and Ibiza, popular places are creaking under the weight of millions of visitors. 28 million people visited Venice last year, swamping (excuse the pun) the local population of 55,000.

Venice has for years considered limiting the those who enter the city and recently set a cap on the number of cars allowed in and provides ‘tourist only’ routes for accessing the most popular destinations.

15,000 people call the Greek island of Santorini home. Last year they ‘welcomed’ 2 million visitors. The mayor recently announced that only 8,000 can visit each day in an attempt to help retain its uniqueness.

In Bali, the government is trying to take back control of an out of control industry that is threatening to destroy the very island that has made it what it is. One estimate has it that 300 tonnes of waste enters the waters around the island every single day. Little wonder then that attempts to reclaim land for yet another mega project in the island’s Benoa Bay were met with fierce resistance from locals.

But potentially the most dramatic changes are happening in Ibiza, the hedonistic destination for mostly young, British holidaymakers looking for 2 weeks of mayhem. 3 million visitors arrived on the balearic island in 2017 and it seems as if the tiny island’s population of 150,000 has had enough. Earlier this year, Airbnb and other accommodation platforms were banned, open air bars must now close at midnight and club closing times are now 3am instead of 5am.

The tourist board has also taken steps to address the impact of tourism on the island, with its new ‘Love Ibiza’ campaign focusing on sustainable travel. Tourism has made Ibiza what it is today. Whether that is good or bad, only the locals can say. The Facebook page states, “We want to return to the peace and quiet of the traditional Ibiza.”

I was fortunate enough to visit Ibiza in 1980 when it was peaceful and traditional. Relatively anyway. it was a beautiful place with only a hint of the hedonism that was just around the corner.

My concern is that it will take a lot more than a quaint video to change it back to the peace and quiet of the traditional Ibiza. I believe that to reverse overtourism, or at least stall it, without impacting the economy of the destination, there needs to be the buy in of the local population. The Ibiza video suggests some buy in as it talks about sustainability but there doesn’t appear to be a clear direction on how this will be achieved.

Overtourism is a real threat to many destinations. A well thought out destination brand road map would make this a more compelling offering. Otherwise it becomes nothing more than a (well meaning) dream.

Enrich is not a channel to sell as much as possible, it’s a channel for the brand to build relationships


So I’m checking in online for a flight on Malaysia Airlines and I noticed that my Enrich membership (that’s the MAS Frequent Flyer Programme (FFP)) has been downgraded from gold to silver.

That in itself is hardly a surprise because I rarely fly with them anymore (the 3 – 4 business class business trips I take to the UK from Malaysia each year are now on a competitor carrier where I’m a gold card member) but what surprised me is the way my demotion was, or in this case, wasn’t communicated to me.

After going through old emails, I don’t think I received any communications telling me I would be or had been downgraded. No gentle nudge or reminder to travel to retain the gold status. No email to ask what could MAS do to help me remain a gold card holder. Nothing. Just a stealth like downgrade. And I presume that’s standard operating procedure for anyone downgraded?

I can’t remember how long I’ve been a gold member but I suspect it’s around 10 years, maybe more. But as I’ve documented extensively elsewhere in this blog, I’ve been flying with Malaysia Airlines for more than 30 years and was one of the few to fly MAS in the days after MH370 went down. So I feel, perhaps wrongly that I have some relational credits in the bank.

Now I’d like to reiterate that I’m not complaining about being downgraded because I knew it was coming. I’m just reminded how few brands understand the concept of loyalty, of retaining a customer once they’ve acquired them. Of doing what they can to salvage a customer before they leave.

Harvard Business Review would argue that not all customers are worth keeping. And Malaysia Airlines most probably would argue that I’m definately not worth keeping. Even though I manage the travel budget of my family of five as well as my company and influence a number of other business owners.

According to Harvard Business Review, “acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.” Meanwhile Accenture reports that 80% of ‘switchers’ feel the company could have done something to retain them.

I switched my long haul allegiance to another carrier years ago and am definately one of the 80%. Malaysia Airlines has done nothing to stop me switching. And has done nothing to try and win me back once I have switched.

They put a lot of effort into encouraging travellers to join Enrich, the Frequent Flier programme. But once a member, communications are fairly standard and lack personalisation. Even a customer experience email sent to me after a flight was addressed ‘Dear Sir/Madam’.

Malaysia Airlines needs to move away from a transactional approach to branding

The email was written in an old fashioned style (who says ‘we will duly respect your style?”), littered with grammatical errors and despite stating the survey was only valid for 7 days, the link which was sent to me on 8th October 2017, was working today 10th April 2018. The email offers me an opt out option if I don’t want to receive the surveys but there isn’t a link to make this happen.

The email signed off ‘We are professional, progressive, connected and open‘ That’s a bold, ambitious statement, very hard to measure and almost impossible to live up to.

I get a lot of emails from the frequent flyer programme and they are almost always trying to sell me flights, packages, destinations, discounts on third party products and services and I get that but these are all transactions. The airline is simply carpet bombing the database with offers and hoping that enough of them will stick.

The focus seems to be about selling enough of everything to as many people as possible and in the shortest period of time. There is zero attempt to build a relationship with the recipient despite the fact that it’s the FFP. It simply reduces MAS to nothing more than an object or a commodity.

But as Malaysia Airlines should have realised post MH370, objects can’t be differentiated emotionally and besides consumers have no emotional connection or loyalty to objects.

I am sure MAS understands this because that’s why it has a FFP programme. Unfortunately, it’s stuck in the past when it comes to using the FFP. Malaysia Airlines needs to stop looking at members as customers and start to see them as partners.

What are the lessons for MAS and other brands? If you collect customer data, store it and use it properly. Instead of trying to sell something to everyone, use the data base properly. Link offers to customer value requirements. Preempt negative situations. Don’t simply downgrade members, find out how to keep them happy. Personalise correspondence. Encourage participation.

Instead of selling to them, collaborate with loyalty programme members. Build relationships by providing solutions to members’ needs. Successful brands are built on openness and Malaysia Airlines says it’s an open company. Prove it.

Every Internal branding project needs to be driven by the CEO


Just thinking about an internal branding programme that Fusionbrand did at the end of 2017.

One of the hardest parts of the project was getting the C level execs to buy into the fact that without their support and especially the buy in of the CEO, it would never gain traction. (Side note, it was a GLC and smoking is banned anywhere in government offices but the CEO smoked).

The C level executives just wanted a series of messages to be created and then those messages were to be broadcast across the organisation. We explained that this would never work. Mainly because the concept of creating and broadcasting a series of words, no matter how well crafted they are, simply doesn’t work any more.

But also because we needed to be setting examples, not telling people how to behave. Back to the simple example of the smoking CEO. If an employee is told not to smoke on the premises but the CEO smokes in his office and the smell wafts its way down the corridor, teasing all those that smoke and potentially killing all those who don’t, why should the employee pay attention to the no smoking signs? And how can the no smoking policy be enforced if the CEO smokes?

Besides, we as consumers have been let down so often by corporate promises that are compromised by reality that we tune out of messaging anyway.

One of the goals of any internal branding project is to bring the employer and the employee closer together. The CEO needs to lead by example in every aspect of his daily routine. And that begins with obeying the rules.

Meeting Malaysia’s corporate leaders of tomorrow


Founded in 1905, the University of Malaya is Malaysia’s oldest university. It has 27,000 students attending 12 faculties, 2 academies and 3 Centres at the sprawling campus on the outskirts of KL. I was invited to be a guest speaker at the Graduate School of Business, Faculty of Business and Accountancy.

The title of my presentation to the UM Graduate School of Business

It was a great opportunity and a privilege to spend a few hours with some very bright people who may one day be running some of the best brands in Malaysia. There was lots of participation and plenty of probing questions! Most of which I answered, I think! OK, maybe not the Samsung one!

Students at the UM GSB kept me on my toes!

Many thanks to Professor Zalfa Laili Hamzah for organising the talk.

‘Think Big’ yes, but first Malaysian business owners must stop thinking cheap


There’s a thought provoking piece in the business section of freemalaysiatoday.com that reports more Malaysians buying Chinese made goods ‘out of economic necessity’.

The article says that Malaysians look past the stigma of Chinese products even though there are concerns that they of inferior quality and possibly even dangerous compared to products from other countries.

The article quotes Mr Yeah Kim Leng, professor of Economics at Sunway University Business School who says, “the open market system brought about by globalisation and increased connectivity was intensifying competition for local businesses.”

The President of a local consumers association supports Mr Yeah’s point of view saying that even though many Malaysians are concerned about the quality and legitimacy of China made products, they are prepared to basically risk their lives because Chinese made goods are readily available and cheaper than Malaysian products.

Another economist and Klang MP Charles Santiago is quoted as saying, “Malaysians were buying food from China out of economic necessity despite their misgivings about the quality of the items.” He went on to say, rather worryingly, “There is no excuse for eating toxic food. We must ensure that the food coming into the country fulfils all international health standards.”

I agree with Mr Santiago, there is no excuse for eating toxic food. And in the last twenty years there have been reports out of China of adulterated baby formula. Factories using industrial-grade salt to pickle vegetables then spraying them with banned pesticides before shipment, soy sauce made from human hair, counterfeit alcohol and fruits and vegetables with unacceptably high levels of illegal pesticides.

In our house we stopped buying any foods and most other things from China more than 10 years ago. I don’t care what it costs, I’m not going to jeopardise the lives of my family in an attempt to save money which if they get sick is a false economy anyway. More on the false economy later. But it seems we’re the exception not the rule.

I think there is a deeper issue here. My theory is that there is a culture in Malaysia of ‘if it’s cheap, its good value.’ I think we’ve lost sight of what constitutes value. There are many reasons for this. We’ve been ripped off or know of people who have been ripped off, time and time again by unscrupulous companies from just about every sector and in particular automotive/property/food/transport/healthcare/hospitality and so on.

One patriotic Malaysian friend of mine (and I won’t be popular for quoting this), suggests some Malaysians have been let down so many times and have become so cynical about what companies promise that they now believe it’s better to pay the minimum amount for something and then if it doesn’t deliver on the promises made, well at least the bare minimum was spent.

At the same time, he believes this has created a stubbornness which in turn has made them unable to make sensible decisions when confronted with difficult scenarios.

He suggests that is why many people will spend 30 minutes stuck in traffic to avoid a RM1 toll charge. The fact that the wear and tear on the car engine, the petrol, the lost productivity and stress cost so much more than the RM1 toll charge is irrelevant. The goal is to avoid the RM1 toll charge.

It’s the same with people (and this is not just restricted to Malaysia) who make a special trip to fill up their petrol tank because the next day, petrol is going up by 2 sen a litre. Much of what is saved, is spent on the extra journey, the fuel used in the inevitable long queue and the time spent away from more important things. In almost all such cases, the action delivers a net loss or at best, an immeasurable gain.

And that’s why Malaysians are now buying toxic food. It’s not deliberate, it’s just a natural progression. How many times have you heard a conversation along the lines of:

Q: ‘How was the nasi lemak?’
A: ‘Good, it only cost RM6.’

Hardly the breakfast of champions but never mind, it only cost RM6

The fact that the dish was 80% rice, included 3 peanuts, two ikan bilis, a tiny serving of sambal, the scrawniest chicken wing and 1/8th of an egg is irrelevant. And that’s before we even discuss the source of the oil used in the cooking, the supply chain and the hygiene of the foreigners who cook the food. What’s become important is that it only cost RM6.

What’s all this got to do with the economy and in particular branding? Well for Malaysian businesses to compete against any foreign firms, not just those from China but also those from Europe, the USA and north Asia, they need to move on from the mentality of competing purely on price.

To move on from a belief that they can only compete if they are the cheapest. To see their business not as a series of transactions, but as building relationships with their customers. Because this approach is unsustainable. There will always be someone out there, who can produce what you produce cheaper. And in this case that someone is China.

The economist Mr Yeah suggests that Malaysian firms should ‘think big’ and he’s right, Malaysian firms or rather the businessmen that run them, need to think big but only after they move away from the belief that what’s cheap is good or what’s big is cheap. And the good news is that it’s not a huge step.

International luxury houses such as Gucci, LVMH, Prada, Georgi Armani and Channel have for years dominated sales of luxury goods in Malaysia. Closer to home, Malaysia has proven it can build brands from scratch. Think of Royal Selangor Pewter, PappaRich, Sime Darby, YTL, Proton and Linghams sauces, probably the first Malaysian brand to go international and now available in 100 countries.

But these are the exceptions, not the rule. And it’s the middle ground that needs to change. To move away from the false economy of cheap is best. The false economy in Malaysia has become so chronically negative that it is having a detrimental effect on decision making across the spectrum. Even though it is now threatening lives.

I find it extraordinary that I am writing a blog post about people willing to risk their lives to save a few pennies. But everywhere I go, my team and I have discussions about brand tactics that are driven not by questions such as “What do we have to do to make our business the number one choice in our sector” but instead by questions like “How much does it cost?”

Recently I had a discussion with the head of marketing at the Malaysian campus of a British school with a unique 150 year heritage. The head of marketing wants a video for the school and he asked us to submit a proposal. He didn’t have a brief (which as head of marketing he should prepare) but wanted us to submit a proposal for ‘a school video’. When we asked the budget, he refused to share it.

So there was no brief and no budget. I explained that there were already a lot of videos of the school online (‘none of which are very good’ according to the most senior member of staff) and how is this one going to be any different? He replied that that was our job.

That we should ‘think out of the box’, to ‘propose something unique’, to ‘do something special’. When we explained that ‘thinking out of the box’ took more time and therefore cost extra and therefore we needed to know the budget to see if was possible, he refused to share it.

I explained that even without the ‘thinking out of the box’ requirement, the budget was crucial because it would determine the type of production. Did he want a script? Did he require a film crew to visit the school? Are we to interview staff/pupils etc? Would he like drone shots? How long does he want the video to be? SD or HD? And so on.

We realised that if we were to go this route, we could be submitting ideas for months before we accidentally created something he liked. We also realised that by not sharing the budget, there was a good chance that even if we created something he liked, he might not be able to afford it (or alternatively, we could propose something that didn’t utilise the full budget, to the detriment of the school) and that his decision would probably be based on price and so we reluctantly walked away from the business.

This mentality of ‘cheapest’ has a negative impact on his brand. Not because he didn’t get to work with us although thats one reason, but also because it makes the video a priority instead of making what the video can do a priority. It’s the business equivalent of buying potentially tainted food from China and ignoring that fact because the main thing is it was cheap.

This culture of cheapest is best has caused him to move from doing what’s best to market the school to getting a video done. It actually becomes a box ticking exercise instead of a useful tactic. And we’re seeing this time and time again.

Once a large percentage of Malaysians get past the ‘cheapest is best’ mentality, then only then can businesses have the confidence to ‘Think big’. It will require a cultural change in both how they think and how they run their businesses. Once they do that then we’ll see more successful Malaysian businesses become brands.

SIX tips from Fusionbrand on how to avoid the same fate as Tourism Malaysia


Yes it looks like an irresponsible adult allowed a petulant child with a grudge against the creative fraternity loose on a very old software programme and yes, it should never have made it past the idea stage. It’s the creative equivalent of a train crash featuring trains carrying toxic chemicals or nuclear weapons. But does it matter? In the short term, perhaps. Long term, maybe. But it never have happened.

I’m talking of course about the Tourism Malaysia VMY2020 logo (see pic) launched at the end of January 2018 by Datuk Seri Nazri Aziz, the Malaysia Minister of Tourism and derided by much of Malaysia, graphic designers worldwide and respected media organisations such as the Daily Telegraph, the BBC and the South China Morning Post.

How to make sure you don’t end up with one of these

Despite the negative reaction of, well everyone, I’m going to stick my neck out and say that the reality is the new logo (if it survives and I don’t think it will) won’t have an effect on visitors contemplating whether or not they should visit Malaysia in 2020 (and the years before and after 2020).

In fact after being featured on social media and a host of international news channels and publications, it may have provided Malaysia with yet more free publicity.

Admittedly not the kind of publicity Malaysia really wants but it’ll take more than negative publicity about a crap logo to attract or stop foreigners from visiting the country.

Nearly every business/school/institution and many individuals have a logo. We see logos on business cards, buildings, billboards, buses, lamposts, food packets, print ads, TV ads and just about everywhere else you can stick one.

And they sell computers, clothes, cars, cosmetics, finances, food, schools, fashion and fags, alcohol, appliances, airlines and holidays, and just about anything else in between.

There are good logos and bad logos, some change on a regular basis, think Google, others stay pretty much the same for years, think Apple or Nike. We’re told logos must be unique yet instantly recognisable.

They must have colour because certain colours convey certain meanings yet they must be instantly recognisable and have the same impact in black and white.

We’re told that each element of the logo has meaning. A logo designed with sharp, straight lines communicate a strong, trustworthy brand.

Curved lines on the other hand communicate a caring and supportive product or service. The rationale for combining curved and straight lines is an ambitious company.

And we’re told that everyone should have a logo because they represent the brand and make you stand out from the crowd. But crowds behave differently today and are influenced in different ways.

The illustrative style that we recognise as logos today is nearly 150 years old and harks back to a time when Western civilisations moved out of the fields and into the factories. Most of those factories are now here in Asia where we’re living our lives a little differently today than we were back then.

The main role of the logo, traditionally anyway, has been to create awareness about a business or in this instance, a destination (and not the country) and help to build a positive image about the business/destination.

Logos evoloved to become a symbolic reflection of what the busines/destination wanted to communicate to audiences. And when logos changed, it was meant to be part of an overall strategic shift in direction for the brand and would be one of many elements of that new brand strategy that had to be communicated in a joined up, integrated manner.

But over the last 20 years, businesses have got lazy or perhaps greedy. Too many businesses have changed logos in isolation, without incorporating the change into a new strategy.

They’ve updated the brand identity and called it a rebrand without making any improvements to the organisation. And then they’ve watched, surprised when nothing changes.

The London 2012 logo dodged a bullet

Sometimes when a logo changed slightly and the reaction was negative, the brand got away with it. Remember the London Olympics logo? Other times, such as the GAP logo change in 2010, the consumer response was deafening and GAP had to backtrack quickly. But overall, because these changes were ad hoc or tactical, they made little difference to the business delivery.

Another classic example is oil behemouth BP. Back in 2000 the firm decided they wanted a new logo that communicated ‘green growth’. Despite spending over US$200 million it was considered a massive failure because the opinion of most people was that there was nothing green about the business of oil. No matter what the company tried to make us believe.

Our new logo tells you we’re not in a dirty business so you must listen

And then in 2010, the largest offshore oil spill the history of the oil business put paid to the concept of the green growth oil company communicated via its logo. For many, that’s when logos lost their relevance.

With the proliferation of countries competing for the same visitors, too many destinations play safe and compete with the same look and feel, making it difficult for potential visitors to differentiate them.

Add to this mix the powerful impact of social media on the travel industry and visitors now use the Internet for research purposes and get most of the information that influences their decision making from content generated by people like them and not logos.

The rise of the ‘me too’ destination logo dilutes the importance of the logo in the visitor’s decision making process

The focus has shifted away from the identity of the destination to the experiences of other like minded people in that country. Against this backdrop, it’s hardly surprising then that the importance of a logo will not be what it was.

According to the World Travel & Tourism Council (WTTC), global tourism generated $7.6 trillion for the global GDP. More than 105 million international visitors arrived in South East Asia in 2015 and that figure is growing at an average of 8% every year.

Many of those visitors will visit Malaysia not because of the logo but because Kuala Lumpur International Airport is an increasingly important hub for low cost carriers servicing destinations such as Vietnam, Cambodia, Thailand, Myanmar and more. And any trip to SE Asia will include visits to other countries in the region.

So in terms of the impact the logo will have on visitors to Malaysia, it will be negligible. However, it will help shape perceptions of Malaysia as a country and much of the debate across social media was how embarrassing the logo is for Malaysia.

So in terms of the reputation of Malaysia, there will be a perception impact and that will probably add to the negativity about the country. If most of the content consumers read about Malaysia is negative, then perceptions will become negative. And those perceptions can only be influenced and changed with a brand strategy that includes all stakeholders and not with tactical activities such as a new logo, advertising or events.

For Malaysia, what’s done is done. What can other countries, states, regions, cities or towns do to ensure their efforts aren’t ridiculed in the same way?

Here are 6 lessons that can be learned from this fiasco. They should be applied to any destination branding initiative.

1) Set up a nation branding task force.
Every country or state/city/place should have one. Malaysia used to have one and in 2008 the task force commissioned Fusionbrand to develop the Malaysia nation brand but the plans were canned when a new administration took over and a new department was set up under the new Prime Minister’s Office. This department embarked on a badly researched project about 5 years later that revolved around a tagline and a logo and not a strategy and as a result, lasted little more than a month.

2) Nation branding is strategic not tactical.
Nothing related to the nation brand can be done in isolation. To avoid similar failures, anything related to the nation/state/region/city brand must go through the nation branding task force. And that includes important ministries such as the Tourism ministry. Even state tourism boards and other stakeholders must share with the nation branding task force.

3) Test identity concepts before launch.
No man is an island. But sadly in Malaysia, if a senior person proposes something it is rarely challenged internally, even by marketing professionals hired supposedly for their knowledge. Anything creative should always be tested internally and with multiple consumer segments and the task force. I know it’s time consuming and expensive but which is worse, a delay in the launch or becoming the laughing stock of the world?

4) Have a plan for your identity launch.
Don’t expect to wing it. And be prepared for serious back lash from consumers because most of us hate change. Not many new logos were well received initially. But many of them are now very familiar, think Pepsi, Citi, Accenture, Qantas. After a certain amount of fumbling, the Minister stated, “I have launched it. Nazri Aziz never backtracks. This is what will be used for the world, only one logo, no other logo.” Would a clearly defined, sensible rationale have been a better way to announce the new logo? Absolutely.

5) Social media is your friend not your enemy.
I get the impression, perhaps wrongly that Tourism Malaysia was completely unprepared for the reaction to the logo. Especially on social media. Social Media CAN effect change so learn to work with it. But remember it is not a soapbox. Simple consumer research at the logo development stage on Facebook and Twitter would have saved Tourism Malaysia and the country, a lot of embarrassment.

6) Logos / taglines etc should not be confused with branding.
Malaysia has had a tough time over the last few years with the country struggling to stay relevant in an increasingly competitive environment. It’s hard to find current arrivals figures but the general consensus of opinion is that visitors from wealthy countries or high spending tourists are not visiting as they used to. A lot of this is because there is confusion over what constitutes branding and the Malaysia tourism brand has little differentiation. Brand identities / taglines / positioning statements / advertising campaigns and other marketing tactics are not branding. They may create awareness but that rarely convert to arrivals.

As I’ve stated already, I don’t think this farce will have much of a positive or negative impact on arrivals. But it’s impact on Malaysia’s brand? That worries me but that’s a discussion for another day.

Fusionbrand is Malaysia’s premier strategic brand consultancy. For more information on how we can help you get your branding right the first time, please call +60379542075.