Just about every survey I read suggests social media marketing will take a larger piece of marketing budgets over the next 5 years. One recent survey suggested social media spending will increase 144% over current levels by 2019.
But few companies in SE Asia really know how to use Social Media, especially when it comes to engaging with consumers and dealing with issues raised by those customers. I spend half my time trying to explain to customers that social media isn’t another platform to broadcast a carefully carved corporate driven message to anyone and everyone.
We liken social media to a virtual coffee shop where you talk to people as equals not as an old fashioned brand talking down to ‘stupid’ consumers in a patronising manner with a predetermined message.
Social media requires an ability to be real, to be human, spontaneous, transparent and crucially, be able to resonate with each consumer on their level. This is of course a daunting task as it reduces the amount of control a company has over it’s messaging and it’s brand.
Here’s an example of how to successfully engage with customers on Twitter.
A customer complained about a brand in the UKRather than complain, the brand engaged positively with GoogleGoogle responded in the same manner making the whole experience positive for everyone
The good news is, according to another recent study, those companies prepared to invest in delivering good customer service on Social media see customers spending up to 40% more with that company.
So the next time a customer complains on social media, take the time to listen and respond in a human way and on their level. And you could see your income increase by 40%, more effective and a lot less expensive than any advertising campaign!
It never ceases to amaze me that despite all the stats pointing to investment in retention and loyalty are key to building a profitable brand, most brand owners invest the majority of their marketing dollars in acquisition tactics that belong to a world that no longer exists.
The belief that advertising can build a brand in the social economy is laughable yet where do brand owners go when they want to build a brand? The nearest advertising agency. it’s ludicrous because if all you have is a hammer, everything looks like a nail. Advertising agencies only have advertising so all roads lead back to advertising and the problem with advertising is that NO ONE IS PAYING ATTENTION.
And this is where I disagree with David’s comment that “It is increasingly difficult to build long term relationships with hard won clients and customers”. I disagree because it has never been easier!
We know where everyone is, physically and digitally, we have their names, their addresses, both digital and physical, we know what they like, what they dislike, we know who their friends are, who they like, who they don’t like, who influences them, we know what winds them up and most important of all, we know that they want us to be part of their lives.
Yet most brands ignore building loyalty or give it a cursory nod in the form of generic, meaningless loyalty programmes that often provide ‘deals’ that are worse than what the customer can get himself.
Good customer service builds loyalty
Firms prefer instead to focus on acquisition and then, when there is a problem and brands fail to address the issue or worse, ignore the customer completely or address it in an amateurish, arrogant manner, brands wonder why those customers leave and angrily share their frustration across social media.
It has never been easier to build long term relationships with our clients and customers to improve loyalty, it’s just that most brands are going about it the wrong way.
TripAdvisor is 15 years old today. TripAdvisor has been at the heart of the revolution in destination branding and is responsible for changing the culture of travel and the travel related decision making process. It has ripped up the hospitality industry manual and forced the industry to focus on delivering value to customers rather than promising to deliver value.
According to comScore, TripAdvisor is the world’s largest travel site and together with it’s stable of 24 other travel brands including SeatGuru, Tingo and Family Vacation Critic gains 315 million unique monthly visits. And those visitors have created more than 200 million reviews of over 4.5 million destinations.
TripAdvisor broke loose from parent company Expedia in 2011 with an IPO valued at US$4 billion. As IPOs go it was a quiet one but TripAdvisor is a successful business with annual sales last year of US$354 million, up 39% over the previous year and now has a market capitalisation of US$12.7 billion.
I’d like to take this opportunity to thank you for letting me be your customer for more than 25 years. During that time I’ve had some amazing experiences with a brand for which I’ve always had a soft spot.
I remember as soon as I could afford a ‘proper’ car, I went out and bought a BMW. I was living in Bahrain, it was 1989 and I purchased a stunning 1982 635csi with a little rubber spoiler on the boot. Black with red leather interior it was a beauty. Of course it was seven years old so always broke down but I was young and didn’t care. Even in the summer, with the temperature hovering around 45 degrees C when I found myself sitting yet again in a pool of sweat by the side of the Shaikh Khalifa highway whilst waiting yet again for Ali (we were on first name terms) to arrive in his tow truck, I felt privileged.
BMW 635csi
I saved up and soon purchased a brand new British racing green 525i that was ideal for those long journeys across the desert to Riyadh. At around this time and due to competition from Japanese and American brands, you began to position BMW as a luxury brand (we won’t mention the disastrous acquisition of Rover and the ridiculous belief that you could position Rover as a luxury brand).
I think it was 1992 when I bought the 5 series but I have to say it was tough selling it a few years later, around the time you lost about £700 million in one year (close to £2 billion in today’s money) and your brand was struggling to live up to expectations.
525i ate up the miles between Bahrain and Riyadh
When I arrived in Malaysia after my stint in Bahrain, I couldn’t afford a new BMW and anyway your reputation here was so bad then that I wouldn’t have bought one if I could. But using service and customers to drive the rejuvenation of the brand culture you turned around your poor reputation and kudos to you.
The good news was that by 2012 I was in the market for another new BMW. By now I’m a husband and father and doing well. So my wife and I bought an X1. To be honest that was a mistake but as offloading it would incur a massive loss (it didn’t take off in Malaysia) we decided to sell it to one of our small companies and buy an X3. By the way, what exactly is the X1? Is it a hatchback? Is it a family estate? To be honest I could never figure it out but I’m glad we got rid of it because the plastic on the dashboard buttons was beginning to come off and the door was creaking and the rear window was starting to rattle.
Now the X3 was a hit with everyone in the family and we’ve had some great times in this car. It purred on long journeys to Singapore, Terrengganu or up to Penang. The X3 lapped up the school runs and trips around town and by the end of 2014 we had done close to 100,000 kms. Not huge mileage, especially for your cars but that’s when things started to go wrong. Sure there were similar little niggles to the X1 – rattling window and creaking door but we tolerated them.
In mid 2014 the X3 started to spew grey smoke out of the exhaust. Now remember we live in the tropics so cars are fairly warm when they start so it wasn’t due to a cold engine but I wasn’t bothered as this is a BMW and I’d read on the BMW website that, “Original BMW parts are subject to the same standards of quality as BMW vehicles – from construction planning to quality assurance.”
At BMW it would seem longevity is up to 2.5 years
Of course when I read that before buying a car I felt reassured and it was one reason why I had ignored the fact that BMW only gave a 2 year warranty when competitors were giving anything from 2 – 5 years. But reading it again it suddenly looked like a bunch of words stuck together to make me think the components were solid and reliable. Obviously not.
So I went back to the website and read it again and realized that the copy was hard to understand. I mean read this, “The precision and high-quality construction of each original BMW part guarantees that all components in your BMW work together perfectly – for optimum performance and maximum safety and longevity.” Is it common then for some manufacturers to construct parts that don’t worth together perfectly? And what’s the definition of longevity in Munich? When it comes to certain components is it less than 30 months or does it depend on the component?
As I was considering what to do about the smoke, the airconditioner stopped working and in the tropics you need aircon. So we sent the car to the dealer we bought it from and asked them what was wrong.
They told me that both the compressor and the turbo needed to be replaced. Now I have to say I was taken aback by this. We’re talking about a BMW here and although I’m no petrol head, I was confident these components should last more than 30 months, especially as BMW prides itself on the longevity of its parts (assuming longevity is more than a couple of years). So I scoured the Internet looking for complaints about the X3 turbo unit and compressor and couldn’t find any!
One website http://www.consumeraffairs.com features an astonishing 786 complaints about BMW but as far as I can see not one of them is related to these 2 components. Another site, http://www.bimmerforums.com also has a surprisingly large number of complaints about BMWs but nothing about these components which again suggests to me once more that I was just unlucky and got a car with 2 faulty components. After a great deal of searching, all I could find was one poor BMW user who had to wait 22 years before he could replace his compressor.
As for the turbo issue, most online discussions around the current generation of turbos suggest a lifespan of up to 250,000 miles. I thought that was a little ambitious so I halved it which meant I should get 125,000 miles or about 200,000 kms. My X3 has done less than 100,000 km and the turbo is kaput.
Unless the longevity of your components means no more than 2.5 years, I think you’ll agree that these two bits of hardware should last considerably longer than they have done on my car. I also own a Mercedes C250 and a 5 year old Suzuki and neither of these cars have any problems with these or other major components.
I contacted my dealer and asked them to replace the parts free of charge because it doesn’t take a rocket scientist to realise I was just unlucky and had got a faulty car or at best a car with faulty equipment. And in today’s transparent, human environment and with your focus on the customer as well as our long association, I thought this would be a relatively simple process. After all, all I’m doing is asking BMW to take responsibility for the issue.
At the same time, on December 18th 2014 I wrote to BMW customer service in Munich and received an unsigned email the same day telling me my complaint had been forwarded to the relevant department for assessment. I can only assume that assessment is continuing because as of today, 19th January 2015 I haven’t heard from anyone.
Meanwhile the dealer immediately offered a discount of 20%. I took this as a sign that he agreed with me because logically if it was common for these components to fail so quickly, they wouldn’t have offered me a discount. I wasn’t happy with this discount and realizing the dealer isn’t the manufacturer, I decided to contact the head of BMW Malaysia.
The only way to get hold of Mr Harris is through his secretary. I don’t know if she passed my email to him because he didn’t reply (but she did tell me when I called her that he is very busy) but she did pass the email to staff in customer service (the irony) and for some reason to the after sales area manager who was the only one to contact me, unless you include a variety of automatic ‘out of office’ emails as contact.
The After Sales Area Manager wrote to me (spelling my name wrongly – that really bugs me because it suggests sloppy standards and that’s not good in the automotive industry, ask British Leyland and a host of other dead automotive brands).
In his letter he informed me that BMW cars have a 3 year warranty on paint defects and 12 years unlimited mileage against paint corrosion and a bunch of other irrelevant stuff that just rubbed salt into my wound.
So I wrote back to him suggesting it is only right and fair that BMW takes full responsibility for these defective components and replaces them free of charge. I asked him as the representative of BMW to accept this responsibility and ensure this negative experience doesn’t escalate further.
Later he called me and we spoke for about 10 minutes. I once again explained the problem and when I finished he said it didn’t matter because BMW was not going to replace the parts free of charge and that “You have a contract with the dealer not BMW.” Stunned at this response I asked him to pass me to someone in customer service or management who might be a little bit more empathetic but he refused saying, “I’m not going to escalate this higher.” Shocked I told him that in that case I would take my complaint public and he laughed and said, “I’m going to end this call because you are wasting my time.”
And that’s as far as I got. All I wanted was you to accept responsibility for a couple of substandard parts. To see the bigger picture and give a little bit back after 25 loyal years and numerous positive recommendations. But I didn’t get it. There was no empathy, no demonstration of your customer focused values, despite what you say in your recruitment video and a complete lack of concern over my situation.
So as it stands I really can’t see myself buying another BMW because I’ve lost faith in the brand. I really like the clever way you use a German speaking Chinese lady to communicate your caring and customer focused culture and “reaching out to the individual and speaking to him in a very personal way” but as a customer, I’m not feeling it.
Certainly that culture hasn’t filtered through to the people in your office in Malaysia. Certainly not the one who told me “he was going to end the call because I was wasting his time”. And contrary to what the confident girl said in the video, the culture of your company appears to be very different to what it actually is.
My friends will probably be happy because I’m a very vocal brand advocate so at least they won’t have to listen to me yapping away at how great BMW is. But they do have to listen to me whine about the cost of the repairs.
We’re going to miss those beautifully packaged boxes you send out with the “exclusively for BMW white card owners” on them that include a desk calendar for me to promote you and a brochure with ‘special offers’ that are not as good as I can get myself if I go directly to the company but I know you mean well.
So it looks like it is goodbye from me, your friend and advocate of 25 years.
It has been scientifically proven that almost everyone remembers negative events more clearly than positive ones. Apparently it is something to do with spending more time processing negative information more thoroughly than positive information.
This probably explains why most of the mass media and consumer generated content about Malaysia Airlines is negative.
Of course its disjointed and poorly thought out marketing tactics and privatization programme aren’t helping but you can read about that here.
When a firm experiences a run of bad luck, it needs to be on top of its game when it comes to engaging consumers and restoring confidence in its ability. It also needs a bit of luck and that luck can appear in many different ways.
Yesterday Malaysia Airlines flight MH2 from Kuala Lumpur was carrying the irrepressible London Mayor Boris Johnson who had been working his magic on a trade trip in the region. During the flight a passenger described by one of Mr Johnson’s staff as being ‘off his head’ got abusive and had to be restrained by the MAS staff, with a little help from Boris.
MAS crew perform admirably in difficult situation
Police met the plane in London and the passenger was taken away and later charged. When asked about the Malaysia Airlines crew, the Mayor’s staff had nothing but praise. Eileen Burbidge travelling with Mr Johnson said, “so impressed w/MH2 cabin crew (Kuala Lumpur-LHR); amazing professionalism/handling of passenger who was off his head.”
This small but significant event is a great opportunity to start the process of rebuilding the MAS reputation. It isn’t enough to salvage the airline’s reputation but it is a good place to start.
Here are six things the airline must do immediately to get the most out of this good news story:
1) Write a number of stories about the event from different angles. Include interviews with the cabin crew, other passengers and of course Mr Johnson. Share the articles across multiple platforms.
2) Meanwhile share the mainstream press stories across social media and encourage others to also share them.
3) Share the video of the event across all channels.
4) Get cabin crew involved on TV chat shows to talk about their lives with MAS, the event and other events and how they deal with them.
5) Hold informal internal coffee mornings for other staff to interact with the crew and learn from them and build morale.
6) Monitor social media discussions about the event and contribute to those discussions. Also comment on discussions and articles and follow up with responses to those comments, even if they are negative. Not from a corporate perspective but from a human one.
The rejuvenation of the MAS brand and its reputation will take more than privatization, a new name, renegotiated supplier contracts and redundancies.
The airline must restore consumer confidence in its ability to offer a professional, competent, efficient and effective service. The performance of the staff in this potentially explosive situation is the first step in that process and it must be leveraged effectively and organically to maximum effect.
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.
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.
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.
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.
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?
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.
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…
brandconsultantasia.com 