profitability

Brand perceptions of 1 brand can be influenced by small, unconnected actions of others

Published on 05/11/2019 by brandconsultantasiaLeave a comment

Here’s a cautionary tale about how the innocuous actions of one brand can influence perceptions of another brand as well as cascade into more complicated issues.

At the end of October 2019 I flew into Kuala Lumpur International Airport from Narita, landing at 0500 hrs. On arrival at KLIA, I have 2 options to get to my house, Grab or the KLIA airport limousine service.

I intended to use Grab but when I arrived, I was prompted to take my picture for authentication purposes. As I’ve cracked my screen right over the forward facing camera, this wasn’t an option.

So the only option was the airport limo service. I couldn’t find an app for the service and their website doesn’t list the fares so I needed to use the booths at the airport.

I knew from memory that arriving between midnight and 0600 hours means I incur a 50% surcharge, which is fair enough.

As I walked through customs and reached the Airport Limo counter, it was closed. Fortunately I know there is also a counter at the domestic arrivals but I did wonder what the Japanese families who were on the same flight would do if they intended to take a taxi downtown.

Walking to the domestic arrivals area, I was approached by two illegal taxi operators who offered to take me downtown for RM200, almost double the expected airport limo rate, even after the surcharge.

Of course I told them to get lost but there are numerous stories on the internet of people who have been duped by these unscrupulous operators and I wonder if they approached any first time visitors, would they have paid the inflated price?

As these are not licensed operators, I presume they are not insured.

Anyway, when I got to the domestic taxi counter, I asked why the counter at international arrivals was closed and the young man replied, ‘Not closed, they are asleep.’

Now while I respect his honesty he shouldn’t be saying that. I mean, what sort of message does it send?

Finally, this frustrating and underwhelming brand experience ended with me walking out to the car where the only 2 drivers were talking to each other.

As I got in my car, the driver continued to chat with his friend. He then got in the car and continued chatting. It was all very casual, as if me the customer was more of an irritant than his only source of income.

But it also showcases the lack of appreciation for the customer that is so common in Malaysia.

It’s as if there is an assumption that there will always be an unlimited source of customers. This is especially common with those businesses that are monopolies.

This despite what happened recently to established businesses such as the taxi industry that has been decimated by travel disruptor Grab.

What are the branding lessons to be learned from this simple yet important interaction? The issue here is one of stakeholder communication and brand management.

These brands need to ask themselves why the booth at international arrivals is closed at a time 100s of passengers are landing at KLIA? How often does this happen?

Do staff sleep every night? If yes, what is the direct and indirect impact on revenue and reputation?

Why are the brand front liners so ill prepared for a simple customer question? Have they not been trained properly? What else do they answer so naively?

What can be done to fix the problem? How can staff be trained to present a more professional explanation? In this case, a simple response to such a question could be, “Sorry sir, they are changing shifts and will be back online in 5 minutes.”

There has been a lot of talk about illegal taxi operators at KLIA and how there is a zero tolerance toward them. That doesn’t seem to be the case in reality.

This isn’t just an issue for the KL taxi service, it’s also an issue for the Malaysia nation brand and the airport operator.

If tourists unwittingly use an illegal taxi and they are involved in an accident, incur medical expenses or worse, are killed. Who is accountable? Are the authorities, through lax enforcement, culpable?

Will it take a serious accident causing injury or even death to tourists to make the government do something?

What will be the impact on the brand if there is an accident and it goes viral? What damage will be done and how much and how long will it take to address the negative impact on the brand?

What will be the consequences of such an event on potential visitors or investors in the country? Will they potentially choose an alternative destination or review Malaysia as an investment option?

If illegal taxi operators are allowed to function without fear of prosecution, how does that impact the airport’s relationship with legal operators? If illegal taxi services can operate freely, why should legal operators follow the rules?

In the future, could those legitimate operators sue Malaysia Airports for loss of income?

What about the reputation of the police, already under fire in Malaysia for numerous issues ranging from drug abuse to mysterious disappearances, corruption and more?

What about the reputation of PDRM, will it be further tarnished by illegal touts operating with impunity at the airport?

If a Minister has stated there will be zero tolerance to illegal taxi touts why are they still operating? What impact will this have on future statements from the Minister, a representative of the government?

Successful branding requires all stakeholders to work together, to understand what is their responsibility to the brand and what is required to deliver a seamless, positive brand experience at every touch point every time.

This simple example of a seemingly innocuous event with one brand has the potential to negatively impact numerous other brands. Every business should look at branding from the same perspective and not in isolation.

It’s potentially complicated but the rewards for all stakeholders are positive and for commercial organisations lead to greater profits.

The Malaysia Airlines tie up with Liverpool may sell tickets, but it won’t rebuild the brand

Published on 14/02/2017 by brandconsultantasiaLeave a comment

The English Premier League is broadcast to 70% of the world’s 2.1 billion football fans in 212 countries and territories around the world. Asia and Oceania represents 35% of that global audience.

In China alone, up to 18 broadcasters show nearly every game every week to more than 350 million fans across the country.

As of last year, a number of Asian brands including Thailand’s Chang beer (Everton) and King Power (Leicester City), Japan’s Yokohama Tyres (Chelsea), Yanmar and Epsom (Manchester United), Hong Kong’s AIA (Tottenham Hotspur) and GWFX (Swansea City) could be seen on advertising at grounds and/or on shirts.

Betting firms such as 138.com and UK-K8 who are targeting Asia are represented on the jerseys of West Bromwich Albion, Bournemouth, Watford and Crystal Palace.

In the championship, AirAsia sponsors Queens Park Rangers and Malaysia has a relationship with Cardiff city. Last year Malaysia Airlines signed a three year deal to be the official carrier of Liverpool after Garuda Indonesia relinquished the role.

Any reference to Malaysia Airlines on the Liverpool Facebook page?

Football has become popular with big global brands because of its impressive reach and because traditional channels such as TV are becoming fragmented as new services like Netflix, iflix and Amazon prime as well as Youtube, Facebook and others make it increasingly hard to gain the eyeballs all brands insist they need.

Football gives these brands the opportunity to reach a mass audience as well as be associated with what is obviously a very popular sport.

But in an economy driven not by what a company says it does but by what its customers experience, I question the relevance or validity of this approach.

I also think that if the logic is that by supporting a football team, a brand reaches out to all that team’s fans then surely fans of other teams will not support that brand?

And what if the team does badly? How does the association with a badly performing product reflect on the brand?

Take the case of Malaysia Airlines and Liverpool. Liverpool is one of the greatest, most iconic football clubs in the UK. The club was established in 1892, four years after the original premier league was set up.

The club’s trophy cabinet contains eighteen domestic League titles, seven FA Cups and eight League Cups, more than any other club.

They’ve also won five European Cups, three UEFA Cups and three UEFA Super Cups which means they’ve won more European trophies than any other English team in history except Manchester United (also 41).

That’s an impressive record but there’s a problem, they haven’t won an EPL title since 1992. Does that matter? Well it should do.

Does a brand such as Malaysia Airlines, which is going through a business turnaround plan to make it more competitive, efficient and effective, want to be associated with a team that hasn’t won anything significant for nearly 40 years?

And over the last few years, Liverpool has developed a reputation for poor winter form. The team won 2 out of ten matches at the start of 2016. In January 2017, Jurgen Klopp’s team lost 3 matches at Anfield in one week and as a result, was unceremoniously dumped out of two major competitions.

The team narrowly missed their worst run of losses at home since 1923 with a 1-1 draw against Chelsea at the end of January but the poor form continued into February with the recent 2-0 defeat away to lowly Hull City, 15 places below them. Only time will tell if last Saturday’s win against high flying Tottenham was the beginning of a new dawn or a flash in the pan.

If the latter, how does that reflect on Malaysia Airlines?

The Malaysia Airlines logo appears at the bottom of the home page, between the beer and the donuts

Liverpool are now 13 points off the leaders Chelsea and definitely under achieving.

Sure Malaysia Airlines is getting the eyballs, assuming viewers are watching the LED panels around the ground but is it the right environment for the brand? Is being associated with a team that is underachieving going to leave a positive impression?

You could argue that all Malaysia Airlines is doing is trying to raise awareness. But is raising awareness the right way forward? Is there anyone out there NOT aware of Malaysia Airlines?

Before Malaysia Airlines stepped in, Garuda International was the official carrier of Liverpool but after three years and a comprehensive study to determine if the airline was benefiting from the sponsorship, they pulled the plug. Surely if they felt they were getting value for money, they would have stayed on?

Garuda wasn’t the only sponsor to see little value in sponsoring teams in the EPL. In June 2016, Chinese smartphone maker Huawei ended its relationship as “official smartphone partner” to Arsenal after two years, citing “limited visibility.”

Malaysia Airlines hasn’t disclosed the amount it is paying to be the official carrier but Garuda forked out US$9 million (RM40 million) a year for the privilege.

So if Malaysia Airlines is paying the same (probably more but anyway), that’s US$27 million or RM125 million for brand exposure on LED and static boards at each home game, exposure on the Liverpool FC website which seems to consist of the logo at the bottom of the page, in publications and on the Facebook page although a quick look at the Liverpool page failed to find any reference to Malaysia Airlines.

The package is also supposed to include co-branding opportunities, merchandising rights and pitch side access with players and legends.

That’s a lot of money to pay to increase awareness of an airline that is probably known to everyone on the planet. But Malaysia Airlines CEO Peter Bellew thinks the deal, “has changed perception radically for us, in China, in Thailand, in the U.K.”

He didn’t explain what the perception of Malaysia Airlines was before the deal and how advertising on LED panels can change those perceptions.

The first game at which Malaysia Airlines appeared was a Liverpool v Manchester United match at the beginning of the 2016/17 season.

Liverpool managed to hang on for a draw, not an auspicious start. During the game, Malaysia Airlines advertised roundtrip fares between Kuala Lumpur and London at a ridiculously cheap £395 (RM2,299).

Branding is not about sales, it's about relationships — Branding is not about sales, it’s about relationships

Confusingly, Bellews credits the passenger load increase on the Kuala Lumpur to London route from 45% in May 2016 to 63% in December 2016 to the Liverpool deal and was quoted in one newspaper as saying, “Old-fashioned sales and marketing works.”

Slashing prices to the bone and spending RM125 million to raise awareness (and to change perceptions) and tell football fans you are selling tickets at £395 when other airlines are selling the same route at £500 isn’t really old fashioned sales and marketing, it’s just old fashioned and more importantly, unsustainable.

And to be frank, it’s hard not to fill a plane from Malaysia to the UK in December as thousands of expatriates head home for Christmas and thousands more Malaysians head to Europe for the long holiday.

Irrespective of the fact that Malaysia Airlines is sponsoring a weak product, there is also the question of whether football fans in Asia, watching matches as they do in coffee shops, bars and roadside stalls at 2, 3 or even 4am really take in the messages on the LED billboards.

And even if consumers do take in and accept the limited messages that can be communicated on a pitchside screen there is another flaw to this process. What if performance doesn’t match any perception created?

Of course in the ‘old fashioned’ world that didn’t matter because the focus was more on acquistion anyway and there was a belief that there were always going to be new customers.

At least that’s what TWA, Swissair and the other 300 airlines that have failed over the past 50 years thought.

Brands such as Malaysia Airlines generally succeed, or fail not based on their advertising, positioning or associations but on operational issues, service capabilities, retention and the experiences of others we relate to.

The problem for Malaysia Airlines is that today, all of the above are played out on Facebook, in the letters pages of newspapers and in the comments sections of popular bloggers.

Dissatisfied customers can change perceptions and damage brands on social media much faster than those brands can change perceptions through pitchside LED screens.

In the ‘old fashioned’ world, brands reached out to the masses. Awareness and sales took precedent over customer development.

I get the feeling that Malaysia Airlines is focussing too much on getting back into the black, no matter what the cost. Selling tickets at RM2,299 and old fashioned sales and marketing tactics may just do that.

But what happens when the carrier wants to increase prices? If Malaysia Airlines has been attracting price conscious customers, won’t they move on to the cheapest carrier?

And if this model is successful, then it will probably be the next advertiser on those LCD screens.

10 things to do to save the Malaysia Airlines brand

Published on 28/05/2014 by brandconsultantasia15 Comments

If Malaysia Airlines (MAS) makes it to 2015 and beyond, 2014 will probably be remembered as an annus horribilis for the beleaguered brand. In fact it may go down as an annus horibilis for the Malaysia Nation brand but we’ll discuss that another day.

MAS weren't ready for the ferocity of the global media — MAS weren’t ready for the ferocity of the global media

Certainly the first half of 2014 has been desperate for MAS with missed revenue targets, ineffecitve advertising campaigns universally mocked by the industry, reports of alleged sabotage, police investigations, negative press about the customer experience and of course the tragic circumstances surrounding MH370 and the subsequent weak handling of the global media by the airline.

The once mighty airline, an early poster boy for national carriers is struggling on a number of fronts with two big questions 1) Can MAS survive and 2) should it be allowed to fail? being asked in coffee shops, boardrooms and even in schools.

Mass media advertising does not build brands. THe sooner MAS understands this, the better

The answer to 1) is yes, and to 2) is no.

But to survive, someone is going to have to get very, very tough because MAS is in a mess. Since 2007, MAS has made 3 cash calls to the tune of RM7 billion (US$2.1 billion) and over the last 3 years has accumulated losses of RM4.1 billion (US$1.2 billion). Whatever they are doing isn’t working.

Morale is low, bookings are down especially from normally busy and profitable routes to and from China, the unions are throwing their weight around even though the airline is terribly over staffed – you only need to go to KLIA to see so many staff sitting around doing nothing and I heard one story recently of a new person who arrived to find someone asleep (with a pillow) at his desk.

Just to get an idea of the situation, Singapore airlines (SIA) has a fleet of 104 aircraft (MAS 107), flies to 62 destinations (MAS 61), has revenue of RM36 billion (MAS RM58 billion) and is staffed by 14,000 people (MAS 20,000) and yet in 2012 made RM1.150 billion ( during the same period MAS lost RM400 million).

SIA is flying to the same amount of destinations, operating the same amount of aircraft and using at least 6,000 less employees to do it. It turns over only about 60% of what MAS turns over yet makes an impressive profit.

Or is it this? — What is the MAS brand identity? Is it this?

Os is this the MAS brand identity?

MAS needs a new strategy but cutting costs is not the way forward. In the interests of nation building and to ensure morale and belief in Malaysia doesn’t plummet further and to turn MAS around quickly, the firm needs to carry out a number of key initiatives immediately starting with

1) All suppliers have to accept that their existing agreements must be cancelled and be given the opportunity to submit new proposals that are acceptable to the airline. If they cannot agree terms, new tenders must be issued.
2) Moving forward, all procurement activities must be done transparently.
3) The unions have to understand that 5,000 staff must go. The government must underwrite any redundancy packages for 12 months to encourage staff to leave and reskill these staff to ensure they find work immediately.
4) Training of staff, especially front line staff has to be ramped up because these people are key to the success of the brand and at the moment their customer engagement skills are simply not good enough. But training providers must be recruited transparently.
5) MAS must review it’s sales policies, processes and systems. Right now they are not leveraging effectively on key opportunities such as the Enrich database.
6) MAS marketing and advertising is stuck in a time warp of mass media mediocrity. It needs to stop wasting huge amounts of money (I was told RM400 million in 2013) on irrelevant advertising campaigns and review it’s marketing approach now.

You can’t build a brand using mass media so stop trying to do so

7) MAS must understand that customers build brands not advertising departments. The new strategy must focus on the customer and delivering economic, experiential and emotional value to its customer segments and on their terms.
8) MAS appears to have 3 brand identities at the moment. It’s a mess and needs to be revamped quickly and there has never been a better time to do it as the MAS brand identity is tired and old and associated with MH370.
9) Successful airline brands today are innovative, creative, nimble and move fast. I remember being in discussions about updating the uniform in 2003. 11 years later it is essentially the same.
10) Years ago MAS aggressively marketed it’s Enrich programme and encouraged anyone to sign up. But the programme is antiquated and a mess. Children get offers to sign up for credit cards, there is limited segmentation and personalisation and opportunities to reward and leverage brand loyalists and identify and nurture influencers are missed.

Used properly, the MAS FFP is a potential revenue gold mine

There is an obsession at the moment that cutting costs is the way to make MAS profitable. It is the wrong approach. However by understanding the importance of branding and spending money on the right brand strategy and integrating that brand strategy with the corporate restructuring plan, significant savings can be made and crucially, those savings (obviously) save the company money but will also generate more income by negating the competition, increasing share of wallet and allowing MAS to increase not decrease ticket prices.

How Malaysia Airlines can rebuild its troubled Brand

Published on 03/03/201403/03/2014 by brandconsultantasia4 Comments

Malaysia Airlines (MAS) embarked on a massive restructuring plan towards the end of 2011 with the goal being to reduce costs and return to full year profitability in 2013.

At the same time, the airline reported a staggering RM2.52 Billion (US$850 million) loss for 2011.

MAS didn’t realise its stated goal because in late February 2014, the national carrier posted a 2013 net loss of RM1.17 billion (US$356 million). This was almost three times the airline’s 2012 net loss of RM432.6 million.

So despite the restructuring plan, MAS lost RM4 billion in 3 years. Ouch.

In 2012, one assumes as part of the restructuring plan, MAS announced a business strategy with two key strategic elements – one to focus on the premium sector and the other to focus on the competitive Asian market.

I don’t know what the airline’s definition of the premium sector is but bearing in mind premium passenger numbers appear flat, a large chunk of its business comes from the domestic government and the price sensitive kangaroo routes, this may be a major challenge.

Furthermore, I’ve seen nor heard of any premium customer strategy or tactics. The ‘Flying in luxury’ section of the March 2014 issue of Going Places offers little insight into what might be happening. Even the benefits of being a platinum member of the Enrich programme haven’t changed in a long time.

Premium passenger numbers appear flat

Of course they could be referring to the upgrades to the business and first class check in counters at KLIA. Whilst they are an improvement and certainly add an air of exclusivity to the experience, they are hardly ground breaking. And the attitude of some of the staff manning these counters is often indifferent at best.

But I digress. About 18 months ago, MAS announced that it was doubling its marketing budget. The marketing budget is reported to be as much as 2% of revenue which means that in 2012, MAS spent more than RM550 million or US$190 million to focus on the premium sector and the Asian market in an attempt to rebuild it’s battered brand. That’s a tidy sum. Did it work? Based on the latest figures, no.

In 2012, the company announced it will provide a ‘better and more branded customer experience and embark on a major advertising and promotions campaign′.

I don’t know exactly what is ‘a more branded customer experience’ but as a frequent flyer of the airline I haven’t witnessed a change in or better customer experience although the terrifying vibrations at 38,000 feet on a 737 flight from Kuching to KL in January 2014 were new but I don’t think that’s what they meant.

And judging by the negativity across the Internet it would appear few others have experienced an improvement in customer experience.

In 2012 talking about the appointment of Ogilvy and Mather as the airline’s agency, Al Ishal Ishak the senior vice president for marketing and promotions stated, “2012 will be a breakthrough year for Malaysia Airlines on our path to recovery. We recognised, however, that we could not achieve financial success without clearly defining our brand positioning.”

He went on to say, “Ogilvy understood this and throughout the pitch process were best able to translate our message into a powerful campaign idea. An idea that is big enough to help us transform our business and truly engage our customers like never before.”

Judging by the advertising campaign that soon followed, I can only assume that idea revolved around journeys and suitcases. It was, in my humble opinion one of the worst advertising campaigns I have ever seen. I wrote about it here and you can see the TVC below.

What is really depressing about this whole depressingly familiar scenario is that the O&M advertising campaign aims in part to create awareness and drive visitors to the MAS website. And if improvements were to be made to the experience, one would expect logically that the website experience would be the first experiential improvement.

Sadly no, despite a RM550 million marketing budget which I hope wasn’t spent just on the O&M advertising campaign, the first page of the MAS website has a bug in it that frustrates visitors every time and the bug hasn’t been fixed for at least a year!

Another area that one would expect to be addressed during the improvements to the customer experience would be interactions with the customer service department but again, judging by this negative blog posting, the airline has not managed to deliver on its promises.

So now that MAS has posted another net loss, despite doubling it’s marketing budget to clearly define it’s brand positioning and despite not improving the customer experience, what can the airline do now to salvage its reputation and rebuild its brand?

Here are 20 things MAS needs to do now to improve its brand

1) You and the unions need to wake up to reality and appreciate that market conditions are such that unless you get rid of a large number of staff, the airline will be on my list of brands that won’t make it past 2016.
2) The organization is the brand. Many MAS staff are trying really hard but they are let down by those that don’t care. Current middle management systems don’t seem to be working. Fix them.
3) The six principles to turning around an airline and used successfully by Air Canada, ANA and Aeroflot and probably being used by MAS (a logical assumption bearing in mind the influx of management from Air Canada) include a zero compromise on quality of customer service, investments in staff training and better internal and external communications. The company is failing miserably in all these activities and needs to carry out a comprehensive review and overhaul of current practices and service providers in these critical areas.
4) Forget about the big idea. In the social economy, when consumers not companies define brands and those consumers are spoilt for choice and rarely believe what advertisers tell them, the one size fits all ‘clearly defined’ brand positioning campaign is a futile exercise that does nothing more than waste valuable funds. In this case, RM550 million of valuable funds.
5) Focus instead on consistent, ongoing, personalised engagement with each of your very diverse audiences. And start with your Enrich database! Segment that database in a way that allows you to deliver value to relevant segments today and not segments that belong to the 1980s. Travellers are segmenting into smaller niche, groups and individual travellers and they are willing/able to manage the whole process themselves. Talking to them requires more than an advertising campaign. See point 5.
6) FIX THE BLOODY BUG IN YOUR BOOKING ENGINE! It doesn’t matter what it costs just fix it! If your global advertising campaign did make a prospect visit your site and she then had to go through the ridiculous moves required to enter a destination or departure city, they’d soon leave thinking, ‘if they can’t make a simple fix like that, what are they not fixing on their aircraft or elsewhere?’

Why is it so hard to fill in the ‘to’ and ‘from’ fields?

7) Because it’s so important, your database gets a double mention. A chunk of your brand’s profitability will come from your existing customers. Instead of spending RM550 million on an outdated advertising campaign that seems to want to acquire and retain customers, start to use what is probably one of the most comprehensive databases in South East Asia, properly.
8) Focus. These ‘one-size-fits-all’ advertising campaigns are an expensive exercise in naïve futility. Put an end to them now. If I’m repeating myself its because the marketing budget is being wasted on outdated mass market models.
9) Don’t do social, be social. Pushing one size fits all advertising campaigns out across social media is pointless. It’s not a television or a radio so don’t use it like one. Social is dynamic and you need to be dynamic to get the most out of it. Stop using your Facebook as another broadcast platform. And stop ignoring negative comments and blog posts and instead, engage with the authors.
10) Integrate all your solutions to make it easier for consumers to use them. 40% of business travellers and 25% of leisure travellers in Asia now use mobile or tablets for travel but as far as I can work out, the MAS app (when I can get it to work) isn’t integrated with my online profile. Why not?
11) Stop spending, no wasting huge amounts of money on forgettable mass market advertising campaigns and start building a brand.
12) Train your staff, and start with your customer relationship staff. Whoever is doing it now isn’t doing a good job. Find someone who really wants it and make your staff the best in the world.
13) You have a legion of brand angels out there who are desperate for you to succeed. Do you know who they are? If not, you need to identify influencers and quickly leverage on their passion for your brand.
14) Seek new revenue streams. Of course you are already doing this but there are a couple of opportunities that you are not exploiting and you should be.
15) You are not a low cost carrier so stop trying to be one.
16) Get those new aircraft, now.
17) Stop focussing on costs and start focussing on delivering value.
18) Don’t compromise on anything related to customer touch points, whatever the cost.
19) Image is everything. The change in the look of some aircraft was a great development but what about the rest of the fleet? There seem to be three different liveries for the MAS fleet. And what about the uniforms? A partial change was made to some male uniforms but what happened to the rest of them? Is this a strategic project or an ad hoc one? Whatever it is, consistency in a brand image is a must.
20) One last comment on segmentation. Each segment within each country has completely different requirements for value. In Indonesia small businesses employ 80% of employees. In Malaysia, SMEs account for as much as 99% of businesses. In Japan, 20% of leisure travel is by the over 65s. What do you know about these segments and do you have a brand strategy to communicate with them?

Not many legacy carriers have remained profitable following the intense competition in the airline industry. Even without the massive interference of the governments of the past, MAS has found it tough to adapt to increased customer expectations, LCC competition, fluctuating fuel prices and rising costs.

The days of using cost cutting and outdated mass marketing communications campaigns to drive restructuring plans are over. The future will require an even more nimble approach and a focus on delivering value to diverse segments on their terms.

Only then can MAS out maneuver budget airlines and other new entrants into the market and become profitable once again.

5 Global Brands that will fail in 2014

Published on 02/01/201402/01/2014 by brandconsultantasia2 Comments

Business today is brutally competitive. Many brands that have done the hard graft to get to the top of their industry, fail to stay there. It used to be that if you made it to the top you were sitting pretty. Not anymore, getting to the top is the easy part. Staying there is now the difficult bit.

Just ask these 5 brands who are unlikely to make it to Christmas 2014.

5 VOLVO
Volvo doesn’t appear to have a sound strategy for Asia and the US markets. Read more about Volvo’s fragmented communications campaigns with different messages.

Volvo ad campaign tried to convince consumers it was wicked!

Crucially, Volvo doesn’t have enough models and is forced to compete in Asia and the US with entry level vehicles from luxury marques Audi, BMW and Mercedes as well as giants like Toyota and GM.

In the United States, Volvo’s market share hovers around the 0.3% mark. In Thailand, the largest automotive industry in South East Asia and the 9th largest in the world, Volvo has had a presence since the mid 1970s yet it only sells around 2,000 cars a year out of a predicted 1.3 million vehicle sales for 2013. In Malaysia it’s less than 1,500 out of a total industry volume of almost 600,000.

Volvo was bought by China’s Geely group in 2010 for US$1.6 billion. Geely targetted sales of 200,000 cars a year in China by 2015. To meet these targets, it’s rumoured that the dealers in mainland China inflated sales figures to generate cash incentives that should have gone to customers but were in fact retained by the sales force. It’s thought that as many as 20% of sales in China were ‘fake’.

A messy marketing approach, limited models and falling sales in key developing markets. Volvo needs to get its act together quickly if it wants to be around in 2015.

4 NOKIA
The Finnish handset giant has gone from hero to zero in a heartbeat. In 2010 Nokia, sold 450 million handsets, outselling Apple 10 to one.

Consumers don't want phones they want smartphones — Consumers don’t want phones they want smartphones

But Nokia’s mobile phone market share was already falling, from a high of 36.4% to 28.9% in 2010.

In 2012 the firm sold 16 million of its flagship Lumia handsets. In the same period, Samsung sold 384 mobile phones while Apple sold 125 million iPhones.

Nokia makes great phones. The trouble is consumers don’ want great phones they want great smartphones and a smartphone needs a good operating system.

And Nokia made the mistake of backing the wrong OS horse when it backed Windows mobile. A big mistake that it acknowledged when it went public with its frustrations with Microsoft’s failure to give smartphone users a good enough reason for using Windows.

As 2013 closes, Nokia is worth 10% of what it was 5 years ago and tragic though it is, Nokia is probably doomed.

3 DELL
Dell makes PCs. Lots of them and very cheaply. In 2000 it made more and sold more than any other company. Dell used to have very good customer service but somewhere along the way, Dell stopped focussing on its customers and focussed instead on producing cheap PCs.

But as Dell is finding out the hard way, cheap is not a differentiator. Worse still and unfortunately for Dell, global PC sales are tumbling as tablet sales skyrocket. So it now has a larger share of a declining market and a poor reputation with customers (a death sentence in the social economy if every there was one). No doubt this is major factor in the fact that in its fiscal second quarter, net income was down 72% from the same period a year earlier. That’s not good.

In September 2013 Dell shareholders approved a US$25 billion buy out by the founder Michael Dell and Silver Lake. This will allow Mr Dell to make acquisitions, increase R&D spend and target new markets away from the scrutiny of Wall Street. Mr Dell has also expressed considerable interest in next generation cloud based services to improve the way businesses operate.

This may keep Dell alive past December 2014 but it will be a very different company to the one we know now.

2. WINDOWS
In the mid 1990s Windows had over 90% of the computer operating system business. Today that share has shrunk to about 15% for sales of new devices and according to Gartner it is unlikely Windows will ever get back much above 15%.

Windows mobile may bury the brand

Windows 8, launched at the end of 2012 was supposed to give the mobile operating system a boost but it failed to ignite much interest and Windows phone now has 2.9% of the smartphone operating system market.

This despite advertising spend of more than US$9 billion over the last 10 years. Windows is probably too big to fail, but if Microsoft doesn’t sort out experiential problems with Windows, especially Windows mobile it may well crash and burn in 2014.

1 BLACKBERRY
The BlackBerry story is the most tragic of corporate tales. Originally Research in Motion, the company was renamed in 2014 but that hasn’t helped the company arrest rapidly declining sales and revenues.

At its peak, BlackBerry was the third biggest handset maker, thanks mainly to its BlackBerry messenger that allowed users to send messages to each other for free.

BlackBerry was once the 3rd biggest manufacturer of mobile devices. Will it make it to 2015?

For a while a BlackBerry was a major status symbol in Asia, especially for aspiring teens. But that all changed with Whatsapp and other free services and since then, BlackBerry has lost ground to Apple, Samsung, LG and other mostly Asian smartphone makers who are more nimble and aware of changing consumer needs.

New models and a revamped operating system were launched in 2013 but they failed to have much impact and in 3Q2013 BlackBerry revenue was down 56% over the same period in 2012.

Towards the end of 2013 over 4,500 staff or 40% of the workforce were made redundant and the firm is desperately trying to reduce expenses by a further 50%.

The one bright light is the BlackBerry Enterprise Server (BES 10) that has seen a rise in installations in 2013. Revenue from this ‘service’ business makes up half of the company’s income. If anything happens to BES 10 the firm will go under.

Why these 5 brands? I used a simple methodology to determine which brands are likely to fail. The key elements of the methodology are:

1. Reported sales figures
2. Competitor reported sales figures
3. Anecdotal reports of physical experiences with the brands
4. Professional view of the brand’s communications over a 12 month period
5. Manual tracking of Social media discussions by their existing or lost customers over a 2 month period

Let’s hope I got it completely wrong and these great brands are still around in January 2015.

Should you pay those who influence others?

Published on 02/09/2013 by brandconsultantasiaLeave a comment

This article asks a really pertinent question related to branding today – Should influencers be paid? The answer is an unequivocal yes however you need to be able to deliver on the promises you make otherwise such a tactic will come back and bite you.

Should influencers be paid? (via http://www.adigaskell.org)

As content marketing has risen, so has the value in attracting and securing the attention of brand influencers in your market. These people can often hold considerable sway in their particular niche, and as a neutral and impartial voice can be particularly…

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Malaysia Airlines won’t return to profitability with bland, boring TV commercials

Published on 20/06/201321/06/2013 by brandconsultantasia14 Comments

I don’t like to kick a man (or an airline) when he’s (or it’s) down, and despite a couple of good quarters, Malaysia Airlines (MAS) is certainly down.

The good quarters (following six straight quarters of losses) are a result of increased revenues thanks to better load factors and higher RASK (Revenue per available seat kilometer).

Just to recap, to avoid bankruptcy, MAS embarked on a massive restructuring plan towards the end of 2011 that included cutting unprofitable routes and reducing costs with the goal being to return to full year profitability in 2013.

Although the airline has done quite well, that’s unlikely to happen even though it is focusing on Asia and has stopped flying to costly destinations such as Buenos Aires, Johannesburg, Cape Town and oddly, Dubai. Giving up Dubai and Dammam suggests the carrier is surrendering to the aggressive carriers from the Middle East.

The most recent business strategy announced two key strategic elements – one to focus on the premium sector and the other to focus on the competitive Asian market. The announcement that the airline would go after the premium sector came at the same time as the partnership deal with AirAsia that has now been scrapped.

I’ve seen nothing to suggest the airline is courting premium customers and although it is good to see the airline understands the importance of segmentation, I doubt their ability to execute such a strategy.

Especially as the airline seems to be going the same old predictable route of using an advertising campaign featuring an irritating tagline (more on that later) to magically increase demand. And I’ve seen nothing else to suggest the airline is doing anything other than the usual advertising, print and PR tactics with a nod to social media.

And what an advertising campaign it is! I think this is the TV commercial.

I’m sorry but this has to be the worst commercial or video I’ve ever seen. It features people of various ages walking, cycling, swimming, jogging, directing traffic (I’m serious), reading newspapers, skateboarding, going to a meeting, graduating, bowling, clubbing and all with one thing in common – they are all carrying at least one suitcase! Yes, even the traffic policeman!! This really is rock bottom.

The print advertisement (which I’ve also seen on a billboard) features two men sitting on a wooden dock. They are both holding suitcases and the younger man has his arm around the older man and is looking into his eyes.

Sitting on the dock of the bay, suitcase in my hand

Does this image make anyone else uncomfortable? Here’s a close up to help you decide.

MAS also has a corporate video that starts off with a series of stock scenes featuring babies taking their first steps, dad playing with son, climbers etc and then cuts to old shots of MAS in the early days. Meanwhile the voice over tells us that life is made up of countless journeys. Getit?.

Then we get shots of computer generated imagery of the various planes used by the airline from past to present (didn’t BA do something similar?) before going back to the people shots – nice, smiling, friendly air hostess with kid – cut to boys jumping into lake – then back to nice, smiling people, tender, caring hostess and then, out of the blue we’re told the strangers we meet on our journeys give us courage – cut to skydivers – then back to lovers on beach, cultural harmony, pregnant couple and so on. I stopped at this point, unable to continue. Have a look instead.

One of the videos (I can’t remember which one and I have no intention of watching them again) features the Malaysia Airlines app that I really like but isn’t integrated with the website (or if it is I can’t figure out how to find my bookings made online on the app).

So if MAS is serious about increasing market share, what should the company do? Here are 5 things they need to start doing today.

1) Forget about the big idea. Focus instead on consistent, onging, personalised engagement with each of your very diverse audiences.
2) You probably have one of the most comprehensive databases in South East Asia. Start to use it properly.
3) Focus. These ‘one-size-fits-all’ advertising campaigns are an expensive exercise in naïve futility. Put an end to them now.
4) Don’t do social, be social.
5) Integrate all your solutions to make it easier for consumers to use them. Otherwise they defeat the object of developing them in the first place!

I’ve been flying MAS for over 20 years and I think it is a great product but it needs work. A lot of work. This traditional approach to brand building is not going to help steer the airline to full year profitability. They’d be better off throwing the money down a black hole.

What is Social Business

Published on 19/04/201319/04/2013 by brandconsultantasiaLeave a comment

We’re involved in the development of the Asean Social Business Summit to be held in Kuala Lumpur in May 2013. You can read more about the event here and visit the official site here

But there is a lot of confusion over what is and what isn’t social business. Social Business refers to enterprise collaboration & innovation that uses social technologies to boost corporate, customer and social value. Social Business does NOT refer to social marketing (PR) or social entrepreneurship (helping rural businesses).

This video argues businesses are still stuck in the Industrial Revolution and need to change and change fast. Importantly, it goes some way to explaining what is social business

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What is the difference between an advertising agency and a brand consultancy?

Published on 03/09/201207/09/2012 by brandconsultantasia20 Comments

As the consumer landscape changes and consumer habits and the purchase decision making process evolves, it is imperative that brand owners understand where, when and how to spend their valuable and increasingly limited resources.

Historically advertising agencies defined and controlled a brand’s message and through which channels it was broadcast. They would then blitz consumers with intrusive advertising and messages. The goal was to reach as large and as broad a target audience as possible on those platforms with the most extensive penetration.

But in the social economy, consumers have little faith in such corporate driven messages broadcast across mass media channels to which they are paying less and less attention.

Today consumers spend their time in a variety of social networks or in niche online communities with likeminded people. And it is to these people they look to when seeking information on products and services.

So does this mean the end of advertising agencies and advertising? Definitely not, there is still a need for good advertising agencies that create good work but the process has changed and the advertising agency can no longer be given responsibility for building brands.

In the past, branding and advertising used to be elements of marketing. Today, marketing and advertising are now part of branding and it is the brand consultant you should look to if you want to build a brand.

So here is an outline of the difference between an advertising agency and a brand consultancy. Hopefully this will give you enough knowledge to make an informed decision on who should build your brand.

1) Branding is strategic and advertising is tactical. The most strategic actions you will get from an advertising agency will be a brief. The brief will define the proposition that the advertising must communicate and to which segments. But then what? And what about internally? How will you get personnel on brand? Does the delivery driver or sales assistant know what their role is in the delivery of the promise/s made?

A brand consultant will develop a brand plan or brand blueprint that will drive the brand strategy, both internally and externally. This holistic approach will address all key elements of the brand from the copy used in recruitment advertising to customer facing departments and their ability to represent the brand to point of sale and retention strategies and more.

The brand consultant will then work with you to determine the best resources to use to get the whole organisation on brand.

It is not possible to define a brand through an advertising brief but it is possible to define a brand through a brand plan or blueprint.

2) Advertising agencies do advertising. That’s what they are good at. In fact some of them are very good at it. Advertising uses creativity and a slick message (normally defined by the organisation) to get your attention.

And this is done via campaigns pushed out across TV, radio, billboards, websites and so on. The idea is that enough people will see the campaign and the message will hopefully resonate with as many people as possible. And of course the agency gets a commission for placing these ads with the channels.

If it doesn’t work you either get the agency to come up with another creative idea and go through the whole process again, get rid of the agency, hire another one and hope they can come up with a creative campaign that does resonate or you can go out of business.

And as consumers have lost faith in traditional marketing and now distrust the messages contained in such campaigns or simply miss them because of the clutter, it is increasingly difficult to build a brand using such a model.

So unless you have very, very deep pockets and can advertise consistently for long periods of time, this approach is simply going to waste valuable resources.

A brand consultant will carry out an audit of your business, industry, processes, systems, stakeholders and more and then determine the best way forward for you.

Solutions may require advertising but will also look to improve R&D, sales, production, supply chains, operations, customer relationships and retention strategies.

3) If you are looking to go with an advertising agency, your strategy is likely to be in the hands of a creative director and his team. If the agency is going through a difficult period and doesn’t have many staff when they win your business, the agency will attempt to employ talent with experience in your industry.

Unfortunately, if the talent isn’t available, perhaps because they are working for competitor agencies, you will end up with sub standard people working on your brand and your chances of success are reduced further.

Because branding is a strategic institutional initiative, not a marketing initiative and therefore must have the buy in of executive management, a brand consultant will insist on having C level involvement in the development of the brand which places your brand strategy where it should be, in the hands of executive management.

4) Advertising agencies are often deemed successful if they have won lots of awards for creativity not whether a campaign increases sales or profitability.

There aren’t many awards for brand consultants which is a good thing because this allows them to focus on increasing profitability, often through developing and strengthening relationships with stakeholders and customers.

5) Most advertising focuses on a series of tactical initiatives to acquire customers. A brand consultant will develop a strategy to acquire and retain customers.

6) Traditional marketing activities are enormously wasteful as much of the advertising targets irrelevant demographics or customers that cannot afford or are not interested in the product. A recent report in the Harvard Business Review quoted a UK study that reported 72% of CEOs are tired of being asked for money from marketing departments without an explanation of how it will increase business.

Furthermore, in the same survey, 77% of CEOs have had enough of talk about ‘brand equity’ that can’t be linked to any real equity. A brand consultant will ensure budgets are spent on the right strategies for the right segments with metrics for measurement.

7) An advertising agency uses a one size fits all series of tactical advertising campaigns that use mass marketing across mass media with only a nod to digital and below the line activities.

A brand consultant will look to collect and leverage specific data to develop targetted communications across digital channels to engage prospects, whilst carrying on conversations with existing customers.

8) An advertising agency will often look at what the competition is doing and try to position an offering based on competitor actions. This approach is flawed because successful organisations are nimble and by the time you have developed your position the competition’s strategy will have evolved.

A brand consultant will be aware of competitor activities and will use that knowledge to strengthen the firm’s competitive advantage but will not allow competitors to define strategy going forward.

9) The impact of an advertising agency’s work is difficult to measure. A brand consultant will develop metrics to measure promotions, advertising and other activities.

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

Published on 18/07/2012 by brandconsultantasiaLeave a comment

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

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

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

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

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

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

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

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

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

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

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

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