5 branding tips for Malaysia Airlines to save its troubled brand

Earlier this month, troubled Malaysian carrier, Malaysia Airlines (MAS) reported a staggering RM2.52 Billion (US$850 million) loss for 2011. Despite the tough economic climate, a number of competitor airlines – British Airways, Singapore Airlines and Cathay Pacific all reported a profitable year.

Soon after, Group CEO of MAS Ahmad Jauhari announced that he will implement ‘strong and immediate measures to stem the flow of losses with staff redeployment, improved productivity and efficiency, further cost controls and more route reviews’ whilst at the same time, he also promised ‘an aggressive sales and marketing strategy’.

Marketing budget doubled
Then MAS announced that it has doubled its marketing budget for 2012. The marketing budget is reported to be as much as 2% of revenue which on 2011 revenue of RM13.90 billion (US$4.63 billion) equates to about RM278 million or nearly US$100 million.

So if the marketing budget is doubled, it means that MAS has more than RM550 million or US$190 million to rebuild it’s battered brand. That’s a tidy sum.

Details of what marketing initiatives the company has in mind are sketchy. Although the company has announced it will provide ‘better and more branded customer experience and embark on a major advertising and promotions campaign in 2H/2012’.

This morning I read that the airline has appointed Ogilvy and Mather Advertising as its master creative agency. I also read this comment on the appointment from Al Ishal Ishak the senior vice president for marketing and promotions, “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.”

Before I go on, I have a confession to make, I am a loyal Malaysia Airlines passenger and fan of more than 20 years. During that time I have been on the receiving end of more positive than negative experiences with the airline. So I want the airline to succeed.

But if this is the last chance for this iconic brand, Al Ishak and his team have to get it right. Any advertising campaigns will need to reflect the culture of travel and consumers today and not try to use the traditional high gloss beautifully presented images and TVCs so favoured by the airline industry to ‘clearly define our brand positioning’.

How will MAS spend the marketing budget?
I appreciate it is early days but I have noticed a digital campaign selling the new A380. The style would suggest MAS is going the traditional route using glossy images and slick advertising with high production values to attempt to position the company in the minds of its consumers.

The ad features an image of the A380 in the very attractive new MAS livery and a tagline about the journey which I assume is related to the A380 and one about the aircraft being the pride of the nation. Let’s hope Ogilvy improves on that. Anyway, clicking on the ad, you go to the existing MAS site where you are greeted with the same, larger image of the A380 and the same taglines.

Below the fold there are two black and white images with click through options. The one on the left entitled, Behind the scene (sic) links to still images of the making of the new commercials which look very traditional and my first reaction was what a pity they haven’t changed the cabin crew uniforms. The image on the right links to a video entitled ‘The pride of our nation”, a predictable and uninspiring video of an MAS A380 being painted!

Throughout, the copy is uninspiring.

Below the images are social media options. I had a quick look at the twitter feed and it looks very collaborative with plenty of discussions although efforts to build the brand in the social context can be improved.

But I have a sneaking suspicion that the bulk of that US$190 million is going to be spent on advertising. And as Singapore Airlines learnt with it’s A380s, you can no longer rely on developing a position and using advertising to communicate that position in the hope that it will work and consumers will buy.

The problem is that positioning is a throwback to the mass economy that no longer exists. What advertising agencies tried to do was create a position that reflected the strengths and weaknesses of the offering. Ideally, this position was based on being first in a particular category.

If someone was already first in a category, then companies attempted to redefine themselves in a new category to be first. In the airline business, this tended to be related to passenger comfort or service. The effectiveness of positioning depended on the ability of advertising to drive branding perceptions in the mind of consumers.

To do this, airlines often made promises they were unable to keep (admittedly, often due to third party issues out of their control), failed to meet traveller expectations, often because dynamic competitors moved quickly and so raised the bar, which in turn led to brand disillusionment.

Positioning was ideal for the mass economy. It was also ideal for advertising agencies and marketing departments because it gave them enormous power without the responsibility of accountability. Al Ries and Jack Trout invented the concept of positioning. The preface to one of their books states, “Positioning has nothing to do with the product,…. (it) is what you do in the mind of the prospect.” So, essentially this means that the consumer can be made to believe, through extensive advertising and PR and via the right conduits to consumers, and other vehicles, what an offering means to them.

Well I’m sorry, this might have been true in our parents day, when consumers were more predictable, more trusting and had less choice but in today’s mean spirited world, a world in which only 4% of Americans and 14% of Malaysians believe what they read in adverts it is going to be very, very difficult. And of course the problem with using positioning to build a brand is, if it doesn’t work, the money is wasted, time is lost and you have to repeat the process again, with a new position!

So how can MAS save its troubled brand?
1) Research. Your existing customers are your best source of information. But they are not all the same. I would be interested to know which, if any customers MAS talked to when they were configuring the aircraft. MAS is talking about flat beds and big TV screens in first and business. Well that is so last year and who doesn’t offer them so why should I change? What about Internet access? I hope the A380 offers it throughout the aircraft.

2) Mass market branding and the old model of developing a position and communicating that position across for mass media repetatively for as long as possible is no longer effective. Brands today are built on relationships, access, personalisation and relevance. Before MAS marketed to segments of 18 – 34 year olds, businessmen and so on. Today, MAS must deliver economic, experiential and emotional value to to everybody and on their terms.

3) MAS must focus on developing more profitable relationships, not a more profitable product. Brands evolve when companies start buying for customers instead of selling to them.

4) Branding is an organisational not a departmental responsibility. And the organisation is the responsibility of the CEO. MAS is charging about a 100% premium for an economy class ticket on its A380 in July over the price of an economy class ticket on a 747 for the same route. Throw in all the other airport fees etc and it’s going to have to be a pretty good product to charge such a premium.

5) Retention is key to brand building. Companies no longer sell a product, customers buy a product. And those customers have plenty of choice, especially in the airline business. Sadly too many companies spend lots of money on acquiring a customer but very little on retaining them. MAS is one such company. Once a consumer buys the product, companies should do everything possible to hang onto those customers, build relationships with them, learn about them and leverage them.

Bonus tip. This is the social era. As I said MAS is working hard on social media but there is room for improvement and integration. It would be interesting to know how they leverage their social media efforts to get more business.

ASTRO makes a small but significant branding blunder

Rugby is an increasingly popular sport just about everywhere. According to a recent Mastercard report, the overall global growth in the sport is estimated at 15% per year.

The main rugby event is the rugby world cup which is held every four years. The first rugby world cup was held in 1987 and attracted a global TV audience of 300 million. Twenty years later, the 2007 Rugby world cup attracted a global audience of 4.2 BILLION TV viewers, and the Rugby world cup is now the most watched sport after the Football world cup and the Olympics.

The six nations rugby tournament is the second most important international rugby tournament after the rugby world cup. It is held annually between England, Ireland, Scotland, Italy, France and Wales and was watched by over 69 million TV viewers in Europe in 2011.

The six nations, only a few games live on TV in Malaysia

According to Wikipedia, in Malaysia there are sixteen rugby unions, associations and councils affiliated to the Malaysian Rugby Union and more than 300 clubs and 600 schools and universities nationwide that teach the game.

There are 41,050 registered rugby players in Malaysia (I don’t know who they are registered with), and the country is currently ranked 57th in the world.

There are also countless other rugby players and fans who are not registered but have an interest in the game, such as expatriates from rugby playing countries.

When the commonwealth games were held in Malaysia in 1998, it was estimated that over 50,000 people watched the Rugby Sevens part of the tournament live and 20,000 were at the ground to watch the final, won by New Zealand.

It wouldn’t be too far fetched to say there are probably 250,000 to 500,000 people connected to or involved in some way with rugby in Malaysia.

So it has caused somewhat of a storm within the rugby fraternity in Malaysia to discover that ASTRO, the only satellite TV provider in the country has decided to show only a small percentage of this top class global event live on TV.

One corporate subscriber that spends almost RM100,000 per annum subscribing to Astro was stunned to learn of Astro’s poorly thought out decision not to show the games live and said, “I am shock (sic) to learn of this decision. I don’t get it, why would you not show this popular competition live? We know Astro can do it so why don’t they?”

Another domestic subscriber summed the situation up thus, “I’m sick and tired of the crap they show on Astro and then when something I really want to watch isn’t on live, it really makes me angry and I wish I could change provider.”

An audience of 500,000 is relatively small (although it does equate to about 25% of total Astro subscribers) but this is a lucrative segment with influence and with related content, advertisers would have a captive audience. Such an event should be on the radar of destinations, financial institutions, hotels, automotive companies, schools and universities, real estate agents and more.

One potential local advertiser would be Mastercard which supports rugby on a global scale. Credit cards are sold in many ways in Malaysia, including a sort of hijacking of prospects at petrol stations.

Personally, I would be more likely to be influenced by a Mastercard advertisement linked to rugby than I am by the current tactics.

Astro spends a lot of money acquiring customers but spends little on retaining customers. It may be that because Astro is a monopoly, it doesn’t think it has to listen to its subscribers and it may have a point.

But with a new provider due to launch in 2Q2012, the growing penetration of IPTV providers such as Telekom Malaysia and the growing trend for downloading programmes from the Internet, now may not be the best time to alienate a small but wealthy segment.

What do you guys think?

The top 1,000 brands in Asia – so what!

Following the completion of a research project carried out in conjunction with TNS, the Asia Pacific edition of the globally respected marketing magazine, Campaign Asia has named Sony as the top brand in Asia.

According to the study the top 4 positions all went to power house North Asian brands – Sony retained its position at number one followed by Samsung, Panasonic and LG with Canon at five. In fact the top 5 were unchanged from 2010.

At six is Apple, HP at seven, Google at eight and Nestle at nine with Nike at ten.

Facebook was the top social networking site at number 17 whilst Twitter leapt from 123 to sixtieth.

HTC, whose stock has tripled in the last year and is now Asia’s second largest maker of smart phones leapt from 532 to 100.

Interestingly no Chinese brands made the top 100 and only one Indian brand (Amul) managed to do so.

Amul, the largest food products business in India and the maker of ‘the big daddy’ of butters and the number one ice cream in India, was the best performing non-Japan or Korea brand, coming in at number 89.

At 123, Louis Vuitton was the highest luxury brand and surprisingly luxury brands fared poorly. Despite listing on the Hong Kong stock exchange recently, luxury brand Prada came in at a disappointing 348th, only two places above CIMB and down from 252.

Although Maggi (22nd) place and Tesco (96th) will be familiar to Malaysians, the top Malaysian brand is Marigold at 131, down from 129. Other Malaysian brands include Malaysia Airlines at 163, Maybank at 172 and F&N at 238. Old Town coffee also deserves a mention at 245, coming in almost 40 places above Maxis at 284. Celcom, Maxis main competitor was further down at 395.

Sticking with Malaysian brands, Boh tea was down at 417, Firefly, a budget airline was at 462, up from 518.

The highest new entry was Hankook tyres of Korea at 246. The highest new entry Malaysian brand was Life, a sauces/condiment maker at 718 followed by Kimball, another sauce/condiment maker at 825. Surprisingly Proton, the Malaysian national car was also a new entry at 916.

The survey was carried out in ten Asian markets: Australia, China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan and Thailand. Ages of the respondents were from 15 to 64 and approximately 300 respondents from each country were surveyed.

Participants were asked only two questions:

“When you think of the following (product or service) category, which is the best brand that comes to your mind? By best, we mean the one that you trust the most or the one that has the best reputation in the (product or service) category.”

“Apart from the best brand you entered, which brand do you consider to be the second best brand in the (product or service) category?”

14 major product and service categories were covered in the survey:
Alcohol and tobacco
Financial services
Consumer electronics
Computer hardware
Computer software
Travel and leisure
Personal care.

In addition to these major categories, a further 72 sub-categories were included!

The final rankings were determined based on the total number of mentions each brand received across all categories and countries.

Then the data was weighted on two levels: the first to reflect the population composition within the markets covered, and the second to reflect the competitiveness of the categories included in the study.

Now I don’t know about you guys but if there is one thing I have learnt over the years it is that markets such as Malaysia and Japan or Thailand and India have very little in common, especially when it comes to food, alcohol (60% of the Malaysian market is Muslim and therefore alcohol is forbidden) and other culture specific products.

Furthermore, I don’t know how they included all the categories and sub categories but I can only assume the answers were aided. Nevertheless, imagine a questionnaire that lists 14 potential answers and then a further 72 options to those answers! How accurate are the responses going to be?

I also think that the sample size and the demographic – only 300 participants per country and a massive demographic of 15 – 64 is simply too big to provide results that are actionable or relevant.

And we don’t know the gender of the participants yet gender will be crucial in many of the listed categories and in how we communicate with prospects, with what content and across what platforms.

And looking at the brands, someone in India is not going to name Proton as the best (another thought, define best?) automotive brand because the Malaysian national automotive brand has yet to go on sale in India.

Frankly, I don’t really understand what is the point of this survey and what it means? How is it relevant to a consumer or company in Malaysia when it lists brands not available in the country? How can a company leverage its position? What must a company do to move up the list, perhaps to the top? How relevant is the ranking?

If the survey must be done, it would be better if it were country specific and related to each category alone. Rather than asking two (aided) questions, it would make sense to develop questions based on the product needs in that country. Questions will also need to be developed based on the category.

And instead of looking at traditional approaches that rely on demographics, in the social economy, it would be better to work with social media communities. Results could then be correlated and geographic comparisons made although they still won’t offer actionable data to the brands.

What do you think?

Brand communications is no longer about broadcasting a company position across multiple mass communication platforms.

In today’s always on world, an important part of any brand strategy is the communications strategy but if Asian brands are going to be taken seriously, Asian CEOs must understand that times have changed and that we are living in a new world order. And in that new world order, the success of a brand is in the hands of the consumer not the corporation.

Today CEOs must understand that how consumers source information about brands and where they source that information from, has changed dramatically over the last 5 – 10 years. Where previously they learnt about brands from television commercials, newspaper advertisements and the recommendations of friends, today they learn about brands from Facebook communities, Twitter lists and YouTube channels.

Gartner estimates that mass marketing campaigns now have only a 2% response rate and this is declining annually. Despite this, Asian CEOs, so long in control of their brands and reluctant to lose that control, continue to try and shape brand perceptions by broadcasting positions repeatedly across traditional media via multiple and repetitive campaigns.

But Asian CEOs need to accept that in today’s noisy, crowded, dynamic, mobile market place, a brand cannot be shaped by repetitive communications campaigns that try to appeal to as many people as possible in the hope that someone will buy and communicated across traditional media. And those CEOs must understand that the success of their brands is too important to be left in the hands of marketers and advertising agencies.

According to Gartner, by 2015, at least 80% of consumers’ discretionary spending will be influenced by marketing across social and mobile platforms. And it is imperative that CEOs do not allow marketing departments to continue the mass market model of invasive campaigns that try to push a one size fits all corporate position onto consumers.

So if building a successful brand requires more than a traditional approach to marketing where reaching anyone and everyone and making them all aware of the brand with a generic message broadcast multiple times across multiple channels is not the way forward, what should Asian CEOs do if they want to challenge the global western brands?

The first thing is that this new world order is good news for Asian CEOs because it means they can stop wasting funds on expensive creative driven initiatives that require deep wallets to fund advertising campaigns repeatedly across traditional media in the hope that they will resonate with consumers and lead to a possible sale because the reality is, very few of them are noticed, let alone remembered.

Try this experiment. If you advertise in a daily newspaper or on TV, ask yourself which ads you remember from yesterday’s newspaper or on TV last night. Be honest. I doubt it is many. Personally I remember the ads from the Sunday paper because I was stunned at how many pages featured supermarkets and hypermarkets having a ‘cheap off’ on chicken wings, grapes and cases of beer.

And these are the very same newspapers that featured advertisements for Patek Philipe and Rolex watches, Lexus and Audi cars and other luxury products and services the week before!

And even if you remember newspaper ads or TV commercials, how many of the products or services advertised, have you interacted with? And of those how many have led to a purchase? And even if they have led to a purchase, what did the company do to ensure you come back again? I suspect they didn’t do anything and instead, after they spent all that money getting you into their store or to buy their product, they let you leave without getting some personal information in order for them to start to lay the foundations for a relationship!

In this era of smart phones and the half a million applications that can be used on them; In this era of social media with five hundred million Facebook users (6 million in Malaysia) of whom 50% are active every day and one hundred and forty million daily tweets on Twitter, many of them generated by Malaysia’s 1.1 million members; the proliferation of leisure time activities and abundant choice at malls and more, Asian CEOs must understand that the answer to brand building is delivering economic, experiential and emotional value to consumers and on their terms and across all touch points.

The global economic situation is a golden opportunity for Asian brands to take market share from established Western firms struggling to overcome cash flow issues and poor brand penetration. But it is up to CEOs to understand that they have to review traditional practices and take an interest, indeed responsibility for the brand and ensure brand departments understand that it is no longer enough just to advertise in traditional media and hope a brand will succeed.

CEOs must ensure too that at the heart of any new strategy must be the organization, making sure every brand touch point focuses on delivering value and communications departments must take social media seriously and understand how to deliver more engaged communications. And this will have to be done in a much more integrated, dynamic and fluid manner.

And whereas in the past, a series of the same full page ads repeated in daily newspapers or a number of prime time TVCs was generally sufficient to build brand awareness which would lead to a sale. Indeed, many consumers would actually watch a commercial and take a note of the brand and where they could purchase it. Those consumers would then go to the store, look for the brand and buy it. If the brand was unavailable they would take time out to come back again and again until they could make a purchase.

Today those same consumers don’t bother taking note of the brand names because they’re carpet bombed with messages throughout the day, every day. Many of those messages are making outrageous claims or are totally irrelevant to them. They are also too busy multi-tasking during the expensive commercial breaks. Furthermore, they’ve been let down so many times after believing those claims that they now often ignore them completely. And because consumers have so much choice and so many information channels, they don’t need to pay attention to messages broadcast via mass media any more.

Now consumers use social media and other tools where they inhabit communities that they relate to and trust, to seek information about brands. So it is in these communities where brands must learn to communicate and engage with consumers and deliver value that resonates with those consumers enough to make them want to own the brand.

Don’t get me wrong, I’m not saying don’t advertise but I am saying that if your organization is not on brand and all marketing initiatives are not integrated to allow you to deliver on the brand promise. And if your organization is unable to deliver value across all touch points and if you don’t use every opportunity to engage with consumers and collect data to help you get to know your customer and start to build a relationship with your customer, your advertising efforts will be wasted and your brand will not survive these extraordinary times.

In this crazy, always on, competitive market place it is these relationships that are going to help build a successful brand and not newspaper ads or TV commercials, no matter how cool they are and no matter how cutting edge is the technology used in the commercial.

Advertising campaigns need to be integrated across the organisation

Recently I wrote a post about my experiences when I called the number on a billboard selling a luxury automotive brand. You can read the full article here

Basically I talked about how I rang this brand after seeing a billboard outside my office. I got through to the receptionist who asked for my number and said she would get someone from sales to call me back. Nobody called me back, even though the car costs about RM500,000 (US$166,000)! I thought this was an excellent example of why so many brands fail. But I didn’t think much more about it.

Then today I was sitting at a traffic light outside Bangsar Shopping Complex and I saw the same company had another billboard, this time it was advertising their jaw dropping top of the range V10 sports car that costs over RM1,250,000 (US$420,000) in Malaysia. Now this really is an exclusive motor and in the middle of last year there were orders for about 240 of them in the UK and a waiting list of 12 months. If they are only selling 250 odd in the UK I would expect them to sell no more than 50 in Malaysia. So you have to question why they market such an exclusive product on a billboard.

But this is not a rant about using old mass market mass economy models to sell luxury brands, this is about the fact that it is imperative that marketing campaigns are integrated and organisational excellence is at the heart of any tactical campaign.

And I know it isn’t at the heart of this campaign because whilst waiting for the lights to change I decided to call the number on the billboard and see what sort of a response I would get.

I called the number. No answer. Now it was 5.17pm and perhaps the receptionist has gone home. But I doubt the sales team had gone home. I bet they were sitting around wondering how to drive traffic to the showroom so they can make target this month and get a nice juicy bonus for Chinese New Year. Perhaps at least one of them might have been wondering why the expensive outdoor campaign they’ve been running for some time hasn’t generated any results!

I’ve tried to go and see these guys but the marketing manager tells me they are doing well. Here are some basic principles to abide by when you run an advertising campaign so that when you are doing well, you can do better.

1) You advertise on billboards to stimulate, inform, persuade etc. If you want to inform perhaps a 100 people in the country about a luxury product, spending large amounts of money on billboards or for that matter print ads in daily newspapers, is a complete waste of marketing dollars.
2) Consumers who can afford to spend over 1 million Ringgit on a car are unlikely to keep to your office hours. Make it easy for them to spend money with you.
3) Your advertising copy should appeal to a specific audience – in this case, those who can afford over RM1,250,000 on a car – everyone else is just getting in the way. So create copy that will resonates with that target market. This ad just mentioned the engine capacity and that was it! Ever wondered why mini does so well?
4) Develop metrics for measuring channel effectiveness. A simple metric for outdoor ads is a specially assigned number for that campaign.
5) Outdoor advertising is 24 hours. That’s probably one reason why you bought it in the first place! If you can’t have someone on standby 24 hours a day, install an answering machine or after office hours have calls diverted to a sales manager or sales director.

These are elementary and should be included in any strategy document created by a brand consultant.

Why are you still using positioning to build a brand?

Back in the late 1960s, Al Ries and Jack Trout published their first article on positioning. But the term didn’t really become advertising jargon until the articles entitled “The Positioning Era”, were published in Advertising Age in the early 1970’s.

You can read the original articles here

There are numerous definitions of what positioning is today (Google ‘what is positioning’ and you get 24,900,000 responses). Even wikipedia isn’t sure but anyway you can read their definition here

But in today’s marketplace, positioning has multiple problems. Here are 11 reasons why you shouldn’t use positioning to build your brand:

1) Positioning was developed for the US mass market of the 1970’s. Is the Malaysian market similar to the US market? I don’t think so. The Malaysian market isn’t even similar to the Singapore market and they used to be the same country! And Thailand has little in common with Indonesia and so on. So why use the same model here?

2) In a smaller, flatter more competitive world, advertising agencies have used increasingly desperate and outrageous claims in their advertising to position products in the consumer mind. In Malaysia, Proton uses ‘You’ll be amazed’ to describe it’s MPV. I’m sure it is a good car but if it will amaze me, how will a Lamborghini make me feel? Consumers have been carpet-bombed with such claims for so long that now, they rarely take any notice of traditional advertising.

3) Positioning is only suitable for mass markets. Yet branding today is about segmentation and communicating and engaging with those segments via relevant channels and with messages that resonate specifically with those segments or niche markets. It’s also about retention and relationships. Does this mean that a company should develop different positioning for different niches? Or does it use the same approach for every niche? And does it use the same approach for existing customers as well as prospects?

4) Positioning is immeasurable: You can’t say “our positioning has improved our sales by 5 % or as a result of our positioning strategy, our brand is 12% better than competitors. Furthermore, it is impossible to measure the ROI or benchmark positioning.

5) The wikipedia definition is a top-down, company knows best, hierarchical marketing approach. Yet we live in a C2C environment in which consumers define brands.

6) Positioning is one-way. The company knows best and you must listen to us. We tell you how our products are positioned and you will accept what we tell you. But today, if you are not entering into 2 way conversations with consumers you are about to join the brand graveyard. Today, consumers get any information they want on anything from anywhere at anytime and then make their own decisions.

7) Positioning is competition, not customer driven. The basic premise of positioning is that you want to be number 1 or number 2 in a category in a prospect’s mind. If you can’t be number 1 or number 2 in an existing category because of competition, you make your own category. In today’s congested marketplace, the investments required to develop a new category are enormous. Furthermore, besides the difficulty and expense of creating your own category, you are also letting your marketing be driven by the competition rather than consumer demands for value. This means you are always playing ‘catch-up’.

8) Positioning is dated. With limited competition (by today’s standards) in most categories, positioning was a compelling theory. The problem is that the world has changed a little since 1969. Yet agencies continue to recommend positioning as the foundation for any brand strategy.

9) Positioning uses mass market channels such as TV and billboards to reach as many consumers as possible using repetition to create interest. Yet ask yourself, what do you do when the commercials come on TV? Surf the Internet? Put the kettle on? Go to the bathroom? Text a friend? Basically, you do anything but watch the commercial. How many TV commercials can you remember seeing over the weekend? It’s the same with billboards. How many billboards can you remember from your morning commute? And even if you remember those commercials or billboards, how many of the brands have you explored and purchased?

10) Positioning requires massive, and I mean massive budgets that few companies have. If you do have a massive budget and you do execute your campaign across multiple channels for say six months, what happens if it doesn’t work?

11) To use a sporting analogy, in the early 1970s, professional tennis players were still playing with wooden racquets. Soon after the first non-wood racquets appeared. These were initially made of steel, then aluminium and after that, carbon fiber composites. Today’s racquets include titanium alloys and ceramics. As technology has broken new ground, the tools have improved. It is the same in every Industry yet when it comes to building brands, we’re expected to use the same technology and tools as we have been for the last forty years.

If your agency recommends developing a positioning strategy to build your brand politely show them the door and call us!

Build a brand with the basics

Right near my office at Phileo Damansara in Petaling Jaya, a luxury German auto manufacturer has two billboards advertising its top of the range luxury autos. One is a saloon and the other is an SUV. I like this particular SUV so much that if I was still putting posters up on my bedroom wall, the SUV would be front and centre.

This company also has a number of billboards at other locations around the city of Kuala Lumpur and in the suburbs featuring a smaller version of the SUV (for which there is a 1 year waiting list) and other versions of the saloon. It also spends a lot of money on print ads and recently advertised their top end coupe in a Malaysian daily and a Malaysian business weekly.

Cars in Malaysia are expensive as import duties can go as high as 300% for luxury vehicles. The full page full colour ad with standard automotive blurb also stated the price of over RM1,000,000 (US$333,000). At that price, there are probably no more than a handful of people in the country who can afford the car. Even if there are a 100 or even a 1,000 people in the country who can afford the car, full page ads in national newspapers are probably not the most cost effective channels to communicate with those people.

Now I’ve actually approached this particular organisation in the past to ask if we can come in a make a capabilities presentation. We didn’t get past the marketing manager who basically said that as sales were very good there was no point meeting us.

Judging by recent reports, the company is certainly doing well after the launch of new models in 2008. In fact, the company claims to have been Malaysia’s fastest growing luxury car brand in that year with sales up an impressive 102%. Moreover, sales continued to climb in the first 6 months of 2010 with sales up 66% over the same period in 2009. Impressive figures and the company now claims to have about 5% of the luxury market in Malaysia.

Anyway, seeing this billboard on a daily basis with the telephone number prominently displayed, was beginning to get on my nerves. So I decided to call the number. After all, if you advertise your products on a billboard and display your telephone number, one can only assume that you want prospects like me to call you.

And if a prospect calls that number you better have the processes and systems in place to ensure that the person receiving the call passes it on to the right department. And you better have the right processes and systems in place to ensure that the next person in the process does what they are supposed to do. In this particular case, call the prospect back. Especially when we’re talking about a luxury product.

So anyway, I called the number and asked for information about the top of the range SUV. The receptionist was very pleasant and explained that she would get someone from the sales department to call me back. I gave her my mobile number and waited for the call. That was last Thursday, today is Sunday and I still haven’t heard anything. Bear in mind this vehicle costs over RM500,000 (US$166,000).

Generally the point of billboards is to create awareness. A telephone number is there in the hope that the keen, desperate consumer who wants the product so much that he will take the time to record the number and follow through with a call. Of course most of us just ignore billboards and the messages on them. Indeed, it’s rare for a prospect to call. But there are always incoming calls that may just result in an easy sale to one person who may become a customer for life so if you don’t have those basic processes and systems in place to take the information and pass it on, what is the point of advertising?

Here are some more tips that will help this company improve its profitability, the most important metric for branding:

1) The era of the global ad buy is over. Different markets require different communications strategies. Whilst it may make sense to create awareness of a luxury product via national papers in relatively wealthy western markets, it is a waste of money in developing markets where the demand for luxury products is limited to only a few.

2) Brand building is about the long term. When you launch new products they will, if you are extremely lucky, fly off the shelves or out of the showroom. But this is the exception, not the rule. And anyway, this doesn’t mean that you can become complacent, sit back, put your feet up and relax. Your competition will soon catch up and your moment in the limelight will soon be over.

3) The whole point of mass market advertising such as billboards and newspaper ads is to create awareness with mass markets. That is why weekend copies of daily newspapers are full of ads for hypermarkets, supermarkets, discount stores, sales and so on. But luxury products require more than a mass market tactic to make a sale. If you must use these old fashioned tools, use them to develop a database of prospects so that you can qualify those prospects and invite them to your showroom if you think they have potential.

4) Many companies will have a system in place to act on incoming enquiries. But who is responsible for ensuring those enquiries are acted on? The system must also ensure incoming enquiries are reported to sales management so that they can follow up with the sales department.

5) Brands are built on offerings of economic, experiential and emotional value. That journey begins with the first contact. It doesn’t matter how much you spend on advertising, if you can’t deliver that value, prospects will go elsewhere.

Now I’m going to call BMW to get more information on the X5.

How to build a brand in Asia today

Building brands has evolved from the one dimensional, top down era where the company controlled the relationship and essentially managed that relationship using broadcasts across mass media such as TV, Out of Home, print and radio with messages and content created to tell you what the company wanted you to know into the bottom up, customer economy.

In the bottom up customer economy, brands and their success or failure are defined and determined by customers. Those customers will create content and messages and disseminate that content and those messages across multiple platforms and to communities who are interested in their opinions. Now, how you interact with consumers is on their terms.

This is not revolution, simply evolution in the branding space. Brands are to blame for this loss of control because they have consistently misled consumers or over promised and under delivered. Brands can no longer be built using one-size-fits-all messages broadcast across traditional media channels to anyone who will listen. Basically because no one is listening.

Sure, there is still a place for messages, campaigns, and so on but because there are so many sources of information, so much clutter, these messages don’t have the impact or influence they had 20 or 30 years ago. In the digital age you can spend as much as you want on traditional media and reach everyone in the country but if they are not listening they won’t buy your product or service.

If a brand wants to be successful it must learn to communicate with multiple segments, and messages must be targeted and must be dynamic, using content and channels that resonate with those segments. But brands must move away from the traditional demographic approach to researching those segments. After all, how many 15 – 24 communities are there on Facebook? And content must constantly be revised and updated with new content.

And organizations must ensure that they deliver on promises and that promise must deliver economic, experiential and emotional value to each of those multiple segments. In the consumer business, this is most often done, initially anyway, in the store. Because in the customer economy, no matter how much you spend, if your staff don’t know how to build rapport with your prospects then they may buy once but rarely will they become a loyal customer. And without loyal customers, you won’t have a brand.

So if you are looking to build a brand, forget about reach, awareness, positioning and brand equity and trying to be all things to all people and start thinking about delivering value to specific segments and building customer equity.

Asian companies need to stop following the herd

I’ve said it before, but I feel the need to say it again, according to Ernst & Young, up to 90% of products fail to become brands, despite US$1.5 trillion spent on marketing every year. Despite massive marketing budgets, global brands with extensive reach and high brand recall, numerous brands have died a painful and often avoidable death. Despite those massive marketing budgets, brand loyalty is decreasing and customer dissatisfaction is increasing.

So why do companies insist on investing massive amounts of money in marketing even though it is proven to be inneffective? There are a number of reasons – ego, inertia, fear of the unknown and fear of change, herd mentality and more.

But for the smart companies, think Dell, Amazon, Google, McDonalds, Walmart, Public Bank, Toyota, yes Toyota and many more, the halcyon days of inneffectiveness are over for marketing people and smart CEOs and CFOs expect, no demand greater accountability and more sustainable results from their marketing investments.

When branding was little more than a creative driven concept where a logo was used to make a name stand out and the world was much larger and competition was limited, the four Ps and old world communication goals such as reach, positioning and awareness were often enough to build a brand, then branding was little more than a subset of marketing.

But that US centric mass economy era no longer exists. The world is a much smaller, competitive and very different place today and branding has taken on a much more important role within the organisation. Moreover, consumers are more enlightened and cynical and no longer pay much attention to traditional marketing efforts.

The definition of a brand today is here

Key areas are retention (95% of marketing efforts are aquisition focussed yet very little is spent on retention so as 1 customer is expensively aquired, an earlier one also expensively acquired, walks out the door to the competition. Many companies lose money on the first sale. In the case of technology, it could be the first million sales. Brands are built on the 2nd, 3rd 4th and so on sale).

Organisational excellence (if you don’t do everything effectively and efficiently and on personalised customer terms, you won’t survive). Economic, experiential and economic value for customers (on their terms) and measurement.

It’s not only marketing that is now part of branding, it is also the supply chain, customer service, accounting, sales, purchasing and so on.

The world has changed and if you own a company, you need to change with it. You owe it to your shareholders, your customers, your staff and yourself. It is time to stop wasting money on proven inneffective marketing and start investing in your brand.

Singapore Airlines Suites, branding blunder or recession victim?

There have been numerous branding blunders and you can read about some of them here but rarely does Singapore Airlines feature. Singapore Airlines (SIA) consistently leads the industry in profitability and manages to ride out turbulent times better than most in its class. It has always been aggressive, acquiring aircraft and expanding its fleet quickly, in 1979 it set a record at the time, when it traded relatively new aircraft for an updated version of the B-747 for a then record of S$2.2 billion. SIA also differentiated itself early on with its adoption of the Singapore Girl as the face of the airline and service as the unique selling point.

But the world of today and the world of the 1970s are very different. The 1970s were the halcyon days of the mass economy. In the mass economy, with its mass markets and mass media, perhaps a little bit of help from the government and a large dose of nationalism. And by broadcasting the same message to large audiences who had limited sources of information, it was a lot easier for an airline to establish a brand.

More of this and more of that and better this and better that or bigger this and bigger that coupled with large advertising budgets worked well. As competition increased, consumers became more segmented and media choices fragmented, like many other industries, airlines turned to positioning as a strategy.

Positioning consisted of creating a position in prospects minds that reflected the strengths and weaknesses of the offering as well as those of competitors. Ideally, this position was based on being first in a particular category. If someone was already first in a category, then companies attempted to redefine themselves in a new category to be first. In the airline business, this tended to be related to passenger comfort or service. The effectiveness of positioning depended on the ability of advertising to drive branding perceptions in the mind of consumers. To do this, airlines often made promises they were unable to keep (admittedly, often due to third party issues out of their control), failed to meet traveller expectations, often because dynamic competitors moved quickly and so raised the bar, which in turn led to brand disillusionment.

Positioning was ideal for the mass economy. It was also ideal for advertising agencies and marketing departments because it gave them enormous power without the responsibility of accountability. Al Ries and Jack Trout invented the concept of positioning. The preface to one book states, “Positioning has nothing to do with the product,…. (it) is what you do in the mind of the prospect.” So, essentially this means that the consumer can be made to believe, through extensive advertising and PR in the right conduits to consumers, and other vehicles, what an offering means to them.

Airbus A380
When Airbus announced it’s super plane, the Airbus A380, ever aggressive, SIA was one of the first to sign up and the first A380 delivered was delivered to Singapore Airlines on 15 October 2007. It entered service on 25 October 2007 with an inaugural flight from Singapore to Sydney. Passengers bought seats in a charity online auction paying between US$560 and US$100,000 for seats. Understandably, the new aircraft, a clever publicity stunt and an inquisitive general public, generated a lot of media coverage and by the end of February 2009, a million passengers had flown with Singapore Airlines on the A380.

But the majority of those passengers are flying economy. The problem has been getting passengers to use the suites, positioned as, “a class beyond first.” When the new A380 service was launched, in the way that has always done, SIA used global TV, print and online advertising and PR campaigns to launch the new A380.

Beautifully executed TVCs were developed for the Suites by a top advertising agency using taglines such as “your own private bedroom in the sky”. Other taglines included “an unprecedented level of privacy” in a “cabin unlike any other”, and sleeping on a “standalone bed that was not converted from a seat”. Givenchy Beddings (and pyjamas) Ferragamo toiletries and Krug or Dom Perignon were also part of the deal.

But despite a unique product, some slick marketing based on a huge investment in a one-size-fits-all message to mass markets using mass media, consumers and corporations haven’t bought into it. Why not?

Lack of research
One of the reasons could be that SIA didn’t talk to customers and prospects about what they might want from such a service, and, more importantly, how much they would be preparred to pay for it. In fact, it appears that SIA didn’t even engage with members of its Frequest Flyer Programme. SIA simply went ahead and developed the product and then, in a traditional 4 Ps (product, price, place and promotion) and positioning strategy, tried to sell it.

To make it even harder for themselves, and despite charging a premium of more than 50% over the first class fare, SIA would only reward loyal members of its Frequent Flyer Programme (FFP) Krisflyer with 10% more miles than a regular first class ticket! Moreover, any redemption of miles could only be for economy, business or first class and not for the Suites!

According to Shashank Nigam, “Several HR departments of companies, including civil service departments in Singapore, issued circulars or directives stating that “Since the Singapore Airlines Suites are a class beyond first, officers who are usually eligible for First Class travel will be ineligible for Suites”. So by now, SIA had upset its two most important customers, its own government and elite members of the frequent flyer programme!

In 2008, as the economic crisis began to take hold and suite sales nosedived, SIA maintained its pricing strategy, making it even harder for financial institutions, already under scrutiny for lack of risk management, to justify such extravagance.

Another reason for the poor response is probably related to the ground experience. Although positioned as a class beyond first, elite passengers were expected to use the same check-in facilities as passengers travelling in first class, the same lounge and essentially, the same food as first class passengers.

Premium revenues drop by 40%
By the middle of 2009, SIA was feeling the heat on a number of fronts. The economic situation gripping the world caused international premium passenger numbers to fall by 18% year on year in the first 10 months of 2009. At the same time, premium revenues dropped by up to 40% over the same period (IATA). Another challenge was from competitors such as Emirates and Qantas who don’t offer Suites but do have exceptional first class experiences including cabins on their A380s that feature a Bar and bathrooms with showers, limousine transfers at departure and arrival (not available to SIA passengers, even those using Suites).

SIA reviews incentives
SIA scrambled to recover some marketshare. The first incentive was a free night’s accommodation at the Raffles Hotel in Singapore for all passengers flying Suite class. Neat, but hardly enough to justify a 50% premium over first class. Then SIA remembered the people who have made it such a success story in the past, first class passengers and lucrative members of Krisflyer. SIA relented on the bonus miles and began offering 300% bonus miles instead of 10%. Definately a step in the right direction but perhaps too little too late as it is rumoured that a significant number of key SIA customers have defected to Emirates and Qantas. If this is true you can be sure these airlines will make it harder for these premium passengers to leave than did SIA.

So what could SIA have done better? Here are 5 things I would have done although, if they had done number one the rest would have been redundant. What else would you have done?

1) Research. Your existing customers are your best source of information. Talk to them, find out what they are looking for and match attributes to their requirements for value. If SIA had talked to its premium passengers and its own government departments, it would have realised that the market could not support the suites product.
2) Mass market branding with a focus on the 4 Ps is no longer effective. Brands today are built on relationships, access, personalisation and relevance.
3) SIA should have focussed on developing more profitable relationships, not a more profitable product. Brands evolve when companies start buying for customers instead of selling to them.
4) Branding is an organisational not a departmental responsibility. And the organisation is the responsibility of the CEO. To expect a passenger to pay a 50% premium over the price of a first class ticket and not offer a limousine service on the ground when all competitors offer it to first class passengers shows a real lack of judgement.
5) Retention is key to brand building. Companies no longer sell a product, customers buy a product. And once they’ve bought the product, companies should do everything possible to hang onto those customers.

SIA is a great brand. As I write this, I am sure SIA is working out what to do with its Suites. If SIA aims to meet customer requirements for emotional, economic and experiential value, then the airline will bounce back stronger and better for the experience and the Suites can be written off as a victim of the recession. If they don’t the suites may become yet another branding blunder.