Tag: Malaysia

You cannot build a brand with advertising alone

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86% of Malaysians don’t trust advertising. The Star) . 78% of Malaysians trust the recommendations of other consumers. There are more than 1,500,000 Malaysians on Faceboook. 80% of affluent Malaysians (those with a household income (HHI) above RM5,000) use social networking sites. Nine of the Top 20 websites in Malaysia are social networking sites. These consumers are the new world order. They are online for many hours a day and pay little attention to traditional mass media. Despite this, Malaysian companies continue to poor billions (RM6.45 billion in 2008. Adoi) into mass market advertising in the mistaken belief that what they are doing is building a profitable brand.

Advertising was much more relevant in the past when the mass media was limited to only one or two TV stations, few radio stations, a couple of national newspapers and the occasional billboard. Limited leisure time pursuits meant consumers spent a lot of time interfacing with the mass media. Finally, there was little competition so high product or service standards were unimportant. With frequency and timing, mass media advertising generated enough ‘awareness’ to justify the budget.

With limited competition and consumers who were willing to accept low standards or didn’t know any better, such awareness could result in sales and for some, it was enough to build a brand.

Using advertising to build a brand is ineffective
Unfortunately, using advertising to build a brand will not work anymore. Mass media has disintegrated into niches or communities. Consumers have been carpet bombed by so many messages – up to 3,000 a day and for so long, that they have learned to block most of those messages. The favoured reaction of advertising agencies to declining responses and lack of effectiveness is to increase frequency but this doesn’t help because it just adds to the cacophony.

In a media saturated world, awareness is just background noise that means very little. For most companies, and there are very few exceptions, in an age when information on every product and service is widely available, and consumers have more choice, are better informed, and more powerful, creating awareness is not going to build a brand. For instance we’re all aware of Mazda, Alfa Romeo, Eon Bank, Pan Am, Airbus, Ritz Carlton and many other multi national global brands, yet most of us will go through life without ever buying something from these companies.

Indeed, many companies have realized, sadly after spending millions on advertising, that advertising can raise awareness (and even that outcome is not a given), but still fail to transform an offering into a brand. Settling for awareness, when so much more is possible and required is a total waste of valuable funds.

But this doesn’t mean that advertising is no longer important. Advertising is, and will probably always be, important to branding. But its role has changed. Advertising can no longer be a tactical initiative to ‘reach’ as many consumers as possible to ‘get the name out there’.

Advertising
Advertising must do more than try to create awareness. Advertising must work to ensure consumers adopt offerings into their lives. Adoption enables an offering to be seen as the best option. But this adoption also needs organisational excellence and the ability to match offerings to client requirements for value. Advertising cannot be expected to do this on its own. And it is wrong of advertising agencies to give the impression it can but it is also wrong of business owners to expect advertising agencies to be solely responsible because advertising is not a silver bullet.

It may seem like I am stating the obvious, but advertising must also communicate trust. This is the key element in any relationship. Prospects won’t make that critical initial connection without trust. And for trust to grow into loyalty, the key to brand building, companies must deliver on the promises made in the advertising. If you don’t deliver on the promises made, your target market is reduced by 86% and you are trying to sell to the 14% of Malaysians who trust advertising.

Some of the claims being made by property developers, automotive distributors, airlines and others in their advertising are often bordering on the ridiculous. Consumers, already pressed for time and cynical, are doubtful as soon as they see the advertising. If you foster doubt from the moment of the initial contact, you’ve wasted every dollar spent on that campaign. If you are making claims you must follow through with them across every touchpoint. And don’t expect it to happen overnight. It takes time to build loyalty.

Understand that building a brand requires not just advertising but also a significant investment in building loyalty and organisational excellence and the money you spend on advertising may be money well spent. Failure to do so and you may as well pour it down the drain.

Malaysians haven’t changed since 2003

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Omnicom Media Group (OMG) announced yesterday that newspaper advertising in Malaysia is as effective as it was six years ago. The report also states that readers ‘take note’ of 57% of newspaper ads and that this figure has not changed, I repeat, has not changed since 2003.

The sample size was 1,023 readers aged between 15 – 34 in four locations. They were tested on their recall of 15 ads in different sizes and in different places in newspapers they had read. The number of ads tested was 2,452 that appeared in 15 ‘main’ newspapers.

The agency developed what they describe as ‘three indicators of effectiveness’

1) Ad Noting or ad recall
2) Ad read or readers attention
3) Brand recall

The reports states that bigger ads perform better with a full page ad yielding 21% higher ad noting than a quarter page. Furthermore 60% of colour ads are noticed compared to 53% of B/W ads.

I got my information from this article and not from the original report which I would love to see.

So I can only go on the above data, plus some other results that don’t deserve to be published.

So what is my beef with this report? Well, in no particular order, the first issue I have is with the methodology. The report doesn’t tell us if the responses were aided or unaided. Critical. My second beef is with the ‘indicators of effectiveness’. There was a time, many years ago when newspaper advertising, with its one-size-fits-all mass marketing approach was effective. But not today. Awareness, or noting, or recall is simply not enough to turn a prospect into a tryer. And even if readers are bucking the global trend and not blanking out these and other messages but are indeed noting these ads, so what!?

Another beef is with the number of ads and the channels. 2,452 ads that appeared in 15 newspapers. That’s a lot of ads in a lot of newspapers. Most of us would find it hard to think of 15 mainstream newspapers in Malaysia. I’d also like to know which ads they were shown. For instance, were 15 year olds shown Louis Vuitton ads? They might recall it but what are the chances of them buying the product?

When we have a first meeting with a prospect, one of the first questions we ask is, “Have you read the paper today and if so, which ads do you recall?” Very, very rarely does someone actually recall an ad. And many of them were reading the paper as we walked into the meeting!

The time spent by Malaysians online went up 24% from 3 hours a day in 2006 to 3 hours and 46 minutes a day in 2008. With broadband penetration forecast to be 50% in 2010, that figure is going to rise significantly. Already, 80% of affluent Malaysians (those with a household income above RM5,000) use social networking sites. The time Malaysians spend interfacing with traditional media will suffer. But perhaps the most telling statistic of all is one that appeared recently in the Star, “78% of people trust the recommendations of other consumers, while only 14% trust advertising.”

So even if consumers are noting or recalling or whatever the latest term is, it doesn’t really matter because 86% of them don’t believe what they read in the advertisements so they’ll never buy the product!

Singapore Airlines Suites, branding blunder or recession victim?

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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
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.

Suites
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.

Outstanding performance by Tourism Malaysia

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Tourism Malaysia should be commended for its performance last year. A total of 23.65 million visitors in 2009, beating the target set by Putrajaya by an impressive 4 million. In fact the 2010 target of 23 million visitors was beaten by over 500,000 visitors. This generated over RM50 billion for the country despite the difficult global situation.

You may be interested to learn that FusionBrand carried out the research that addressed numerous areas and culminated in over 300 actionable recommendations, including that TM move away from a global one size fits all strategy to a geographic focussed, segment specific stategy.

To realise these recommendations, FusionBrand also wrote the 2009 Tourism Malaysia global brand plan and 12 key market brand plans that were the back bone of the Tourism Malaysia brand strategy for 2009.

FusionBrand would like to think it was responsible, at least in a small way, for part of this impressive performance by an organisation that will be, within 10 years the number one industry in Malaysia, in terms of revenue.

Does shock and awe advertising still work?

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This is a brutally graphic public service announcement from Australia’s Transport Accident Commission (TAC). Viewer discretion is advised.

This is an immensely powerful piece of work beautifully executed. And it had an emotional impact on me. All the characters resonated with me as I imagined myself as many of them at various stages of my life. At the end I was breathless and close to tears.

But the question being asked by Bill Green is “Does this stuff work? Really work?” According to Bill, TAC says yes. According to TAC, “in 1989 the first TAC commercial went to air. In that year the road toll was 776; by 2008 it had fallen to 303”. That fell again to 295 in 2009. However, despite these powerful commercials, 16 people died over the Christmas period.

Topically, I have just spent 10 days in Australia over the festive period and the only TVCs I can recall were for alcohol (beer and hard liquor) and fast food. I was stunned to see so much alcohol advertised on TV. I didn’t see this TAC commercial or if I did, it didn’t register.

Using creativity to communicate
Advertising, and in particular well executed advertising, used to be a great way to reach a great many people over a relatively short period of time. With less competition, more accepting and attentive consumers, such reach could ensure the message was received and absorbed by the right people. Not anymore. Mass media has fragmented into niches and communities. Using creativity to communicate a message is no longer effective because the message is blocked out or soon forgotten because we simply don’t have the interest or bandwidth to absorb all the messages assaulting us throughout the day, every day. Increasing frequency doesn’t help, it makes it worse as it adds to the noise. Even beautifully executed work like this is lost in the fog of products and services.

I wrote an article about a similar approach used toward smoking in the UK and Malaysia. You can read the full article here,

Chilling commercials don’t work
With smoking, the research, carried out over 10 years by the Institute for Social and Economic research found that the warnings on cigarette packets that smoking kills or maims are ineffective in reducing the number of smokers. Likewise, chilling commercials or emotionally disturbing programs are also ineffective. The study also discovered that when a close family member become ill from the effects of smoking, the smoker takes no notice. In fact, according to the study, smokers only reduce the number of cigarettes or sometimes quit when their own personal health is at stake.

In Malaysia, despite nearly US$50 million spent on shock and awe campaigns to create awareness of the dangers of smoking, the number of smokers has practically doubled every 10 years. Whether or not there are parallels between campaigns for smokers and those who drink and drive, I don’t know.

Personally, I suspect that the reductions in fatal traffic accidents since 1989 are due to better safety features in cars, better roads, better lighting, highly visible enforcement measures, increased penalties for offences such as not wearing seatbelts and using mobiles, reductions of speed limits, more drug testing and better educated consumers.

The key then is not to add to carpet bombing of consumers via advertising, but to identify how those consumers become better educated? Was it the commercials or a reaction to the commercials or other initiatives?

Pubs legally obliged to breathalyse patrons
This can be done using qualitative research with consumers and then use that data to forge future strategies. It may be expensive and time consuming, but it will give us the answers we are looking for and determine future strategies. Of course it may be that it is not the commercials but in fact peer pressure at key times such as when consumers leave a pub, club etc. I think this may be the case and I see a time, not too far in the distant future when all bars and restaurants have to, by law, breathalyse all patrons as they leave the premises.

Personally, although this is a powerful TVC, I wouldn’t watch it again. If this commercial came on, I would change channels because if I am watching TV, I don’t want my leisure time to be challenged by issues I don’t want to address at that particular time.

Thanks to Andy Wright for the heads up on this story.

How not to sell a London property to Malaysians

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I spotted the sign below on a lamp post in Damansara this morning. In case you can’t read it, the content is as follows:

London – Condo
Good Buy & Invest (sic)
West London £220k
Call for Preview
012XXXXXXX

I cannot believe that a genuine UK property developer or estate agent would encourage a company to sell million Ringgit properties with signs on lamp posts. After all the UK property market, and in particular the London market is benefitting from substantial investment and has hardly been affected by the global financial crisis.

Commercial property
Jones Lang LasSalle expects the total direct investment in commercial real estate in the UK to be around £23 billion (RM125billion) for 2009. Prime yields in the West End are 5% and in the city, around 6.25%. That’s impressive compared with a bank rate of, well about 0%.

Residential Property
Meanwhile, the residential market is also performing strongly. International buyers increased by 25% in 2009 compared to 2008. Most of the investment is coming from Europe, Russia and the Middle East. Knight Frank estimates demand from new buyers is “almost 25% higher than a year ago” and “prices have now risen 13.8% in the nine months since March.”

In fact, most of the investment is coming from the overseas market. Foreign buyers account for 80% of the investment, the highest ever. Indeed, the average over the last 10 years has been closer to 46%. The latest sources of this overseas investment include Oman, Libya, Lebanon, USA, Korea and Ireland.

UK property roadshow
Little wonder then that Malaysian firms want to get in on the act and sell UK property. I can’t find any figures on the total Malaysian investment in the UK or London property market however, the recent launch of a luxury development at Imperial Wharf, London, Malaysian buyers purchased £9.25 million (RM56 million) worth of luxury apartments and penthouses over the 2-day road show in Kuala Lumpur.

Olympic games
With more than 10,000 Malaysians studying in the UK and a number of companies keen to make the UK their European HQ, there are going to be plenty of willing buyers. Especially with the Olympics to held in London in 2012.

Wrong way to sell
But this is not the way to sell those properties. It dilutes the value of the property, negatively impacts the credibility of the local representation and makes it harder for future efforts to sell UK properties here in Malaysia. But worst of all, it portrays Malaysia as an amateur in a professional world.

Updated: 11th January 2010. I have since called the number on the bunting. I spoke to a nice guy with a pleasant attitude. I asked him where the property is. He stated the property was in South Ealing. As I know this area well I asked for the exact location and I consider it to be more Brentford than Ealing. He asked for my email address and promised to email me more information.

That was last Thursday, I have not received anything as of today.

Case study – How a Malaysian Company built its brand from the inside

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Senior executives at a Malaysian technology related firm were frustrated. Sales growth was not meeting expectations, despite the firm’s 20-plus year track record, strategic partnerships with top international firms, excellent service and high profile advertising campaigns.

To boost sales, the firm had explored common alternatives – price cuts and an expensive marketing campaign. But although such actions had a short term impact in the past, there were no long term benefits and they hurt profitability. So the senior executives decided to look at another option – increase sales effectiveness by reviewing sales processes and tools, increasing the sales close rate and shortening the sales cycles.

Headquartered in Kuala Lumpur, the firm specializes in boosting supply chain and other efficiencies through both product sales and software and other integration. With offices in Singapore, Thailand and other Asian countries, the firm has a blue-chip list of customers that includes some of Malaysia’s largest companies. Sales had grown steadily over the previous decades, but the firm was now facing price-based competition from China at the same time as it was weighing opportunities to go public.

Issues
After looking at the issue, senior management determined that the sales problem was not due to a lack of leads. The firm received a steady supply of leads from word-of-mouth and customer referrals, as well as from its strategic partners. The sales staff also cold-called regularly for leads.

The main issue was converting those leads into sales. Qualified leads languished in the sales pipeline for months or even years. Too often, active senior management involvement was required to close sales, which took time away from expansion, financial and operational issues. The sales force constantly pressured management for price cuts to make sales. Even when sales were made, opportunities for sales to other divisions or branches were rarely leveraged. Too many sales were for low-margin commodities and replaceables, when the firm wanted more profitable service, maintenance and IT integration contracts.

Management had earlier tried to address these issues with automation (providing laptops to the sales force and installing a low-end CRM system), new sales compensation schemes, re-organization (creating a department just for telephone sales) and other steps. But sales still were not meeting expectations.

Traditional sales training
So the managing director decided that the best solution was to upgrade the skills of the 15-member sales force and other customer facing departments, and requested bids from multiple training companies. The most common proposal focused on sales training that emphasized lead development and closing skills. However, such training was generic to almost any industry.

Another, more expensive option, was a comprehensive approach that included revamping its sales processes and skills around the company’s offerings and requirements of its customers. After careful consideration, the company decided that an improved sales process and customized training provided the most value, and contracted with the sales development division of Malaysia’s leading customer driven brand consultancy, FusionBrand.

Sales audit
The first step was an in-depth sales audit that sought to uncover issues hampering sales as well as opportunities for improvement. FusionBrand conducted hour-long, confidential interviews with senior management, sales managers and many sales personnel. All sales material, including brochures, proposals, quotations, sales scripts, pipeline reports and other information, was reviewed and analyzed. Current as well as “lost” customers were interviewed for their critical perspective on the sales process and their reasons for buying/not buying.

The sales audit resulted in a comprehensive sales process analysis that identified strengths and weaknesses in the sales process as well as in the sales material. For example, the sales pipeline report, a key tool for sales forecasting and supplier orders, was both out of date and contained inaccurate information, making it difficult to prioritize resources and estimate future sales. The sales process analysis included numerous specific recommendations for improving sales processes, reports, collateral and proposals.

Many graduates of training courses complain that the material studied was not relevant to their industry or customer requirements. This issue did not arise because FusionBrand carried out a sales audit first. Information learned during the sales audit was then used to develop two customized sales training courses that incorporated actual customer, product and sales situations. Furthermore, the number of attendees was limited to 12 to ensure that each sales person gained maximum benefit from numerous role-plays and hands-on exercises.

The first customized, two-day course focused on sales basics, ranging from lead development, time management and closing. Special attention was paid to dealing with price-based objections. About four weeks later, the second customized course was held in 5 half-day sessions over a three-week period to minimize the impact on sales time and provide more opportunities for review and retention. This course focused on “strategic sales.”

Many training courses assume that sales can be made in a single sales call. However, only commodity, low-margin products can be sold in one call. More advanced offerings inevitably require strategic sales, characterized by longer sales cycles, multiple corporate decision-makers (ranging from finance to IT to actual users) and complex requirements. Such strategic sales require understanding differing requirements for value among various departments as well as internal political issues at the prospect. Using an existing prospect that was difficult to close, each attendee developed a focused sales strategy and delivered a PowerPoint presentation designed to win over all departmental decision-makers involved in contract approval.

Sales manual development
The final phase of the multi-month effort was a sales manual. A sales manual includes standardized information on sales processes, compensation (eg, commission schedules), reporting, requirements, resources (ranging from key telephone numbers to report and presentation templates), sales tips and more. The sales manual gives the company more consistent management by acting as teaching tool for sales managers with new staff and ensures more consistent operations and reduces training time.

Results
Results have been achieved in both sales and other departments. Ordering is based on more accurate pipeline data, which has reduced inventory, freeing up capital for expansion. Morale has improved, sales personnel are more confident and less inclined to reach for a calculator at the first objection and offer discounts. The company has made its sales and presentations more customer-centric. Most importantly, sales have accelerated and sales cycles are starting to decrease.

Other internal branding initiatives were embarked on to ensure the successes were communicated and integrated throughout the organization.

Summary
Companies invest a lot in marketing to generate leads. But even all the leads in the world mean nothing until they are converted into a sale and, ideally, a long-term customer. That is why investing in your sales organization, processes, and personnel is crucial for ensuring that customer requirements for value – whether at the MD or user level — are consistently understood and addressed by the brand. Such understanding is hard to achieve from a ‘one-size-fits-all’ sales training class.

A sales process audit, customized sales instruction and sales manual can give companies the framework and structure to close more sales more often – without having to compete just on price. This in turn will build a comprehensive, well respected and, most important of all, profitable brand.

The organization is the brand

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Japan Airlines was established as the national flag carrier of Japan in 1953. The government was the largest shareholder and for over 30 years, JAL was the only Japanese domestic airline with the rights to fly international routes. In other words, as a government entity it had a monopoly on those prized international sectors.

Rather than employing professionals in the industry, the government tried to run the airline, creating bureaucratic inefficiencies that had little inclination to deliver the value customers are looking for.

Hope came in the late 1980s when the government sold it’s stock in the company and the airline was privatized. In 2002 Japan Airlines System was incorporated to manage JAL and by 2006 the airline’s daily operations had reached 192 international routes and 387 daily flights.

A new brand identity and aircraft livery themed around ‘the arc of the sun’ was created and it was hoped that ‘the identity would help JAL build a stronger global brand and position a JAL flight as a means to acclimatizing to Japanese culture, attempting to attract more international business people flying to Japan to choose JAL over other international carriers’.

In 2010, JAL is fighting off claims of imminent bankruptcy by multiple media organizations. According to etravelblackboardasia.com, JAL has experienced financial difficulties for quite some time and currently owes more than US$5.8 billion.

JAL shares plunged to a record low in Tokyo trading last week, however the airline is still positive that it will experience a turnaround with the support of the Japanese government. The site also quotes a JAL spokesperson as saying that reports that JAL was planning to cut all of its international routes to cut costs are 100% false.

Well, only time will tell but it is crystal clear that the airline is in big trouble and is surviving on bail outs from the ETIC (Enterprise Turnaround Initiative Corporation of Japan).

What lessons can other legacy carriers learn from this?

Using creativity to build a brand.
When Japan Airlines and Japan Air Systems merged, the idea was to provide the foundations for a more efficient organisation to compete both domestically and internationally. Nothing wrong so far.

Next came the development of the brand image. This was to clearly communicate the fact that the merger had created a new and improved organization. According to Landor, the JAL agency, “the JAL brandmark needed to express a new business philosophy and strategy and at the same time be flexible enough to apply at every touchpoint where travelers, airline employees, and travel advisors have exposure to the brand.”

Landor also says on it’s website, “The JAL mark reaches dynamically to the sky. It is derived from the motif of a rising sun, one of the best-known icons of Japan. The mark is drawn in a modern way and is reflected in the red sun on the tail of the aircraft. In 2002, the integrated holding company was established and the JAL mark was introduced. It is now visible in advertising, ticketing, airport environments, and the combined fleet of aircraft. Implementation of the design will be gradually executed through prioritized applications.”

Sounds good, but the problem is that consumers aren’t buying that stuff anymore. Positioning products belongs in a mass economy that no longers exists. There are too many airlines essentially positioning themselves in the same way. This is because positioning and the 4 ‘Ps’ are imprinted on the DNA of an entire generation of marketers. But the market conditions have changed and it is time to bury the concept otherwise we’ll see more companies in the same position as JAL.

JAL should have focussed it’s brand building efforts, not on reaching for the sky with a motive derived directly from the sun but on providing value to customers based on bespoke relationships with existing customers, access, relevant content to relevant segments, userbility, technology and more. Sure a slick identity is important but it will not build the brand on its own.

Strategic relationships
JAL was late joining an airline alliance which meant it couldn’t offer the interconnectivity of competitors. This has had a profound impact on the airline. ANA, JAL’s competitor joined Star Alliance in 1999, eight years before JAL joined ONEWORLD.

Operations
Although once the airline was privatised, it did reduce costs by cutting staff levels and employing cheaper foreign staff, it still operated at high unit costs which had a negative impact on operating effectiveness.

The right technology
It is critical to invest in technology that is user friendly. JAL’s flight planning software is awkward and confusing.

Flexibility
Like many airlines, JAL focussed on attracting customers to the high yield spots at the front of the plane. There is a general theory (I don’t know how true it is) that if you fill business class on a 747, the flight is paid for and the rest is gravy. This is a common strategy but in the recent economic meltdown it’s not a very effective one.

Despite no longer being a government company, JAL was slow to adapt to the economic situation and suffered as a result. It is imperative therefore that airlines become more nimble and whilst a strategic plan is important, it has to be versatile enough to adapt quickly to challenging market situations. At the same time, it has to be adaptable to take advantage of opportunities.

I doubt very much that the Japanese government will let JAL fail. But what about other Asian legacy carrier established by governments to fly the flag globally? Many of them are already sucking funds out of already empty coffers. Will they be alowed to fail?

Organisational excellence required to build global Asian brands

Published on by brandconsultantasia1 Comment

Not too long ago, the Michigan (U.S.) State Business School reported that every US$1 (RM3.36) invested in marketing earned US$5 (RM16.80). By contrast, for every US$1 (RM3.36) invested in operational excellence, returned revenue was US$60 (RM201.75).

Despite such data, the majority of Asian firms have been slow to grasp the importance of everyday operational excellence that requires a continuing commitment to quality service, as well as processes that are effective from the customer’s point of view and advanced supply chain skills.

Many Asian firms prefer to spend fortunes on tactics to acquire customers yet very little on the operational and other strategic requirements needed to keep them. Sales and marketing growth based on increased awareness are fine and important but they are activities to be embarked on only after the operational foundations are in place. This is because an acquisition only approach is generally unsustainable.

Therefore, once a customer is acquired, it is critical to develop relationships to retain them. Firms cannot simply ‘hope’ they will come back time and time again because, with so much competition, so many alternatives, if you are not communicating with them – and selling to them, someone else will.

Customers build brands
And because customers have the power to make or break our brands, Asian companies must learn to do business on their terms. At the same time, they must become focused on creating PROFITABLE customers (on average, 15% of customers are unprofitable), ensuring those customers become our brand ambassadors, and consistently increasing their share of wallet.

Coca-Cola, Marlboro, Pan-Am, Ford and so on, represent mass-economy brands. These Western brands were successful because they shrewdly used the tools of the mass economy. They positioned themselves by repeatedly advertising in the mass media of one, two or three TV stations, one or two newspapers and knew where consumers were most of the time as there were few leisure time activities to take them away from the home.

Global markets
They also used mass production to achieve economies of scale, and they used distribution to penetrate mass markets. Global markets were opening up, disposable income was increasing, competition was limited. Customer retention didn’t really matter. Markets were growing so fast, and the mass-economy tools were so powerful, that it is was fairly easy to acquire a new customer for everyone that was lost. They also had a large, essentially one segment, ready made affluent domestic market.

But today, the mass economy is dead. The mass economy was killed by the fragmentation of the media, new leisure time activities, the Internet, greater competition, globalization, immigration, increasing number of and power of retailers, marketing segmentation and other forces.

In its place, we now have the “Customer Economy.” Companies no longer have the exclusivity to make the rules and control information by “positioning” products or promoting “brand equity” through advertising and PR like they did in the mass economy. Moreover, where in the past, prospects were segmented by demographics and geography, now they are part of communities. In these circumstances, can advertising and PR be effective to build brands? As part of a comprehensive brand strategy, yes. On their own, no.

For example, in the 10 year period to 2006, the computer manufacturer Acer spent US$10 billion (RM33.6 billion) trying to build a global brand via advertising. The effort failed. Acer withdrew from the retail market and has only recently reentered it with a new strategy focusing on individual segments.

Sony mass market failure
In 2000 and 2001, Sony spent an incredible US$2.5 billion (RM8.4 billion) on advertising worldwide. The result? The first three months of 2003 saw stunning losses, a 25% slide in the company’s share price in just two days and layoffs of more than 20,000 workers worldwide.

Unperturbed, Sony again tried mass economy tactics in 2008, spending an astonishing US$4.9 billion (RM16.5 billion) to position its diverse range of products including televisions, Blu-Ray players, music players, Laptops, PlayStation games, movies from Sony Pictures and new music from Sony Music. The approach failed and Sony is now exploring a more specific product focused niche approach.

Asian companies
Asian companies obsess with using traditional marketing tools such as advertising and PR to acquire new customers. But what good does it do to acquire customers if you have no idea how long they are going to stay and how profitable they will be? Also required are investments in operational excellence and accountability.

There is also a belief by many firms that they just have to ‘participate’ in an activity to get business. One local firm we’re familiar with collected 200 qualified leads from a trade show, yet months later those leads were still collecting dust! They were waiting for the prospects to contact them!

Another Asian company invested over US$50,000 (RM175,000) on a trade show, instructed 3 ‘top’ sales people to represent the company at the trade show and then failed to train the staff on how to behave and sell at the trade show. Moreover, there was zero investment in a lead management programme for leads generated. This meant the company was unable to measure the effectiveness of the trade show.

Finally, within 3 weeks of the trade show ending, two of the sales people manning the booth left the company, taking all the leads generated with them.

As we work to move up the value chain, the goal of every Asian company that wants to build a brand must be profitability, backed by measurement and accountability. Reaching solely for sales or market growth is no longer enough.

Repeat business
Not so long ago, in the US, to reach its sales goals, Ford offered $3,000 in rebates and other special deals off the cost of the Taurus car. Ford maintained its market share – but at the cost of losing money on each vehicle sold. Interestingly, Ford learned from its mistakes. Its next TV ad campaign in the US was based on the following line: “The highest proportion of repeat buyers of any car in its class.” What better testimonial is there? Little wonder then that in a report released by LeaseTrader.com in August 2009, Ford had the highest brand loyalty of any American automotive brand.

Despite the obvious need to invest heavily in retention strategies, ask a typical advertising agency about the branding issues faced by Acer, Sony, Ford and other companies, and what do you think the most common response will be?

Exactly. Recommendations for more ads, in more media across more platforms! They’ll promise a better creative team to provide greater creativity, but what’s really required is accountability for results! The usual agency attitude of “spraying and praying!” may have been the best strategy during the mass economy when there were a limited number of media conduits. But in the customer economy, the proliferation of media outlets and competitive advertisers now makes it practically impossible to build a brand solely based on ‘spraying and praying’.

Strategic approach required
What Asian companies need more than anything else is a strategic approach to branding that is aligned with the new imperatives of the customer driven global economy. Branding in the customer economy requires a fresh look at how the organisation engages with customers, as well as market and profitability requirements.

Rather than a simplistic reliance on logos and creative driven, one-size-fits-all, repetitive advertising, branding today demands research, data, measurement, supply chain effectiveness, customer intelligence, service AND accountability to both customer requirements and resources spent. Only once the company has identified who it should talk to and how, can it start to talk to those prospects.

Because acquisition is so expensive, and existing customers make the best brand ambassadors, branding also requires an emphasis on the identification and retention of PROFITABLE customers. This is especially true as the balance of power shifts from sellers to buyers.

The payoffs from such customer-economy branding can be substantial. British Airways calculates that customer retention efforts return $2 for every dollar invested. The clothing label Zara has thrived against powerhouses like Gap by moving from four collections a year to releasing new styles every two weeks.

So, as Asian firms attempt to move up the value chain, it is imperative companies monitor their retention rates (which fewer than 20% of companies do), because it is the best indicator of future profitability and brand strength.

Track RFM (Recency, Frequency, Monetary Value) because it shows which customers may be prone to defection and which are candidates for up – or cross – selling. Since it is likely 20% of customers are generating 80% of profits, segment customers according to profitability, and develop unique value propositions for the top 1%, 4% and 15%.

Calculate the lifetime value of clients. For instance, Ford calculates that a customer who buys his first car at the age of eighteen, upgrades it every three years and services it at a Ford dealership is worth a six figure sum to Ford over a lifetime. Cadillac estimates the lifetime value to be $300,000.

Revisit dormant customers. And optimize spending by developing marketing ROI based on actual customer profitability.

Other areas of organisational excellence that are key to building global Asian brands include recruitment and training. The retail sector is only realizing a fraction of its potential. This is partly due to the lack of training of staff and subsequent indifference of frontline staff when interacting with customers. If there is no attempt to build rapport with a prospect, why should the prospect return?

This is also true of manufacturing. One company in Malaysia we contacted recently listed 2 markets it wanted to develop as the UK and France. Yet when we called the office, no one spoke English.

Building Asian brands will take much more than basic advertising and PR. Core requirements include research, accountability, operational excellence, data management and customer equity (lifetime value of customers).

In Malaysia, according to research carried out by PriceWaterhouse Coopers, 86% of Malaysian CEOs and their Board of Directors say that they believe in the economic potential of effective brand building. However, almost the same number of CEO respondents admitted that they do not have a brand unit to integrate brand practices within their organisation. Sentiments are similar in Thailand, Indonesia and Vietnam

Until those C level executives take the plunge and invest in their brands by building operational excellence into their brand strategy, the concept of building global Malaysian or other Asian brands will remain just that, a concept.

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Automation is a tool, not a solution

Published on by brandconsultantasia2 Comments

In the mass economy that started before the second world war and ran until the start of the customer economy circa mid nineties, branding was a less complicated process. Consumers had little choice or knowledge and as a result would make brand decisions based on corporate promises or claims. Consumers needs were relatively simple and once they used a brand and if they were happy with that brand, they would remain loyal to the brand.

We’ve come a long way since then and branding has become a lot more complicated. As competition increased, companies tried to compete, often by slashing prices that ruined quality or making false claims about product capabilities. Advertising led campaigns focussed on aquisition and fed up consumers fled to the competition and the process continued.

A core element of brand building today requires brands to engage with customers to ensure a thorough understanding of the customer’s requirements for value and then matching the attributes of the product to those requirements for value. Once a customer is acquired, the process of continuous engagement continues through two way communication. The ultimate goal is to retain customers in order for the company to up or cross sell to them in the future. The icing on the cake is to turn them into brand ambassadors.

Up until recently, mobile service providers in Malaysia didn’t have to worry about subscribers leaving because they were able to create a number of road blocks to ensure the process of switching providers was too complicated. Even the recent implementation of number portability still punishes consumers which is why the response has been lukewarm.

I’ve been with my mobile provider, Celcom for at least 10 years and have put up with poor service, repeated dropped calls, confusing billing, lack of interest or understanding of my needs, inflexibility and non existent customer engagement for the majority of that decade. During a recent trip to Singapore I was checking email on a regular basis and have just been hit with an astronomical bill due to my usage of the data roaming service. I am not complaining about the massive hike in my bill because the reality is I should have checked the fees before using the service. (Having said that, I have done this in the past and not received such a large bill. Furthermore, a brief warning before usage would have been helpful).

But I am complaining about the fact that, after 10 years as a customer, Celcom sends me one text message warning me that I have passed my credit limit and then cuts my line without any consideration for my payment history or my time as a customer. This is even more irksome as my October bill is not actually due till 16/11. Despite this, and no doubt wary of the reputation of Celcom, my efficient pa had, yesterday instructed our despatch to pay the bill today, 11/11, five days before it is due. The balance is from my November bill and is not due till around the same time in December.

I’m also compaining about the company’s use of automation. If I try to make a call to my provider, using my handphone I am transferred to a machine that gives me some instructions that result in me receiving a text message stating the details of my overdue amount including dates due. That’s useful information. But it doesn’t give me an opportunity to pay the overdue amount or discuss the situation to someone. So Celcom is saying to me, “Your payment is overdue, you are barred from using your phone. We know you run a business but we don’t care. We know that some of you use your phone to go online and now you can’t, tough. In fact, we don’t want to help you or have anything to do with you until you settle your outstanding bill.”

So here are some suggestions for Celcom that brands in other sectors can also benefit from:

1) All customers are not created equal. Don’t treat those with a good payment record the same way as you treat those with a bad payment record.

2) Similarly, most customers are good people. If someone is late with their payment, don’t automatically assume they are a criminal. Find out what the problem is and see how you can make it better.

4) You collect a lot of data on your customers and their usage patterns. Use that data to form a relationship with those customers in the form of better service delivery.

5) Branding today is about engagement. Take the time to engage with your customers. Communicate with your customers in person.

6) Automation is a tool, it’s not a solution.

7) Just because you have acquired a customer, doesn’t mean you own them and don’t have to do anything to keep them.

8) You are not the only company doing what you do in the country.

9) At least give your customers the impression you are grateful for their business.

10) Everything you offer can be duplicated by other service providers, except the relationship you have with your customers.

Feel free to submit any recommendations to improve the Celcom brand experience.