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Wednesday 26 June 2013

Ryanair doesn't care about customers!!! And that works fine for their brand strategy


Ryanair is an interesting brand to place under an evaluation microscope. The fact that it has established itself as an consistent offender when it comes to negative brand perception hasn't seemed to of damaged its stability. In fact if you didn't know the low cost no frills airline recently announced a record £481 million in profit for 12/13.


The more passionate customer service connoisseurs among us would argue that Ryanair as an entity should really not be doing this well. How can a company, which spends so little time on customer satisfaction, and so much resource on squeezing extra revenue out of its customer base, continue to enjoy expansion, growth and substantial market share? 

Let's be crystal clear on Ryanair’s brand perception. If you thought Ryanair scores positively as a brand with a strong focus on satisfying customers through a low cost model you would be wrong. One of the most common words you will find linked with Ryanair brand perception is 'deception'. Take for example the company website which ranks the worst in terms of ease of use for all UK travel companies.


Virgin might focus on the Rockstar holiday, JetBlue may pride itself on its on-board customer comfort but Ryanair makes absolutely no bones about the fact that first and foremost it is a low cost, high revenue margin operation. You will notice that whereas Virgin is noted as taking a more customer-centric approach Ryanair instead focuses on driving traffic to the website, currently in the tune of 1.2 million customers a day. Makes sense when you consider a complete lack of consideration when it comes to customer service strategy or any investment in understanding how the rising influence of social media will change the way consumers behave. You might think that in this day and age a CEO would take time to listen to its customers. It's clear from the below blog that Ryanair have no time to liaise with 'idiot bloggers', a strategy which some have described as 'analogue marketing in a digital world'.


Surely this defies all logic? A brand can't place so little emphasis on the customer and continue to enjoy strong profit and growth. How can this model be sustainable? Surely sooner or later Ryanair will suffer for a complete lack or respect in maintaining a strong and loveable brand?

You would certainly hope so however that depends on a few factors changing in the market it currently operates in. The Brand Avenger would argue that in order for Ryanair to begin to feel the pain in terms of sales then one, or a combination of all three of the following things would have to happen.

1) Price would have to decrease in importance when it came to choosing an airline to travel.

It is far too easy nowadays for a consumer to use a search engine such as Skyscanner and search for the cheapest possible option when it comes to flying. There is no denying the fact that holidays are expensive and as many see the flight as a means to an end it will normally be travel where customers look to tighten the purse strings. Would many be willing to pay extra dollar dollar bills for a promise of better service or increased comfort? Has any brand connected so well with airline consumers that it justifies an increase in spend? The answer is no. When it boils down to it Ryanair will always continue to win if they can successfully maintain a lower price than the nearest competitor. Brand reputation maybe in tatters but then again the consumer isn't really buying the brand in this instance.

2) There would need to be an increased number of competitors serving the same routes as Ryanair to give the customer more choice.

More competitors, more options and more choice for the consumer. It is a simple case of supply and demand! The Brand Avenger would assure you the service could be much worse if the market continues to lose suppliers. 


Let's take the above example into consideration. Ryanair purchase AerLingus, swallow up all brand assets and the consumer has to fly with the same company to reach their destination. This of course leads to complete control for the company and complete loss of power for the consumer. 

If Ryanair are ever going to pay for its non-existent investment in brand strategy it will only be when customers have a choice. They have a choice of supermarket, of restaurant and of clothes store but when it comes to airlines how many companies can truly offer the routes and price Ryanair currently do?

3) A competitor would have to truly embrace a customer centric strategy to retain the loyalty of customers.

We should be careful when using the term customer-centric in any sense when analysing the aviation industry. Whereas it is true Virgin invest a considerable amount of time and resource on marketing strategy focusing on service and comfort it does little to truly win the loyalty of its most frequent flyers. Despite significant lip service and hefty marketing budgets focused on service Virgin have yet to understand the full value of the customers that spend the most on their service. If they did then Virgin would be tailoring the lowest prices fares and significant promotions with the largest discounts to the most frequent of flyers rather than trying to acquire new flyers. The largest retailer in the UK knows that three quarters of sales revenue is generated from customers who stay loyal to their brand. In a market heavy on competition and with the rising power of word of mouth marketing there is no reason why the same concept couldn't work for an airline as long as they were willing to fully embrace a customer-centric ethos.


Let's finish with a quick review of the above article. The Economist argues that 1 in 5 of Ryanair's passengers are travelling for business, which equates to 17.5 million customers a year. This is a segment of customers who is clearly a significant revenue generator but also one of the segments that Ryanair could be in greatest risk of losing if market conditions change. At the start of this article The Brand Avenger wondered why Ryanair continued to do so well despite such poor brand perception and I think the analysis of the business consumer sums up the reasons quite nicely. Until someone, somewhere can come in with a matching price with a greater emphasis on customer service with minimal hassle much like the rest of Ryanair's customer base the business trade will continue to flow. However, Ryanair need to realise that this model cannot be sustainable in the long term. The only way it would be is if they were to become a complete monopoly and competition authority bodies won't allow them to do so. Sooner or later some brand, somewhere will do what Ryanair does cheaper and better and when that happens, much like the 1 in 5 business crowd all of Ryanair's customers will leave the brand without an ounce of regret or any feeling of commitment. After all, it’s nothing personal, it’s just business.

Wednesday 19 June 2013

Flogging a dead horse? Can Myspace rise from the ashes?


MySpace is back! If you didn’t know that then you should check out the below Youtube clip


In many ways MySpace’s fall was more impressive than its rise. The brand should have been able to hold onto its position of power in the Social Network space. The fact that unique visitors fell from 78.9 million per month in 2006 to 34.8 million three years later clearly demonstrates how big its decline in popularity was.

There are many theories as to why MySpace ultimately failed to maintain its dominant market position. Many blame the sale of the Social Media site to News Corp as a preliminary blow that was hard to come back from. De Wolfe himself has cited a pressure to monetize the site following the sale as a step in the wrong direction. Whatever the cause it is clear that De Wolfe’s earlier claim that MySpace would have 400 million users by 2015 is just not obtainable.


So why would a group of investors try and salvage this social media ship wreck? Is it even possible to reposition a brand and restore it to its past glory following such a public fall from grace?

There are examples of companies that have successfully repositioned brands and there are examples of companies which have failed and gone out of business. Clearly the success will depend on a number of factors but most importantly a clear and viable long-term brand mission will be important.

MG Rover had once enjoyed a healthy position in the UK car market. However, following years of decline the Birmingham based brand was left in a perilous position by the turn of the 21st Century. Following a buy out in 2000 there was hope that a brand refresh and a product re-launch would be enough to save the company. But when it came down to it Rover reputation was too damaged to recover and it wasn’t long before the car maker was confined to the brand graveyard.


However before we begin to assume there is no hope for MySpace we should consider the tale of Apple. In 1993 you may have been forgiven for believing the rise and rise of Microsoft would lead to a permanent burial of the company responsible for the Macbook in the 80’s


But Apple wasn’t about to lie down and die an easy death. Apple carefully evaluated its position in the market, where technology was going and most importantly stuck to its gun on its brad strategy moving forward; Apple would be the icon of doing things differently ad this couldn’t have been anymore evident in its unique differentiated approach to releasing MP3 players and phones with a clear focus on usability and a rebel image. And in terms of brand success the rest is history.


Reading the above review which details some of the key changes in Myspace strategy it is clear that it is going to take more than the removal of a capital S in the logo to create success. You can’t argue with the ambition of the new owners and the clear focus they are placing on music, personalized radio station content, etc. And if nothing else early Brand scoring metrics will probably be music to the investor’s ears as negative perception continues to fall as detailed below.


It is clear that Myspace can go one of two ways in the future. It can stick to a strategy look to offer a differentiated product portfolio and have a clear aligned band strategy or it can jump from one strategy to another in a desperate search to provide a purpose and meaning to the target audience. Whatever way it goes there is no doubting it is a massive task and a warning to all powerful brands in any market that you can’t forget about your brand strategy.





Wednesday 12 June 2013

The Man Of Steel and its Promotional Partnerships... Super Marketing?

Later this week the world will witness the launch of the hugely anticipated Man Of Steel franchise. Capitalising on the popularity of super hero films Warner Brothers are hoping the most recent caped crusader adaptation to hit the screen will bring with it broken records at the box office and a steady stream of investment. And as long as they can keep the public interested in the series The Brand Avenger can't see why they wouldn't be able to achieve this.

Warner aren't the only company who are hoping to capitalise on an investment in the film as several other firms outside of the entertainment industry have also signed themselves up to lucrative contract deals. Companies ranging from Lidl to No Fear are hoping to boost revenue streams through investing in Clark Kent with some companies as Chrysler and Nokia going as far as to design actual products around a Superman theme.

http://www.marketingweek.co.uk/news/brands-take-off-for-the-man-of-steel/4007015.article

There is a long history of companies seeking out promotional partnerships with the silver screen to complement their marketing efforts. Regular readers of The Brand Avenger will remember that Audi looked to capitalise on Iron Man 3 mania through a lucrative sponsorship deal. There are of course countless other examples of how some of the biggest brands in the world look to boost their reputation and enhance visibility through promotional tie ins with the entertainment industry.

If you are looking for a simple way of capitalising on a bit of quick and dirty exposure then promotional partnerships will certainly give you that. However I wonder how many companies have well and truly thought of a long term marketing strategy before they have decided to fork out on marketing investment and exclusivity rights for the Man Of Steel.

http://www.licensing.biz/news/11485/Man-of-Steel-flies-into-LIDL

Lidl is an interesting partner for Man of Steel when it comes to distribution rights. Surely for a retailer as long as you have accessibility and location locked down the most important next step is to ensure customers are shopping at your stores and not your competitors. However if Lidl well and truly believe that the exclusivity of selling Superman franchise will lead to improved levels of customer loyalty then this is misguided at best.

Even the biggest brands are accountable for poor marketing decision making especially when it comes to partnerships with movie features. In so many ways Coca-Cola are leaders when it comes to leveraging brand perception however in so many other ways they failed when it came to the Coke Zero/ Skyfall promotional partnership.

http://www.thesocialpartners.com/2012/10/22/coke_zero_james_bond_skyfall_fail/

As demonstrated in the above article if you don't have a well planned out, logical strategy for placements you risk the chance of becoming more quickly forgotten than the prestigious red carpet ceremonies that come hand in hand with the launch big films. In the case of Coke Zero the brand team may have initially had a clear and concise brief which supported the idea at first. In this instance The Brand Avenger wouldn't be too surprised if the objective was to win market share and brand recall of Coke Zero with the 18-35 make demographic. However, when you well and truly analyse some of the metrics behind Coke and Skyfall you quickly begin to realise that along the way the message became lost.

https://www.youtube.com/watch?v=RDiZOnzajNU

One of the best examples of Coke's lack of engagement can be demonstrated through the lack of buzz generated after the above You Tube viral. Despite 3 million views in the weeks after its release the campaign quickly lost momentum, most evident in the fact that the campaign only returned a couple of hundred tweets which is a disaster and not a sound long term investment choice.

Maybe things would be different if Coke pipped Heineken to the post to become the official replacement of the famous Vodka Martini's shaken not stirred.


http://www.dailymail.co.uk/news/article-2206593/James-Bond-swaps-Vodka-Martini-pint-Heineken-controversial-product-placement-deal-new-film.html


£28 million is a lot of money to pay for a lucrative product placement. From a brand recall point of view for Heineken the lure of extensive product placement and exclusive access to TV ads with Bond was too much for the company to resist and made more sense than the deal Coke Zero took out. But in terms of whether the brand investment in promotional placements is worth it i'm afraid the answer is there is no answer. Put pure and simple no one knows which makes the expense even harder to justify if you are looking for return on investment.

http://www.livescience.com/24957-james-bond-product-placement.html

We cannot say for sure that showbusiness and investment in strategic partnerships can yield big returns however marketeers need to be realistic when they look to undertake such partnerships in regards to what they get back. If you are well and truly looking to win the loyalty of your casual and regular customers you are not going to get it through claiming exclusivity on a movie franchise with a limited shelf life. If you are looking to partner up with entertainment entities I would suggest taking a leaf out of Experian's book and look to build a more viable long term strategy.

http://www.marketingweek.co.uk/news/ticketmaster-eyes-growing-insight-market/4007017.article

Insight and big data are key trends and huge growth areas for all industries. Through partnering with a data specialist Ticketmaster may not be in the front row when it comes to sponsorship deals and partnerships but that won't bother them if they are selling out the theatre.