There’s a war brewing in the skies and it is all about money, or the lack of it. While Tony Fernandes has succeeded as the familiar poster boy for AirAsia, MAS’ Idris Jala has been quite the opposite, avoiding directly selling himself to the public. But all that changed, when Idris took to primetime tv to announce his zero-fare offer to all Malaysians, putting on a sales pitch quite uncharacteristic of Malaysia Airlines.
Many know that bargain basement prices have always been AirAsia’s war cry, but when the prestigious national airline begins trumpeting free seats, the public was sure to be stumped. Which made Tony sit up the next day and snap back. Because with 1.3 million zero fare seats up for grabs, anything was possible; anyone could fly! The last thing he needed was a spanner in his forecast of 20% growth in AirAsia’s passenger volume for 2008.
He hit out at Malaysia Airlines for competing directly with his business model and at the same time not allowing the budget carrier to compete against the national airline. While he nervously brushed aside Malaysia Airlines’ radical announcement as ‘imitation is the best form of flattery’, the undercurrents were too serious to ignore. Amidst all the rhetoric, the prospect of being locked out of the low-fare passenger market through promotional extensions of MAS’ zero-fare platform with other equally attractive configurations was something Air Asia could ill afford in its space.
A battle of semantics also showed up Tony talking about a sub-zero fare position. Hey, now you can get paid to fly? Or is he talking about lower fuel surcharges for travellers? Dicy territory in these trying times. After all AirAsia X is already working on a 2 US cents per available seat kilometre (ASK) cost structure, which is lower than AirAsia’s 2.7 US cents and the 4 to 5 US cents for full service carriers.
The flurry of exchanges did however throw up a hot roti canai or two in the air, and my eternal favourite - chicken rice. Combo that with the best nasi lemak in the sky, and Tony has me eating out his hands!
He went on to say MAS should work together with AirAsia instead of competing and accused the full service airline of ‘surrendering’ to Singapore Airlines (SIA): “MAS and AirAsia will go to war and the only beneficiary will be SIA!”
So will the open skies policy in 2009 be the death knell for both players if this fight for crumbs persists? Or should I just shut up and ride on the tail wind?
Sources: Adopted from Adoi News Desk
Sunday, June 29, 2008
Sometimes, You Need A Second Brand
ONE OF THE BIGGEST MISTAKES THAT A company can make is to think that their brand can stand for everything under the sun. But once a company becomes successful, it usually forgets what made it successful in the first place and starts to line extend its brand into other products or services.
That can prove to be a costly mistake. The typical argument from management is that the brand is already well known; therefore it will be easier and less costly to launch a new product or service under that name. And management can usually point to increased sales to justify this move.
But here’s the danger. Branding mistakes don’t immediately whack you on the head – they will build up over time. The problem with line extension is that it may give your sales a boost in the short term simply because you are now selling more products. But in the long run, line extension damages both the core brand and the new products launched under the brand. The reason is simple. With line extension, the core brand is weakened because it no longer stands for the one thing that made it strong in the first place. It now stands for several things, and when you stand for several things, you end up standing for nothing. In branding, there is no such thing as being neutral. You are either this or you are that. Try to be both and you end up shooting yourself in both feet.
WHO INVENTED DIGITAL PHOTOGRAPHY?
Canon? Nikon? Olympus? Nope. It was Kodak. Surprise, surprise! Yes, Kodak pioneered this category way back in 1976. But Kodak made one big mistake. They did not launch a new brand for their digital cameras. They insisted on using the Kodak name because it is a wellknown name. True, but what is Kodak known for? Photographic film! That mistake probably caused Kodak the lead in this sector.
NEW CATEGORIES NEED NEW BRANDS
Have you ever wondered why those big luxury cars from mass market car makers like Peugeot, Rover, Fiat, Citroen, Renault, Opel, Ford, Volkswagen and Mitsubishi don’t sell very well despite the fact that they are very well-equipped and priced cheaper than the equivalent Mercedes- Benz, BMW or Audi? You don’t need to be a rocket scientist to fi gure this out. Who wants to buy a luxury car from companies that are known for making mass market cars? I don’t care how good the cars are, as long as they wear the wrong badge, they won’t sell in the luxury car sector.
Ever wondered why expensive Seikos don’t sell as well as expensive Rolexes? Rolex is a premium brand. Seiko is a mass market brand. Seiko is very well-known (and they probably make very good watches) but it is not known for premium watches. If Seiko wants to go upmarket, it needs a new brand. Likewise, if Rolex wants to go downmarket, it needs a new brand – like Tudor, for example. If they go downmarket with the Rolex brand, guess what will happen? They will destroy the brand equity of the upmarket Rolex watches.
New categories need new brands. That is why Toyota, despite being such a powerhouse name in cars as well as the world’s most profitable car maker, wisely chose to launch a new brand when it ventured into the luxury car segment in 1989. The rest, as they say, is Lexus history. How come Lexus was so successful when it did not invent the category called “Luxury Japanese Car”? Honda did, with their Acura division. But here’s the thing. Honda didn’t do it wholeheartedly. They have a new luxury car division but they are still selling cheap, re-badged, 4-cylinder Hondas like the Integra, which was (and still is) based on the Civic. They didn’t have a fullblown, dedicated platform, V8-powered luxury model like Lexus. Lexus started right at the top with the LS400, which is pitched directly at the Mercedes-Benz S class, BMW 7 series and Jaguar XJ12.
BUT WHEN DO YOU LAUNCH A SECOND BRAND?
When you are the dominant player in your category. Toyota didn’t launch Lexus until its Corolla model has been firmly entrenched as the best-selling car in the world. And only after Lexus became the best-selling luxury car in its key market of USA did Toyota launch WiLL, a Japanese-market-only brand that is designed for young, trendy, female professionals; and recently, Scion, a US-market-only brand aimed at the young, sporty types.
In Singapore, you will find small companies with multiple brands (and multiple subsidiaries). It is a phenomenon that I simply cannot understand. Why would you want so many brands when none of them are even close to being a market leader? Many of these companies are finding it hard to grow their market share in their core category, so they start launching other brands into other categories to try to grow. It doesn’t make sense. If you cannot even grow in a category that you know well, how can you grow in a category that you know nothing about? Put away those additional brands. Focus on the core brand. Grow it into a powerhouse. Then, launch the second brand.
Sources: This article is an excerpt from the book “Transforming Your Business Into A Brand” written by Jacky Tai and Wilson Chew. Jacky is a Principal Consultant of StrategiCom, a B2B branding specialist.
That can prove to be a costly mistake. The typical argument from management is that the brand is already well known; therefore it will be easier and less costly to launch a new product or service under that name. And management can usually point to increased sales to justify this move.
But here’s the danger. Branding mistakes don’t immediately whack you on the head – they will build up over time. The problem with line extension is that it may give your sales a boost in the short term simply because you are now selling more products. But in the long run, line extension damages both the core brand and the new products launched under the brand. The reason is simple. With line extension, the core brand is weakened because it no longer stands for the one thing that made it strong in the first place. It now stands for several things, and when you stand for several things, you end up standing for nothing. In branding, there is no such thing as being neutral. You are either this or you are that. Try to be both and you end up shooting yourself in both feet.
WHO INVENTED DIGITAL PHOTOGRAPHY?
Canon? Nikon? Olympus? Nope. It was Kodak. Surprise, surprise! Yes, Kodak pioneered this category way back in 1976. But Kodak made one big mistake. They did not launch a new brand for their digital cameras. They insisted on using the Kodak name because it is a wellknown name. True, but what is Kodak known for? Photographic film! That mistake probably caused Kodak the lead in this sector.
NEW CATEGORIES NEED NEW BRANDS
Have you ever wondered why those big luxury cars from mass market car makers like Peugeot, Rover, Fiat, Citroen, Renault, Opel, Ford, Volkswagen and Mitsubishi don’t sell very well despite the fact that they are very well-equipped and priced cheaper than the equivalent Mercedes- Benz, BMW or Audi? You don’t need to be a rocket scientist to fi gure this out. Who wants to buy a luxury car from companies that are known for making mass market cars? I don’t care how good the cars are, as long as they wear the wrong badge, they won’t sell in the luxury car sector.
Ever wondered why expensive Seikos don’t sell as well as expensive Rolexes? Rolex is a premium brand. Seiko is a mass market brand. Seiko is very well-known (and they probably make very good watches) but it is not known for premium watches. If Seiko wants to go upmarket, it needs a new brand. Likewise, if Rolex wants to go downmarket, it needs a new brand – like Tudor, for example. If they go downmarket with the Rolex brand, guess what will happen? They will destroy the brand equity of the upmarket Rolex watches.
New categories need new brands. That is why Toyota, despite being such a powerhouse name in cars as well as the world’s most profitable car maker, wisely chose to launch a new brand when it ventured into the luxury car segment in 1989. The rest, as they say, is Lexus history. How come Lexus was so successful when it did not invent the category called “Luxury Japanese Car”? Honda did, with their Acura division. But here’s the thing. Honda didn’t do it wholeheartedly. They have a new luxury car division but they are still selling cheap, re-badged, 4-cylinder Hondas like the Integra, which was (and still is) based on the Civic. They didn’t have a fullblown, dedicated platform, V8-powered luxury model like Lexus. Lexus started right at the top with the LS400, which is pitched directly at the Mercedes-Benz S class, BMW 7 series and Jaguar XJ12.
BUT WHEN DO YOU LAUNCH A SECOND BRAND?
When you are the dominant player in your category. Toyota didn’t launch Lexus until its Corolla model has been firmly entrenched as the best-selling car in the world. And only after Lexus became the best-selling luxury car in its key market of USA did Toyota launch WiLL, a Japanese-market-only brand that is designed for young, trendy, female professionals; and recently, Scion, a US-market-only brand aimed at the young, sporty types.
In Singapore, you will find small companies with multiple brands (and multiple subsidiaries). It is a phenomenon that I simply cannot understand. Why would you want so many brands when none of them are even close to being a market leader? Many of these companies are finding it hard to grow their market share in their core category, so they start launching other brands into other categories to try to grow. It doesn’t make sense. If you cannot even grow in a category that you know well, how can you grow in a category that you know nothing about? Put away those additional brands. Focus on the core brand. Grow it into a powerhouse. Then, launch the second brand.
Sources: This article is an excerpt from the book “Transforming Your Business Into A Brand” written by Jacky Tai and Wilson Chew. Jacky is a Principal Consultant of StrategiCom, a B2B branding specialist.
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