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Fare and square
Thoughts about Travel on June 5, 2008
In the face of skyrocketing oil prices over the last five years, airlines have had a tough time trying to convince the average Joe that they’re better off flying than taking the train or not traveling at all.
The first and simplest model is that of the base fare, which most low cost carriers have adopted. They believe that if you can attract a prospect with a $10 base fare, that they can then be convinced to purchase a ticket at its actual fare of $200. After all, once you’ve trimmed away your last olive, why take the blame for the mile-high list of airport, bank, fuel company, insurance and government surcharges.
The surprising thing about this model is that it works – or will at least work until everyone else follows suit. For example, imagine picking up a pack of crisps for 5 cents, only to have the cashier hand out an itemized bill with an additional $1.95 in display, storage, transportation, municipality, cleaning and government surcharges. FMCG arguably isn’t the best example, but you get the picture. The restaurant industry reacted in a similar manner when they faced rising taxes a few years ago, only to fall back to all-inclusive prices in due course. Distancing yourself from the reality of an industry to maintain sales targets only breeds commoditization and is at best a short-term solution.
Then there’s the value model, which is by far the most demanding. Instead of competing or justifying price, most premium airlines create value by investing in long-term solutions such as service differentiation, improving brand perception and encouraging travel. This option is particularly difficult for small airlines to adopt because it requires substantial short-term investment. The advantage however, is that the airline and its customers won’t be held ransom to market fluctuations.
Last on the list is the transparent cost model, which airlines usually adopt after either exhausting or forgoing the value creation model. It doesn’t take a rocket scientist to figure this one – the airline’s fares fluctuate in proportion to its costs. While it may pinch sales in the short term, you can at least rest in the consolation that the airline isn’t compromising its standards. Airlines in this model tend to either shelve all non-essential services or offer it at a significantly higher premium. The key word here is brutal honesty; anything less and it’s back to the base fare model.
Although the value and transparent cost models may seem worlds apart, they’re actually not that different. The difference lies quite simply in whom the models benefit. While the former benefits the airline industry, the latter benefits passengers. In fact, most airlines choose a balanced mix of the two.
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Family name etymology
Thoughts about Life on May 30, 2008
In most parts of North India, you’ll come across some interesting family names which have roots dating back to their first ancestors’ professions, such as Screwvala, which literally means screw vendor. However, back down in South India, I was content with the fact that our names didn’t mean much; or at least that’s what I thought until earlier this week, when I stumbled across my family name’s etymology.
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What would you do
Thoughts about Marketing on May 16, 2008
Last Monday, a father inadvertently left his 23-month-old son in Vancouver airport; a story which should remind you of Home Alone 2. No, the son didn’t thwart a midnight heist of Duncan’s Toy Chest, but nonetheless, Air Canada generously offered to fly the father all the way back from Winnipeg and to Vancouver again, which, given the minimum $438 round-trip fare, is something they weren’t obligated to do, let alone in 2008.
The question I was recently asked of a similar situation was how I, as a shareholder of the company, would have reacted to the news. Even if you put aside the warm fuzziness and consider the chip off the company’s bottom-line, the answer’s still obvious – I’d be proud. As a customer, you’d be silly to expect them to do it again, but at least you’ll know that they have a heart, which in turn builds brand empathy.
It goes against everything you may have learnt in B-school, but it works. For example, while most airlines throw in bonus reward miles and levy second bag surcharges, Air Canada offers its customers an alternate $22 discount for forgoing reward miles, checked baggage and date flexibility. Honest.
I can’t quite put my finger on it, but for some odd reason the only thing that comes to mind when I hear the word PR is Prentiss McCabe. Air Canada has shown that by focusing on genuine customer satisfaction, that they’ve spent a fraction of what they would’ve paid their PR agency and achieved so much more.
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Inspiriert
Thoughts about Advertising on March 18, 2008
For those of you who’ve pulled dusty Merriam and Webster out of the closet, the title’s German for “inspired”; and no, you’re not going to receive a Zertifikat Deutsch for guessing that anytime soon. I simply reckoned that if Audi could be brave enough to push “vorsprung durch technik” around the world, they must have had a pretty damn good reason.The question is, were they arrogant or simply inspired?
For someone who’s been in advertising, I can tell you that the inspiration behind a brand seldom makes the fifteen feet from the marketer’s sketchpad to the developer’s keyboard. Yet, it is that very inspiration, which makes the product break free of the clutter of price and promotion.
And what better way to be inspired than in the details; which is precisely what Audi have managed to do with their 2008 A4 (well, at least for the first 15 seconds). From the error messages to the manner in which the experience begins, the theme of setting a new standard is reinforced time and again. It’s just a shame that the rest of the site doesn’t quite follow suit.
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The incredible Brandini 2
Thoughts about Marketing on February 13, 2008
Even as children back in grade six, we knew there was something special about the swoosh or those three stripes we found on our desks. They were brands that inspired. Brands that inspired you to make every last segment of pencil lead count, as your chemistry teacher turned to the periodic table on page 345.
While some companies have the luxury of throwing bags filled with Benjamin Franklin at the likes of Landor and The Brand Union, figuring out a brand on your own brings its own satisfaction. In this particular case, I’ll use the example of Musafir – a brand I’ve been working on these last few weeks.
If you’ve read the first post in this series, I’ll skip having to discover the brand for obvious reasons and jump right into defining it. Now there are books that ramble on about procedures to define your brand, and animated slides that make even less sense. In all honesty, all you need to do is look at your competition, look at your market and find your niche.
I’ve personally seen brand pyramids that can go as far as nine tiers and rarely do they share the same terminology, but it’s relevance that matters at the end of the day. We found our nirvana in understanding our brand’s benefits, personality, values and essence.
With the definition locked in, the abstract moves to the tangible – creating the brand’s visual identity. You’ll have noticed that a bit of color theory went into the brand pyramid above; and with good reason too. The two weeks it took to define this particular brand were overshadowed by the four it took to approve a visual identity.
This is obviously the most subjective step in the entire process, with the only boundaries being those set by the brand pyramid. However, ten rounds of archaic, indistinguishable and complex artwork later, we finally reached a consensus.
And that in a nutshell is defining and creating a brand at its simplest. There’ll be more about cultivating and communicating a brand in the posts to follow.
