Dip

What you do when your company heads towards out of business by a search giant conquering several categories. Google is launching a free sat-nav application integrated with search which you can use it on your phone. Garmin, Tom Tom and other related company’s shares just fell severely in the last days, and figures are not positive.

So what these companies should do? the dip is near and the turn should be strong, but the fact is that the question lies on what should have they done. One of many reasons GM might have failed was that it didn’t spot or believed in the green opportunities of the future auto industry, which could reduced people’s annual spending on cars with a valid reason behind. Yet, they kept insisting building bolder cars with high levels of gas consumption plus launching more and more brands losing focus.

GPS nav companies face the same irony when confronted with such market shift. Google is offering a free app which might be of a superior quality when compared with others charging around 50$ to 100$ US per app. Mobile is concentrating everything, and search is indeed the perfect match for such GPS services. As for the free model, that’s just how Google operates, along the long tail.

Toyota plans hundred years ahead, and as many say today that it is hard to plan next month in such rapid changing markets, I believe companies should definitely plan ahead several scenarios that can happen in the fast moving markets we see today. The key thing here is that they shouldn’t be able to react, but instead drive their industry and product categories as Google keeps on driving. Innovation is staggering and decisive today. If you had a Google next to you as your direct competitor what you would do today?

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A Public’s Company Inertia

RATP is the company behind the transportation service and the metro in Paris. RATP is broken. Every beginning of a month inside the metro stations we can see huge lines of people waiting to solve their problems with their monthly passes to access the metro.

After these huge lines of people we can spot a few unmotivated employees, usually two or four at a small office trying to deal with the crowd demands, which can span from acquiring their passes to technical problems solving or a need for more information in determined issues.

These small offices are present in a few key stations, 28 in fact within the whole Paris area (which has about 400 in total). The recharging machines also see huge lines of people as everyone tries to recharge their passes within the same day to not lose a single dime in the monthly period.

The fact that is a public company might be a strong reason why people from top to bottom actually don’t care that much about what happens. Not only this is normal here but also in many other countries throughout the world, as the key goals that drive state owned companies seem not driven to improve but to maintain. There is a complete inertia in RATP and also a lack of care in fact for the people who use the service.

Now, if we changed the scenario from this essential transportation service natural monopoly by RATP to a product or service fitting in whatever existent category, the result would be interesting to see, I guess in a 6 months’ time the company would have closed.

You don’t have to pay consultants to realize that if you change the configuration on the pass to start-end whatever day instead of first-last day of the month, or add more people for support at peak days, or get more machines rolling at the same days, or divert the crowd by days within increasing timelines, etc. You just have to do it as you would do it if it was for yourself. Effectiveness unfortunately is still very scarce in public companies and just makes Paris in this aspect definitely not a fast moving forward thinking European capital as others nearby indeed are.

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Brand preference hard to say

“I bought it because was cheap and I really like the brand”. Says a friend of mine regarding a sun cream. So I asked, why do you really like the brand? First thing was, “I don’t know”. Then trying to extend his arguments came more rational attributes to justify the brand choice. The product smell or parfum experience was great and could even make the bathroom have an aroma in the air. Then also the competitive pricing and some comparisons with other brands, as well as the creamy side of Dove’s line of products. Funny to see how rational attributes come to justify a brand choice when there’s a bunch of emotional attributes behind that. The first glimpse of my friend’s answer was that he actually didn’t know what to answer. People take it hard to understand, market researchers harder.

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Awareness and engagement

Recently I came across a campaign feedback from an European parliament candidate on the election last month. The feedback was quite good from someone who considered that this candidate had done a great campaign by its clever integrated communications strategy and presence in key places. After revising myself the campaign, I noticed one key fact. There was nothing within the candidate. She didn’t stood for nothing rather than “a new face for Europe”! There was a lack of ideas behind the candidate and simple key explanations on why I should vote on her and what in fact did she stood for? this lack of determined attributes was within all communication materials and website.

I am amazed by the money spent in political campaigns which turn out to be substantially worthless in terms of results, and deeply questioned by how good was in fact this campaign, where it could have been well planned, but never engaging.

The difference between awareness and engagement is wide, and the story goes on with companies that still hope its sole spend in “awareness” will drive results.  Today you can spend millions advertising your brand, interrupting people on the media and on the streets, but that never means people will eventually buy it. On the base of a brand pyramid there is awareness, and indeed you need to build brand awareness and take you word out to your defined market, though, on the other end (top) there is engagement, and in between there must be a clever mix of rational attributes (benefits) and emotional attributes to build up your way to engagement. Most probably your sales will go up if your product or service is really worth buying, if you bought so many ad space that is inevitable for people to become aware of your brand, and also if your campaign remarkably communicates your brand essence.

Still, today rules changed, and instead the web enabled that the gap between awareness and engagement shrunk in time. The speed your brand can travel between the base of the pyramid to the end of it is so fast that it becomes imperative you think clearly on your brand essence and cleverly build up your way with consistent benefits and emotions; simple key ideas amazingly built up internet brands as youtube, facebook or twitter in a couple of weeks.  Within a traditional advertising driven thinking, I believe there should be a shift, one that you can spend millions developing your product or service to make it much better than it is, and then spend a lower percentage of that millions engaging your brand with a clever integrated, creative and interactive campaign that spreads. People will listen and talk and interact if your brand is remarkable, and if you cleverly connect with your audience by understanding it, you’ll probably get much more results than spending all those millions just to interrupt people on the streets with flyer’s and poor TV ads without any sense behind. Awareness gets your word out indeed, but engagement makes your word staying in a conversation.

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Acquisitions and Branding, simple lesson from Cathay

When acquiring Dragonair in 2006, Cathay Pacific did not merge the two brands nor co-branded both companies. With this decision, Cathay cleverly identified the different positioning between the two airlines and took aim to build both brands instead of merging them. Both brands have a clear market range and identity. Cathay with international routes from Hong Kong, has a more demanding customer that is willing to pay for quality and service within long flights. Dragonair on the other hand, supports a more regional focus, flying within Asia and more specifically to China where lower cost flights are appreciated in a high price sensitive market.

With both brands already well implemented in their markets and successfully positioned, a brand merge could have had generated a great loss of brand equity for Cathay or Dragonair, where a sudden inconsistency could have been surrounded by questions about which service to expect, which pricing to build in, which routes to take on, which identity, etc, especially when there is a large gap differences on respective target markets traits and expectations.
Strategically, it was a very smart move to complement Cathay portfolio to China, where the routes to Shanghai and Beijing are highly important. The deal placed Cathay to exploit the rapid growth in the passenger market in China, almost the second biggest global aviation market after the US, complementing its short routes to China with several Dragonair routes including the great Hong Kong – Shanghai, and also a joint venture with Air China. Cathay better coordinates connections through Hong Kong into China and offers more competitive prices for flights to Chinese cities from overseas destinations.

The combination of Cathay’s international reach and Dragonair’s well established branding on the mainland will mean a greater reach for the company, and a stiffer competition for other airlines. Cathay’s decision to retain the Dragonair brand name is not intended to create a “sub-brand”, as other airlines have done, to try and establish a presence in the “no frills” carrier market, but yes to cleverly manage both brands and build upon their equity developed before. Cathay offers a simple lesson on how extensions, re-branding, or co-branding can be wrong moves especially in the services industry, and how maintaining brand names after acquisitions could be a strategic move to develop long term growth as both are currently doing very well today.

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