In 2011, brand is everything in the corporate world.
While the rest of the business operations are considered a cost, marketing makes money.
And central to so much of modern marketing is the brand, built up over many years of long investment and engagement with the consumer.
So it is amazing from a marketing perspective that Qantas would decide to hurt its own brand so badly in so many markets by attempting to force the hand of the unions and the federal government.
Qantas senior management and the board must have taken the decision that most customers would eventually be won back again.
The question is here will they be right? Well, yes and no.
Why some will return…
In a duopoly that exists in the Australian airline market, eventually most of us will fly with Qantas again, probably more out of need than want.
Some will be lost though for good to Virgin Australia and the Qantas-lite budget airline, Jetstar.
But given a choice between two competing brands that differ little in price, the one that is perceived by the market to have better service will win. And that usually is Qantas. Even with all their faults they still command around 60% of market share.
They will still need to rebuild though. Qantas will hit the marketing trail hard in the next few months to try and rebuild some of the positive experience with the brand that consumers had before the shutdown.
Look for a heavy PR approach, very cost-effective and one they seem to like for building positive brand attitudes.
An advertising campaign will be worked into the PR that will aim for developing a positive brand attitude and rebuilding preference towards the brand.
I’m also guessing a short term promotional campaign to retake market share lost and re-establish consumer preferences in favour of Qantas.
… But others won’t
What hurt their brand the most was that individual consumers were not given any warning at all and were treated as casualties in the war against the unions.
Regardless of the arguments about that being right or wrong, passengers were left stranded and given very little information about what was going on. Ouch!
Goodbye positive experience. Goodbye relationship with the consumer. And goodbye the consumer’s preference placing the Qantas brand number one.
The shutdown has dealt a big blow to the Qantas brand, placing doubt in the mind of the consumer about whether or not flying with Qantas is going to lead to a positive experience.
We no longer know if we will be happy and safe flying Qantas so we no longer can give that number one brand preference spot in our minds to them.
So while market share may eventually come back, mind share, a more important marketing concept for building relationships with consumers in 2011, has probably gone bye-bye for a longer period of time. And getting it back in any period of time is going to be difficult.
And domestically and internationally this is where the hurt locker meets Qantas.
Virgin Australia were quick to pounce on the shutdown, branding themselves the national carrier and turning themselves into the knight in shining armour rescuing the passenger in distress.
The Virgin Australia CEO, John Borghetti, a former Qantas executive who was once touted as a likely CEO, is keen to get some good old fashioned revenge on those who showed him the door only a few years ago.
The Virgin Australia of 2011 is a far different and superior brand to Virgin Blue and it will look at taking some of the key segments away from Qantas in the next few months, especially the lucrative business market.
Internationally Qantas is up against some very smart and well-funded operators. Getting international market share back will be even harder.
No free kicks from market structure there. Market share internationally may take longer than 12 months to get back, and even then only through low price fares that hurt the margins.
We may even see a retreat by Qantas to a few key routes, such as Sydney – LA, leaving the rest for Jetstar to take over.
And then?
Qantas will not come out of the union-breaking exercise unscathed. Marketing history in Australia tells us brands that treat consumers like this do not win back a consumer’s preference for a very long time. Just ask Vodafone.
Considering the union dispute is far from settled, there may be more hurt to come for all of us that fly Qantas.
But one thing is certain right now and that is most of us will be flying Qantas out of necessity and not want.
And that is not a good place for the Qantas brand to be.
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Comments (7)
Geoff Henderson
Student (logged in via email @skymesh.com.au)
I think I am in the passenger class that does not want to fly Qantas but probably will.
That "concession" I make, despite having my natural and long-held love of Qantas wrung dry since privatisation, is just to support the Qantas (right or wrong) staff and Australia. It's the only way I can make a positive contribution to this disgraceful play of events.
I have read elsewhere in the last 48 hours that Qantas is a premium brand, and this article considers branding too. My personal experience of…
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Troy Barry
Mechanical Engineer (logged in via email @gmail.com)
"The shutdown has dealt a big blow to the Qantas brand, placing doubt in the mind of the consumer about whether or not flying with Qantas is going to lead to a positive experience." - I suppose at this stage that is pure supposition, unsupported by evidence. It's a bit disappointing to see that sort of sweeping opinion presented as fact on a website branded as Academically Rigorous. I might just as blithely state "This shutdown has delivered a massive boon to the Qantas brand, reassuring customers that Qantas is determined to deliver the best value for money experience in the face of all difficulties."
Personally I am happier to fly with a Qantas which shuts down for a weekend every thrid year than an airline whose reliability is bedevilled by months of union industrial action.
David Glover
Communicator (logged in via email @gmail.com)
Troy, though I agree Andrew should have included some evidence, from my perspective as a marketing professional the brand damage is as certain as an assessment you might make that a piece of metal stressed beyond a certain point will be irrevocably weakened (I'll leave the details of my metaphor to you so I don't display my ignorance!).
Let me expand: I am certain there is damage because trust is at the core of brand value – because it's at the core of people's decisionmaking. And Qantas' action…
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David Glover
Communicator (logged in via email @gmail.com)
Sorry that should be "their" talk to date...!
Byron Smith
(PhD candidate in Christian Ethics at University of Edinburgh)
Air travel is particularly damaging to the climate due to its multiple effects on the atmosphere. A single return flight from Sydney to London can add the equivalent of 6-8 tonnes of carbon dioxide (and that's for an economy seat; business or first class are significantly higher). Since the per capita Australian footprint is about 18 tonnes annually (the highest of all OECD countries), and a sustainable world requires an average annual footprint of about 1 to 2 tonnes, jet planes likely have little place in a positive response to our climate predicament (not least because unlike other sectors, there are not really any low-carbon alternatives available or even on the horizon). From this perspective, the decline or demise or airlines is a reason for celebration, albeit one with a few drawbacks (e.g. loss of jobs, reduction in ease of travel).
Robin Bell
(Research Academic Public Health, at University of Newcastle)
Its difficult to believe that the Qantas executive and Alan Joyce did not understand the effect that the stranding of 10s of thousands of passengers would have on the brand. The damage is done, and Qantas doesn't have the resilience required to re-establish customer trust.
This is a clear agenda aimed at the destruction and dismantling of Qantas, and its rebadging (liquidating of Qantas capital assets) as JetStar or an overseas based JetStar look alike. Would we be surprised if the next move were to be the appointment of administrators, a claim that there is no money to pay employee entitlements, and a grab for a government handout to honour those entitlements.
Andrew Burry
(logged in via Facebook)
I agree with Troy that this claim of brand damage, supported by logic rather than evidence, can be seen as a little extravagant. It may well be the case that the proportion of Qantas' customers flying by necessity rather than choice has been a growing one for some time.
Much is made of 70,000; it being the number of persons supposedly abandoned by the carrier, but while it looks large in a headline, is it really? Qantas' commercial interests are supported by a relatively small number of persons…
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