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. Their market share will take a hit in the short term, probably the next six months or so, but the market structure itself will see most of this drift back to Qantas.
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.
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.