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Cutting Too Deep Puts Brands At Risk


Cutting Too Deep Puts Brands At Risk

When price wars flare up, staying competitive sometimes means cutting costs. In these situations savvy brands will maintain quality and reduce quantity, as we see in this example from the food industry, when Breyers Ice Cream reduced their carton size to compete without sacrificing ingredient quality. In contrast some brands take the ill-advised route of reducing their quality, which becomes dangerous for a company like Alaska Airlines with a long-established reputation for customer service. 2017 wasn’t a great year for the airline industry in terms of customer service performance, and Alaska Airlines was no exception. In addition to a decline in customer service, their challenging merger with Virgin America and operational difficulties at subsidiary Horizon Air left many employees dissatisfied.

Let’s take a closer look.

A recent Seattle Times article sheds some light on what’s been happening that puts the brand at risk. Disgruntled pilots unhappy with management’s handling of contract negotiations last Fall are purposefully slowing Alaska’s traffic in minor but perceptible ways. The article continues, “in December, flight attendants rose up against the latest small cost-shaving measure that had been planned for January — taking away the free Biscoff cookies on flights leaving after 10 a.m., a move that would supposedly save $3 million per year.”

Apparently, employees dubbed this Cookiegate, and though the airline rescinded the measure after flight attendants complained it would upset passengers, the article shares that management insisted the cabin crew still try to save money by handing them out only if requested. As one flight attendant said, “Man, it’s a race to the bottom. I feel that we are devaluing our own product.”

Price Wars Aren’t Won By Weakening Your Strengths

When competition is on the rise and price wars are setting in, there’s real danger in gambling with brand value. Alaska’s merger with Virgin America allowed it to expand and link, becoming a dominant west coast network, preventing rival Jet Blue from doing the same. But Delta has also established a major presence in Alaska’s hometown of Seattle offering 53 routes out of Seattle that overlap with Alaska. And because they’re a major carrier, they can do things like introduce their premium transcontinental product, Delta One, on the Seattle-New York route as well as offer service on major international routes.

Mark Di Somma outlines 38 ways brands generate “badwill”, and it’s sad to see many of what Mark cites happening over at Alaska. But there’s hope. Despite the difficulties, CEO Brad Tilden says, “I’ve been with Alaska for nearly 27 years, and in virtually all of those years, we’ve been fighting for our future. The next few quarters might be tough, but I have no doubt that we will come out on top.” He also acknowledges the problems happening internally and writes, “It never feels right when the people part of our business is not running smoothly.”

Brands Are Built From The Inside-Out

Alaska provides a real-time case study of brand expansion intersecting with market volatility and mounting competition. While not every brand is expanding, nearly all brands have to cope with market volatility and competitive threats while providing shareholders with the best returns. Here’s what we can learn from this:

When your internal team isn’t happy, they can easily air their grievances with the rest of the world. There are no secrets anymore, but that’s not a negative. Being transparent with a plan of action and results regularly shared can help empower teams to move forward with the brand instead of against it.

Sometimes a powerful differentiator can be small. Alaska’s customers aren’t necessarily looking for the brand to be a major airline, or compete with lie-flat first class pods. They appreciate small, unique elements that distinguish Alaska from both the majors and the low-fare brands. Even fast food chain Chick-fil-A is differentiating by training workers to say ‘please’ and ‘thank you’.

Make sure your leadership team is spending time ‘on the ground’ with the people who make up your brand and customers. The TV show Undercover Boss showed us how executives who may be distanced from their brands can learn a great deal by getting at their employees’ or customers’ level. To prove this works, look at Amazon. As part of a training session each year, Jeff Bezos asks thousands of Amazon managers, including himself, to attend two days of call-center training. The thinking is that it’s easier to understand customers when you actually listen to them. In general, too many brands delegate this kind of work to online surveys that pester site visitors and app users with incessant requests for feedback that’s never properly analyzed for insight.

The Blake Project Can Help: Please email us for more about our purpose, mission, vision and values and brand culture workshops.

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

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