Sunday, September 27, 2009

Why travel companies aren't building top global brands

Interbrand and BusinessWeek have been publishing a list of the top 100 Global Brands for 9 years now. In preparing the the list for 2009 they have set up a hoop or two that a brand has to get through to be considered a global brand. These require more than just name recognition and sales. The test is that the brand

“must derive at least a third of its earnings from outside its home country, be recognizable beyond its base of customers, and have publicly available marketing and financial data.”

As they say in the BW article, this means a lot of big private or nationally contained companies missed out on the list. That said, in the list of 100 brands (topped again by Coca-Cola) there is not one travel company. I might be being narrow in my definition as the list contains Disney at number 10 and American Express at 22 but these are not pure play travel brands like a major US or Euro carrier (American, United, Continental, BA) or a mega chain (Hilton, Starwood, Marriot). I am trying to figure out why that is and what that it means. Despite travel being (by many measures) the largest industry on the planet and despite what feels like every other advertisement I see being from a travel company, according to Interbrand niche but high profile products like Ferrari (88th) and Moet & Chandon (82nd) are more valuable brands than the long list of travel companies that we could all debate as the biggest brands in travel.

We know that travel brands are well known – by that I mean recognised by consumers in prompted and (more importantly) unprompted awareness tests. We also know that there is a degree of brand loyalty in travel as evidenced by frequent flyer programs and flag carrier love ins. Though the first kind of loyalty (frequent flyer programs) is a “bought” loyalty and the second (flag carrier) is often tied to misplaced jingoistic behaviour. The reason for travel being missing from Interbrand’s list is therefore clearly not a “recognition” factor.

The main test in the BusinessWeek/Interbrand survey is the significance of the “earnings derived from the power of the brand…the brands effect on earnings relative to other…assets”. For the travel brand builders this means that BusinessWeek thinks that these 100 brands get dramatically better sales bumps just from their brands than the equally as well known travel brands. That the recognition and awareness of travel brands does not translate as much into sales assistance as for equally as recognisable non-travel brands.

If this conclusion is right, then we need to think about why this is and whether or not this means that travel companies are worse at marketing than we thought. Or - is there something about travel that makes it harder to build a brand that in tech, fast moving consumer goods and luxury brands (the majority of the list).

In analysing this I turned to thinking about the brand battle between Coca-Cola (ranked 1st) and Pepsi (ranked 23rd). Each throws hundreds of millions of dollars at marketing products with subtle but not extreme differences (much - dare I say - like a lot of travel products). One theory is that the travel consumer is more fickle than the cola consumer (as a proxy for most fast moving consumer good) because they have more options to choose from and given the high cost more reason to change supplier. Clearly there is some loyalty within the travel consumers but I consider it more like a “basket of loyalty” rather than a dedicated loyalty. That is, consumers have a basket or collection of brands in their minds and are open to buying any product in that basket. For example I will fly to Europe on any of Qantas, Cathay, Singapore, BA and Virgin. Sure I have one that I would like to fly more than the others but for a specific trip the decision point between these brands is price and schedule. Which one is cheaper and at the right time. With Coke and Pepsi schedule and price are not issues. There is usually no shortage of supply (schedule) and price is usually equal between the two products. In the case of the luxury brands like Ferrari price is still not an issue as people are not choosing based on price and schedule/supply is not an issue (if you want one and can pay for it they will get you one). The question is then, can a travel brand break out of a consumers “basket” such that it can develop the same psychological hold on a consumer that a cola, luxury or soap brand can. A hold that can overcome the price and schedule/availability advantage that another brand has in the basket.

I can’t think of one and therefore understand why there are no travel brands in Interbrand's list of top 100 global brands. Can you?

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