Even cheaper brands need to differentiate

by Nigel Hollis | April 14, 2014

Thanks to Phil Herr, who suggested I read the Harvard Business Review (HBR) blog post by Denise Lee Yohn, titled, “Don’t Settle for Being an ‘-er Brand.’” 

In a nutshell, Yohn suggests that any brand that defines itself by comparison to another – small-er, bigg-er, thinn-er, light-er, fast-er, sexi-er – is unlikely to be viable in the long term. Great brands, she proposes, have no reference point but themselves. 

I am sure that Yohn is right. Cheap-er brands might have a viable future provided their business model is set up to deliver great value on a consistent basis. Even then, however, being a me-too does not guarantee success. Compare any two value brands in the same category, and you will find that they have carved out different propositions in order to survive (unless there are other barriers to competition). 

Take the example of the two biggest low-cost air carriers in Europe: Ryanair and easyJet. Superficially they both appear to be operating similar business models in the same part of the world. Nothing could be further from the truth. 

Cheaper brands

Ryanair was founded 10 years before easyJet as a “no frills” airline, and has steadfastly stuck to that model ever since. The airline typically flies to secondary airports for the cities it serves and has focused on the tourist business. Ryanair has created a strong reputation for low prices but has not endeared itself to the traveling public. In the BrandZ 2012 data, four times as many people said they were unlikely to recommend the airline as said they were extremely likely to do so. The brand is most likely to be characterized as uncaring, dishonest and arrogant. 

In creating such a distinct business model and brand image, Ryanair has created a perfect foil for easyJet. While still focused on providing low fares, easyJet mainly flies to the primary airport in the cities it serves and tries to provide a more positive customer experience. As a result of its efforts, more people claim to be likely to recommend easyJet, and the airline tends to be seen as straightforward, fun and friendly. 

One might be led to assume that Ryanair is the carrier that no-one would want to fly, except for one small detail: its average seat price is over a third less than that of easyJet (based on the two companies’ 2013 annual reports). As a result, Ryanair flew 30 percent more people than easyJet in 2013. Remarkably, in 2013 the income before tax of the two companies was very similar. They just went about making their money in rather different ways. 

I guess you could say that Ryanair is the cheap-er brand, but easyJet is a bett-er brand? But what do you think? Please share your thoughts.


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  1. Jeanette Yañez, June 23, 2014

    Hello Nigel,

    i think it is all about the positive experience you have. it doesn´t matter if you are the cheapest airline, the important issue is the emotion reaction you are living in the consumer. it takes a conversation and a little bit of interest in the people you are helping to make something ordinary in extraordinary.

  2. harsh, June 23, 2014
    This shows how business model innovation plays an important role and how positioning of your brand makes a difference in perception of consumers....Great article !
  3. Eduardo C., June 23, 2014

    Hi Nigel!

    Once again thanks for sharing, just read the article as well and found it quite interesting and useful.

    Regardless of your comment;” I guess you could say that Ryanair is the cheap-er brand, but easyJet is a bett-er brand? “

    I tried to remember of my old eruopean student experience, and was trying to figure out why was I always traveling trough Ryanair, specially when most of my friends were recommending me not to, and to be honest I could never found out a reason not to, can’t even think of the so called “bad service”, I always kept in mind that I save lots of money on the trip and that I arrived fast.

    And I think that’s why it’s a highly successful business, and that’s why I think it sold way more than easyjet, putting aside that both of them have different positionings, I think they also serve different targeted segment needs, mine back there was; getting from point A to point B , didn’t even care if they gave me food or even have a decent seat (ever tried couchsurfing).

    No matter how many things a brand can offer, sometimes is just not what the end-consumer wants or needs when the moment of true comes.

    But, what do you think?

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