| 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.
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.