I was at a talk yesterday, given by Paul Fifield, visiting professor in Marketing Strategy at Southampton University. Paul’s style is witty and down to earth, which made for an entertaining address. His lecture centred on the importance of engendering passion and loyalty into our brands all sound stuff as the economy goes into recession.
Chatting to Paul afterwards, our conversation got on to Ryanair. Paul asserted that there was no value in the Ryanair brand; a view that seemed instinctively wrong to me at the time and has remained so ever since.
I believe there are 4 contributors to a brand's value:
Or, in the language of the psychiatrist’s couch: am I known, am I loved, does anybody understand me and what could I be doing with my life?
Applying these measures to Ryanair, we get some interesting results.
Awareness: Ryanair has phenomenal brand awareness in the UK and Europe. Ask anybody to name a budget airline and the chances are that Ryanair will be among the first mentioned. This means, love it or loath it, there is a good chance that you will check out Ryanair prices if you are looking for a cheap trip in Europe. Score: 10/10
Loyalty: Fair enough Paul, you’ve got me here. Tales abound of poor customer service and a sense of being ripped off by seemingly unavoidable extras. Most people will treat Ryanair as their carrier of last resort. (This said, we travelled to Italy with Ryanair in the summer, admittedly because there was no alternative, and found it surprisingly acceptable we’ll use it again). Score: 2/10
Understanding: People are very clear about what Ryanair offers: it has become synonymous with low-cost and no-frills travel. Michael O’Leary’s abrasive style leaves us in no doubt what the brand promise is. To paraphrase him: ‘If you want to fly to Italy for a tenner, don’t expect me to serve you champagne on the way’. Score 10/10
Stretch: Could Ryanair take its brand into other markets? Of course it could. The low cost, no-frills approach has a place in many different markets, be they travel or otherwise. Easy Group has been at the forefront of this, admittedly with varying success, but it isn't the brand that has been the weak link in the failures. Score 7/10
Paul will argue that value is transient and, in the absence of brand loyalty, it will migrate as soon as anybody new comes into the market with a better ability to meet customer needs.
This opens up a whole new debate about barriers to entry, but, let’s not argue the point that if Ryanair could sort out the loyalty element of its brand, its position would be even more unassailable. (That said, attracting 32 million travellers a year seems to demonstrate a pretty keen understanding of customer needs do we really want pampering or price?).
Far from demonstrating that reducing your offering to a commodity destroys brand value, Ryanair does the exact opposite: the key is to become number one in your chosen market, by whatever route. High levels of awareness; absolute clarity about what you offer; sufficient stretch to support entry into new markets and high barriers to entry for new players combine to put a very meaningful and resilient figure into the balance sheet.