Diminished Brand Experience Will Fell Malaysian Airlines, Not Downed Planes
Bloggers, columnists and others are predicting the demise of Malaysian Airlines based on the events of March 8th and July 17th, citing erosion of trust in the brand. As discussed further on, if Malaysian Airlines fails, it will not be because of these two “incidents” (though how such loss of life can be referred to as an “incident” is beyond me); it will be because other factors have diminished the value of its brand.
After all, American Airlines did not go out of business a decade ago, despite three of its planes crashing in a two-month period (two in the 911 attacks and Flight 587 on November 12th) killing all aboard, and a passenger trying to detonate explosives on a fourth plane the following month. The Malaysian Airlines situation is fairly similar.
Strong brands can survive disasters – especially when the companies behind the brands aren’t to blame for what happened – provided they respond appropriately.
In 1982, someone placed potassium cyanide in Tylenol bottles. Seven people died; Tylenol survived. As with some critics of Malaysian Airlines, the press believed the incident sounded the brand’s death knell.
The Washington Post’s headline the next day: “Tylenol, Killer or Cure?” The New York Times’ editorial stated, “I don’t think they can ever sell another product under that name.”
Despite the doom and gloom predictions, Tylenol emerged stronger than ever because of how it handled the situation.
Johnson & Johnson did everything it could to prevent others from ingesting potentially-contaminated medication, it pulled 31 million bottles of product off US shelves at a cost of $100 million (USD) and led the charge for the development and regulating of tamper-proof packaging. Throughout the recall, the investigation and the product re-launch, Johnson & Johnson was in regular communication with the press – something absolutely essential to surviving disasters in this day and age of instant news.
Market value of the brand decreased by $1 Billion (USD) in the months that followed and market share dropped from 35% to 8%. Within five months, however, Tylenol had recovered 70% of its market share; within 12 months it was up to 37% as people started switching to Tylenol. Within 12 months, perception of the Tylenol brand was 15% higher than it had been before the murders.
Closer to home, Maple Leaf Foods survived the Listeria contamination of 2008 which claimed the lives of 22 people. Again, the company did everything correctly. It investigated and recalled its products immediately, apologized publicly very shortly after learning what had happened, maintained complete transparency with the press and health authorities, helped employees deal the situation, compensated victims’ families appropriately and showed that it genuinely cared throughout the process. Maple Leaf subsequently helped develop new food-handling safety procedures which it shares with the industry. Today, Maple Leaf Foods remains a trusted Canadian brand.
As mentioned, strong brands can survive “incidents” – provided the brand is not diminished by non-crisis-related circumstances. The Malaysian Airlines brand was very strong a couple of years ago despite having posted losses at various times over the past decade.
In 2013, it won the World Travel Awards (WTA) as Asia’s Leading Airline. In addition, it won two Skytrax World Airline Awards, the World’s 5-Star Airline Award and the Best Airline Signature Dish Award. It also won these Skytrax Awards in 2012, as well as the one for Best Cabin Crew.
As expected, the airline was also well-respected its home country, winning the 2012 Gold Putra Brand Award in the Transportation, Travel & Tourism category as well as the Most Promising Brand Award. With these kind of accolades, the brand was well-positioned for success… but lost this advantage to budget-cuts in areas that affected perception of the brand.
If Malaysian Airlines goes down, it won’t be because of the two downed planes. Or at least not solely. Nor will it be because of the less-than-stellar handling of the two situations. History shows that, over time, customers tend to forgive, and even forget, corporate disasters. They are far less tolerant of slipping customer service and product standards.
There was a time when I would have been happy to book a Malaysian Airlines flight. There was also a time when people spoke highly of the airline’s food, the cleanliness of its cabins and the friendliness of its crew. This is no longer true. There are a lot of complaints in all categories – many of them in online forums where the poor reviews can be seen by one and all.
In an effort to cut costs, Malaysian Airlines has cut quality and corners. Crew morale has been affected by the sub-standard offerings and it shows. As a result, the airline’s delivery of service no longer lives up to its promise, nor to the expectations raised by the winning of the awards. Unless this gap is closed – and closed very quickly – the brand will not have the strength to survive the double hit of the double plane loss.
Compounding this problem: Malaysian Airlines ceased advertising following the disappearance of Flight 370. Although the messaging should have changed, the marketing dollars should have been maintained. This lack of communication is partly to blame for the falling ticket sales and 20% drop in stock price (at a time when the Malaysian stock market is doing well).
Unless Malaysian Airlines takes immediate and dramatic steps to protect and rebuild its brand, by…
- reinstating the calibre of service on which its reputation was built, and
- communicating regularly and compassionately with the world,
… it likely faces a future similar to Excedrin’s Encaprin. En-cap-what? Exactly.