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We hate to say it…

Yesterday, Eos Airlines announced that it had filed for bankruptcy, with a complete cessation to flights. A little over a year ago, SwelledHead posted about the then emerging new breed of all-business class airlines. First came MAXjet and Eos, followed a few months later by Silverjet.

As transatlantic marketing professionals, we had to wonder about the possibilities for this trio. Did the all-business class business model make commercial sense? Who had pitched the price/service equation right? How would the major carriers react to a different type of competitor?

For expert insight, we turned to Henry H. Harteveldt, Vice President & Principal Analyst, Travel Research, at Forrester Research. He looked right past the self-acclaimed “better service at a lower price” promise, citing utility as the fundamental factor for long term success.

For most business travellers, the majority of whom don’t reach into their own pockets to pay for the seat, the big advantage of the major carriers is flexibility in the service. BA, Virgin, United and American have many flights leaving each day, so missing one really isn’t much of an ordeal. Moreover, all have major international feeder networks of their own and/or through partner airlines (these factors make Lufthansa’s all-business class offering workable). MAXjet and Eos started out with a single daily NY-LON departure. Even after boosting this threefold, it just wouldn’t be enough to meet the needs and expectations of seasoned business class flyers.

To reiterate Harteveldt’s words: “Part of the challenge for Eos, MAXjet, Silverjet and L’Avion [a French member of the all-business class cohort], is that you need to reach a critical mass to provide the utility the traveller needs. JetBlue would be nothing if it hadn’t expanded beyond its initial routes… its impact would be de minimis. The brand has to offer utility to its customer… must represent value and meet emotional and rational needs.”

Taking MAXjet as an example, he continued: “They haven’t mispriced the product, but missed opportunities. Perhaps they would have been better off not adding other airports, but greater frequency to London and new routes from JFK to destinations such as Paris, so it represented greater utility from New York… then added flights to Las Vegas and California to add utility for domestic and international travellers.”

While the better service at a lower price model worked well for some customers – typically the principals of smaller firms who travel frequently but are more price sensitive – MAXjet and Eos missed or were unable to fulfil the real demands in transatlantic air travel.

Where does this leave the remaining incumbent? Silverjet is still running at a significant loss, according to its last published results. While this is acceptable for a business that is still in its start-up phase, the current downturn in economic conditions will not be creating favourable conditions. While Silverjet may be able to pick up business from passengers forced off Eos (it has arranged a clever deal to honour tickets of Eos passengers), with just two NY-LON daily departures it is still not fulfilling the needs of most business class traffic. The situation does not look good.

That’s not to say that the major carriers have won the war. The battle still rages, but on a different front, from low cost carriers. The first of these is Zoom Airlines, a Canadian carrier that also plies the NY-LON route. A relaxation of the rules governing transatlantic air travel, the “Open Skies” agreement, may see more of this sort of competitor take to the air. Or maybe such a major change will see the large airlines reduce their prices against each other, squeezing out Zoom and any other such pretenders. There can be little doubt that the transatlantic airline business is a tough one.

Is the mighty Tesco the next British retailer to fall victim to curse of the United States?

The United States has been something of a necropolis for British retailers with overseas ambitions. Sainbury’s, Dixons (now DSG International) and Marks & Spencer are some of the biggest names to have succumbed to a curse that appears to stalk the fortunes of plucky UK companies trying to make it in the world’s biggest consumer market.

If you were to put money on one that might succeed where others have faltered, Tesco would seem a safe bet. When it comes to achieving bounteous growth, both at home in the UK or overseas, the supermarket-and-almost-everything-else giant has demonstrated over and over that it’s got what it takes.

Yet, it too may be coming under the same terrible spell. The marketing director of Fresh & Easy, Tesco’s US convenience store enterprise, has hinted on his blog that all is not well. Simon Unwins has revealed that three months of review will take place before any further expansion, with analysts saying that results have been less than was hoped.

While Fresh & Easy could well be proving problematic for its parent, Swelledhead would not yet put its equally distended neck on the line and say that Tesco in America is doomed. Though history does not bode well, the company has boomed under the leadership of CEO, Sir Terry Leahy. Much of the success under his tenure has been found outside of the UK, where Tesco has shown an ability to adapt to local markets – a failure of the same being the undoing of foreign ventures at many other British retailers.

The Sunday Telegraph, the British newspaper which broke this story, reports that Unwins claims Fresh & Easy is simply taking a breather from its rapid expansion and is bedding down its operations. A potentially worrying sign is the news that Tesco is moving the CEO of its thriving Thailand business, Jeff Adams, to “work alongside” Tim Mason, the CEO of Fresh & Easy.

While the hiatus may indeed be unintended, and a bit of an internal shake-up somewhat disconcerting, to summarise it as the beginning of the end does seem a little premature. The UK lacks overseas success stories and has this lack of confidence is evident not only through failed international expansion, but a willingness to roll over to almost any foreign takeover. Tesco appears to be making sensible choices to keep things on track, and an eventual triumph would be a welcome shot in the arm for all British retailers with an eye beyond Blighty.

Read the original Sunday Telepgraph article here.

Where in the world would you find Dirty English?

Where does English gentility mix with British yob culture? I can think of a few London nightclubs that might be contenders, but in fashion terms the surprising answer is West Coast America.

Juicy Couture is unavailable in the UK (except perhaps for a small level of importing into boutiques), but its designs bear many cultural hallmarks of its isles. Take, for instance, the company’s logo, with its crown and rampant ‘scotty’ dogs. Typography that plays on the style of Old English manuscripts. Men’s wallets embossed with a crest that could have been stolen from Her Majesty. And a signature line of chav tracksuits of which Burberry would be proud.

What caught my eye this morning was an ad in the New York Times for the company’s new male fragrance, Dirty English. Its visual mix of a traditional bottle shape and crest, combined with characteristic scally chains and sovereign rings, makes for a heady and impacting blend of urban styles. Quite how this emerged in La La Land is something of a wonder.

It just goes to show the potency of American Anglophilia, here at its most subversive in retail terms. Quite splendid, innit?

Click here to view the Juicy Couture website.

Click here for the entry on Juicy Couture in Wikipedia.

How much should you protect your brand?

The value of a brand can be huge. Especially when you own an historic, storied high-end name. Like  Ferrari.

The Italian sportscar maker is fiercely protective of its identity, and understandably so. Having to deal with fakes built in back street garages in Thailand is bound to make you a bit touchy. Even so, the legal threats against a British Ferrari owner seem a little heavy-handed.

Dan Cawley of Manchester, England, is coming under pressure from the manufacturer for customizing his 360 Modena into a stretch limo. Apparently the inclusion of an additional centre section means the car no longer has the right to wear Ferrari badges. The company has given him 14 days to remove them, or face the consequences in court.

Brand identity matters, but is this really such an infringement? Swelledhead thinks the negative publicity this story will generate isn't worth the brand protection it seeks to gain.

More details here.

How to sell a French car? Tell everyone it's German

Credit where it's due to Citroen's advertising agency, Euro RSCG Worldwide, and those at the car company with the balls to buy into some incredibly bold and brave creative.

Citroen's ad for it's latest mid-sized family car, the C5, uses every stereotype in the book (well, the generally positive ones at least) to give the tongue-in-cheek suggestion that the car you're looking at is 100% Deutsch. Only at the end, as the camera revels the Citroen double-chevron grille, are we told that this "unmistakeably German" car is actually "made in France".

The ad acknowledges what everyone thinks and says already; German cars are superior. Citroen has played the "if you can't beat 'em, join 'em" game, and SwelledHead think's it's a smart move. Car buyers may not be convinced that any nation's cars are as good as those from Germany, but if they're as good then that's praise indeed.

The relevance of this to transatlantic marketing. Well, it's an interesting demonstration of the value that cultural identity brings to a brand. That applies well beyond the auto industry. Would you prefer French or Bulgarian Champagne? English or American tea? Nepalese or Scottish whisky? Might you try the unconventional alternative that promises to be at least as good? You might, which is what Citroen is betting on.

Personally, I think the C5 is an appealing new model that deserves success. It will be interesting to see how the market responds.

MAXed Out

MAXjet Airways’ failure proves that a business model and strong marketing, in addition to a good idea, is needed to succeed when thinking about transatlantic business.

Capital intensive businesses such as airlines are prone to failure as their fixed costs are so high.  When the price of fuel or the number of people flying fluctuate dramatically, there is little management can do to adjust.  Throw in a much better capitalized competitor which decides that your nipping at its heels has gone far enough, and you’ve got a recipe for disaster.  When Swelled Head first spoke with Henry H. Harteveldt, airline expert at Forrester Research, he said pretty much the same (essentially predicting that American Airlines or British Airways could easily add Stansted flights and crush MAXjet).  His view was guarded to pessimistic as to the viability of MAXjet without something compelling to differentiate its business model, and he was spot on.

The failure of MAXjet casts a long shadow on business class airlines Eos and Silverjet.  They need to demonstrate a point of departure (sorry) that goes beyond a better seat, or they will follow MAXjet into the history books.  The biggest weaknesses these airlines face are narrow loyalty programs (useful only on their own routes), limited feeder networks, capital constraints that limit flights per day and number of destinations. 

Advertising in this category has generally been pretty uninspired given such innovation in the air.  Perhaps the failure at MAXjet will cause CMO's at Eos and Silverjet to rethink their efforts, and become more aggressive in pointing out their advantages and creative in presentation and positioning.  Public relations at these companies has also been notably weak.

A little go-to-market savvy might be useful, too, in making airlines such as Eos and Silverjet more compelling.  Unlike MAXJet, from which I never had a sales call, Eos is active in direct marketing and telemarketing.  Could be that Eos’ sales prospecting is differentiating enough – with only 48 seats to fill a few times a day, it wouldn’t take much of a sales effort, especially at prices that are lower than BA’s for a better service, to do the job. 

None of this is to say that MAXjet was a total loss to the business traveler; seating on many airlines’ transatlantic flights has been upgraded and the cost for business class travel has gone down dramatically even in the face of skyrocketing fuel costs. So I hope you will join Swelled Head in saying a fond farewell and thanks to MAXjet for its short but important service to transatlantic business.

With this post, Swelled Head returns after a six-month hiatus.  Sorry for the discontinuity, but we've been working on business strategy and development for our agency, Austin Lawrence Group, and can now return to Swelled Head with some regularity.  See you here again soon - and Happy New Year!

Lawyers who really "get" transatlantic business

We don’t often imagine that an attorney could be a strategic partner when considering new markets for a product or service, but I’d recommend you think again.  Withers Bergman, a midsize law firm with offices in the US, UK, Italy and Switzerland is a standout; they are great attorneys but what makes the firm a must-evaluate resource for transatlantic marketers is that they really get the business side, too.

I’ve had the opportunity to meet a number of the partners and senior lawyers at the firm, first at its launch event for its handbook for Americans in London (with fantastic pragmatic advice across a wide range of personal, tax, legal and cultural subjects), and then subsequently in pursuit of opportunities for clients and prospects.  Everyone at the firm with whom I spoke or met has strong business acumen and understanding of entrepreneurship to go with their law degrees.  If you’re considering a new venture that crosses borders, I strongly recommend that you consult with Withers before making a move overseas or a major financial or legal decision involving your personal or business affairs .  The advice they offer could be very valuable. 

If you want a copy of its handbook for Americans in London, send an email to dawn.bishop@withers.us.com

How others see us. How we see ourselves.

Each quarter, Director magazine - the publication related to the UK's Institute of Directors - includes the "After Hours" supplement. Brimming with charming advice, such as how the weather impacts the British summer social scene or how to cruise Scotland to find the finest whiskies, the latest issue takes a look at British national identity.

Interesting to SwelledHead was the comparison drawn by how the British see themselves and how they're see by others:

The British see themselves as:                Others see the British as:

Rational and fair minded                          Reactionary and slightly bonkers

Passionate                                               Cold and aloof

Adaptable and accommodating                  Quaint and charming

Humorous                                                Funny

Culturally fragmented                               Civilised and cultured

Polite to a fault                                        Polite to a point of rudeness

Ironically amusing                                     Sarcastic and ridiculing

Understated                                              Ambiguous

Is this a fair or accurate assessment? To my mind, on the whole it would seem to be, but as an invented concept, being British - or indeed "Britishness" - is something that is difficult to define or agree upon. It's an elusive notion that alters with whomever you ask. It's definitely there, and it can be a real moneyspinner both at home and overseas. You may know it when you see it, but you'll never pin it down. Perhaps therein lies its allure.

US B2B Public Relations Success Tip #3: Help your agency understand what you want

When was the last time you told your agency what you want them to do for you? Chances are that it was months ago – perhaps even back to the point when you hired them. It sounds simple enough to be clear about what results you’re asking your agency to achieve, and it is, but it tends to be one of those tasks that is done once and then only taken care of again when a problem is perceived.

By that stage the relationship with the agency can become damaged. It feels as though they’re unable to work to your agenda and maybe you need to try someone or something else.

It's our experience that maintaining a clear understanding of expectations between agency and client is made even more challenging by distance. If your service is delivered remotely, maybe in different languages, the situation can be exacerbated. If this sounds like you, what should you be doing to prevent things from going stale?

While changing your agency can seem refreshing, it could be a move that sets you back in terms of time and unnecessary effort. Your incumbent knows your business and knows you, but what they may not know is that what they’re working on isn’t giving you satisfaction. To be sure, it’s a question any good agency should ask every so often, yet appearances can be deceptive - it appear that everything is fine when in fact it is not.

The simple answer is to ask questions and help your agency partners in finding the answers:

Are we getting coverage in the right media?
Are the correct messages getting through?
Should we be looking at other activities?
How can you better support our sales staff?
What impact is activity having on our prospects?

We suggest making this process a quarterly task as part of regular reviews of communications planning. It doesn’t need to be an in-depth session – just asking the questions and acting as a team to giving the answers some thought is all that it takes.

A great opportunity to sponsor a U.S. sport in the U.K.

Our agency, Austin Lawrence Group, recommended to a U.S. financial institution that it become the title sponsor of baseball and softball in the U.K.  Unfortunately for us, BaseballSoftballUK, thousands of British kids and this particular firm, the sponsorship didn’t happen.  It was intended to burnish the reputation of this company in the local market, aid employee morale (a community service concept was part of the program, whereby its employees would act as coaches and umpires with a great reward event at the end of the season) and make baseball accessible to British youth who might not have had a prior interest or the ability to pay for the equipment and/or coaching and umpires needed to have an organized team and league. 

We also recommended to start a “City Softball League” to raise money for a teenage crisis center in London – elements of which seem to have been taken up by BBSBUK with its “London Corporate Games” initiative.

I’ve posted this item because I believe so strongly in the value of such a program to the kids who could be served by it…hundreds or maybe even thousands of children could be positively impacted by an investment well within the reach of most City financial firms.

For a U.S. securities broker or money manager this would be a transatlantic sales, marketing and branding initiative that would more than pay for itself in terms of enhanced reputation among clients and peers, and a unique way to make a difference in the community.  As I write, there is no title sponsor for this organization, so a close and possibly exclusive relationship should be possible to negotiate.

And baseball represents a lot of what is great about the United States.  It’s a wonderful game that teaches many important life lessons, and for the British, a chance to experience a bit of our culture firsthand, instead of through Hollywood or McDonald's.

If you think there’s no market for U.S. sports in the U.K., consider: more than 300,000 British kids play baseball every year.  And, U.S. football is making noise about greater activity in the U.K., with the New York Giants and Miami Dolphins playing in London in October.  Check out the NY Times article today for more info on U.S. football in the U.K. and beyond.

If you’re interested and would like to learn more about our program design, contact me at k.lempit@austinlawrence.com or James Ollerenshaw, at james@austinlawrence.com.  You can learn more about baseball in the U.K. at http://www.baseballsoftballuk.com/