A New Brand Evaluation Model: The Way Forward - Case Study Example

 “A new brand evaluation model: the way forward” Executive summary The budget airline, Easy Jet, has had a checkered evolution from the start to now. Its current strategic operational and competitive environments are basically determined by a series of factors such as an ever intensifying competitive environment in the no-frills air passenger transport sector, supply chain management cost related constraints and a global economic downturn. This report focuses on brand management strategy in general and the construction of a contingency model for new brand evaluation in particular with specific reference to Easy Jet airline. Contingency models on new brand evaluation techniques have been built in a number of industries. This report on the Coterminous Brand Value Model has particularly identified and treated the strategic brand management practices at Easy Jet in the light of the evolving scenario of competition and strategic choices available to the brand management team. The inevitable conclusion is that contingency models to evaluate new brands in the low cost airline industry have produced a dichotomy, viz. competitive environment-centric models that emphasize strategic competitor oriented brand creation and management and purely strategic management-centric approaches in which the emphasis is on the internal management processes to achieve brand related outcomes. Thus the CBV Model seeks to integrate the two value parameters into one. Introduction A variety of models to evaluate brands has come up in the recent years. While most of them are based on the general contingency brand evaluation approach, there are a few of them which particularly emphasize the strategic constraints faced by brand evaluation modelers. Thus these latter models factor in the difficulties in the form of biases and prejudices that are inherent in model building approaches adopted by individual managers. It’s not altogether a foregone conclusion to present models that invariably produce positive outcomes on a scale of weighted customer preferences though. Almost all the existing band evaluation methods place emphasis on weighted averages to build a systematic model of customer preferences while ignoring the degree of bias in each such preference and its occasioning contingency. That’s why this writer calls his model a contingency model of new brand evaluation. One of the earliest brand evaluation models to appear on the business scene was the Ideal Brand Model. It was followed by many others and among them Lexicographic Model, Conjunctive Model, Disjunctive Model, Determinance Model and more recently Expectancy Value Model are prominent right now. The last mentioned model has some logical coherence and cohesiveness with regard to the decision making processes of consumers. While consumer behavior is treated as an integral part of the model’s systemic process, consumers’ beliefs concerning attributes of brands are taken into consideration by multiplying each brand’s weight thus finally creating ranks of preference among consumers for each brand. This writer has developed the following new brand evaluation contingency model centered on the branding strategy at Easy Jet in the no-frills low cost passenger airline industry. The model has placed emphasis on an essentially significant and inherent characteristic of this particular industry as a global phenomenon, viz. consumers’ coterminous preferences for individual brand values of each low cost airline in particular and any industry in general. Thus the model is called Coterminous Brand Value Model or alternatively Coterminous Brand Preference Model. A significant amount of analysis in this paper would focus on the secondary research aspects of consumers’ indifference to a particular brand in the low cost no-frills airline industry delineated on the lines of identical brands and services. Analysis: Coterminous Brand Value Model or Coterminous Brand Preference Model The following diagram was used by the writer to build up the contingency model for the evaluation of new brands with specific reference to Easy Jet airline. p = preferences (value) r= ratios (value) “C” stands for the coterminous value of the formula and is equal to unity by way of summation of outcomes. The letter “p” signifies the preferences of consumers for a particular airline or a firm in the whole industry, while the letter “r’ signifies the value ratios based on each airline’s financial performance criteria and attendant value creation for the customer/consumer. There is the particular need to emphasize the fact that Easy Jet’s current performance analyses and brand management strategies have been thoroughly studied by the writer to build the model attributes without compromising the value parameters (Dhar, 2007). As the above diagram illustrates a given value for brand non-dependency would entail a series of behavioral patterns on the part of the consumer. However its value is determined by the functional variations of consumer preferences for a particular brand, say, for Easy Jet’s super brands that are based on the provision of safe, feel-good, value-based point-to-point air travel within Europe. Its short hauls have won the platitudes of many a critic. This super brand creation effort coincided with other similar low cost short haul airlines coming into the competition. However, Easy Jet’s super brand creation strategy paid off from the very beginning. Consumer preferences for Easy Jet’s super brands as against the others’ could be calculated on the basis of a number of seats booked during a year. The following data table shows how Easy Jet’s sales volume has been increasing over the years despite the fierce competition from other budget airline operators. The data were analyzed by using a comparative analysis technique to achieve comparable consumer preferences for a cross section of brands offered by low cost air lines operating in Europe. The writer exercised due care to avoid duplication of brand loyalty because the contingent model building exercise requires here consumer indifference between brands and not loyalty. But nevertheless the phrase “brand non-dependency” was used instead of brand indifference in order to build up a systematically consistent model of consumer behavior determined solely by the attitude “any brand is ok as long as the minimum level of satisfaction for an affordable price is guaranteed”. This approach underlies the analysis of this new model throughout this paper. If any variances or co-variances were to be introduced there would be specific mention of them. Thus the above Easy Jet’s sales trend is now posited against the BMIbaby’s, another short haul European budget airline, to convincingly establish how consumer preferences became coterminous during the period under review and how brand non-dependency led to consumer indifference captured through fluctuating sales of the two. The representative sample of data included in the analysis cannot be expanded to include other budget airlines such as the British Airways because this study is selectively restricted in other respects. The above data tables and their outcomes were used by the writer to give a value to the coefficient “ratios” so that the CBVM would be qualitatively efficient. Easy Jet’s values 8.71 and 5.70 were used to construct the ratios coefficient. Both the values significantly raise the Easy Jet’s position above the rest of its competitors. Next the paper would examine the different ratios of financial performance by Easy Jet and BMIbaby in order to determine the cross value samples for the establishment of the coterminous model of brand evaluation. For instance there are the sales revenue performance criteria such as the net sales revenue ratio and the gross sales revenue ratio. These ratios have acquired a significant amount of variance and co-variance over the years at Easy Jet. For the comparative study against Bmibaby, the latter’s ratios too were subject to a similar examination though the focus remained only on the consumer’s brand non-dependency behavior and not on the company’s financial performance. The significance of financial performance ratios lies in their ability to enable the researcher to identify value creation parameters inherent in the system. For instance Easy Jet’s financial ratios were far better compared to that of BMIbaby’s but nevertheless BMIbaby’s losses during the period between 2007 and 2009 cannot be attributed to anything else other than poor management and global economic downturn worsened by rising fuel costs. Therefore the latter problem was common to Easy Jet as well. Then the value construct for the ratios is basically determined by internal management strengths or/and weaknesses which turn would either reduce or increase operating costs. In the case of BMIbaby the airline experienced a lot of labor problems such as the negative response of over strained pilots. These weaknesses were obviously expressed though higher costs. Thus the consumer was asked to bear the burden of rising costs due primarily to poor management. On the other hand Easy Jet successfully passed the attendant benefits on to the consumer by way of reduced prices and more intangible benefits such as comfort. In between the two, consumer loyalty or/and brand dependency was determined by an indifferent attitude because the consumer did not attach a particular value to the super brand of Easy Jet but made a comparison with what BMIbaby and other budget airlines operating short haul flights offered for the identical price. This theoretical construct was incorporated into the model as ratios to achieve a fairly representative model of attitudes on the part of the consumer. The following theoretical constructs were established in the process of this analysis. The consumer’s independent behavior with regard to brand dependency was established through the factorial outcome of the preference value for each brand or airline. Such preference value was not taken for granted as the ultimate preference parameter for a particular brand determined by the individual consumer’s brand loyalty or dependency because in between two brands a wider spectrum of preference values could exist, i.e. the coterminous behavior of the consumer. Financial performance ratios were used to obtain a weighted average for each brand. For example Easy Jet’s super brand status was comparatively established through its above average performance in ratios as shown by the following data analysis. The writer of this paper made use of this analysis cited below to arrive at the ratio value parameter of the whole model. The values that the following analysis has given to Easy Jet are taken as the basis for the weighting of the co-efficient “ratios” in this model. In conjunction with other similar values given in the same analysis to other competitors in Europe, this brand evaluation model emphasizes the coterminous behavior of the consumer to arrive at its conclusions. Therefore its theoretical framework of reference is significantly influenced by such exogenous variables as industry-based factors. CBVM has been thus produced as a basic brand evaluation model to determine the otherwise indeterminate coterminous behavior of the consumer with regard to brand dependency. In the short haul air travel market in Europe in particular and the world in general there is very little evidence to prove that a particular consumer would be totally dependent on a brand when competing brands offer identical products with identical services attached. Thus the writer comes to the following analytical conclusions about the CBVM. The CBV has a parametric value above one, meaning greater than unity. In other words the demand for Easy Jet’s super brand was influenced more by the consumer’s indifference to brands than by a determinate or definite behavioral pattern based on the given brand loyalty or dependency. In other words the dependent variables “preferences” and “ratios” were influenced by greater amount of brand non-dependency than by perceived or imagined brand loyalty. As a corollary of the above brand non-dependency acquired a greater value than one (e.g. greater than unity) in its overall outcome to produce a coterminous behavioral pattern on the part of the consumer with regard to brands and subsequent attachment. In other words identical brands of BA, Virgin Atlantic and BMIbaby underperformed not because brand dependency for Easy Jet was higher than for those three but because on a given set of performance criteria Easy Jet achieved more customer value and passed the same on to the consumer as a value addition. Finally CBVM has been basically determined by the comparative values of the two coefficients – consumer preferences and performance ratios. Assuming that these two coefficients register negative values as in the case of BMIbaby, definitely the final value of the coterminous behavior of the consumer would be negative. Recommendations Benefits of the Coterminous Brand Value Model This Model is based on the logical premise that the consumer behavior with regard to brand dependency moves through a haze of indifference or indeterminate process. In the first place consumers of short haul flights do not need to depend on the brand as an a priori determinant in the decision making process. Many brand evaluation models discussed above invariably seek to incorporate consumers’ brand loyalty or dependency as an integral part of the model while at the same time ignoring the fact that there is a vast area of contiguous overlapping in consumer behavior with respect to brands when the latter happen to lack any distinct value parameter or attribute. CBVM on the other hand incorporates a co-efficient called “preferences” to overcome this shortcoming in other models. Preferences can either be negative or positive and therefore they need to be factored into the equation so that the individual consumer’s preference is included in the sum total of preferences to produce an average weight. It’s a comparative value and not an absolute value. It’s comparative vis-à-vis other variables such as the price of the product and so on. CBVM has also been built on the premise that coterminous consumer behavior is more authentically valid in market contexts where brands appear to have overlapping frontiers of various values. Brands cannot be regarded as failure-proof entities. Some of them might not stand the test of time. Thus this Model allows the researcher to overcome those limitations of other models. Finally CBVM provides a theoretically sound basis for further analysis and study of band evaluation in any industry. The company in question would benefit so much from CBVM at a fairly reasonable cost on research and therefore there is the most probable outcome based on CBVM that brand building efforts have to be accompanied by similar efforts to add value to the final product in the eyes of the customer as an extemporaneous measure. REFERENCES . 1. Dhar, M. 2007, Brand Management 101: 101 Lessons from Real-World Marketing, John Wiley & Sons, Inc, New Jersey. 2. Financial ratios of Easyjet (GB0001641991 - EZJ) compared to its main competitors, from, www.financialratio.com. 3. Passenger statistics, 2008, from, www.easyjet.com. Read More