Building strong brands is one of the ways on which a company can develop and sustain an advantage over its competitors, and thereby is bale to maintain or increase its sales or market share.
POSITIONING STRATEGY WITH A NEW IDENTITY: A CASE STUDY OF VIETNAM AIRLINES by Le Hong Dac A research study submitted in partial fulfillment of the requirements for the degree of Master in Business Administration Examination Committee: Dr Truong Quang (Chairman) Dr Clemens Bechter Dr Lalit.M.Johri Nationality: Vietnamese Previous Degree: Bachelor of Economics University of Agriculture and Forestry Scholarship Donor: HoChiMinh City, Vietnam The Government of Switzerland Asian Institute of Technology School of Management Bangkok, Thailand August 1999 Acknowledgement I wish to express my profound gratitude and great appreciation to my advisor Dr Truong Quang for his valuable guidance, advice and encouragement throughout the research study Special thanks are extended to the other members of the Examination Committee, Dr Clemens Bechter and Dr.Lalit.M.Johri for taking interests and giving valuable suggestions to improve the content of this study Deep appreciation and thanks are also extended to Mr Luong Hoai Nam, Mr Trinh Ngoc Thanh, Mr Duong Tri Thanh, Mr Mai Quoc Tuan, Mr Nguyen Thuong Hai, Mrs Nguyen Thi Minh Yen and Mr Le Dinh Tuan of Vietnam Airlines Corporation for providing me the desired information and data for this research study I fall short of words to express my thanks to my family and my friend Ngo Thi Hong Thu for their constant love, moral support and encouragement Last but not least, I would like to thank the government of Switzerland for providing me a full scholarship to study at SAV in HCMC, Vietnam and at School of Management in Bangkok, Thailand ii Abstract There is a strong link between the growth of market share and the profitability of a company with the power of its brands Like other well-known carriers in the region or in the world, when the old identity is not suitable with the current status of the company anymore, changing in to a new identity should be implemented as soon as possible More often than not, the Vietnamese companies seem to neglect the issue of branding This study analyzes the importance of brands and the process of branding management To illustrate the corporate identity building issues and positioning with a new identity in the airline market, this study examines the case study of Vietnam Airlines Corporation Interviews with managers and customer survey are carried out to investigate the competitors’ reaction and customer’s perceptions toward the new identity At the end, some recommendations are proposed for Vietnam Airlines to manage its new brand successfully and for other companies that want to change into a new corporate identity iii Tables of Contents Tittle page ……………………………………………………………………………………….i 1.1 Rationale of the Study 10 1.2 Statement of the Problem 10 1.3 Objectives 10 1.4 Research Methodology 11 1.4.1 DATA COLLECTION 11 Secondary data: 11 Primary data: .11 1.4.2 DATA ANALYSIS 11 1.5 Research Framework: 11 1.6 Scope and Limitations 12 1.7 Structure of Research Study 12 2.1 Introduction 14 2.2 Develop a Brand Identity 14 2.2.1 WHAT IS A BRAND? 14 2.2.2 A BRAND IS MORE THAN A PRODUCT 16 2.2.3 BRAND EQUITY 17 2.2.4 BRAND IDENTITY 18 Definition 18 The brand position trap 18 Four brand identity perspectives 19 The Identity Structure 20 2.2.5 Brand Identity Planning Model 22 2.2.6 BRAND POSITIONING 22 2.2.6.1 Developing a positioning strategy 23 2.2.6.2 Strategic Misconceptions 23 2.3 Manage Brand Image 24 2.3.1 THREE COMPONENTS OF BRAND IMAGE 24 2.3.2 BRAND IMAGE DRIVES BRAND EQUITY 24 2.3.3 BENEFITS AND IMPORTANCE OF A BRAND IMAGE: 24 2.4 Maintain Brand loyalty 25 2.4.1 CULTIVATING LONG-TERM RELATIONSHIPS WITH CUSTOMERS .25 2.4.2 BRAND LOYALTY 25 2.4.3 BRAND LOYALTY VERSUS SERVICE LOYALTY 26 2.4.4 HOW TO BUILD LOYALTY? 26 3.1 Asian-Pacific airline market 28 3.1.1 INTRODUCTION 28 3.1.2 FUTURE TREND 29 3.1.3 GLOBAL OUTLOOK AND GROWTH TREND: 30 3.1.4 AIRLINE ALLIANCES 31 3.2 Airlines Industry in Vietnam 32 3.2.1 BRIEF HISTORY OF VIETNAMESE CIVIL AVIATION: 32 3.2.2 VIETNAM AIRLINES BACKGROUND 33 Current Status of Vietnam Airlines .34 2.2.2 CORPORATE BRAND NAME: VIETNAM AIRLINES CORPORATION .37 2.2.3 VIETNAM AIRLINES NETWORKS 37 4.1 Company Strategy Analysis 39 4.1.1 CUSTOMER ANALYSIS 39 Industry Trend 39 iv Motivations 39 Unmet needs 39 Market Segmentation 39 4.1.2 COMPETITOR ANALYSIS .40 i Domestic routes 40 ii International routes 40 4.1.3 SELF-ANALYSIS 44 Existing Brand image: 44 Friendliness 44 Vietnam Airlines’ SWOT Analysis 44 Organization structure and values .47 4.2 Analysis of Brand Identity System of Vietnam Airlines 55 4.2.1 BRAND AS PRODUCT 55 The Product Scope: Associations with Product Classes 56 Product-Related Attributes: 56 Quality Value .56 Associations with Use Occasions 56 Country of Origin 56 4.2.2 BRAND AS ORGANIZATION 57 4.2.3 BRAND AS PERSON 57 4.2.4 BRAND AS SYMBOL 57 The Old Logo of Vietnam Airlines 57 The Old Design of Vietnam Airlines .57 4.2.5 EXISTING MARKETING MIX 58 Reservation Service 61 Before-Flight Service 61 Check-in Service 61 On-board Service 62 After Flight Service 62 Vietnam Airlines’ Strategic Alliances 63 4.3 Develop New Brand Identity for Vietnam Airlines 64 4.3.1 CORE IDENTITY: SERVICE-MINDED, SECURITY AND SAFETY 64 4.3.2 EXTENDED IDENTITY 64 4.3.3 THE NEW DESIGN OF VIETNAM AIRLINES 66 4.3.4 REASONS FOR LAUNCHING A NEW DESIGN AND A NEW IDENTITY 66 4.3.5 UPDATING VIETNAM AIRLINE’S IMAGE 67 (b) The New Identity of VNA 70 4.3.6 PARTNERS IN THE SPECIAL LIVERY DEVELOPMENT .70 4.3.7 PLANNING FOR LAUNCHING THE NEW DESIGN AND NEW IDENTITY 71 4.4 Manage Brand Image 71 4.4.1 POSITIONING STRATEGY 71 4.4.2 PERSONALITY 71 4.4.3 BRAND STRATEGY .71 4.4.4 NEW MARKETING MIX 72 Product 72 Personnel 72 Service 72 Price 73 Promotion 73 Tactical and Strategic Advertising 75 Place 76 v Brand Consistency and Loyalty .77 4.5.1 CONSISTENT BRAND STRATEGY 77 4.5.2 BRAND LOYALTY 77 5.1 Outline of the survey 78 5.2 Profile of the Customer Survey 78 5.3 Factor Analysis 81 Airlines 85 Ads theme line 85 Now more than ever, a great way to fly 85 5.3.9 MULTIVARIATE ANALYSIS OF VARIANCE (MANOVA) (APPENDIX 1) 88 5.4 Brand awareness 89 5.4.2 BRAND NAME TRIAL 91 5.4.3 THE MOST FAVORITE ADVERTISING CAMPAIGN (APPENDIX 1) 92 5.4.5 FACTORS INFLUENCE ON DECISION-MAKINGS OF CHOOSING VNA’S SERVICE 93 5.4.6 THE EVALUATION OF VIETNAM AIRLINES’ SERVICE QUALITY 94 5.5 Brand Loyalty 94 5.5.4 INFORMATION ACCESS FOR A NEW BRAND 97 5.6 Questions related to a New Logo and New Colour (New Design) of Vietnam Airlines 98 5.6.1 COLOUR OF THE NEW PAINTING 98 5.6.2 NEW LOGO 98 5.6.3 FEELINGS ABOUT THE NEW DESIGN (NEW COLOUR AND NEW LOGO) 99 5.6.4 PREFERENCE ABOUT THE NEW DESIGN 99 TABLE 5.6.4A: PREFERENCE OF NEW DESIGN BY AGE 99 6.1 Conclusions 102 GENERAL CONCLUSIONS 102 6.2 Recommendations for Vietnam Airlines .103 6.3 The suggested model for Corporate Identity Building Process .104 CORPORATE IDENTITY BUILDING PROCESS 104 vi List of figures Figure 2.1: The brand 15 Figure 2.2: The brand and the consumer .16 Figure 2.3 A brand is more than a product 17 Figure 2.4: The core of the brand identity 21 Figure 2.5: Brand Identity Planning Model 22 Figure 2.6 Brand Image drives brand equity 24 Figure 2.7 Brand loyalty builders 27 Figure 3.1: Passenger Transport Through Years 35 FIGURE 3.2: Vietnam Airlines Route Map 38 Figure 4.1: Regional airlines market mapping 44 Figure 4.2: The Current Organizational Structure of Vietnam Airlines 52 Figure 4.3: Transforming Organizational Structure 54 Figure 4.4: The Proposed Organizational Structure .55 Figure 4.6: The Old Design of Vietnam Airlines 58 Figure 4.7: Distribution Channel of Vietnam Airlines 63 Figure 4.8 Anatomy of Vietnam Airlines Brand .66 Figure 4.9: The New Design of Vietnam Airlines 66 Figure 4.10: The Factors Creating Change Into a New Identity of Vietnam Airlines .67 Figure 4.11: The comparison between the old and new identity 68 Figure 5.1: Age group of respondents 81 T-Test 85 Figure 5.2: Awareness of airlines 91 Figure 5.3: Brand Name Choice 92 Figure 5.4: Brand Loyalty .95 vii List of tables Table The brand position trap 19 Table 3.1: Overall Financial Performance (in US $ millions) 29 Table 3.2: International Traffic Growth (1998-2002) .30 Table 3.3: AAPA traffic – 1998 31 Table 3.4: Alliance summary 1994-1997 32 Table 3.5: Average Age of AAPA Fleets by Airlines (as of November 1, 1998) 34 Table 3.6: Passenger & Cargo Transport (domestic and international routes) .34 Table 3.7: Total of international passengers carried from 1991 to 1998 .35 Table 3.8: Market share of Vietnam Airlines from 1996 to 1999 in main Asia-Pacific routes .36 Table 4.1: Customer Profile of VNA .40 Table 4.2: Vietnam Airlines profile in Southeast Asia market (on a 1-7 scale) .41 Table 4.3: Ranking by categories 41 Table 4.4: Vietnam Airlines Profile in North-east Asia market 41 Table 4.5: Ranking by categories 42 Table 4.6: Vietnam Airlines Profile in European market .42 Table 4.7: Ranking by Categories 42 Table 4.8: VNA Ranking (as compared 15 carriers under survey) .43 Table 4.9: VNA’s Brand Image (between 1996 and 1997) 44 Table 4.10: Vietnam Airlines’ SWOT Analysis 46 Table 4.11: Vietnam Air Cargo Transport Projection (tons) 59 Table 4.12: Vietnam Airlines International Passenger Transport Projection 59 Table 4.12: Number of Personnel as of May 1999 .60 Table 4.13: Level of education of Vietnam Airlines employees (as of May 1999) 60 Table 4.14: Vietnam Airlines Resources and Skills 61 Table 4.15: Vietnam Airlines’ Strategic Alliances 64 Table 4.16 Change of VNA Brand Identity 68 Table 4.17: Advertising concepts for 1999 74 Table 5.2.1: Gender 78 Table 5.2.2: Frequency of passengers flying on international routes 79 Table 5.2.3: Structure of Nationality .79 Table 5.2.4: Occupation structure of respondents 80 Table 5.2.5: Income 80 Table 5.2.6: Age 81 Table 5.3.1: Descriptive statistics of thirteen variables 82 Table 5.3.2: MSA (Measure of sampling adequacy) 82 Table 5.3.3: Guidelines for Identifying Significant Factor Loadings Based on Sample size 83 Table 5.3.4: The rotation of factors 84 Table 5.3.5: The Total Variance Explained 84 Table 5.3.6: Ads slogans of some famous airlines or aircraft manufacturers in the world 85 Table 5.3.7: Test with Gender 85 Table 5.3.8: Test with Income 87 Table 5.3.9: Test with Nationality 88 Table 5.4.1: Awareness of the carrier 89 Table 5.4.2 Brand name vs Income 91 Table 5.4.4 Sources of information about Vietnam Airlines 93 Table 5.4.5: Factors affecting passengers to choose Vietnam Airlines’ services 93 viii Table 5.4.7: Vietnam Airlines’ Service quality 94 Table 5.5.1 Buying the same brand .95 Table 5.5.2 Brand Switching 96 Table 5.5.3 New Brand Trial 96 Table 5.5.4 Source of information for a new brand 97 Table 5.6.1: Attitudes towards the new painting of Vietnam Airlines 98 Table 5.6.3a Feelings about the new design by age 99 Table 5.6.3b Feelings about the new design by nationality 99 Table 5.6.4b: Preference of New Design by nationality 101 ix Chapter Introduction 1.1 Rationale of the Study Building strong brands is one of the ways on which a company can develop and sustain an advantage over its competitors, and thereby is bale to maintain or increase its sales or market share The development of competitive advantage through branding is particularly crucial for mature and declining industry or market With a population of more than 79.4 million people in 1998 (AsiaWeek, 05-07-99), Vietnam is a great potential for both local and foreign investors in air transport sector Many international airlines have come to exploit business opportunities in this country As a result, this emerging market has become the site of fierce competition for airlines industry, especially when the region entered the economic crisis in 1997 Taking advantage of global branding and powerful financial resources, many carriers have been eating up the market share of Vietnam Airlines Furthermore, airlines industry is one of the toughest markets because of its specific characteristics Especially, there exist a very high entry barrier due to high cost of entry (required huge capital investment in terms of facilities and other fixed assets) and the perishability of the products Therefore, to be successful in doing business in this industry requires a very good branding strategy This is not, by no means, an exception for Vietnam Airlines 1.2 Statement of the Problem Thanks to the open door policy, Vietnam Airlines experienced an exponential growth during the period between 1991 to 1996 with an average volumes growth of 32% per annum (even as high as 55 % per year in 1992 But it started to face sharp decline in 1997 and 1998 due to the financial crisis in Asia Meanwhile, many foreign airlines firms have kept on increasing their flights to Vietnam, which has aggravated the situation for Vietnam Airlines Therefore, to response to these challenges, Vietnam Airlines needs to better to REPOSITION ITSELF IN THE ASIA-PACIFIC REGION BY A MORE EFFECTIVE BRANDING STRATEGY (new logo design) It is a survival mission presently and for building up competitiveness in the future for the airlines 1.3 Objectives This research focuses on the following objectives: To define the principles of brand performance attributing to airline's competitive advantage To investigate the consumer perceptions toward brand name and their choice criteria for brands To investigate the consumer perception towards the new brand of Vietnam Airlines 10 ... 44 Vietnam Airlines’ SWOT Analysis 44 Organization structure and values .47 4.2 Analysis of Brand Identity System of Vietnam Airlines 55 4.2.1 BRAND AS PRODUCT... 1992) 2.2.4 Brand Identity Definition A brand identity provides direction, purpose and meaning for the brand Aaker (1996) gives a variety of definitions of brand identity such as: Brand identity. .. Figure 4.7: Distribution Channel of Vietnam Airlines 63 Figure 4.8 Anatomy of Vietnam Airlines Brand .66 Figure 4.9: The New Design of Vietnam Airlines 66 Figure 4.10: