Monday, April 30, 2012

What's in a Brand?

One of the most important things a company can do to market itself is creating a "brand".  A brand is a promise from the company to its customers to deliver value consistently over time.  In the case of Southwest, the company brands itself to a host of parties including: employees, customers, and investors.  Southwest's success depends on its ability to successfully brand itself to these three parties, all of which are necessary to keep it running.  Because their executives are aware of this, they spend a significant amount of capital making sure that they are being branded as positively and efficiently as possible.

We know that Southwest has become synonymous with happy employees.  It has already been noted that Southwest accepts fewer than 3% of its applicants for jobs.  It has become one of the most highly sought after organizations for workers.  The reason for this is that the foundation of Southwest's corporate message is that employees always come first within the company.  This is a very unique message that is neither practiced nor preached by many other organizations.  Instead, the majority of businesses understandably put the customers' desires above all else.  Southwest's belief is that this focus on the satisfaction of its employees has a trickle down effect throughout the company.  By prioritizing employees, Southwest also empowers them to further help the company in unconventional ways.  Most of the time, this is reflected in customer service that is characterized as above and beyond, but it also extends to innovation, as well.



Even though the company line is that employees always come first within the company, the end game is really that the customers come first.  Southwest is purely going through an extra step to get there.  Accompanying every promise made to Southwest employees that their needs will be put first, is a return promise that employees will deliver "positively outrageous service" in a manner consistent with the "Southwest spirit".  Those terms embody what employees are expected to deliver and how they're expected to deliver it.  In other words, Southwest wanted its employees to be branded to customers as the best and friendliest in the business.  However, the "how" means nothing without a "what".  Southwest's offering (and the backbone of their brand) is a pledge to provide safe, affordable, reliable, timely, courteous, and efficient air transportation.  As has been previously discussed, they are most often separated from other airlines on the basis of affordability.  This pledge, in conjunction with the value added by the helpfulness of employees creates the brand that Southwest markets to its customers.



Finally, the brand image that Southwest wishes to convey to its shareholders is one of growth and superior financial strength.  Despite being in an industry that has taken it on the chin for the last decade or so, Southwest has continued to look for growth opportunities.  In 2011, the company acquired AirTran Airways effectively increasing their fleet of planes by 20%.  Southwest also made a purchase of 150 new state of the art planes in 2011, signaling their ambition to grow in a market that has seen stagnant growth and margins turn negative.  The reason Southwest is able to grow in this climate for airlines is because of their uniquely profitable operations.  CEO Gary Kelly notes in his 2011 letter to shareholders that while "many U.S. airlines succumbed to the challenges by either ceasing operations or reorganizing through bankruptcy, Southwest Airlines, in stark contrast, prevailed."  The ability to turn a profit while so many competitors are merely struggling to survive is something that a company can hang its hat on.  Its also a great way for a company to brand itself to potential investors.

All of this talk about branding can be related to the idea of identity.  When a company is determining what they want their brand to be, the number one question it must ask is what their identity is.  Who are we, what do we do, and how do we do it?  When they have answers to those questions, they have the answer to what their identity is, and when they know that, they aren't far away from creating their brand image.  The hope for every company is that its brand will instill an identification-based trust in its customers.  Identification-based trust is defined as a mutual understanding of each other's intentions and appreciation of the other's wants and desires.  Essentially, this means that a Southwest customer trusts that Southwest will dutifully acknowledge their promise to provide the highest all around quality air transportation in the business.  This trust is directly reliant on the brand that Southwest creates and their ability to maintain it.










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