Ale Olivetti

Branding case study

AlitaliaAlitalia

(United Kingdom). Soft chimes echo in the lobby of Omni Luxury Hotels. Rooms have the signature scent of lemongrass and green tea. Bath salts are enriched with eucalyptus essence. The minibar is stocked with mojito-flavoured jelly beans and a miniature Zen garden. All these elements compose the sensory marketing, a critical step in defining the brand personality.

Let’s take another brand, Starbucks. What is the secret of the American coffee chain? The product, whether it is Latte or Frappuccino, is the least relevant component of the Seattle giant. The key word is experience. Thinking of Starbucks means having the idea of a unique environment which changes depending on the location: near a beach it has a seaside atmosphere, in an art city it turns into a theatre. Starbucks is a relaxing place, generally with comfortable armchairs and a fast internet connection. It is a sort of open space where the customer smells the familiar aroma of coffee, and therefore sensory marketing re-emerges: the sensation and perception of the product. The strength of Starbucks’ brand experience is very noticeable in Italy, where the chain only landed in 2018 with the first store in Milan. The scepticism of the coffee giant, which impersonates the concept of the Italian bar, arose from the presence of thousands of coffee shops in the Milan area alone. A scepticism that soon proved unfounded. In fact, despite the many bars that offer a product at a lower price, Starbucks is always full. In other words, the American chain leads customers to spend more in exchange for a unique experience. Finally, according to the five dimensions of the brand persona (sincerity, excitement, competence, sophistication, ruggedness), Starbucks’ brand may be described as sincere (down to earth, honest, wholesome, cheerful) and exciting (daring, spirited, imaginative, up-to-date).

Alitalia’s brand must change as it has lost its way

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April 2021

Article

Features that the second brand under analysis, Alitalia, lacks. What sets the airline apart from others? Nothing. There is no memorable experience in Alitalia. Instead, there are many positive memories of the past when the Italian carrier flew with the liveries of Bulgari and Baci Perugina (in the 90s, the debts were already digging the well). But today there is no longer any brand memorability and therefore there is no distinction with competitors. If there is no difference, it is unreasonable to pay a ticket 100€ instead of 10€. No brand experience equals no increase in sales.

It is undeniable, however, that Alitalia still retains a top-of-mind awareness. It is the first airline that comes to mind when talking about Italy, after all, the original one was born in 1946, educating generations of passengers to fly. Like Lufthansa if asked to name a German airline. Nevertheless, in recent times, a share-of-mind awareness, the consideration of several brands of a group, has been taking hold. The concept is subjective, but in the Italian case, it is likely that immediately after Alitalia (FSC, Full-Service-Carrier) there are Ryanair and EasyJet (LCC, low-cost carriers).

Brands are strategic and financial assets. Awareness as a single value is not enough, because it is dictated by the brand equity, the overall value of the brand on the market. Among the data included in the equity there are the profit margin (1), the market share (2), the recognition and association of the brand by consumers (3).

Alitalia’s current brand

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According to Cirium’s analysis, in 2017 Alitalia reported a Net Profit Margin of -17% (Net Income / Revenue) with a loss of €598 million. The brand equity is starting faltering. Furthermore, the market share of the Italian airline is less and less significant, starting from the number of passengers, as Cirium reports: in 2019 Iberia carried 22.4 million, Alitalia 21.3, despite thirty more planes in the fleet. Data from Anna.Aero show that, before the pandemic, Alitalia had 40% of the domestic market and less than 10% of the international one, with a smaller presence than Ryanair and EasyJet. In the world, Alitalia is perceived as a spit with some glimmer of hope in Latin America. On a national scale, AZ’s top route was Milan Linate-Rome Fiumicino followed by Rome-Catania and Rome-Palermo. In short, Alitalia can easily be described as a local public transport company. It is curious how the route most operated by the carrier in 2017 was the one covered by a faster and often cheaper substitute, the high-speed train. But it is not the right place to introduce a discussion on business strategies. The last point of equity is the recognition of the brand by the consumer. Alitalia is a one-of-a-kind composite name, a key feature of branding (uniqueness). So are names like Iberia and Lufthansa, less Air France and British Airways. To be clear, none of the brands mentioned are imitable, but the words Air and Airways, like France and British, are recurring. Consumers therefore recognize the Alitalia brand, but what do they associate it with? To the glorious company of ‘46 or to the failed one of recent years? On the professional side, a survey would be the best measure to reveal how the airline is associated with negative thoughts that respond to the second question. However, the author merely indicates two factors that make a negative association more plausible than a positive one:

1) Alitalia has transformed itself from an international carrier into an international dispute over thirty years. AZ is not recognized as beautiful Italy, but as parasitic Italy.

2) It is a company in a regressive phase, the passenger experience is equal to that of 2001, when Boeing delivered the 777s.

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The real risk, probably already a reality, is that the detractors outnumber the promoters. In branding, the detractors are people who are victims of a negative experience or who speak ill of a brand, bringing facts that are often difficult to reject. The promoters, by contrast, are people conditioned by an excellent experience or strongly interested in the brand. Excluding some European patriots who still see salvation in Alitalia, brand loyalty is mostly negative (detractors) or passive, that is, a neutral experience that does not increase brand awareness. Finally, a model called Brand Asset Valuator (BAV) is used to evaluate the performance of brand equity. The main points of the BAV are Differentiation, Relevance, Esteem and Knowledge. The data indicated above show that Alitalia fails across the board. Employees are aggravating the uncertainty of brand equity. At the demonstration in Rome a few days ago, the Alitalia’s caste presented itself with placards against low-cost airlines and the European Union. “Try telling the French to give up the Air France logo… See where they send the Vestager!”. Instead of pleading a lost cause, Alitalia employees should acknowledge the brand’s failure, becoming brand champion (or ambassador) of a renewal. It follows that the European Union’s request for a radical discontinuity with the past is well-founded. In a letter reported by L’Espresso, the EU Commission for Competition, led by Margrethe Vestager, stated that the NewCo cannot be called Alitalia in any way, or recall this brand.

In the press conference last week, Prime Minister Draghi explained that the “boys” (sic) - the Minister of Economic Development Giorgetti and the Minister of Economy Franco - are discussing the change of the logo and the name of the airline, which should become ITA.

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ITA, acronym for Italia Trasporto Aereo, is the company founded in 2020 by the Ministry of Economic Development with a capital of €25 million in charge of forming the NewCo. The Italian government has decided to circumvent, unsuccessfully for now, the Brussels request on discontinuity, creating yet another new company (after CAI - Compagnia Aerea Italiana in 2009 and SAI - Societa’ Aerea Italiana in 2015). ITA’s 88-page business plan, which does not mention Alitalia even once (Italians clever as the weasels), is a set of many beautiful things without any indication of how to do them. SWOT and PESTEL analysis, modern fleet by 2025, alignment with best practices, guarantee of the digital experience. All talk no action. At this stage, doubts arise about ITA’s brand strategy, which leads to its positioning on the market. Would the new brand be a trivial acronym created to avoid the European bureaucrats? Alitalia’s executives sat at the bar, when this was possible, and in ten minutes they identified an acronym that recalled Italy. TAI (Trasporto Aereo Italiano) had already been suggested, so they changed the order of the letters. A brand strategy must, first of all, include targeting, the audience to which to convey the message. And then it must have a specific and achievable brand promise. Would ITA be ready? A problem for NewCo is also the so-called frame of reference. Alitalia is an airline based on an FSC (Full-Service-Carrier) model and until a few years ago it was considered a premium brand. If ITA went out of its market model, a deviation would hardly be accepted by the consumer. On the one hand, there is a model that in the past has not been properly managed, on the other hand, the impossibility of changing course. Another reason why a rebranding is essential.

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Be Air Italy instead of ITA. It is a provocation, not even a remote hypothesis, but there are reasons why it might actually work. When Qatar Airways’ CEO Al Baker announced that Meridiana would become Air Italy and presented a serious plan for the company rebranding, no one dared object. Also, because Air Italy has always played a secondary role with respect to Meridiana, but the Italian name, which is very regional (Sardinia), would not have worked in an international project.

For the grounds listed a few paragraphs ago, Air Italy was a less unique brand than Alitalia, but it had a charm generated by the colours and a completely new logo, accompanied by a marketing strategy that overall brought some fresh air into the company. Unfortunately, marketing is not the solution to every problem and Air Italy became a wolf camouflaged by sheep. Still in marketing, for example, the lack of a DRIP model (Differentiate, Reinforce, Inform, Persuade) in digital promotion has led to a profound crisis in the company. History teaches us that big promotions on the Milan-New York route are not enough to generate revenues. The product must be differentiated at all costs, a brand must put pressure on consumers’ beliefs, inform and persuade them.

Air Italy’s brand

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Another example, successful this time, is American Airlines. After 45 years, in 2013 the American major airline changed its logo to facilitate the merger with US Airways and therefore a necessary repositioning on the market. On the practical side, the new generation aircraft, built with composite materials instead of traditional aluminium, would not have allowed to apply the original chrome livery.

Alitalia could change the logo, and it is a viable road, especially if it considers a (complete) change of the colour palettes, but the name would remain associated with the failed state company and in a rebranding phase it is a huge problem. Hence, a new logo may not give a breath of fresh air to the NewCo. One last tip for those who insist on being an innovator or promoter of Alitalia. Wasting time worshiping a myth that does not exist is truly incomprehensible. The Alitalia brand is no longer relevant, it has neither a promise nor core values nor a defined audience. A rebirth passes through the awareness of the problems. Be promoters of solutions | olivettia.

American Airlines’ brand before and after rebranding

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