KULULA.COM - Case study Mini In-Class analysis - HAVING A BIT OF FUN WITH AN HISTORICALLY BASED CASE STUDY FOR ANALYSIS
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KULULA.COM - Case study Mini In-Class analysis - HAVING A BIT OF FUN WITH AN HISTORICALLY BASED CASE STUDY FOR ANALYSIS

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We had the privilege of having the inimitable Prof Geoff Bick as our Marketing Lecturer during Module 3 of the EMBA. For many students, this intense, Honours level exposure to Marketing is a ...

We had the privilege of having the inimitable Prof Geoff Bick as our Marketing Lecturer during Module 3 of the EMBA. For many students, this intense, Honours level exposure to Marketing is a completely new experience.

With 25 years of Marketing, Business, Advertising, Communications et al experience under my belt, I must say that I have seldom enjoyed a lecture series as much as I did the two week intensive course with Geoff.

He is a seasoned marketer, a disruptive innovator, has a WICKED sense of humour and is a MASTER at his craft. As part of our ' action learning' process, there was a requirement for each modular group [ 6 members per group] to submit at least 4 of the assigned Case Studies.

This entailed studying a brief and answering or analysing questions specific to the brief. I was fortunate to draw the kulula.com story out of the hat - and decided to have some fun with the Presentation as well as Analysis document.

I kept my peers in class - my audience - in mind - a great many engineers, CA's, metalurgists, PhD's etc - who had not been exposed, in great detail to the principles of marketing.

SO - I had some fun and learned quite a bit about the ' birth' of kulula.com.
A light-hearted piece of work that provided me with some space for creativity and just playing with my studies.

Aimed at anyone who is interested in...well...an interesting story - see the brief as well as commentary within the document - as well as the basics of disruptive innovation and how to take a brand to market within financial as well as economic limitations.

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KULULA.COM - Case study Mini In-Class analysis - HAVING A BIT OF FUN WITH AN HISTORICALLY BASED CASE STUDY FOR ANALYSIS KULULA.COM - Case study Mini In-Class analysis - HAVING A BIT OF FUN WITH AN HISTORICALLY BASED CASE STUDY FOR ANALYSIS Document Transcript

  • EXECUTIVE MBA 15.3 MARKETING MODULE CASE STUDY: KULULA.COM LECTURER: Professor Geoff Bick FINAL MARK: Date: 10 October 2013 Prepared by AMANDA BRINKMANN on behalf of EMBA 15 Module 3, Group 4 Amanda Brinkmann Henry Jonker Wilhelm Kühn Mandisa Mashicila-Sekgalakane Rachel Mathale Zinnia Molelo NOTE: CASE STUDY BRIEFING DOCUMENT UPON WHICH THE MINI-MARKETING ANALYSIS MODULAR/CLASS PROJECT IS BASED – ATTACHED AT END OF DOCUMENT
  • PLAGIARISM DECLARATION I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is one’s own. Allowing another to copy my work and use it as their own is also plagiarism. This assignment is my own work. I have not allowed and will not allow anyone to copy my work with the intention of passing it off as his or her own work. I acknowledge that working with someone on my assignment is allowed, but only if a mutual effort is made and different examples and, where necessary, wordings are used. Signature Amanda Brinkmann Henry Jonker Wilhelm Kühn Mandisa Mashicila-Sekgalakane Rachel Mathale Zinnia Molelo 2
  • STRUCTURE OF CASE STUDY: QUESTION AND ANALYSES A PROVIDE A CRITIQUE OF KULULA.COM’S PROMOTIONAL STRATEGY – PROVIDE AN OPINION ON WHETHER WE BELIEVE IT WAS SUCCESSFUL AND PROVIDE A RATIONALE FOR OUR SUMMATION A 1 THE PERFECT STORM FOR DISRUPTIVE INNOVATION: THE KULULA STORY: CONTEXT  From 1978, de-regulation of domestic airlines in US & UK, which set the scene for the launch of a range of low-cost airlines, such as RyanAir, EasyJet, Virgin Express et al. Post 9/11 – low-cost airlines continued to do well, due to their business model.  In 1999 in South Africa, the economy had weakened, the travel market had become price sensitive and there were 3 main players in the traditional domestic airline market: * SAA * British Airways Comair * Nationwide Air. Air travel was reserved for those that traveled for corporate business purposes as well as for the upper-middle class.  Gidon Novick, then an employee of British Airways Comair, spotted a potential gap in the market; the possibility of launching operating a low-cost, no-frills airline, modeled on the EasyJet formula. Before launching such an airline, there were a range of considerations that had to be taken into account and researched: - THE PRODUCT AND BRAND OFFERING: DISRUPTIVE INNOVATION WITHIN THE SA AIRLINE INDUSTRY – NEVER SEEN OR EXPERIENCED BEFORE: LOW, COST, NO FRILLS, CUSTOMER-CENTRIC, SERVICE ORIENTED, QUALITY AND SAFE, AIR TRAVEL – CREATING A MARKET WHERE THERE ONE DID NOT EXIST BEFORE Differentiated offering:  Low-cost [ not cheap], no frills, easy to book on-line [ tickets cannot be changed once booked], no pre-assigned seating, food and beverages sold on board – unnecessary costs of operations and business systems were stripped out of the traditional business model, leading to the ability to charge 40% less than conventional fllights.  The success and profitability of the airline was premised on maintaining a passenger load rate of 80% [ industry norm =60%], achieving at least 30% of bookings on-line and to ensure the lowest possible cost distribution. These were the MARKETING & BUSINESS OBJECTIVES OF THE BRAND. A 2 PROMOTIONAL STRATEGY - MAKING STRATEGY AND MARKETING STRATEGY FLY……. 3
  • The PROMOTIONAL STRATEGY IS where STRATEGY AND MARKETING STRATEGY meet and where it either flies….or stays grounded. The overall AIM of the MARKETING & COMMUNICATIONS STRATEGY was to create consumer AFFINITY with the brand – price is NEVER a source of sustainable competitive advantage. Whilst this new entrant would be AFFORDABLE – it could not ever be perceived as CHEAP. THE KULULA.COM VALUE TRIANGLE – BRAND CORE VALUE: “ SIMPLE VALUE” To give expression to a robust, sustainable PROMOTIONAL STRATEGY, the following elements need to be in place, powerful, creative and focused:  TARGET MARKET – CORRECT SEGMENTATION, IDENTIFICATION AND DESCRIPTION – UNDERSTAND WHO YOU ARE HAVING A CONVERSATION WITH and what their NEEDS are – even if they don’t know it yet.  FORMULATING THE MOST APPROPRIATE PROMOTIONAL MIX AND THE RIGHT MESSAGING TO MAKE YOUR MARKET SIT UP AND NOTICE….AND CARE: This is about finding the right balance between above-the-line, below-the-line and through-the-line channels to communicate the brand positioning statement and values – so as to creatve TOP-OF-MIND BRAND AWARENESS, VISIBILITY AND BRAND DESIRABILITY, DEMAND & UPTAKE – WHERE MARKETING MEETS THE MONEY AND IS MEASURED Taking the brand to market and driving sales – marketing, advertising and promotional ROI – bang for your buck. THE KULULA.COM VALUE TRIANGLE: BRAND CORE VALUE: “SIMPLE VALUE” 4
  • TARGET MARKET AND SEGMENTATION If a low-cost airline was going to be launched, it would be done within the BA Comair stable and so, it was firstly essential to ensure that the target market for the airline would not canniabilise on BA Comair’s passengers. It would also be vital to differentiate such a new airline brand very clearly from the traditonal domestic carriers. A report from McKinseys revealed that users of a low-cost airline would not defect from existing domestic airline brands; rather, they would be new entrants who are using road, bus and rail transport; this would in other words be a newly served market segment that would be created. The target market was defined as: The mass market, LSM 6+ [ travelers who use road, rail and bus transport – which cost 10% less than the average kulula.com oir travel offering], families and individuals, who were not dependent upon flexibillity and last-minute changes to flights, as well as small and medium businesses. THIS WAS A BRAND-NEW OFFERING, NEVER SEEN OR EXPERIENCED IN THE SOUTH AFRICAN SKIES BEFORE AND AIMED AT A MARKET SEGMENT WHO HAD NOT IMAGINED THAT THEY HAD THE WINGS TO FLY! UP UNTIL KULULA.COM ARRIVED – THEY WERE – SITTING DUCKS. [ in those buses, on trains and in cars…..] PROMOTIONAL STRATEGY: DISCUSSION AND CRITICAL EVALUATION THE BIG IDEA AND BRAND POSITIONING STATEMENT A small start-up agency, called MorrisJones&co was shortlisted during the process of pitching for the advertising and marketing account of the new low-cost airline. From the beginning, the agency and the client entered into a partnership relationship based on trust, respect, transparency and collaboration. This was to be the key to the success of the working relationship and of the launch of kulula.com – the first South African low-cost, no –frills airline. 5
  • Given that the target audience would be largely new entrants into air travel, MorrisJones&Co ideated the Super-Hero Concept, which became the foundation of the airline’s campaign. The premise was that everyone has a secret desire to be able to fly! [ And don’t we ALL?!] From this premise and Super-Hero concept, the positioning statement: “ NOW EVERYONE CAN FLY” flowed from what can be described as a brutally simple, yet creative advertising & marketing strategy: If anyone could fly, then ordinary people could become Super-Heroes! This premise very cleverly parodied the notion that the customer is always the hero or ‘ the customer is king.’ To fully differentiate the brand, it was decided to break with traditional airline naming conventions; it also had to convey the preferred distribution channel, which would be on-line/web-based booking. This is how Kulula, meaning ‘ easily’ in isiZulu was born – and the .com added, so as to indicate the distribution channel. “ NOW EVERYONE CAN FLY” LAUNCH: EXAMPLE OF OUTDOOR ADVERTISING – SUPER-HEROES CAN FLY 6
  • LAUNCH: EXAMPLE OF PRINT/PRESS ADVERTISING – NOW EVERYONE CAN FLY SUPER-HERO 7
  • DESIGN TAKEN THROUGH INTO ALL ELEMENTS OF THE BRAND – FROM USING AIRPLANES AS FLYING BILLBOARDS, TO CASUAL AND MORE COMFORTABLE FLIGHT ATTENDANT UNIFORMS, TO OUTDOOR, INTERACTIVE ACTIVATIONS AT AIRPORTS, BROCHURES, RADIO – THE ADVERTISING AND MARKETING CAMPAIGN BECAME PART OF THE DISTRIBUTION CHANNEL FOR THE BRAND – AND COULD BE FACTORED INTO THE OVERAL DISTRIBUTION COST FORMUALA – WITH ROI CALCULATED AND TRACKED A 3 PROMOTIONAL CAMPAIGN MorrisJones&Co made the determination that to reach the MASS market – ABOVE-THE-LINE CAMPAIGN presented the most cost-effective LAUNCH route – within the CONSTRAINED BUDGET. A UNIQUE campaign was required to cut through the clutter. Creatively, the agency and client took an unconventional approach – rather than the traditional AIRLINE type advertising campaigns, involving comfortable seats, smiling cabin attendants and great food – which does not reflect the kulula.com BRAND VALUE – “ SIMPLE VALUE” – decided to use OUTDOOR MEDIA to deliver the branded messages over a SUSTAINABLE PERIOD OF TIME with REGIONALISED MESSAGING. 8
  • MEDIA USED:  OUTDOOR BILLBOARDS – airports at IN and OUT destination centres – Johannesburg, Cape Town and later Durban – THIS FORMED THE BASIS OF AWARENESS BUILDING OTHER MEDIA: Weekend Press, Regional Radio, Cinema, web and limited television for Durban launch 3 PHASES: * LAUNCH: JULY – OCT 2001 * DBN LAUNCH: NOV 2001 – JAN 2002 * CAMPAIGN MAINTENANCE : FEB – JUNE A 4 CRITIQUE: DID THE KULULA.COM PROMOTIONAL STRATEGY WORK – WAS IT SUCCESSFUL AND HOW DO WE KNOW? RESULTS OF COMPLETE PROMOTIONAL STRATEGY OVER THE 3 PHASES: THE SUCCESS OF THE KULULA.COM PROMOTIONAL CAMPAIGN IS REFLECTED WITHIN THE FOLLOWING FACTORS:  YEAR ONE: 500 000 tickets sold at an average passenger load factor of 65% - capacity of available seats were tripled during the first year due to uptake and growth  The sales range of minimum – 75% and maximum – 85% load factors, multiplied the available capacity - EXCELLENT CREATION OF DEMAND – BEYOND EXPECTATIONS  ADSPEND was used STRATEGICALLY to increase ticket sales to the next level – effectively absorbing this cost into the distribution cost average  3 INCREASES IN PASSENGER LOADS co-incided with INCREASED adspend – by the 3rd increase, far less advertising spend was required- increase in capacity needed to be smaller and cumulative BRAND EQUITY was stronger  Distribution cost DROPPED DRAMATICALLY - 50% less than competitors – meaning that the cost of the sale and the cost of conversion and retention was considerably more favourable and profitable than the traditional domestic airlines  In testing EXPOSURE to the kulula.com advertising and via the measurements done after the campaigns, a SIGNIFICANT IMPROVEMENT in the perceptions of service among kulula.com passengers – including areas not covered by the advertising campaign – such as leg room, reliability and safety  The advertising itself became a STRONG DRIVER of ON-LINE BOOKINGS – with increased CURIOSITY ABOUT THE BRAND  The launch of kulula.com GREW THE LOCAL AIRLINE MARKET by 12% - which was equal to the capacity that the airline added to the market; the new offering, the focused market 9
  • segmentation and marketing, advertising and communications strategies, effectively created a new and unserved DEMAND within the airline travel market  WEB BOOKINGS accounted for 65% of sales – this exceeds the target set by 100%  IN ADDITION, R 3 million in press coverage was generated due to the focus on building strong relations with the press as well as by the anticipation value that the various campaign elements created  MorrisJones&Co and the client pulled every aspect of the brand essence through as an experience for the passenger and potential passenger, at every selected touchpoint THE MEASURABLE ACHIEVEMENTS OF THIS MODEST, BUT WELL-CONSTRUCTED AND INTEGRATED CAMPAIGN – SUPPORTED BY BOTH CLIENT, ORGANISATION AS THE LIVED BRAND AND AD AGENCY ARE REFLECTED WITHIN THE GRAPHS BELOW: 10
  • LOAD FACTOR RANGE – SURPASSING THE INDUSTRY AVERAGE OF 65% - YEAR ONE OF KULULA.COM ADVERTISING & MARKETING SPEND AMORTISED AS COMPONENT OF THE TOTAL DISTRIBUTION COST PER PASSENGER – EFFECTIVELY BECOMES A REVENUE CENTRE 11
  • B. ANALYSE THE RELATIONSHIP BETWEEN KULULA.COM AND THEIR ADVERTISING AGENCY: MORRISJONES&CO – WHAT DISTINGUISHES THS RELATIONSHIP FROM THE TRADITIONAL CLIENT/AGENCY MODEL? MorrisJones&Co were a small start-up advertising agency, comprised of unique and creative individuals who pitched on the kulula.com account – just waiting for THAT BIG BREAK. From the get-go, agency and client had a number of things in common – not the least of which is the fact that THEY WERE BOTH START-UP BUSINESSES, willing to invest fully into the ideation, creation and launch of this new, disruptive and innovative brand into the air travel market. During the pitch process, the creative director, Angel Jones, well known for her individuality and creativity, ideated the SUPER-HERO CONCEPT built upon the premise that EVERYONE ONE OF US HAS THE HIDDEN DESIRE TO FLY. From this BIG idea, flowed the positioning statement that differentiated the kulula.com brand - “NOW EVERYONE CAN FLY”. This was essentially central to the CUSTOMER/PASSENGER-CENTRICITY and SERVICE ETHIC OF SIMPLE, CONSISTENT VALUE that would underpin the kulula.com philosophy and core brand value – a PARODY ON THE NOTION THAT THE CUSTOMER IS KING. Together, Gidon Novick and MorrisJones&Co created the foundation of PASSION and ENTHUSIASM and ‘going beyond what was asked for’ trademark of the kulula.com brand. The agency’s THOROUGHNESS, DEPENDABILITY, and pulling the design and core brand values through to all elements of the organisation – including the aircrafts as moving billboards set the tone for the relationship between client and agency. This was most certainly NOT the typical client/agency relationship – where client would hand over his brand to an advertising agency rather begrudgingly and wait for a variety of creative executions with the expectation that he would be wasting money. This relationship was characterised by shared risk, bringing the DNA of what kulula.com would become into the experiential and lived experience of the agency – they were in fact an extension of the brand and business. Both kulula.com and MorrisJones&Co describe the relationship as being one that was characterised by MUTUAL TRUST and TRANSPARENCY from DAY 1 - “A MAGIC EXPERIENCE”. The agency took the account VERY seriously – as it was their ONLY account – they remained heavily invested in the process and this is evident when viewing the results and outcomes related to the mutual growth of both client and agency. The RISK of R 3 million budget and what needed to be achieved – meant that both client and agency determined that the only way that the campaign would yield the mutually beneficial results, was if it was BOLD, WOULD STAND OUT AND BE IN YOUR FACE. Moreover, that the campaigns have certainly been! 12
  • One could even contend that the personality of the agency co-developed with kulula.com. MorrisJones&Co are now an established agency with a basket of big brands – and their positioning speaks for itself: MorrisJones&Co: COLLABORATION, CONVERGENCE, CUSTOMISATION – KEY CONTRIBUTOR TO THE SUCCESS OF THE PARTNERSHIP AND ‘CO-OWNERSHIP’ OF THE KULULA.COM BRAND 13
  • C HOW DOES THE MARKETING OF AIRCRAFT DIFFER FROM MARKETING OF AIRLINES? Typical traditional airlines market their brands by showing visuals of comfortable chairs, smiling flight attendants, tasty-looking food and exotic destinations. This was most certainly not in line with the positioning statement and core value of kulula.com. Kulula.com instead, used their customers as the central focus and heroes of their marketing campaigns and used their AIRCRAFT very effectively, as giant flying and moving billboards and ambassadors for the irreverence and innovative nature of the brand. On a further conceptual basis, when one speaks about marketing an airline, a range of global airline brands come to mind – Lufthansa, Emirates and British Airways for instance. These are airline carriers who have become brands with their own unique consumer perceptual franchises and with strong brand affilliations within their target markets. When one speaks about the marketing of aircraft at a higher level of abstraction, one then automatically thinks about Boeing, which would seem to be the most dominant aircraft brand in respect of brand recall. One associates safety and a range of features with the various models and super-planes that have recently come onto the market. There is a certain level of comfort attached to knowing that you are being flown in a Boeing in the first place and then by a safe and reputable airline carrier brand. D IS THE KULULA.COM STRATEGY SUSTAINABLE – OUR RECOMMENDATIONS TO GIDON NOVICK, MARKETING DIRECTOR OF KULULA.COM IN TERMS OF ENSURING CONTINUED SUCCESS OF THE AIRLINE. Whilst kulula.com positioned itself as a low-cost, no frills airline, it has been very careful not to fall into the trap of being perceived as the ‘CHEAP’ airline. convenience. Their positioning offers value for money, efficient service and No airline or business that attempts to compete on low prices will sustain in the long term – and so from a basic strategic positioning, the brand strategy is most certainly sustainable. 14
  • However, THE SKY IS NOT THE LIMIT – in the longer term, given that kulula.com is in the business of simple, consistent, passenger-centric and convenient travel and other experiences, it would seem appropriate and strategically prudent to extend the range of SIMPLE VALUE offerings to other simple value offerings that make sense and speak to the target market. Services such as alliances with car rental companies, hotel groups, apartment rentals and other travel and experiential related services, would almost naturally emerge from the evolution of this brand. There are great opportunity to provide this novice airline passenger with a comprehensive experience – as a seamless experience and under the kulula.com on-line booking system. Continued focus on retention of the existing passenger base, excellence in service, consistency as well as keeping the brand ‘ fresh’ by feeding the near anticipation that has been created in the minds of consumers in terms of the creativity and boldness of the brand, will be central to the sustenance of the brand and strategy. As with all emerging brands and organisations, functioning in turbulent times, the brand will have to continue sensing both internally and externally to ensure that it is alert and alive to even the smallest shifts in the marketplace – it has to retain its edge and be able to respond in a nimble and responsive manner. E IS THE KULULA.COM PROMOTIONAL STRATEGY SUSTAINABLE – OUR RECOMMENDATIONS REGARDING THE RELATIONSHIP BETWEEN THE CLIENT AND ADVERTISING AGENCY: MORRISJONES&CO The results that were achieved using a very limited budget in creative and innovative ways; ensuring that the brand personality and experience were made real and evident at a multitude of touchpoints, would most certainly be a sustainable manner in which to continue. There is however the possibility that there will be other entrants into this new market that has been created. Both cllient and agency will no doubt remain alive to this possibility and will ensure that the brand retains its FIRST TO MARKET advantage. 15
  • There will be constant pressure on this brand to be innovative, creative and to have a certain amount of entertainment value when it communicates with its audience – and so this will place pressure on both client and agency to produce at the level of the launch and subsequent campaigns. As the business grows and economic and other circumstances within the PESTEL change and shift, there will have to be a collaborative and continuous relationship of growth and movement as the market demands it. The relationship between client and agency is nearly symbiotic, in that it appears that they are able to feed off one another from a creative as well as business perspective. If the agency is able to maintain its level of commitment and its intimate, trusting and transparent relationship with the client, as well as remaining invested in co-creating the growth and expansion of the kulula.com brand offering as a whole, there should be room for this mutually beneficial relationship to continue well into the future. However, the reality is of course that the world shifts, we live in a dynamically complex environment with change being one of the few constants – it is therefore near impossible to predict how long this relationship will endure. 16
  • Given the remarkable results that this relationship has yielded, we would contend that it would be sensible for Gidon Novick to engage at an even deeper level with this business partner and for the agency to immerse themselves further into the cllient’s business – so as to become a fully-fledged, long-term strategic partner. This kind of client/agency relationship is exceptional and unique – and should be stewarded as much as possible. CONCLUSION This case study and the story behind the rise and success of the partnership between kulula.com and their agency is one of those epic and exceptional tales. One cannot begin to do the entire journey justice. We remain in awe of what was achieved within the constraints and limitations. This provides us with a prime example of the power of collaboration, communication, passion, innovation, trust, boldness and creativity coming together – to take to the skies – and to fly to the moon. [ Which is not an impossibility given the daring of the kulula.com brand] 17
  • APPENDIX A: KULULA.COM MISSION: 2013 Our mission 1 safe and professional At no time is our dedication compromised. Our most important principle is "safety first". 2 the easiest around This means that not only can people fly with us; you can hire a car, get a room or book a chauffeur-driven cab to the airport. We'll always aim to provide the easiest way to book, the easiest way to pay, and above all, the easiest to afford. 3 simple We don’t complicate things. We don’t use high-and-mighty language or overly wordy descriptions. We get to the point and that’s that. 4 totally honest This means we tell it like it is. We're not shy of being straight and down-to-earth. There are no hidden costs. What you see is what you get. 5 great fun We help people lighten up. Smiles and jokes are free. We always want to be genuinely friendly and provide the right environment for our staff’s natural talent to shine. 6 inspirational Wherever possible, we provide our staff with the best opportunities to develop their skills, and take their abilities to new heights in the service of our customers. We are more than just an airline... we're an entire travel experience. Wherever our customers see the kulula.com brand, they can expect these values. 18
  • kulula.com ‘ NOW EVERYONE CAN FLY” PREPARED BY: AMANDA BRINKMANN For GROUP 4: EMBA 15.3: MARKETING MODULE 3 Henry Jonker Wilhelm Kühn Rachel Mathale Zinnia Molelo MANDISA MASHICILA-SEKGALAKANE
  • THE PROMOTIONAL STRATEGY…… HELPING THE STRATEGY AND MARKETING STRATEGY FLY…….OR STAY GROUNDED To give expression to a robust, sustainable PROMOTIONAL STRATEGY, the following elements need to be in place, powerful, creative and focused: TARGET MARKET – CORRECT SEGMENTATION, IDENTIFICATION AND DESCRIPTION – UNDERSTANDING EXACTLY WHO YOU ARE HAVING A CONVERSATION WITH & WHAT THEY NEED – EVEN THOUGH …in THIS case…. THEY DON’T KNOW IT YET…… FORMULATING THE MOST APPROPRIATE PROMOTIONAL MIX within a LIMITED BUDGET COUPLED WITH THE BIG IDEA – THE MESSAGE TO CAPTIVATE YOUR MARKET AND GET THEM INVOLVED: This is about finding the right balance between above-the-line, below-the-line & through-the-line channels to communicate the brand positioning statement and values – so as to create TOP-OF-MIND BRAND AWARENESS, VISIBILITY AND BRAND DESIRABILITY, DEMAND & UPTAKE – WHERE MARKETING MEETS THE MONEY AND IS MEASURED Taking the brand to market and driving sales – marketing, advertising and promotional ROI – BANG for you buck
  • THE CHALLENGE – DISRUPTIVE INNOVATION CREATING AND LAUNCHING A NEW BRAND, DIFFERENTIATED, PREVIOUSLY UNEXPERIENCED LOW-COST AIRLINE PRODUCT OFFERING INTO THE MARKET OF SITTING DUCKS……. ‘ NOW EVERYONE CAN FLY” BRAND CORE VALUE TRIANGLE “ SIMPLE VALUE” AT THE CENTRE OF THE BRAND PROPOSITION CUSTOMER AS THE HERO FRIENDLY, FUN, IRREVERANT, PROFESSIONAL SERVICE – AT ALL TOUCHPOINTS NO COMPROMISE ON SAFETY TIME AND CONVENIENCE – MAKE EVERYTHING AS EASY AND SEAMLESS AS POSSIBLE FOR THE CUSTOMER CONSISTENT SERVICE OFFERING – AFFORDABLE, LOW PRICING – BUT NOT CHEAP FOCUS ON AN EXCELLENT VALUE EXPERIENCE – THROUGHOUT THE DISTRIBUTION CHANNEL
  • If anyone could fly, then ordinary people could become Super-Heroes! This premise very cleverly parodied the notion that the customer is always the hero or ‘ the customer is king.’ SITUATIONAL CONTEXTUAL REALITIES & CONSTRAINTS • • • • • • • • • • • R 3 MILLION MARKETING/LAUNCH BUDGET ADVERTISING & MARKETING AS PART OF DISTRIBUTION CHANNEL MARKETING & BUSINESS OBJECTIVES: 80% PASSENGER LOAD - AGAINST 60% INDUSTRY AVERAGE 30%ON-LINE BOOKINGS – TO KEEP DISTRIBUTION COSTS CONTAINED CREATING TOP-OF-MIND BRAND AWARENESS AND CURIOSITY CREATING DEMAND & UPTAKE OF NEW, UNKNOWN, UNTESTED PRODUCT OFFERING IN WEAK ECONONY, WITH TRAVEL SPEND CURTAIL COMPLETELY NEW TRAVEL MARKET SEGMENT – ‘ THE SITTING DUCKS’ – DON’T KNOW YET THAT THEY WANT TO OR CAN FLY
  • Judging the success of the kulula.com PROMOTIONAL strategy – measuring RESULTS against the STRATEGIC and MARKETING OBJECTIVES  YEAR ONE: 500 000 tickets sold at an average passenger load factor of 65% - capacity of available seats were tripled during the first year due to uptake and growth  The sales range of minimum – 75% and maximum – 85% load factors, multiplied the available capacity - EXCELLENT CREATION OF DEMAND – BEYOND EXPECTATIONS  ADSPEND was used STRATEGICALLY to increase ticket sales to the next level – effectively absorbing this cost into the distribution cost average  3 INCREASES IN PASSENGER LOADS coincided with INCREASED ad spend – by the 3rd increase, far less advertising spend was required- increase in capacity needed to be smaller and cumulative BRAND EQUITY was stronger  Distribution cost DROPPED DRAMATICALLY - 50% less than competitors – meaning that the cost of the sale and the cost of conversion and retention was considerably more favourable and profitable than the traditional domestic airlines  In testing EXPOSURE to the kulula.com advertising and via the measurements done after the campaigns, a SIGNIFICANT IMPROVEMENT in the perceptions of service among kulula.com passengers – including areas not covered by the advertising campaign – such as leg room, reliability and safety  The advertising itself became a STRONG DRIVER of ON-LINE BOOKINGS – with increased CURIOSITY ABOUT THE BRAND  The launch of kulula.com GREW THE LOCAL AIRLINE MARKET by 12% - which was equal to the capacity that the airline added to the market; the new offering, the focused market segmentation and marketing, advertising and communications strategies, effectively created a new and unserved DEMAND within the airline travel market  WEB BOOKINGS accounted for 65% of sales – this exceeds the target set by 100%
  • Judging the success of the kulula.com PROMOTIONAL strategy – measuring RESULTS against the STRATEGIC and MARKETING OBJECTIVES……..  IN ADDITION, R 3 million in press coverage was generated due to the focus on building strong relations with the press as well as by the anticipation value that the various campaign elements created  MorrisJones&Co and the client pulled every aspect of the brand essence through as an experience for the passenger and potential passenger, at every selected touch point  THE MEASURABLE ACHIEVEMENTS OF THIS MODEST, BUT WELLCONSTRUCTED AND INTEGRATED CAMPAIGN – SUPPORTED BY BOTH CLIENT, ORGANISATION AS THE LIVED BRAND AND AD AGENCY ARE REFLECTED WITHIN THE GRAPHS THIS CAMPAIGN, ITS DARING AND CONCERTED IMPLEMENTATION LAUNCHED KULULA.COM AS THE FIRST ENTRANT INTO THE VALUE-FOR-MONEY, NO FRILLS AIR TRAVEL MARKET – MANY HAVE COME AND GONE – KULULA.COM IS STILL GOING STRONG
  • DIRECT CORRELATION BETWEEN ADVERTISING & PROMOTIONAL SPEND AND REACHING OF SALES, MARKETING AND STRATEGIC BUSINESS OBJECTIVES
  • DISTRIBUTION COST AT 50% LESS THEN COMPETITORS ON AVERAGE – WITH PROMOTIONAL SPEND FACTORED IN AS PART OF THE COST PER PASSENGER
  • ACHIEVING LOAD FACTORS OF BETWEEN 75% & 85% AGAINST INDUSTRY NORM OF 65% - AND WITH KULULA.COM TRIPLING IN ESTIMATED CAPACITY IN YEAR ONE
  • ADVERTISING RECALL AND BRAND AFFILIATION: KULULA.COM PASSENGERS AGAINST WEIGHTED AVERAGE – BRAND AFFINITY, AWARENESS AND ATTACHMENT ESTABLISHED IN YEAR ONE – ONE OF THE MOST TALKED-ABOUT BRANDS DURING AND AFTER LAUNCH
  • VISIONARY CLIENT – GIDON NOVICK – MEETS ANGEL JONES – CREATIVE DOYENNE – THE MEETING OF TWO EXTRAORDINARY FORCES WITHIN THE STRATOSPHERE TWO EXTRAORDINARY ENTITIES MEETING AS ONE – “ A MAGIC EXPERIENCE” OF COLLABORATION, TRUST, CO-CREATION IMMERSION AND TRANSPARENCY A RELATIONSHIP DESTINED FOR SUCCESS
  • THE SKY IS NOT THE LIMIT - SUSTAINING THE BRAND AND THE STRATEGY…. EXTENDING THE BRAND OFFERING OF SIMPLE VALUE TO INCLUDE THE FULL PASSENGER LIFESTYLE EXPERIENCE – A GALAXY OF POSSIBILITIES INTO THE FUTURE
  • CONCLUDING THOUGHTS…..  This case study and the story behind the rise and success of the partnership between kulula.com and their agency is one of those epic and exceptional tales.  One cannot begin to do the entire journey justice.  We remain in awe of what was achieved within the constraints and limitations.  This provides us with a prime example of the power of collaboration, communication, passion, innovation, trust, boldness and creativity coming together – to take to the skies – and to fly to the moon.  [ Which is not an impossibility given the daring of the kulula.com brand] kulula.space…..the next frontier?
  • Wits Business School WBS-2003-4(a) kulula.com: Now Anyone Can Fly (Abridged) It was January 2003, 17 months since kulula.com had taken to the skies for the first time. This lowcost airline had survived almost two years in an extremely tough industry and had been very successful since its inaugural flight on 1 August 2001. Gidon Novick, kulula.com's executive manager of marketing, was involved in its unusual, but highly successful communication strategy from day one and maintained a close relationship with the advertising agency, morrisjones&co. But despite its success, Novick did not feel comfortable. He realised that the business might soon face a problem – the possibility that the hype in the market had declined to a certain extent or could do so in the near future. He knew that in the fiercely competitive airline industry one could never sit back and relax. It was time to rethink kulula.com's communications strategy. Novick could not afford to miss a single significant fact in establishing whether the current formula was sustainable or not. There was the lurking threat of other competitors entering the market – such as national carrier SAA with its own low-cost airline. Even the current relationship with kulula.com’s advertising agency needed some reconsideration. Background on the Low-Cost Airline Industry The deregulation of the domestic airline industry in the US in 1978 and in the UK in 1979 opened up the market for the entry of other competitors, such as low-cost airlines, into a domain that had had previously been exclusive to government-subsidised national flag-carriers.1 Despite the seemingly crowded market in Europe, discount airlines such as easyJet, Ryanair, Buzz and Virgin Express had all grown stronger and had placed Europe's traditional flag carriers under severe threat.2 1 Up until 1978 the global airline industry had been controlled mainly by national governments that owned or subsidised the so-called national flag-carriers, which carried the flag of their nation on the tail of the aircraft. 2 U Binggeli and L Pompeo, ‘Hyped Hopes for Europe's Low-Cost Airlines’, The McKinsey Quarterly, No. 4, 2002, available www. mckinseyquarterly.com (accessed 15 November 2002). This case was prepared by Research Associate, Stephanie Townsend, with Senior Lecturer Geoff Bick. The case is not intended to demonstrate effective or ineffective handling of an administrative situation; it is intended for classroom discussion only. Copyright ©2003 Graduate School of Business Administration, University of the Witwatersrand. No part of this publication may be reproduced in any format - electronic, photocopied, or otherwise - without consent from Wits Business School. To request permission, apply to: The Case Centre, Wits Business School, PO Box 98, Wits 2050, South Africa, or e-mail chetty.l@wbs.wits.ac.za.
  • kulula.com: Now Anyone Can Fly At the time of deregulation in the US, the major airlines had also underestimated the potential of the low-cost airlines. The low-cost airline industry in the US had shown excellent growth, with Southwest Airlines being the market leader. Others included JetBlue Airways, American Trans Air, Air Tran, and Spirit Airlines.3 These airlines together accounted for some 30% of the US domestic air travel market.4 The terrorist attacks on the World Trade Centre on 11 September 2001 left many of the world's already ailing airlines in a state of crisis, with Swissair, Belgium's Sabena, Australia’s Ansett and US Airways going bankrupt. In comparison however, the low-cost carriers did very well after the September 11 attacks.5 The operations strategy of the low-cost carriers was simple: they used secondary airports that had lower airport fees, and their aircraft were of a single type. They had no business class, no free refreshments, no frequent-flyer programmes, no connecting flights, and no possibility of rebooking to other airlines. In addition, direct bookings were predominantly conducted through the Internet. By December 2002 domestic airline operations in South Africa were primarily divided among four competitors: SAA; British Airways Comair with its local BA franchise; its no-frills arm, kulula.com; and the independent operator, Nationwide Airlines. Intensive Air, another low-cost airline, became operational in 2001 but liquidated in 2002. Background on kulula.com Commercial Air Services (Pty) Ltd (Comair) operated as South Africa's first private airline since 14 July 1946. On 27 October 1996 a British Airways franchise agreement came into effect and Comair became known as British Airways Comair (BA). Comair remained a South African controlled company and in 1998 was listed on the Johannesburg Securities Exchange (JSE). In 1999 the airline realised that there was a growing need for affordable air travel as the market had become seriously price sensitive. The economy had weakened at the time and travelling expenses had been cut.6 This realisation led to the launch of kulula.com in July 2001 as a separately branded Comair initiative: a South African low-cost, no-frills airline modelled on the successful European low-cost airline, easyJet. Kulula.com offered return flights between Johannesburg and Cape Town for as little as R800, three times a day, and received 2 000 bookings on its first day of operation. The product offering was simple: easy online booking directly with the airline and affordable fares. At the same time, frills were kept to a minimum: tickets could not be changed once they had been purchased7; there was no pre-assigned seating8, frequent flyer programme or business-class; and food and drink were sold on board rather than distributed for free.9 By stripping costs out of kulula.com's operations and business systems, the airline was able to offer up to a 40% discount on a conventional airline ticket. Research had found strong evidence to suggest that independent players did better in the low-cost segment because they were not bogged down by the systems and culture of the full-service airline. 3 F Brassington and S Petitt, Principles of Marketing (2nd ed), Prentice Hall, London, p 881. Ibid. 5 J Fletcher, 'Cheap Fares Forever?', Time, 3 February 2002, p. 62-63. 6 Interview with Gidon Novick, Comair: executive manager: marketing, 10 October 2002. 7 Policy changed in January 2003. 8 Changed in March 2003. 9 Taken (with minor adjustments) from: C Jowell, kulula.case: How kulula.com Exercised Real Marketing Muscle, Entry document for the annual Tusk awards, sponsored by the Marketing Federation of Southern Africa, 2002. 4 2
  • kulula.com: Now Anyone Can Fly So, if kulula.com were to succeed it would had to make the most of the benefits of belonging to the Comair group but also transform its business model.10 Several local and global factors prevented kulula.com from following a typical overseas model. The threat of competition was one of these factors. There were also structural difficulties, including the fact that load factors11 needed to be consistently high for kulula.com to remain profitable. Other constraining factors were the fact that kulula.com was in the same stable as Comair. Secondary airports were also not as available or as well equipped to deal with the volumes of lowcost passengers as their overseas counterparts. In addition, there was reduced adspend (advertising budget) available to encourage direct sales so that costs could be kept to a minimum. This meant that the low-cost model's marketing and advertising had to deliver greater response volumes with fewer resources.12 To deal with these constraints, the marketing objectives were to establish the airline profitably, to maintain passenger load factors of 80% (compared with the industry average of 60%), and to achieve at least 30% bookings online to ensure low-cost distribution. Marketing Strategy13 If you feel 100% comfortable about your communication strategy, it probably is a good one, but not a great one – Colin Jowell, strategic planning director: morrisjones&co Morrisjones&co, a small advertising agency (originally M&C Saatchi SA), had been looking for an account that would give it the break it so desperately needed. Consisting of only five young people, the company was bare-boned when it was short-listed for kulula.com's account.14 While brainstorming ideas for the proposal the agency wanted to put to kulula.com, creative director Angel Jones came up with the superhero concept that was to form the foundation of the airline’s advertising campaign. It was premised on the idea that everyone had a hidden desire to fly. With the positioning statement, 'Now Anyone can fly', Jones developed what she called a "brutally simple" creative route: if anyone could fly, this meant that ordinary people could become superheroes (in ad-land at least). The idea, therefore, was to show as many types of ordinary South Africans as possible, dressed as the superheroes they could now become with kulula.com. It was a tongue-in-cheek dramatisation of the philosophy that the customer was the hero (see Exhibits 1, 2 and 3 for examples of advertisements.) Once this main idea was in place, the rest came fairly easily. Adamant that the corporate colours should be bold, the agency team considered colours like orange, until a bright, neon green eventually emerged. The bright green was also reflected in the spandex costumes of the superheroes in all the proposed advertisements. Passion and enthusiasm became a trademark of the company. Jowell reckoned that the company’s “going beyond what was asked for" attitude might certainly have helped morrisjones&co to win the account, but that the very detailed turnkey solution it offered, covering literally everything from uniforms to signage, also played a big part. This thoroughness, he said, signalled that 10 Jowell, C. kulula.case: How kulula.com Exercised Real Marketing Muscle, op cit. ‘Load factor’ refers to the proportion of seats sold in relation to the total number available. 12 Taken from: Jowell, C. kulula.case: How kulula.com Exercised Real Marketing Muscle, op cit. 13 Taken from (with minor adjustments): C Jowell, Kulula.case: How Kulula.com Exercised Real Marketing Muscle, op cit. 14 Based on an interview with Colin Jowell, 4 March 2003. 11 3
  • kulula.com: Now Anyone Can Fly morrisjones&co was dependable, and set the foundation for good relations between the two companies. Both kulula.com and morrisjones&co held the view that the key to success was the relationship between the company and the agency. Mutual trust and transparency existed from day one of the relationship – so much so that Jowell described the relationship as a "magic experience".15 The agency took kulula.com's marketing campaign very seriously (Jowell jokingly remarked that it had to, as kulula.com was its only account at the time) and kept a close watch on every development. It was a risky business with a relatively small budget of R3 million, but their view was always that "if it feels safe, it may be that people won't notice it at all, which is much more risky. If it is bold and in your face, it will stand out".16 Positioning and Branding The overall aim of the marketing and communications strategy was to create strong consumer affinity with the brand. Both morrisjones&co and kulula.com knew that price was not a source of sustainable competitive advantage. They therefore developed the following value triangle for the brand, with ‘simple value’ as the core: Figure 1 kulula.com’s Value Triangle COST Consistently low prices Always good value QUALITY • Safety • Friendly service • Customer is the hero BRAND CORE SIMPLE VALUE TIME Take no more of our customers' time than is absolutely necessary The search for a name for the airline that could encapsulate value, simplicity and ease was not a simple matter. 'Comair Lite' was Comair's original suggestion, but morrisjones&co felt a different name was needed to create a separate identity, and preferred one that broke naming conventions such as 'air', 'airways' or countries of origin, to emphasise its difference. In addition, the name had to carry information about the distribution channels, namely online sales. The end result was 'kulula' – which translates as 'easily' in Zulu. At first there were concerns that it would be difficult to pronounce, but the name 'kulula' prevailed in the end, with only one last hurdle to be removed: a small bus transport company had already registered the trade name 'kulu'. Comair subsequently offered to buy the name, the company agreed, and kulula.com was born. While the policy was never deliberately ethnic or empowering, the implications of the name were welcome. 15 16 Interview with Colin Jowell, 9 December 2002 Ibid. 4
  • kulula.com: Now Anyone Can Fly In order to create a positioning statement for the brand, 'simple value' was translated into a consumer benefit – ‘Now anyone can fly’. (See positioning equation below.) Figure 2 kulula.com’s Positioning Equation CONSUMER TRUTH More people would fly if they could afford the time and money BRAND TRUTH SIMPLE VALUE = less time and money NOW ANYONE CAN POSITIONING STATEMENT Pricing Strategy As a low-cost airline, kulula.com had a strong commitment to passing on cost advantages to its customers. In addition, at least 30% of any given flight would be available at the advertised lowest price, without restriction. This approach was brand new, as competitors, although able to match certain prices, made available only a very limited number of lowest-price fares. The kulula.com pricing model was deliberately simpler, so that the customer would learn that the brand offered consistent value and lived up to its promise of 'simple value'. For this reason there were limited price promotions and the airline had a policy of never offering discounts so as to avoid creating the impression that it could cut costs even more if it chose to. Product Innovation: Within Low-Cost Constraints Every area of the product offering was examined for strategies that could make the kulula.com experience unique, easier and simpler for customers, at no additional cost to the business. One of these strategies was to offer special benefits to flyers rather than awarding costly points or discounts. The first of these benefits was kulula.com/cars, where simple and competitive rates on car rental were offered through a partnership with the rental company, Imperial. Branded service delivery was another important strategy. Kulula.com’s staff uniforms were designed for greater comfort and improved functionality, and reflected more open and casual brand values. Staff were also trained in how to deliver service that was not just good, but also appropriate to the brand and the humour associated with it. Alternative Market Segmentation Instead of the traditional segmentation model, kulula.com looked for a new way to segment its market. While the model below was applied in some way at Comair, it did not adequately define the segment that kulula.com sought. 5
  • kulula.com: Now Anyone Can Fly Figure 3 Traditional Segmentation Model Purpose of the Flight Business High Leisure • Frequency of Flying Low The model also helped define how kulula.com would differ from the BA Comair service. New segmentation was clearly required if kulula.com was to target correctly and avoid cannibalising Comair’s market.17 A McKinsey survey also revealed that most passengers who flew with low-cost airlines were not defectors from the incumbents, but rather that lower prices encouraged people to fly when they would otherwise have travelled by road, by rail, or not at all.18 Key marketing dimensions that kulula.com considered were: who was responsible for paying for the flight; passengers’ flexibility; passengers’ expectations about comfort; and the purpose of the flight. From an analysis of these dimensions, it was easy to see that kulula.com suited individual/family payers better, as they had a minimal need for flexibility (although kulula.com later introduced a facility to exchange tickets). In addition, while the purpose of the flight could be business or personal, business people who flew kulula.com would be more likely to be from small and medium enterprises (SMEs) than employees of large corporates. The dimensions were added to an income filter (LSM 6+).19 At these income levels people start utilising bus transport for long distances and, given that the bus fares on the same routes were only 10% lower at kulula.com’s launch, these customers were, for the first time, included in an airline’s target market. This identification of an additional target market influenced morrisjones&co’s messaging, media choices and product development in kulula.com’s first year of operation. Morrisjones&co found that the key differentiator in the past (whether the flight was for the purpose of business or leisure) had little bearing on the choice of airline defined by the new segmentation, namely bus travellers. Advertising and Promotion Morrisjones&co used a number of key vehicles to promote the airline: above the line media20 to reach the mass audience required; below the line elements21 to maximise visibility and optimise the budget; and public relations and events. Morrisjones&co saw this kind of direct promotion as vital, 17 ‘Cannibalism’ in this context refers to the threat of stealing market share from the parent company. U Binggeli and L Pompeo, ‘Hyped Hopes for Europe's Low-Cost Airlines’, op cit. 19 The South African Advertising Research Foundation (SAARF) Living Standards Measure (LSM) divides the South African population into ten LSM groups, 10 (highest) to 1 (lowest). The LSM segments the market according to its living standards, using criteria such as degree of urbanisation and ownership of cars and major appliances. 20 Traditionally defined as advertising on radio, TV, printed media and outdoors. Banner advertising, although sometimes placed in a category of its own, was regarded as above the line advertising by morrisjones&co. 21 Traditionally defined as advertising by direct mail (post, e-mail, SMS, etc), point of sale advertising, events, etc. 18 6
  • kulula.com: Now Anyone Can Fly because kulula.com planned to make use of alternative distribution channels. Traditionally, travel agents had been primarily responsible for distributing of tickets, and customers did not often make use of the web. Advertising and communication spending would therefore act as a substitute distribution cost and had a few key objectives. The first of these was to drive top-of-mind awareness. Research had found that people’s desire to travel was related more to their external needs than to a specific lowprice special. Top-of-mind awareness of the brand was thus vital, because kulula.com could never be sure when a person would enter the buying cycle. The second objective was to build brand security and trust. There was always a concern that the meaning of 'value' would be transposed into meaning 'cheap'. In order to counter these impressions, the agency constantly promoted the airline's high production values. The third objective was to capitalise on times when people would be more predisposed to fly, such as during school holidays and on Valentine's Day. Implementation and Tactics Because of the large audience size, morrisjones&co chose above-the-line media as the most costeffective launch route. But within the constraints of the launch budget, a particularly unique campaign was required to cut through the clutter. Conventional airline advertising showed a selection of common images: comfortable seats, great food, smiling cabin attendants or exotic destinations. Kulula.com believed that none of these would reflect the brand values implied in 'simple value'. The foundation of the campaign was outdoor advertising. Kulula.com chose this medium for its ability to deliver a branded message over a sustainable period of time with a regional focus. Outdoor billboards at airports and in and around the destination centres (Johannesburg, Cape Town and later Durban) were the basis of awareness building. Other media included the weekend press, regional radio, cinema and the web, and limited TV coverage with the Durban launch. The media campaign had three phases, the airline launch (July 2001 - October 2001), the Durban launch (November 2001 - January 2002) and campaign maintenance (February 2002 - June 2002). To maximise the budget, the theme for the above the line campaign was carried into all elements of service delivery and design. Every last detail, down to the call centre holding tune, was carefully crafted. The positioning line was written on all kulula.com airplanes to make them into flying billboards and airport kiosks and interactive (Internet) displays, brochures and timetables all carried the message that the airline wanted to drive home – now anyone can fly. Communication Results22 Comair stated in its 2002 Annual Report that domestic air travel had been characterised by overcapacity, aggressive pricing and flat passenger demand in traditional airline markets. It noted, however, that with kulula.com attracting a new travel market, Comair had nevertheless performed well, and that the combined British Airways and kulula.com brands had achieved improved domestic market share.23 22 23 Taken from C Jowell, kulula.case: How kulula.com Exercised Real Marketing Muscle, op cit. Comair Ltd, Annual Report, 6 June 2002. 7
  • kulula.com: Now Anyone Can Fly The success of kulula.com’s communication strategy was reflected in the following factors: • in the first year of operation, the airline sold 500 000 tickets. Load factors remained consistently above the industry average of 65%, while capacity (available seats) tripled. The sales range (in which the minimum and maximum monthly load factors experienced – 75% and 85% – were multiplied by available capacity) illustrated that the marketing efforts had achieved their objective of creating excellent demand for the capacity available (see Exhibit 4); • advertising spend was used strategically to increase ticket sales to the next level (effectively making it a distribution cost). There had been three significant increases in passenger numbers since the launch and these all coincided with increased advertising spend. In the case of the third increase of capacity, less advertising spend was needed, since the capacity increase was smaller and the cumulative brand equity was stronger (see Exhibit 5); • distribution costs had dropped dramatically. Comparing the average kulula.com case to the lowest traditional case scenario for Cape Town based on the 7% commission paid to agents on lowest fares available (which accounted for the bulk of the volume), its distribution costs measured over 50% less than those of its competitors (see Exhibit 6); and • exposure to kulula.com’s advertising had significantly improved perceptions of service among kulula.com's own passengers, even if this related to topics not covered directly by the advertising, such as leg room, reliability and safety. Moreover, of all airline users, kulula.com passengers had the highest recall of their airline's advertising. Morrisjones&co argued that this demonstrated that the advertising itself was a strong driver of airline choice. Kulula.com’s advertising also scored well (see Exhibit 7) in increasing curiosity about the brand, providing information and improving perceptions of safety. Since the launch the local airline market had grown by 12% – roughly equal to the capacity that kulula.com had added to the market. Web bookings accounted for 65% of sales (its 'look to book' ratio being 20%), exceeding the target by more than 100%. Kulula.com had also received additional press coverage to the value of R3 million over the launch period, as a result of good press relations. Conclusion If we are forced to make an emergency landing on water, all superheroes who can swim please exit on the left-hand side of the plane. All passengers who can't, thank you for flying kulula.com – kulula.com cabin attendant24 While South Africans had appreciated the use of humour in this period so characterised by increased crime, Novick still struggled with some issues: one of them being the sustainability of the airline’s unconventional approach to marketing and customer service. Kulula.com and morrisjones&co were well aware of the fact that not everybody embraced its advertising campaign. There were complaints from the public from time to time, but the excellent historic booking rates spoke for themselves and the strategy remained very much in its original format. Some questions, however, still remained. Would the marketing strategy still be appropriate or would certain aspects of it need to be modified as kulula.com became more established and the macro and competitive environment changed? Alternatively, even if the strategy was still appropriate, would the communication campaign need an overhaul, particularly in its creative execution? The possibility remained that the green image and irreverent, humorous advertising campaign might become trite or, even worse, obsolete. How could kulula.com ensure that it kept flying high? 24 Author Unknown, ‘Kulula is out of Frills not out of Humour’, Business Report, 6 June 2002, available www.busrep.co.za, accessed 20 November 2002. 8
  • kulula.com: Now Anyone Can Fly Exhibit 1 Billboard Advertisement Source: Reprinted with the permission of Comair Limited and morrisjones&co. 9
  • kulula.com: Now Anyone Can Fly Exhibit 2 Examples of Launch: Outdoor Advertising Source: Reprinted with the permission of Comair Limited and morrisjones&co. Exhibit 3 Example of Launch: Press Adverts Source: Reprinted with the permission of Comair Limited and morrisjones&co. 10
  • kulula.com: Now Anyone Can Fly Exhibit 4 Sales Range (Capacity x Min/Max Monthly Load Factors Experienced) 60000 50000 40000 75% Load Minimum 30000 85% Load Maximum 20000 10000 0 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Source: Reprinted with the permission of Comair Limited and morrisjones&co. Exhibit 5 Advertising Spend vs Sales 60000 R 1,200,000 50000 R 1,000,000 40000 R 800,000 30000 R 600,000 20000 R 400,000 10000 R 200,000 0 R 0 Jul-01 Aug-01 Sep-01 O ct-01 Nov -01 Dec-01 Jan-02 Feb-02 M ar-02 Apr-02 M ay-02 Jun-02 75% Load M inim um 85% Load M axim um ADSPEND Source: Reprinted with the permission of Comair Limited and morrisjones&co. 11
  • kulula.com: Now Anyone Can Fly Exhibit 6 Comparison of Distribution Costs R 35 R 30 R 25 R 20 R 15 R 10 R5 R0 kulula.com: average* Tradional equivalent: lowest cost** scenario for Durban Tradional equivalent: lowest cost** scenario for Cape Town * kulula.com average: includes adspend per sector (regardless of Cape Town or Durban), and all sector commissions (R25 per sector) averaged across all tickets sold. ** lowest cost scenario = 7% commission to agent on lowest fares available (R280 Durban, R450 Cape Town) and excludes adspend Source: Reprinted with the permission of Comair Limited and morrisjones&co. Exhibit 7: Recall of Advertising - How did Consumers React? Recall of Advertising Nationwide kulula.com flyers flyers SAA flyers Weighted Average BA flyers 5.0 4.0 3.0 4.3 4.1 3.0 3.2 3.2 3.3 3.0 3.5 3.2 4.1 4.0 3.5 3.2 2.8 2.9 3.2 2.7 3.1 3.0 3.9 3.2 3.1 3.2 3.2 2.5 2.0 1.0 Made you like them Curious facts/info kulula.com advertising …….. want to fly secure to fly Source: bi5 Resources. Reprinted with the permission of Comair Limited and morrisjones&co. 12