Virgin Blue vs. Jetstar: Comparative Analysis

Executive Summary

Brand equity provides the basis of the success or failure of brands. So to measure the success or failure of brands it is imperative to gain a fair understanding of how the brands were made and what are the bases of the brands. Brands are important in marketing strategy as they provide a story to the product/service which personifies the product and makes customers connect to it. This identification of the brand by customer’s shows how popular the brand is and/or what images of the brand are known to the customers. A brand’s success or failure also depends on the customer’s understanding of the brand offerings which is called brand awareness (Keller, 2008). The failure or success of a brand depends on its brand equity which can be measured following a customer centric approach devised by Keller (1993). The customer centric approach believes that the brand exists in the customer’s mind in the form of knowledge image and awareness. These need to be exploited to help the brand become successful.

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This paper studies the cases of Virgin Blue and Jetstar to understand the brand equity of the existing brands. The study is primarily based on secondary research. The background study into the airline industry in Australia divulge that the competition in the strong, with the airline carriers having power to increase the market for their operations.

The case study analysis is undertaken with two Australian airlines: Virgin Blue and Jetstar. The market segments that the two companies cater to are low cost leisure travellers. But recently Virgin Blue has undergone a brand image change with extending its services to the business class passengers by providing an extended range of services. Following Virgin Blue, Jetstar too expanded their brand offerings. But the former was successful in attracting the customer targeted by the latter was not. The reason was in the lack of transforming the brand image and awareness of the Jetstar. Further, Jetstar aped the strategy of Virgin blue and followed the competitor’s strategy instead of looking into its core competency. This created a mismatch in the current brand image and the desired image.

The research showed that Virgin Blue was expanding more into the domestic market with penetrating further by targeting the business travellers while Jetstar was expanding internationally. Given this background a brand map for both the airlines was devised which helped us identify the core images or awareness that the customers have regarding the brand. This analysis showed that Jetstar created lesser brand images than Virgin Blue. A further analysis into the brand equity of the product was done with the help of the customer based brand equity model. This also showed that Jetstar was a weaker brand and recently has undergone an image change. Here it was found the offering of Jetstar did not match with the branding strategy which made its operations inefficient and increased customer dissatisfaction with the airline.

Then we provided Jetstar some recommendations into the area of branding which would help the company to refresh its present image. For this the company has been suggested to go back to its original strategy of low cist and no frill with only a single class. Further there seems to be no basis for loyalty program which increases customer expectations delivering nothing. This diminishes the customer expectation into dissatisfaction. So a revamping of the brand image and awareness of Jetstar is immediately required to make the brand gain back its competitiveness.

Introduction

Branding has gained much attention from both the corporate and the academia (Keller, 1993). Brand equity helps a brand to gain its presence in the market and it provides the marketing edge which uniquely distinguishes the brand from other products. The interest in brand equity has been twofold: first is to identify the value of the brand for accounting purpose, while the second reason is based on strategic intent of the company to improve productivity. The first motivation to study brand equity helps in ascertaining the value for accounting, merger and acquisition purposes, or disinvestment purposes. While the latter motivation helps in understand the strategic marketing mix that need to be used to have better tactical decision making process.

A brand is a form of discursive story telling that confers the quality of the product or service (Klaus & Maklan, 2007). It can be defined as “a name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors” (Kotler & Keller, 2006, p.256) So the importance of brand lies in creating awareness, market, image, trust, and reputation to ensure future cash flow (Kapferer, 2003). Some researchers argue that brand is what is held in the mind of the customer and cannot be defined through animate objects or signs (Noble, 2006). They are the total experience which the customer undergoes while experiencing the product/service. So brand is important to make presence known in the market.

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Today’s price driven competition has made brands a less important factors for customers (Aaker, 2003). Brand management is important to make the product which is similar in nature different or rather there is perceived difference. The gain of credibility in brands also helps in developing a customer base as long as the offering is relevant to the customer need (Aaker, 2003). The companies who aim to become the market leaders have to provide secondary branding to mark their position even more credible and differentiate their product/service from others. So a brand needs to be created to succeed in the market.

The goal of this paper is to assists managers and researchers who are interested in various aspects of brand equity. This paper aims to concentrate on the second part of the image building process where companies use brand equity as a strategy to differentiate their product/service in a highly competitive market. This paper ascertains what the edges are that branding gives to the companies to differentiate their products and make their product the market leader. This paper is a case study analysis of the branding strategy of Jetstar and Virgin Blue in the Australian market. The paper is based on understanding the segmenting, targeting, and positioning of both the brands and compares them.

The next section will concentrate on the branding strategies that the companies have adopted and analyze both of them. Then the paper will concentrate on ascertaining the target market the companies have tried to capture and the competitor reactions to their strategies. The main questions that this analysis of Jetstar and Virgin Blue tries to answer two questions: (1) how brand equity is created trough brand building process, and (2) what strategies can make a weak brand stronger? The methodology being a case study analysis will be a qualitative research. Data will be collected from secondary sources and the analysis will be based on theories of brand management and branding strategy. So the paper will show how brand equity for Jetstar and Virgin Blue can be identified. Then through secondary analysis and use of brand equity theory, the paper will ascertain the gaps in the desired and mediated brand image of the company and the nature of the gap. Then the paper will also identity the weaker brand of the two and reckoned means to increase the brand equity of the brand.

Competitor Analysis

The Australian airline industry, especially the passenger travel industry has three key players: Qantas, Singapore airlines and Virgin Blue. The industry grew at an annual CAGR of 6.9 percent in 2002-08 (Datamonitor, 2007). The domestic segment of the industry is highly successful and is predicted to grow at an average rate of 10.3 percent till 2010 (Datamonitor, 2007). Domestic share of the industry provides more than 80 percent of the revenue (Datamonitor, 2007).

The competitor analysis is done by ascertaining the industry’s competitive situation. Porter’s five forces are used to analyze the industry situation in Australia (Porter, 2008). According to this theory, there are five competitive forces which are at work and shape competition (Porter, 2008). The forces are “threat to entry, bargaining power of the customers, bargaining power of the suppliers, threat of substitute products or services” (Porter, 2008, p.80). The market is characterized by strong supplier power due to the duopoly that Airbus and Airbus enjoys. The market in Australia has been decentralized to a certain extent which makes the market attractive to new entrants. The main players in the market are the airline operators and the leisure and business travellers are the main buyers. Due to the presence of large number of individual buyers decreases the buyer’s power, as because the airline loses only marginally when it loses one customer.

As there exists no switching cost for customers to leave one seller and move on to other, customers enjoy the freedom of accepting the best deal. But the demand for airline services in Australia is highly price sensitive as customers always look for the lowest cost ticket for their journey (Datamonitor, 2007). Recently with the introduction of online booking sites, the buyers’ power has become stronger as they have been provided with the option of comparing the airfares, flight times, and number of stops. The main substitutes of air travel are roadways, railways and marine. All forms of substitute travelling are time consuming and expensive, especially for domestic travel. So the industry is competitive and has intense completion in the domestic market. But the price sensitivity of the buyers remains a concern. This is because “Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly from an industry to its customers.” (Porter, 2008, p.85)

The competitive review of the industry shows that the airline operators in the Australian airlines industry are the main players. There are three airline operators in the market viz. Qantas Airways, Singapore Airlines and Virgin Blue. The Qantas airways are an Australian airline company, which operates both I the international and the domestic market. They also offer sale of holiday tour packages. Qantas has four business divisions: Qantas, Qantas holidays, Jetstar and Qantas flight catering (Datamonitor, 2007). For our research, we will concentrate primarily on Jetstar.

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Jetstar was started in 2004 as a low cost no-frills airline in Australian domestic market (Datamonitor, 2007). The main strategy to drive their price strategy, Jetstar aimed at efficient aircraft utilization, and turnaround time. They also insisted upon internet sales which comprised of 90 percent of their total sales of tickets (Datamonitor, 2007). Jetstar’s low cost offerings opened up a new road for the domestic leisure traveler in the country. But in 2005, Jetstar still maintained their low prices, but offered added services like meals and entertainment on board to differentiate (Dabkowski, 2005). This was done to attract business travelers.

Virgin Blue was introduced in 2000 as a low cost airline in Australia. The Virgin Blue has the brand name of the Virgin Group of companies known for the flamboyant British managing director of the group Richard Branson. In 2007, Virgin Blue completely changed its image to transform itself from a low cost carrier to a “new world carrier” positioning (Azhar, 2007, p.1). At present Virgin Blue is a full service airline which provides a full-service travel offering at a much lower price.

From the above discussion on Jetstar and Virgin Blue it is clear that both the airlines entered the Australian market to capture the price conscious leisure traveler, but after realizing the potential of the business travel, both the airlines opted for a service offering which provided full services at low prices. Apart from this both the airlines provides frequent flier points which are the main attraction for business travelers. So Jetstar and Virgin Blue are direct competitors in the Australian airline market. Given this information regarding the competitive environment in Australian airline industry, we will now try to find out the branding of Virgin Blues and Jetstar.

Segmenting, Targeting, & Positioning

In order to understand the segmentation, targeting and positioning of Virgin Blue and Jetstar it is important to understand the business models that airlines have today. The airline business models have been described by the Boeing Company in a simple diagram (see figure 1). According to this model there are three business models which provide full service, mixed offerings and low cost. In case of Jetstar and Virgin Blue, both the companies entered the Australian markets as low cost airlines, but went on to provide mixed offerings of services and low cost (Azhar, 2007; Dabkowski, 2005). So they now belong to the middle zone in the diagram where the airlines are neither full service nor are low cost airlines. So essentially both the airlines follow a low cost model but with certain differentiations.

Challenges posed in the industry’s environment.
Figure 1: Challenges posed in the industry’s environment, Source: Boeing 2005.

Mercer provided a definition of low-cost airlines which consisted of three basic elements: (1) simple products which included catering on demand with extra payment, narrow seating, and one single class; there are no seat assignments and no frequent flier programs, (2) they target leisure passengers and price conscious business passengers, they offer short-haul flights and high frequency and they compete with all other transportations, and (3) low operating cost which are achieved through payment of low wages, low airport fees, low maintenance cost, and standby crew. This analysis depicts that low cost airlines have little differentiating strategy with all carriers offering the same set of services. So what formulates the low cost differentiation which gives the brand uniqueness and help create brand equity?

Porter believed strategies are taken by corporate based on their strategic scope or strength (Porter, 1980). Strategic scope depicted the company’s market and they take a strategy based on the size and composition of the market while strategic strength is adopted based on the internal strength of the company. Inters of gaining a unique position the strategy employed by carriers are three fold following Porter’s generic strategies which are cost leadership, differentiation and market share and market segmentation strategy. Cost leadership is the strategy operates at the lowest possible cost by reducing the company’s operating, services and overhead cost. This is the strategy that was followed Jetstar which provides air travel at the lowest possible price (Dabkowski, 2005). Differentiation means provided the stipulated offering by adding frills to the service which the customers consider useful. For instance Virgin Blue provided multi-channel real time satellite TV on board called Live2Air (Jiang, 2007). This strategy is to provide a differentiated product in light of highly competitive environment which provides an edge to the brand (Aaker, 2003). Further this helped the airline to take new opportunities. This shows that for greater success a brand should differentiate from others’ offerings (Aaker, 1999).

The segment target by both Jetstar and Virgin Blue are leisure and business travellers. Both operate in the international as well as domestic markets. Both the carriers have frequent flier programs called Qantas frequent flier program and Virgin Blue’s Velocity. The target market are both leisure and business travellers. They also target the domestic holiday makers who are provided with added services like holiday packages, discounted car rental and hotel reservations. These features provide an added advantage to the strategy of both the companies.

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Branding Strategies and Analysis

Brand Meaning

Now considering the branding strategies of Jetstar and Virgin Blue we try to ascertain the brand image that the company aims to project. Product branding is different services branding due to three main reason, intangibility, heterogeneity, and inseparability of the service offering from the point of production (Klaus & Maklan, 2007). This section discusses the brand building strategy of Virgin Blue and Jetstar and then compares the both. Core brand mantras shows that “heart and soul” of the brand (Keller, 2008, p.122). Here the understanding is of the core brand promises that the company makes to the customer.

While considering Virgin Blue in Australia what are the first things that comp to the consumer’s mind? What makes the customer know the brand? It is called brand knowledge which enhances the brand awareness and brand image of the product/service to the customer (Keller, 1993). Brand awareness is defined as the “brand recall and recognition performance by consumers” while brand image may be defined as “the set of associations linked to the brand that consumers hold in memory” (Keller, 1993, p.2). Using this definition, the brand can be evaluated in the first phase on the basis of the customer’s awareness of the brand. To identify the brand image, it is important to know the product portfolio of the company.

The business portfolios of Virgin Blues are leisure and business travel in both domestic and international. Then what does the Virgin brand stand for? In this section we will demonstrate the qualities or characters of Virgin Blue that captures the customers. Figure 2 shows the brand awareness and knowledge that customers have regarding Virgin Blue. This demonstrates the image that Virgin Blue intends to be discoursed to the customers. Virgin Blues is attached to the Virgin Group of companies owned by Richard Branson. Branson’s charismatic and flamboyant personality has made the “Virgin” the brand which is enriched with the personal characters of Richard Branson. It is believed that Branson’s light hearted persona has been depicted in Virgin’s red and purple colour scheme (Thottam, 2008).

The personality of Branson defines Virgin Group companies to be extravagant and lavish. So this image is carried in the minds of the customers when they see Virgin Blue. The second image that draws the customers’ attention towards Virgin blue is its low costs. As the company provides good services for low prices, the airline has created an image of good service at low prices. The other characteristic that Virgin Blue reveals are emotional appeal, added value and emotional appeal. The emotional appeal has been done through the company promotions which appealed to the customers to the legacy of Virgin Blue. The airline provides a picture of good services at low prices. Further the brand is also known for its frequent flier program, which is a special pointer for leisure travellers through Velocity and extra special treatment for business class travellers through their Lounge facility. As Richard Branson has himself stated, “I believe some of the latest initiatives from Virgin Blue, including its new premium economy product, fabulous lounges, combined with wonderful customer service, will continue to bring it success.” (Branson, 2008).

Mental Map of Virgin Blue.
Figure 2: Mental Map of Virgin Blue.
Mental Map of Jetstar.
Figure 3: Mental Map of Jetstar.

Jetstar is a low cost airline operator who mainly caters to the leisure price sensitive travellers. The airline is known of its low fares and no frill services on board which makes its model one that of a traditional airline (Jiang, 2007). The image that stays most with Jetstar customers is low cost and no-frill airline services. Though recently they have started their Premium Economy class called StarClass after Virgin Blue introduced its Premium Economy class. They also have started a frequent flier program. But the main appeal of Jetstar to its consumers is for its low cost image.

This aspect shows the visibility of the companies and the images that the companies have tot eh customers. The role of visibility is often underestimated and need more attention as it can shape the image of the company and its services (Joachimsthaler & Aaker, 1999). The visibility of brands, especially strong brands can be increased building and supporting their brand equity. So the brand image of Virgin Blue is that of the Virgin group which makes a statement of class, fun and luxury. While that of Jetstar is “cheap” flights. Virgin Blue has a strong brand identity which is provided by the “Virgin” tag to its name while Jetstar’s identity is not very clear with its image of a low cost airline and its new transformation into the mixed airline model where it provides premium economy along with a few services to the business traveller along with frequent flyers’ program.

Brand Equity

Brand equity can be measured through various models. First is to find the brand’s asset value called the brand asset valuator (Kotler & Keller, 2006), then is Aaker’s model which makes brands through a core and extended identity (Aaker, 2003). The other process is through Brand Resonance Pyramid, which allows companies to build their brands as an “ascending sequential series of steps” (Kotler & Keller, 2006, p.262).

The brand equity will be measured using Brand Resonance Pyramid which is a customer –based brand equity pyramid. According to the customers poll on customer satisfaction in airline services in Australia, Virgin Blue has been rated as Australia’s best airline in 2008 (AAP, 2009).

Customer based brand equity model.
Figure 4: Customer based brand equity model.

Figure 4 shows the brand resonance pyramid which depicts the brand characters with the brand image. The premise of the model is based on the belief that brand image and identity resides in the mind of the consumer (Keller, 1993). This is a customer centric brand equity measure which establishes that a brand can become successful with instant association of the brand’s identity and image I the customer’s mind. This pyramid is used to understand the brand equity of Jetstar and Virgin Blue. Identity refers to the meaning of the brand and answers the question “who we are”. For Jetstar the company is a fully owned subsidiary of Qantas Group which operates in the low-cost airline segment in Australia. As salience refers to the emotion evoked by a brand at various purchase or consumption points, it shows that Jetstar evokes one identity i.e. cheap and low cost, while Virgin Blue even though provides cheap flights evokes a new meaning by attaching the “Virgin” brand name.

So in this category both the brands have achieved brand salience as customers do associate with the low cost airlines’ chief brand identity but for Virgin Blue, the identity is extended and promises an added value simply due to the tag of Virgin Group and thus provides a differentiating factor. As far as the visibility of the companies are concerned are consistent with their brand identity as has been supported by researcher’s findings (Joachimsthaler & Aaker, 1999). As the brand awareness also consists of two key dimensions viz. breadth and depth of brands, it is important the customers are aware and understand the total of the value propositions. Keller believes that “The salience or accessibility of the core brand associations depends on their strength in memory, as well as the retrieval cues provided by the extension” (Keller, 1993, p.15). So higher the brand recognition and the customer’s accessibility in their memory to find the right association with the brand and its identity the more salient is the brand. This refers to the brand identity created in the mind of the customers and which they recall at any given moment when they intend to purchase the products/service. So the brand identity that is delivered in both the case of Jetstar and Virgin Blue is low cost domestic flights with no-frill services.

The next block named meaning indicates what the brands are. The customers identify both the brands as low cost airlines but for Virgin they attach a greater value as they provide more of panache than Jetstar. This is reflected in the performance of the airlines, where Virgin has been awarded the best airline in all over category (AAP, 2009), and Jetstar has been ranked the lowest cost airline in Asia Pacific (Dabkowski, 2005). The main notions of the Jetstar airlines are associated with their quick timing and low cost fares. But the meaning that Virgin Blue gives out is more than that. Virgin Blue provides additional features like in-flight entertainment and meals on request as well as a business class lounge for frequent travellers. This indicates that Virgin Blue provides more value to their service. But as far as performance is concerned, both the airlines are equal and they follow the same low cost model.

They look for reducing their operating and overhead costs to keep the flight prices cheaper. The performance of the brand is the service itself which is at the heart of the offering (Keller, 1993). The main potent of this category is to design and deliver services to the customers which fully satisfies the customers. The customer satisfaction for overall airlines is topped by Virgin Blue in Australia which indicates that the customers are satisfied with the service offerings of the airline, whereas the position of Jetsatr has slipped down to the seventh spot (AAP, 2009). The functional needs that both the airlines intend to achieve are:

  1. provide quick flights in short distances,
  2. at low cost, and
  3. additional services on request.

The customer satisfaction is an indicator of the performance. Jetstar has been facing accusations of poor quality customer service, while Virgin Blue is eulogised for its extensive customer centric business which hails with Velocity travel programs and the Lounge for frequent business travellers apart from the core product i.e. cheap airfares. The problem here with Jetstar is it price centric differentiation which takes it to the path of price war which is non-profitable for the industry (Porter, 2008). The customers feel that the [primary characteristic of Jetsatr in providing their brand is high as they provide the lowest possible airfares in any given route. Jetstar has been underperforming as compared to Virgin Blue in making people travel on time to their destination (Murphy, 2007). 88 percent of Jetstar’s flights were on time as compared to Virgin Blue which had 90.5 percent flights on-time (Murphy, 2007).

As compared to other competitions “Of the major domestic airlines that reported for all twelve months, Virgin Blue achieved the highest level of on time departures for 2007–08 at 80.3 per cent, while Qantas achieved 79.1 per cent, and Jetstar 78.4 per cent.” (BITRE, 2008). Jetstar’s performance was far behind that of Virgin Blue indicating that the brand was failing in providing the customers with the core services as promised. Thus, Jetstar scores low on reliability, durability and serviceability. The aesthetics of Virgin Blue is higher as compared to Jetsatr due to the former’s association with the Virgin brand image while the latter has an image of “low cost” which provides a cheap image to the mind of the consumers. Given a better performance of Virgin Blue i.e. higher on-time departure and arrivals, greater efficiency and security, and low cost have made the image of Virgin Blue as compared to Jetstar which has underperformed in 2007.

Further the brand value of Virgin was higher than that of Jetstar where the former comprised of 16 percent of the total profits of the company in 2006 (Bartholomeusz, 2006)and the latter 10 percent of the total profits of the company Qantas (Murphy, 2007). This indicates that the brand’s performance was better in case of Virgin Blue as compared to its competitor Jetstar in the low-cost segment.

Brand meaning is described by Keller using three terms strength, favourability and uniqueness (Keller, 1993). Strong brands have an association with which the customers can associate with the brand. This aspect demonstrates what the brand stands for in the mind of customers. Virgin Blue is associated with the virgin brand which has created a very strong identity based on its flamboyant and exciting image which is associated with the Virgin Blue brand too. The identity that Jetstar evokes is “cheap” airline. So the association is positive in case of Virgin Blue while the association is negative for Jetstar which supposed to be a “cheap” airline as they projected their “cheap” flights with the tag “Cheap flights – Jetstar Airways” (Jetstar, 2009). So the association is solely with price and no other element which will increase the customer’s experiential value. Potter thus said that price cannot be a point of differentiation as it can easily be copied (Porter, 2008). So in terms of brand meaning, Jetstar lags behind Virgin Blue.

The brand’s relationship is based on the brand loyalty of the community. In case of low cost airlines the brand loyalty is low with customer’s association with the company is based primarily of price point. But Virgin Blue has changed the equation in Australia with Velocity, its customer loyalty program. Loyalty program with Virgin Blue has shown extensive customer satisfaction with the services to business travellers (Munro, 2008). This program is specifically directed towards business travellers who also avail the company’s premium economy class. But the customers of Jetstar were not satisfied with the loyalty program which did not provide them with any added facility except for seat allocation which again came with an increased cost (Creedy, 2008; Munro, 2008). So Virgin Blue’s Velocity loyalty program is better than Jetstar’s Anyseat option (Munro, 2008). Jetstar loyalty scheme has not been very successful as opposed to the Virgin Airline’s velocity scheme which provided “red, silver and gold – to its Velocity program, where the silver and gold tiers have a priority check-in and phone service, lounge access and greater baggage allowances.” (Thomas, 2007).

So the strengths of each brand can be assessed with strength assessment model (Keller, 2008). In this model we assess the relative strengths and the areas which bring about the strength of the product. Figure 5 shows the brand strengths of Jetstar and Virgin Blue figure shows that the only core offerings of Jetstar are its low prices and its image. But that of Virgin Blue is multifaceted with the company offering both leisure and business travel proposition. The business travel is based on the same low cost formula but with added services like premium economy class, loyalty program and the Lounge solely for the business class. But Jetstar’s Star Class provides the same offerings as Virgin Blue’s Premium class but here they do not target the business class travellers, but rather introduce the class for their premium offering to leisure travellers and international flights. So the brand strength is low for Jetstar and high for Virgin Blue.

Brand Strength Assessment of Jetstar and Virgin Blue.
Figure 5: Brand Strength Assessment of Jetstar and Virgin Blue.

Target Market and Competitor Reactions

The target market for Jetstar and Virgin Blue is same in the domestic leisure travel market. But Virgin Blue also targets business travelers while Jetstar does not. The market for the two competitors is highly competitive but Jetstar is a follower of the strategies that Virgin Blue takes. When in 2005 Virgin Blue announced of transforming the image of the airline from a low cost airline to a semi-service provider and would fall in the category below full services and above the low cost airline model, Jetstar closely followed suit. The competitiveness of the market comes with price war between the two airlines which drive down prices. But excessive competition based on prices is harmful to the profitability of the whole industry.

This indicates that the airlines are highly competitive, but Virgin Blue steers the market first and Jetstar follows the strategies the former takes. This strategy of Jetstar is wrong, as it will take it to a strategy for which it is not prepared and its products lacks internal and external branding fitting the strategy. As Aaker stated “The challenge of vertical extension is to leverage and protect the original brand while taking advantage of the new opportunity.” (Aaker, 1999, p.81) This indicates that the brand image of Jetstar does not need to be refreshed; rather, it has to reinforced rather than revitalized. This is so because the main aim of Jetstar now should to go back to its original value proposition and brand message which will help the airline to capitalize on its previous market. Further, sticking to its original value proposition will make operations easier and will help in increasing efficiency of the airline. Further, the main aim of Jetstar should be to target leisure travelers and that of Virgin Blue is both Leisure and Business travelers.

Recommendations

This study shows that Virgin Blue has been successful in extending its brand in providing an additional value of the Virgin brand which Jetstar has been unable to do unable to gain. Virgin Blue has successfully extended its offerings from a low-cost service provider to a semi-premium segment between full-service and low cost segment. Jetstar attempted the same makeover following Virgin Blue but has not been completely successful in doing so. This drive was to attract business travellers but failed to do so as the loyalty programs were not sufficient for Jetstar. The extension of a brand depends on the core image and brand value along with the additional value proposition (Aaker & Keller, 1990; Keller & Aaker, 1992; Aaker, 2003). But an unsuccessful attempt in brand extension has the fear of harming the “core brand image by creating undesirable associations” (Keller, 1993, p.16). Thus, it is necessary to identify if there are any brand depletion has taken place for Jetstar and to what extent it can be revived.

The brand s have built their brand equity through one common proposition i.e. price. Both Virgin Blue and Jetstar are based on price pointer. But recently the former has elevated its offerings and its proposition and has moved away from the traditional low cost airline model. Jetstar too followed suit but failed to do create a proper brand image in the new segment. In the following section, we will discuss what went wrong for Jetstar and how Jetstar can elevate its brand image. Brand mantra is the shows the core brand associations with which the brand can be related. The brand image of Jetstar is still that of a low cost carrier. The value proposed in its new offerings also has a “low-cost” tag to it. But the airline has been unable to provide the basics of the offerings. In this section, we will discuss the various aspects of Jetstar and its branding.

Low cost airline’s main offerings are cheap airfares, short haul flights, hub-to-hub focus, and efficient operations with fewer accidents, late departures, and arrivals. The brand image is not only created by what is said by the company to project the product but also through the core product/service itself (Keller, 1993). And there must be an alignment of what is promised through brand building efforts and what is physically delivered. Jetstar’s main problem is in its competition with Virgin Blue wherein the former has been aping every strategic move of the latter. Here we will first try to see the services that Jetstar promises as a brand proposition to its customers. For this, we take a look at the product portfolio of Jetstar (figure 5).

Product portfolio of Jetstar
Figure 6: Product portfolio of Jetstar, Source Jetstar.com.

As figure 5 shows Jetstar has five major product categories which are cheap fares, holidays, hotel, cars, and insurance (Jetstar, 2009). Further categorization of cheap prices is done through discounted prices for airfares and the standard prices. The service offerings are selectively meant for leisure and non-business travelers with no concentration on business class travelers. But Jetstar has introduced its StarClass aimed at the Premium economy class introduced by Virgin Blue. But here the issue was in its introduction of the service without any thought out plan. Virgin Blue introduced the premium economy class aiming at the business travelers. But the target market for Jetstar’s premium economy class is not clear. Therefore, the brand mantra is cheap flights which are even emphasized in its advertisement campaigns. So we see that there is a gap in the service design and communication in case of business travel class. The business travelers’ propositions are premium economy seats and loyalty programs. But the marketing communications from Jetstar fails to communicate this message to the customers.

Jetstar’s Marketing Communication Effectiveness.
Figure 7: Jetstar’s Marketing Communication Effectiveness.

Figure 6 shows that the current brand knowledge of the consumers about Jetstar is as a low cost airline which caters to the leisure travelers (www.jetstar.com/au, 2009). The marketing communications and even the intent of the marketers of the brand are to provide this loyalty program and premium economy class is twofold: (1) to ape the strategy of Virgin Blue and (2) to direct the programs to leisure travelers. But traditionally these were used to attract business travelers, but Jetstar did not try to do it. Unlike Virgin Blue, Jetstar does not have an agenda to target the business class travelers. So the intent of the comply to sell its Star Class with the right people has to be made known to increase brand recall and awareness of the consumers (Keller, 2008). So the airline needs to take two strategies. First is to introduce these classes and promote them as the low cost option for business class travelers which will attract business houses which are cost sensitive. So these services need to be communicated to the business travelers through promotions directed to them. Otherwise, it will be wiser to phase out the StarClass if the company fails to provide a value proposition for the offering. The second option will provide a lot of opportunity to the company to capitalize in its existing core strength and brand offering.

So the strategy that Jetstar should employ is that of brand reinforcement. Jetstar is already a low cost brand established in the Australian market. What is required right now is to identify the areas which need to be concentrated on and which can be foregone. Figure 8 presents the model for brand reinforcement. Here the strategy is to phase out any plan Jetstar has to get into the business class market. The best option for the airline is to stick to its core competency i.e. low cost no frill airlines. The options are to invest more into the fleet, make them more effective and rebrand itself as a no-frill airline, and stop providing any freebies to the customers. The model that they should follow is that of a purely low cost airline to gain back the brand awareness and image they had created earlier which will provide them with the desired brand equity. So the company must protect the source of brand equity is low cost and good performance.

Brand Reinforcement of Jetstar.
Figure 8: Brand Reinforcement of Jetstar.

Conclusion

The Australian domestic market for low cost airline is competitive in nature. There are various low cost airlines operating in the Australian market. The market leaders in low cost airlines are Virgin Blue and Jetstar. The former has transcended from a purely low cost airline to a low cost but few service model. It caters to the segment between the full-service and above the low cost airline segments. Virgin Blue was successful in revitalizing its strategy, but when similar attempt was made by Jetstar, the company failed to do so, depleting a bit of its core brand, and failing to cater to the market properly. This case study analysis provides an appraisal of how brands can be identified and leveraged to become profitable. The case also identify why brands which were once successful suddenly lose relevance. The reason lies in its being wrongly used in the changed context.

So when branding is to be done, company, industry and competitor considerations must be done to make sure that the brand fits into the present internal and external environment. Further, this will also provide the marketing strategy for the brand and how it can be projected to gain equity. The paper shows that brand equity depends in the brand image and awareness, but it also depends on the extended image that the brand portrays or the secondary image that the brand intends to portray. So it is important to understand what the brands stand for before they can be leveraged to gain brand equity. The paper identifies that brand equity cannot be gained when the brand communication is wrong or incomplete. Further if there is a mismatch in the product offering and the market target, positioning, and segmenting, the brand will not be a success as it will not appeal to the wrong market segment. The paper also showed that brand can be successful when it is differentiated or extended if and only if the brand image and awareness are compatible and brings out the desired picture to the targeted customers.

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