Product Autopsy for Delta’s Highly Marketed LCC “Song!”

When talking about strong brands and profitable businesses there is always one thing to keep in mind. Strong brands are created within strong organizations. Rephrasing, it takes a strong business to create a strong brand. When it’s done the other way around, there will be a hip brand, ready to be marketed with the utmost creativity but lacking greatly in profitability. This obviously wouldn’t work for long because nobody likes a brand if it does not generate money, even if it was “cool.” I started looking out on the periphery to see if I could get an example like that and write a product autopsy on it. I am glad that I was able to come up with the idea to write a brand autopsy for “Song” (they weren’t using the term airlines), and enthusiastically started working to find out why and how they failed in such quick succession.

Song has been launched by Delta in an effort to stop LCCs (low-cost-carriers) from ruining their market. Delta just had to stop the market share erosion, and do it fast. OK, so now the problem was obvious, they all had to do was to come up with a concept, which would differentiate Song from existing LLCs. They came up with the idea to become a heavily marketed hip brand. Let’s take a look what happened from then.

The Airline Industry & Triggers to Launch “Song” Let me start with the overall triggers that caused Delta Airlines to launch a low-cost-carrier (referred LCC hereon) in the first place. Due to many industry factors full service carriers (referred FSCs hereon like Delta, United, Lufthansa) were losing market share to LCCs like JetBlue, Southwest and Airtran. High operating costs of many FSCs did not allow them to fight the price wars and they also had hard times in differentiating their product as in the airline industry such changes often take long lead times due to high investment expenses, governmental & international regulations and training & safety requirements. Many of the FSCs suffered greatly in the battle against LCCs, some lost, some acquired their competitors or started their own LCC. LCCs were on the rise, tempting many business and leisure passengers offering low prices and a “not-so-inconvenient” flight experience. Something had to be done by Delta to prevent the erosion of their market share.

Airline consumers are mainly divided in to three major categories by the American revenue management company PROS. First, the so-called yieldable passengers include business and leisure travelers looking for a certain level of service and are not willing to settle for less. These passengers would only make purchases when their expectations are met. Second, airline priceable passengers have loyalty to a certain airline and are willing to book the lowest fares available in that particular airline, regardless of the price of competitors. Third and finally, market priceable passengers have a very strong passion for paying less. They are not loyal to any particular airline and their number one priority is price. This segment has been on the raise within the last decade and LCCs are targeting these passengers offering many price reductions and promotions, trying to get the biggest market share of this segment.

The main idea of an LCC is that, regardless of the flight destination, fares are significantly lower in comparison to FSCs. They can afford to offer lower fares mainly because they have significantly low operating costs. They don’t take-off from major expensive airports, they don’t have gates adjacent to the entry-exit points, they don’t offer in-flight catering, and many don’t even let passengers choose their own seat via online check-in. Every service, rather than the plain idea of being transported from one origin to another destination with a piece of luggage, is considered extra. Even many services consumers take for granted today are sold separately by LCCs, passengers have to pay for online check-in, on-board drinks, extra legroom, and exit-row seats, restrooms, newspapers and magazines. Those are major sources of revenue for many LCCs, so the business strategy can be named as no-frills, where a passenger might even have to pay extra because of forgetting to print the online ticket or the boarding pass. Even though they have many disadvantages when compared with a FSC, they were able to thrive with the ability to attract many consumers due to very low fares. Price has definitely become a major decision influencer in the industry. LCCs are also prone to survive in harsh financial times and social downturns. Their low-cost structure lets them be better prepared in terms of adaptability and durability. Many of them managed to survive during the notorious 2001-2003 period, which includes many incidents as 9/11, SARS threat and major wars in the Middle East. All those factors regarding LCCs made many FSCs wanting to start their own low-cost initiative. KLM launched Buzz, British Airways launched GO, Lufthansa bought 49% of Germanwings and Delta was motivated to launch Song. The value proposition of these sub brands were clearly different then their parents. They execute major cost deduction measures like narrower seats, less legroom, strict luggage limitations, and strict on board hand baggage standards. Passengers majorly accept these service standards for the sake of attaining lower rates to travel. Song was launched by Delta in April 2003 to gain advantage of this growing trend and also set new standards to the industry.

Factors Causing Song to Fail For the sake of the brand autopsy, I should now be asking why Song failed even though it was heavily marketed, perceived to be cool, fun and passengers were thrilled that some of them even named it being the most entertaining flight ever. Let’s go over the details in order of importance. Core Business Model Problems One main problem was that they lacked greatly in understanding what it takes to be an LCC. The essence of a LCCs’ success comes from its ability to understand and mold all the stakeholders of being an LCC. This includes factors like paid in-flight catering, flying from not congested low-cost hubs, less legroom, low quality airplane interiors, fewer flight attendants, and faster ground services to reduce turnaround times at destinations. When all these factors come together, they are merged into a no-frills environment forming rapport with the LCCs’ value proposition and works. Song however, missed the point that a budget airline does not have the room to grow into acting as a FSC, offering extra side benefits as TV screens, free beverage and so on.

Marketing Communications Advertising was also another aspect of failure. Their major debut was with a TV ad, which showed a full family of happy individuals running down a hill of beautiful nature and the tagline was “now boarding happy people.” It was obvious that they were a selling a lifestyle of happy people and they were trying to do that with style. Their value proposition was vague, the tagline “happy people” can suggest many different consumer segments and their positioning with the commercial was just as they were a FSC rather than an LCC. They had some good features that could have been communicated with the consumers but they were nowhere to be found on the commercial. They could have filmed passengers playing games interactively with each other, or cabin crew signing the flight security information or a preview of the in-flight workout program. The ambiguity between the targeted segment and brand positioning along with the vague message of the commercials acted as tools to create confusion among consumers and industry professionals regarding the overall image of the Song brand. The ads failed to forward the message of a fun flight and consumers were only talking about “fun” in focus group session once they flew with Song, they had no idea regarding the experience before that.

Their promotional video on YouTube pictures Song as the airline to revolutionize the industry and relates the brand to many iconic images as the Apple 1984 superbowl ad, Henry Ford, late Louis Armstrong, Wright brothers’ first flight and the signing of the American constitution. This resembles their ambition to change airline industry for good. But this act lacks in that they were neither the first LCC nor among the main innovators in the business. Their product offering is just perceived as an LCC carrier with FSC characteristics and that does not prove to be a strong enough argument to suggest that Song is iconic. Song was only able to take the dull and no-frills image of a regular LCC and turn it into a brand image that includes fun.

Competition Competitive response also has affected Song negatively. Jet Blue, which seems to be a very successful airline in terms of operations, marketing and profits and had the same hip characteristics as Song and was a major threat on their value proposition of being a LCC with style. Jet Blue is an established east coast based airline with hubs in New York and Boston. They operate direct flights to/from many destinations including 17 of the 22 destinations within Song’s network. Having an established LCC in the markets where Song wanted to conquer acted to be a major setback, it also created the impression that Song was simply a me too and just a washed-out imitation.

Brand Culture Their bond with Delta was also an obvious reason why they failed. Song was supposed to burn all bridges with Delta and run away from major constraints as costly employee expenses, ground services spending and operational structures. They were competing with LCCs as Southwest, Jet Blue and Air Tran, all of them LCC from birth and scratch. Song on the other hand was born out of a Delta culture, as a response to the market share erosion and couldn’t totally understand and embody the core business model of a budget carrier. Branding before Business Strategy The management consisted of marketers who are educated to crate successful brands, with a mixture of lifestyle, coolness, x-factor, humor and fun. These are the people behind the success of taking a dull brand like Delta and making something really fun and different about it to turn into Song. They were very successful in creating a brand, which could have been very attracting to the target consumers. They were so busy trying to prove that branding even works in the worst of markets, an executive once commented “A lot of people ask us, ‘you got to be crazy. You’re starting an airline in the worst environment in the history of US commercial aviation.’ We were and we are.” This is what happens when a strong branding is established before implementing a sound business strategy. The executives of Song neglected the fact that great businesses turn into great brands and tried to implement the opposite and failed. Now looking back to the subject and connecting the dots; I can tell that pure branding focus without clear positioning, strong arguments & messages, detailed consumer segmentation and a focused core business model, is another major cause why Song had to cease operations only after three years in business. They were aiming at prescribing emotions rather than being a profitable business. Negative Cash Flow Another very important fact that caused Song to disappear in 3 short years is that they couldn’t maintain the revenue-cost stream. Positioning the brand like a stylish FSC but targeting price sensitive passengers did not work for Song. This controversy has created large budget deficits on their revenue streams, as they were spending money like a FSC but only making enough for a LCC to survive. So now we know all the reasons that made Song fail as a new venture even though it was marketed heavily and perceived to be a superior product when compared with the competition. Now you might have the questions that what could have been done differently to avoid this rapid rise & fall. I’ll be talking about it in my next post, please feel free to comment and share your insight. Thanks,

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