Difference between brand strategy and brand equity management, the United Airlines example

United Airlines Vigin Atlantic

Brand strategy solves two problems:
1) Improves brand’s competitivness against competitors;
2) Motivates inert customers.

Brand Equity Management solves the same two problems and one additional:
3) Minimizes risk of damages management can make to the brand.

Minimizing risk is based on an assumption that one of the most damaging forces in companies can be their managers. Managers have an enormous power to build equity and also to destroy it. Equity can be destroyed either suddenly by few bad decisions, or slowly with many continuously bad decisions. Brand equity management deals with exposing such decisions before damage is made or minimizing damage after it happens.
 

United Airlines example

United Airlines passenger fiasco is an example of lack of brand equity management. United Airlines made two errors:

1) United adopted rules which are in conflict with values accepted by their customers. Staff and overall system behavior is not an accident, but a design which excluded the customer perspective.

2) United CEO Oscar Muñoz tweeted a statement using the word “re-accommodate these customers” which was not apologetic but evasive. He did the Ratner and his error only confirms the first error – that customer or brand equity perspective is not included in the management processes.

United Airlines stock dropped slightly and recovered quickly which indicates that the airlines category is not mature because of high regulation and lack of competition. Due to lack of category maturity, investors assume that content related scandals can not disturb the overall business performance. However, flying customers will definitely have a very negative perception of United Airlines brand which will eventually damage their business, especially as competition and category matures.

Implementation of brand strategy would not prevent the brand damage, but the implementation of brand equity management would. Rules would have been evaluated, culture would have been more competitive and customer focused, and processes minimizing risk would be added. A CEO’s tweet would have been checked properly.

These are the kind of brand equity management errors that allowed competitors like Virgin Group to enter the airline market. Business like Virgin, which was an originally a content business, will use this opportunity to increase their market share.

Written by: Nikola Tosic
Publishing date: 12 Apr 2017