For certain companies, particularly in the consumer sector, branding and marketing is everything. Success or failure hinges on how they relate to the customer and their reputation in the public domain. Ryanair is one of those companies, but not in the way you’d expect! It has long prided itself on no-frills value, shunning customer service and friendly PR, and it has to be said that it has paid off financially. It’s extremely interesting, then, that the firm – led by bullish CEO Michael O’Leary – has decided to go on a rebranding offensive, upping marketing budgets and pledging to prioritise the consumer experience. So why is Ryanair changing its strategy so drastically?
You might expect Ryanair’s impending transformation to have stemmed from shareholder pressure, especially as it has been a public company since 1997. But part of what makes Ryanair’s decision so interesting is that the company’s finances aren’t in particularly bad shape. For the full financial year 2012, revenue lifted by 19% to €3.6bn, while profits shot up by 25% to €401m. The firm posted a third-quarter loss earlier this year, but has said that fourth-quarter figures are set to rebound from the setback. The change appears to have originated internally, then, and the recent raft of senior hires supports this.
Possibly the most notable change is the arrival of Kenny Jacobs as CMO. Previously of Moneysupermarket, Jacobs knows how to develop presence and relevance on and off-line, which is sure to help Ryanair gain ground in an increasingly competitive marketplace.
Marketing is set to play a key role in any future changes to Ryanair’s business model, and the company appears to have predicted this by announcing this month that it will treble its marketing and communications budget to €36m in 2014. The firm is set to move into multimedia campaigns, as well as adapting its brand image to cater to families and business travellers – meaning fewer excessive baggage charges or booking fees, as well as O’Leary himself taking more of a back seat. Added to this are new sources of revenue (designed to replace the lost extra charges) such as the addition of allocated seating, which has already been a proven bonus to Ryanair’s competitors. It’s a lot to be taking on at once, but as O’Leary said recently: “sometimes we may be a little slow to change, but once we get the message, nobody changes faster or quicker than we do.”
For the majority of Ryanair’s customers, all these developments are sure to be welcome news. One interesting recent piece in the Telegraph, though, suggested that the airline’s stripped-back model and O’Leary’s combative nature played a surprisingly important part in securing its customer base. As Ryanair’s Robin Kiely says: “it’s fair to say Michael does polarise opinion, but at the same time it was great PR generation over 20 years.” Without his effusiveness, will the new Ryanair become just another competing firm in a crowded budget air travel sector? Maybe businesses should bear in mind that in some cases, a controversial figurehead can bring positives as well as negatives.
Whatever the future holds for Ryanair, it is unquestionably a brave decision to upend the brand’s persona in one fell swoop. The only question is whether the company has attempted to do too much in a short space of time! Can you think of any other brands that have gone through with such a swift turnaround in image? Let me know at moira@thembsgroup.co.uk, and have a brilliant weekend!