oyalty, Peter Yesawich believes, is
fragile. The managing director of the marketing company Yesawich
Pepperdine Brown & Russell was addressing a general session of
the Mountain Travel Symposium held in Steamboat Springs, Colo.,
earlier this month, and was sharing the findings of his latest
consumer research with the audience.
Price transparency on the Web has led consumers to look for the
best brand for the money, he reported. Not the cheapest available
product, mind you, but the greatest perceived value for the amount
of money they've already decided to spend. If, for instance, The
Plaza in New York is available for the same price as the
business-class chain hotel where a traveler usually stays, The
Plaza likely will be perceived as the better value because its
brand is associated with luxury.
This is not good news for travel companies that have invested
heavily in building consumer loyalty and have come to rely on
repeat business to maintain profitability.
I was moderator of a panel in the session following Yesawich's
presentation, and was curious to see whether the panelists and the
audience (resort-area hoteliers, condo-management company
executives and tour operators working in the ski industry) had felt
the implied impact of Yesawich's research.
In other words, how was repeat business this past season?
On one hand -- perhaps the one with fingers crossed, either for
continued luck or to permit a lie -- no one reported that repeat
business was off. In fact, the general feeling was that repeat
business was what saved the past ski season.
On the other hand, when the discussion moved to the question of
Web pricing transparency and its effect on booking, everyone
acknowledged that consumer focus on getting the greatest perceived
value for money has led to price erosion and deteriorating
If there were a third hand, it would have been held up by the
audience in resistance to Yesawich's implication that this was how
it was going to be for the foreseeable future. Though a
condo-management exec acknowledged using discounted Web sites as a
dumping ground for his distressed inventory, he didn't want to
continue doing so.
It was "like a drug," but he was determined to kick the
How? "Flexibility in marketing," came the answer, and there were
nods of agreement all around. Give call centers the ability to work
with clients on the phone. Rather than give a blanket
discount, only discount when you need to, on a case-by-case
But soon it became apparent that attendees were of two minds on
the issue of flexibility. Someone brought up the practices of
Southwest Airlines as an example of a company that did not put its
inventory on discounted Web sites, yet was one of the few
Everyone -- including those touting flexibility -- praised
Southwest for having a plan and sticking to it through thick and
thin. Southwest, it was noted, used distribution channels on its
But this, in essence, is the opposite of flexibility.
Yesawich was careful not to say that brand isn't important. In
fact, if one is looking for the best brand at a given price, adding
value to brand is more important than ever. But brand loyalty has
become secondary to price loyalty, and price loyalty encourages
I sense he's right, but like everyone else in the room, I'm not
sure what lesson to take away from his observations. To go after
market share at the expense of yield only makes sense if you later
can exploit the market share through brand loyalty, and eventually
But loyalty is fragile.
No wonder everyone needs three hands and two minds to try to
work this one out.