APPENDIX A: ASSIGNMENT COVER SHEET
ASSIGNMENT COVER SHEET
10 June 2014
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MBA Year 1 January 2014
Declaration: I hereby declare that the assignment submitted is an original piece of work produced by myself.
Signature: C Nagooroo
Date: 10 June 2014
Velvet Sky was a low cost airline that launched in March 2011. The company’s corporate philosophy, mandated cost saving through all levels of operations. It was claimed to be the first Broad-based black economic empowerment compliant airline based in Durban. Velvet sky initially enjoyed some success but very quickly ran into financial problems and was subsequently grounded. This essay provides a critical analysis of the impact that the financial problems and the grounding of flights had on the Velvet Sky brand.
Velvet Sky seemed to be a true underdog story that had many working class South Africans routing for its success. The Velvet Sky brand to resonated with the South African public. Here we had a little airline championing the cause of South Africans and taking on the heavy weights of the Aviation industry by providing flights at lower costs. Within a few months Velvet Sky had made a significant impact on the domestic discount airline market and through support from passengers that had benefitted from lower airfares, the company began to grow. Velvet Sky showed positive brand equity as research shows that the brand appeared on Google’s Top SA searches for 2011.
However as quickly as the Velvet Sky brand gained popularity it lost it. The Velvet Sky brand was significantly impacted when financial woes and the cancellation of flights began to emerge. Many customers where left stranded when flights where cancelled. This would definitely create a negative impression of the Velvet Sky brand for those customers. Customer would find it difficult to believe in a brand that has let them down previously. The indication that Velvet Sky was in financial turmoil would further negatively impact its brand. The aviation industry is all about safety and consumers would need to feel the ticket that they have purchased guarantees them safe passage to their destination. In the minds of the public a financially unstable airline could be cutting corners to save costs and hence may not be very safe.
Velvet Sky was launched in March 2011 and had less than a year to build its brand equity before it began to have financial problems. This may have not been enough time for customers to identify with the brand and build their brand knowledge. Brand equity is the added value endowed to products and services. Customer based brand equity can be defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. In general the more that brand equity and a strong corporate image has been established, the more likely it is that the company can weather a storm. While Velvet Sky’s brand equity was initially positive I do not believe it had enough time to establish it’s corporate image before the crisis occurred. As a result the public’s impression of Velvet Sky turned negative in light of its bad publicity.
Bibliography: Happy to provide one if requested. Apologies for the inconvenience.
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