THOMSON deputy managing director Shaun Powell admitted he misread the industry and wrongly thought the market leader could charge a premium for its product when he joined the operator two years ago.
Powell said when he arrived at Thomson from Barclaycard he was ‘a little optimistic’ about how quickly change could be brought about in the market by the company.
Speaking at the Institute of Travel and Tourism conference in Newport, Rhode Island, Powell admitted: “In 1997 I had a view that leading brands should be able to charge a premium because a holiday is the second most important time after Christmas. But I didn’t appreciate the depth of the price spiral that we had got ourselves into and I didn’t appreciate how much mass companies had commoditised theirproducts.
“And I didn’t appreciate the lack of investment in the industry. Most products are the same and most prices are the same, even though historically Thomson has built its business on offering a superior service. Also, I didn’t appreciate how tactical the industry had become. Prices and window displays can be changed overnight. The short term has driven the business.”
But Powell said the experience had not shaken his belief that it was possible to charge a premium price for a strong brand.
“When I first joined the industry, I was told it was different in holidays; it was a unique market; it was not like making chocolate; and the rules of brands don’t work,” he said.
“But there is a way of leveraging brand in package holidays. It’s been done by companies like Mark Warner and Club Med who are marketing to discerning customers. A premium is being attained by premium products. Mass companies like Thomson can also sustain premium prices once perceptions have been changed and once product and service differentiation is achieved.”
n Powell on branding and full ITT conference report, pages 20, 22 and 82