Eurotunnel’s sea change

While Jacques Cousteau might have relished the underwater theme of Eurotunnel’s Le Shuttle, he, along with the rest of the French population, would probably have had difficulty pronouncing the name.

Eurotunnel says it has ditched the Le Shuttle tag to reduce confusion in the cross channel market, and not because of any language difficulties. There has been evident confusion in passenger’s minds between Eurotunnel, the company which oversees services through the channel tunnel, and Le Shuttle, the service carrying cars by train between France and the UK. So the service has been renamed Eurotunnel Shuttle Services, not to be confused with Eurostar, the passenger transport service running out of Waterloo.

Eurotunnel Shuttle Services last week appointed Ogilvy & Mather as strategic communications advisor (MW August 20) to push the brand in all of its markets. It is the first time a single agency has been appointed to oversee its whole target market. The company has previously used a number of different agencies across its five key countries – the UK, France, Belgium, the Netherlands and Germany – and several agencies for through-the-line work.

The move is a sign that the train operator is looking to save money, as well as develop a simpler, more streamlined approach to its marketing in advance of the abolition of European duty-free sales next year. These account for more than 20 per cent of company turnover.

“It’s a revenue stream we will have to replace,” says Bill Dix, managing director of shuttle services for Eurotunnel. “And we will have to add to ticket prices on freight and passenger services. But this is a premium service and elasticity of price is not as much of an issue for us as it is for the ferries.”

The pressure on the company to generate cash is all the more intense because of its 8bn debt mountain. Eurotunnel hopes to make a profit – after depreciation, interest and tax – by 2005.

The effect of the abolition of duty-free is not a straightforward calculation and will not necessarily mean 20 per cent of the company’s revenue disappearing overnight. The retail market at the ports – even without duty-free – is attractive because people tend to spend money when they go on holiday. Capitalising on this, Eurotunnel announced in July that it is developing land around its Calais terminal for discount factory shops.

Eurotunnel is also looking to improve its branding. “What we didn’t need was the complexity, cost and confusion of two brands – that is, Le Shuttle and Eurotunnel,” says Dix. “There’s enough cross-channel confusion anyway, what with the Eurostars and Eurotunnels, Channel tunnels and Le Shuttles. There are a lot of those out there and we just took one away”. Ogilvy & Mather managing director Richard Pinder says: “Eurotunnel is a great product. What you have to do now is make it into a real consumer brand and the idea behind our appointment is to create a consistency across all markets. Mercedes, for example, uses the three-pointed star in every market. Eurotunnel has to do the same thing.”

However, some observers have criticised the company’s decision to keep a debt-tarnished name like Eurotunnel. The company may have sailed into calmer waters, but Eurotunnel still carries baggage from its troubled past. “What it should have done is go for a third completely new alternative which was neither Eurotunnel nor Le Shuttle,” says one agency source.

“From an advertising point of view, what the company has done in the past is get all sorts of people to do all sorts of work,” says a source. “There have also been a number of different campaigns. Basically, there hasn’t been much consistency and the feeling is that this has been a train-oriented trading company.”

Perhaps part of the problem is the way Eurotunnel’s decision-making is split between France and the UK, with group executive chairman Patrick Ponsolle based in Paris and Bill Dix and group managing director Georges Christian Chazot based in the UK.

The marketing department has recently been restructured, with the creation of two new marketing director posts and it has split its UK and Continental marketing. Eric Barrois was named as European marketing director, while former sales and marketing director at P&O European Ferries, Peter Stratton, joined in May as UK marketing director.

Dix is keen to transmit some good news as well. Last year turnover reached 530m, and Eurotunnel saw a 75 per cent rise in car traffic in the second quarter of 1998. It now has a 55 per cent share of the cross-channel passenger market.

O&M is to spend several months assessing the Eurotunnel brand and providing recommendations on future strategy.

Dix has said that the company will take full advantage of its expanding 800,000-strong database, with an emphasis on direct marketing. Eurotunnel is keen to capitalise on what it calls “dinner party marketing” – keeping existing customers loyal and encouraging them to be advocates of the service.

“We will be looking closely at niches and these will be targeted much more clearly. There will be a segmentation process where we will be able to target special interest groups. A lot of investment will be there. We will possibly look at TV and radio but it is safe to say there will be a lot more direct marketing and below-the-line work,” Dix says.

It is likely that O&M’s direct arm Ogilvy One will be involved, although there is a conflict of interest which will need to be reconciled: Ogilvy One handles direct marketing for rival P&O Stena.

O&M has an exciting and difficult task on its hands. It will need to create a superbrand to build market share, attract customers and increase turnover. This will determine whether the company can deliver on its promise of breaking even in seven years’ time.

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