The Story of Patongko | A True Life-Saver for Thai Airways.

‘Patongko’ is a Chinese word, meaning breadstick or Chinese dough.  The method of making the Patongko is to knead the flour and cut into 2 small sticks next to each other and deep fry in hot oil. Thai people tend to eat Patongko as breakfast with tea or coffee. A popular way of eating Patongko is to dip it in sweetened condensed milk or custard.  Patongko is considered a popular breakfast in Thailand because it is delicious and inexpensive. The average selling price of Patongko in Thailand is only 2 Baht per piece.  To see a clear picture, 1 US dollar can buy 15 pieces of Patongko, or even up to 20 Patongko per 1 Euro. 

Since January 2020 when COVID has badly hit the world, it evidently affected all business sectors, from small SMEs (Small to Medium Enterprises) to even large public corporations.  All countries around the world try to introduce strict measures to intercept and control the spread of disease. One of the decisive measures is to limit and to refrain from travelling, which has had a severe impact on many relative industries, especially the travel and airline industries.  The business of the tourism industry in Thailand has also been adversely affected.  Airlines and hotels even tour operators went bankrupt and shut down.  There was a need to stop employment abruptly and enormously.  The crisis has forced global airlines to look for alternatives to help keep the business sustainable and to get through this difficult time, by making good use of their available resources.  It looks like all airlines can do well in this regard.  Thai Airways is the one.  It has reversed the strategy to sell one of the Thai snacks called ‘Patongko’.  The uniqueness of this product is a secret recipe of Thai Airways kitchen, therefore, Thai Airways Patongko quickly gained popularity beyond expectations and can generate income for the company over 10 million Baht a month.

 

	2020 (COVID)	2019	2018	2017
Revenues
- Revenue from sales & services	47.7	180.3	196.0	189.8
- Other income	0.9	8.6	4.6	0.7
Total revenues	48.6	188.9	200.6	190.5
Expenses
- Aircraft fuel	12.3	54.7	60.1	50.2
- Employee benefits	20.5	31.2	30.9	29.7
- Flight services	6.7	21.1	22.2	22.3
- Crew	1.6	6.2	5.6	5.6
- Aircraft repair & maintenance	7.9	19.3	20.1	17.7
- Depreciation & Amortization	27.8	16.8	19.0	17.0
- Lease of aircraft & spare parts	0.2	15.0	15.0	11.3
- Inventories & supplies	2.1	9.1	9.1	9.0
- Selling & advertising	1.9	10.6	10.8	11.2
- Other expenses	89.5	16.1	19.4	19.2
- Finance costs	18.3	-	-	-
Total expenses	188.8	200.1	212.2	193.4
Income (Loss) Before Income Tax Expenses	(140.2)	(11.0)	(11.6)	(2.9)
Income Tax Expenses	1.0	1.0	0.1	0.9
Annual Income (Loss)	(141.2)	(12.0)	(11.5)	(2.0)

Unit:  Billions THB

Table 1:  Thai Airways’ Financial Statement 2017-2020

Source:  invester.thaiairways.com, 2020

 

From Table 1, it can be seen that Thai Airways has suffered from continuous operating losses over the years and even more losses in 2020 when COVID has hit the entire world, the monthly 10 million Baht sales revenue or 120 million Baht per year of Patongko selling cannot be compensated for that lost income at all.  It is not even 0.001% of total revenue.  And the question here is, is it worth it?  It cannot even cover the company's minimal expenses, so why is Thai Airways doing it?  Is it for fun?  Is there any other purpose as to why they do it?  For whatever reason, Thai Airways' Patongko selling has made history and was the talk of the town during the company's most difficult times. This article will, therefore, be focusing on the marketing analysis of this particular product during this crisis.  Even though the company is in financial difficulty, what we will be able to learn from Thai Airways this time is how to manage one of the most successful marketing programs in history.  This is amazing.

Business Disruption

As we all realize, COVID is severe and has a tremendous impact on the global tourism industry, business sectors must do whatever it takes in adaptation for survival.  Especially for airlines businesses, several world-class airlines have launched business ideas of how to cope with this tough situation and bring income into companies.  In most cases, airlines have created new products and services to replace the original products and services that were affected and unable to generate sales during the time of COVID. 

The problem of Thai Airways was intensified during the Covid-19 period, causing the flights could not be operated as usual.  The various departments in Thai Airways were disrupted.  The organization had to brainstorm to find a way to generate income.  It has started from the Catering department to make food menus for sale which initially earned a good income.  Although it is not comparable to the aviation service, the sales have been consistently good for more than 2 months, resulting in an extension to increase sales more and make use of the available resources.  As a result, Thai Airways originated the project called "Tasty over the sky, no need to fly, it can be fun", which was born with the Zero-Cost concept.  Thai Airways became to dig up unused chairs in the warehouse to dust off to make new ones, search the warehouse to bring old parts designed as a table, and install stairs leading up to the dining area by using the old aircraft stairs.  All of this is done in cooperation with the technician department. The technician department has facilitated cleaning and assembling various equipment into decorative furniture, transforming the canteen that serves employees to become a restaurant with a travel atmosphere, and raising the menu that is popular with passengers and developed to be suitable for serving on the ground in terms of both taste and serving size.  In addition to the issue of "food menu" and "decoration", "hospitality" is another hallmark of the brand "Thai Airways".  Some employees also volunteered to dress up in a captain pilot and a stewardess suit to take pictures and talk to customers.  By this work, the pilots and crews even dress up wearing uniforms and full makeup and gather together to make a music band to entertain customers by themselves.  The feedback, in the beginning, has been so good that Thai Airways has extended restaurant operating days from previously Wednesday - Friday to be Wednesday - Sunday and is also aiming to develop similar ideas to other branches.

Product Development Strategy

With the successful concept of "Tasty in the sky, no need to fly, it can be fun.", it led to the next idea of how to generate income from the locations that are cost-free.  And that is where the concept of a new product, Patongko, has begun. Originally, Thai Airways serves Patongko to passengers onboard only.  Nevertheless, when it received a very good response and the company had to stop flying, it has caused many passengers demanding that they want to eat Patongko even if not flying.  The company, therefore, brought out the Patongko to sell to general customers who want to eat even in such non-flying times like this.  Since then, Patongko has always been in the spotlight as a major backlash that might have helped Thai Airways go through this crisis.  When carefully analyzing the product strategy of why selling Patongko was so successful in such a short period of time and fortunately can generate such a significant number of sales for the company, the reasons behind this product success story include the following.

1. Crunchy on the outside but softy on the inside

With the fascinating history of Patongko that Thai Airways serves on board and has long been a favorite of its passengers, Thai Airways thus has chosen to produce Patongko to widely sell in the market.  A secret recipe is successfully created and owned by chefs from Thai Airways.  Based on inquiries from passengers who are customers and like Thai Airways Patongko, they said the reasons why they especially like Thai Airways Patongko is because it is crunchy on the outside while softy on the inside.  The flavor is just right and delicious, not too salty and not too bland.  They also said that so far, they cannot find any other Patongko that is like Patongko of Thai Airways.  A distinctive and unique feature of a product that no one can emulate is the first and foremost important thing in creating a new product strategy.

2. Purple custard dip as a secret recipe and perfect branding tool

In addition to the distinctive features of the Patongko itself, Thai Airways does not forget to add the distinctive features of the custard that are eaten with Patongko as well.  By this work, Thai Airways needs to make small adjustments. Traditionally serving Patongko with sweetened condensed milk or ordinary custard is too plain and dull.  It took the Catering department 3 days to come up with the special "purple sweet potato custard” serving with Patongko which purple is the branding color of Thai Airways.  Customers will be remembering the brand-new purple mustard firstly ever introduced in Thailand, and by Thai Airways.  People who like purple sweet potato custard from Thai Airways revealed that they adore it because the taste is just right, not too sweet and not too greasy. Also, they had never seen the purple custard before because generally Thais often eat Patongko with orange custard, which is made from eggs, or green custard which is made from pandan leaves.  Those are the only two colors of custard Thai people ever know of.  Therefore, the purple custard is considered a wow experience for them.  Also, when they see purple custard, it will automatically recall them of Thai Airways.  Now, “that” is an effective tool of branding.

3. Freshly cooked and served everyday

As the delicious Patongko is often eaten freshly hot from the pan, Thai Airways wants their Patongko to be the best quality and the most delicious, therefore, the standard of the product is set to be made fresh from the hot pan only, not overnight, not selling cold.  This has made Thai Airways' Patongko always famous among consumers for its deliciousness, good quality and no one can imitate.  In fresh production every day and stale stock is not allowed, it is a waste of time in fresh production every time.  Even so, customers are willing to waste long queues to buy fresh products without a single complaint.

4. Limit number of sets purchased per customer per day

Patongko is ideal as a quick breakfast grab before going to work. Since launching, buyers have to wait in long lines, and it runs out very quickly. The phenomenon has become viral that 1,200 pieces of Patongko and 350 cups of purple potato custard are quickly sold out in just 1.5 hours where the first queue starts at 4:30 am. It has become rare items and so popular that Thai Airways have to quickly expand another 4 distribution points by bringing up its existing rental cost-free branches to be new distribution points.  This is a clever ‘rare product strategy’. Not everyone with money can buy it. There is also the ubiquitous hashtag: "Must eat once before you die!", which has had enormous positive marketing impact.

5. Premium product sold at 8x higher price

Besides being delicious, unique and rare, Thai Airways also has positioned their product as premium which price is 8 times more expensive than those sold in the market. While small-sized Patongko commercially available costs only 2 Baht each, Thai Airways Patongko is a much bigger size and sold at a price of 16 Baht each. Still, there were no complaints and does not affect sales at all. This could be the fact that existing customers of Thai Airways are a group of people with high purchasing power, the selling price of Patongko which is 8 times higher than the general market, therefore, has no effect on sales of the mentioned product whatsoever.

The Integrated Communication Strategy

It would be difficult to answer whether or not it is a coincidence or a professionally intentional long-term communication plan of Thai Airways’ marketing team.  The first marketing communication campaign of all channels was kicked off on September 18, 2020, with Twitter, followed by Facebook, IG, and YouTube on the same day.  Every channel has a wide range of talks about Thai Airways Patongko all day, from morning till evening, which is considered to be a very successful launch.  Thai Airways had very well applied a very good integrated marketing communication strategy on the first day of the product launch, including social network, a national newspaper, and even influential marketing.  The integrated marketing communication and media plan have been exhibited in this Table 2 below.

 

	18 Sep 2020	22 Sep 2020	30 Sep 2020	6 Oct 2020	17 Oct 2020
Message	New product launched and its history of secret recipe from Thai Airways kitchen	Long queue phenomenon	10 MB monthly sales	‘Simply the best’ guaranteed and endorsed by the Prime Minister of Thailand	Targeted to expand to 200 locations and sales at 1,000 MB in 2021
Media
- ATL	All leading Thailand’s national TVs and newspapers
- BTL	Company website, brochures, samplings
- Social	Thai Airways Facebook Page, Twitter, Instagram, YouTube
- Influential    marketing	Thailand’s celebrities and influencers post their social accounts that they get to try the Thai Airways famous Patongko, and it's so good.
- Viral   marketing	People continuously post on their social account, showing off how cool and trendy they are, to get a chance to try Thai Airways Patongko with a slogan “A must-eat once before you die.”
- Employee   marketing	Thai Airways staffs together twitted about the pride in their participating in Patongko sales and its incredible deliciousness.

Table 2:  The summary of integrated marketing communication plan of Thai Airways ‘Patongko’

Source:  Compiled by author (2021)

As we can see from Table 2, we must accept that Thai Airways marketing communication team has done quite a remarkable job.  Media planning was ingenious and perfectly integrated, starting from the convincing conveyed message, the smart choice of media, and the right date and time of media launched.  The story was wisely laid, starting from the product that has been officially launched to the market along with a history of secret recipe from Thai Airways kitchen, to the long queue phenomenon, to the incredibly successful sales revenue, to latterly be endorsed by the most influential gentleman in Thailand, and ended remarkably with the next year sales plan.  All messages were plainly distributed in effective integrated media, including above-the-line (ATL), below-the-line (BTL), social media, influential marketing, viral marketing, and most interestingly, employee marketing.  Since Thai Airways is a Thai company and be with Thai people for 62 years in service since 1959, it certainly has a long story and pride.  Thai Airways staffs are proud of their company and above all, they believe in what the company is doing.  They joined forces to promote Patongko via social media with pride.  One pilot captain even proudly posted on his Facebook account that he was the one who deep-fried Patongko by himself, and that has been a talk of the town for quite some times.  This employee engagement in this new product launch campaign was not something the company planned for, and it was completely free.  As for the right timing, everything has seemed to be perfectly covered in a one-month-period plan which created the perfect momentum for target audiences to be convinced of the company and its new product.  For the above-mentioned reasons, Thai Airways has integrated marketing communication for Patongko effectively and successfully.  This is clearly evidenced by the monthly sale of 10 million Baht, which means that the company has sold as much as 600,000 pieces per month.  This is truly phenomenal.

Is the Snack Really Saving the Airlines’ Life?

Thai Airways used to have the highest unit price revenue from first-class ticket sales of long-haul flights as high as 500,000 Baht per ticket, until the current crisis has arrived, causing Thai Airways to turn to sell Patongko at the lowest unit price of only 16 Baht per piece.  Many questions arise in Thai society.  What is it for?  Is it worth doing it?  Is it worth it to mobilize company resources to come together to sell Patongko for the sales volume of only 10 million Baht per month?  The real purpose is not likely to be sales revenue because such little income from the sale of that Patongko is not accounted for even 0.01% of the company's total revenue in the past.  If not for sales, then what is the real purpose of selling Patongko?

It is obvious that the hidden value from Thai Airways' Patongko selling is worth much more than just a 10 million Baht monetary value.  Those hidden values mentioned here are the following.

1. Extend customer base

According to Bangkok Biz News (2020), Thai Airways Catering Director revealed to reporters that selling Patongko has greatly helped the company to expand its customer base. Selling Patongko to customers on the ground makes Thai Airways expand the customer base more. Originally, Thai Airways kitchen is known for having a rather high food price, making most of the customer groups to be limited to only adults with high purchasing power. However, now PatongKo makes Thai Airways accessible to all groups of customers, genders, and ages, with an overwhelming response. This makes Thai Airways brand widely known and not difficult to expand the business.

 

2. Lead to more sales to other business units

With hundreds of customers per day wasting time lining up to buy Patongko, but at the end of the day, only a small portion of them successfully get to buy it. Thus, the rest of them turned to the Puff & Pie bakery shop in the nearby area instead, so as they do not have to feel that they have to return home empty-handed. Puff & Pie is the main brand of food and dessert of Thai Airways. Currently, Thai Airways Kitchen has announced its plan to expand the Puff & Pie brand to the rest of 30-40 provinces that have no branches. The form of business expansion will focus on dealers or franchises. In the first quarter of 2021, Thai Airways initially targets at 500 more branches to generate additional income of approximately 500 million Baht per year.  It is clear that Patongko has brought the Puff & Pie brand business opportunity to Thai Airways.

 

3. Excellent branding tool

Thai Airways has been using purple as an official color symbol of Thai Airways for over 62 years in service, creating a memorable picture for passengers around the world. This purple is the color of an orchid, Madame pompadour, which has a purple hue and is the flower of Thai Airways. Thai Airways uses purple in all its products and services, including marketing materials. When customers see the purple color, they will immediately think of Thai Airways. As well as the efforts to create purple sweet potato custard to be consistent with the Thai Airways branding, customers immediately recognize that this is Thai Airways' Patongko which is both good quality and with a premium price but still worth buying. This is a branding insertion into a product, with a very low marketing budget but creates the best impact.

 

4. Opportunity to promote a good attitude and cooperation among employees

This is probably the first and only chance that we see Thai Airways employees unite as one, together make it through this crisis. Thai Airways staffs together tweeted messages promoting the sale of Patongko with pride. One captain pilot is up to the point where he posted a message through his personal Facebook regarding the pride of even if he is not operating the aircraft at this tough moment, he is proud to play an important part in helping the company get through this crisis by standing and frying Patongko for sale. Executive Chef of Thai Airways delivered a powerful message to greatly encourage to all Thai Airways employees, “We, the Thai Airways employees, fight with all our hearts and never leave each other. Don't forget Thai Airways, don't forget us.” ~ Pierre Andre-Hauss, Executive Chef, Thai Airways Public Company Limited (www.thousandreason.com, 2020).  This collaboration of employees has created a positive drama for the organization. This leads to more customers' desire to increase the company's supports for products and services, in addition to the changes of employees’ attitudes towards the organization.

 

5. Explore new biz opportunity

From the overwhelming success of turning a crisis into an opportunity like selling the Patongko and creating a phenomenon throughout Thailand, this makes Thai Airways seriously study the feasibility of this business.  Thai Airways Catering Director revealed to reporters that Thai Airways aims within the first quarter of next year to launch a new product brand called "Patongko" to the market through a franchise strategy. To meet the overwhelming demand of customers, Thai Airways expects to open approximately 200 Patongko franchises nationwide, generating at least 1 billion Baht in additional income per year. Currently, it is in the process of investing in machinery and preparing the production process to support transportation and maintain the quality of Patongko (Bangkok Biz News, 2020).

 

Conclusion

From the analysis, it was found that although the sales of Thai Airways’ Patongko is so little when compared to other revenues of the company, it has greatly hidden benefits to the company itself in the long-term.  The benefits that the company receives are enormous, which cannot be properly valued in terms of monetary value. Those particular benefits are, for example, the value of the new food business that is coming up, and the brand value of Thai Airways itself that can reach consumers more and thoroughly like never before.  Although such benefits are not tangible and convincing enough to lead the company through this crisis, these hidden benefits will continue to accumulate and keep increasing and eventually affect the brand value of Thai Airways even higher.  And when this crisis has passed, Thai Airways will be a company with a very high brand value. It definitely affects the business and profits of the company.  Selling Patongko is no joke.  Money may not be a big deal.  However, the acquisition of hidden benefits that may affect the long-term business is considered more important in this situation.  Although Patongko sales bring little revenue to the company at the moment, it is evident that Thai Airways has well prepared a plan to expand this project to make a profit of billions for the company in the long run.  And when this crisis has passed and the business can resume operations as usual, Thai Airways shall then be able to generate billions of revenues from new business expansion that is sprouted from the humble sale of Patongko.  From this crisis, we have seen an attempt to sell 16 baht per piece of Patongko from Thai Airways, and that creates a good drama. It helps build a positive corporate image of being a company that never gives up on Thailand and Thai people.  People have seen that Thai Airways will stand up to fight in order to stay with Thailand and Thai people forever.  Moreover, selling Pathongko is also a perfect tool to get a sympathy score from customers, causing a desire to support the business of Thai people.  According to the news report, it mentioned that Thai people overwhelmingly sent their encouragement to Thai Airways when they learned that Thai Airways was selling Patongko for 16 baht each in order to save and sustain the company from this crisis (www.thestandard.co, 2020).  According to the news, Thai Airways is fighting hard in an attempt to survive by declaring bankruptcy and changing its status from a state-owned enterprise to a private company.  However, regardless of the financial situation the company is currently in, it is clear that Thai Airways must continue business as Thailand's National Airline.  Similar to marketing, whether it is any product and service of the company, it will have to continue as well.  The results of successful marketing may be clearly measured by sales, but over the long term, the company will reap the results of this positive marketing and will certainly be benefitted in the future.  I do believe that when Thai Airways returns to prominence in the aviation industry, coupled with new revenues generated from new businesses during this crisis, as well as the ever-increasing brand image that has gradually and carefully built over time, and last but not least, heartfelt supports from customers, will allow the company to move forwardly without stopping.  There is always a hidden opportunity in every crisis.  Every company must learn from past mistakes and knows how to turn that crisis over to an opportunity for the sake of a company to grow with sustainability.

 

Written by: Kaniya Nantamontry

 

References

 

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