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Archive for the ‘luxury’ Category


The question of the day: Can Massclusivity be achieved?

First of all, what is massclusivity?

From Idea Couture’s Idris Mootee:

In economic terms, luxury products are those which can consistently command and justify a higher price than products with comparable function and similar quality.

In marketing terms, luxury products are those which can deliver emotional benefits which are hard to match by comparable products.

One challenge is whether or not a niche player can move outside of their niche, or expand their niche without destroying their brand in the process.

Another challenge is once it can successfully move out of the niche, how far can it go until it becomes mass? Is there such a thing as massclusivity?

Let me give you some example of Massclusive brands (brands which USED to be niche or luxury brands but have now begun to focus on mass market distribution rather than exclusivity):

Gucci.
Cartier.
Ralph Lauren.
Chanel.
Mercedes.
Faberge.
Yves Saint Laurent.
Lotus. Tiffany & Co.
Godiva.

The question rephrased is this: Can a luxury or niche brand remain luxury or niche when everyone is wearing, driving, eating or drinking it?

Are you really “thinking different” when everyone owns the same iPod or MacBook? Are you really stylin’ when everyone is wearing the same Kenneth Cole, Nike or Puma shoes? When everyone is wearing either one of the top five selling perfumes? When everyone is wearing the same 80’s throwback belts and sunglasses? When everyone is sporting Gucci purses and Chanel cell phone cases?

Can a commoditized brand (even if it continues to charge a premium and position itself as a luxury or premium brand) still remain niche when it can be bough at Target or Macy’s, or luxury when it is mass produced in Asian factories as opposed to hand-crafted in Europe?

Have we entered the era of the non-brand superbrand? Where unique, non-recognizable, word-of-mouth only “custom-made” works of art (in tailoring, shoe-making, cuisine, timepieces, writing instruments, vehicle alterations, and other accessories) are the new luxuries/niches? (The more obscure to the general public and exclusive via scarcity the better?)

I am not talking about the masses here. They’re still buying into the notion that the more well-known the “luxury” or “premium” brand, the more valuable it is. (Hey look: I’m wearing an ugly ass cotton shirt produced by child labor in Micronesia! Between the $280 price tag and the brand name, I know I’m wearing some serious couture!) I am talking about the mavens, the hipsters, and those among us with the sophistication to know real craftsmanship from factory-made crap stamped with a fancy logo and a criminal price tag.

Example 1: Buying your fancy rainforest-friendly ‘organic’ tea at Whole Foods vs. buying premium quality no-brand (but incredibly fresh) loose leaf tea by the gram from La Maison Du The in Paris (a tea store and salon with such an enviable pedigree and reputation that it doesn’t require a website.)

Example 2: Buying your Hilfiger/Cremieux/Lauren/cK suit from Macy’s or Dillards vs. grabbing a flight to London to get your next bespoke suit cut on Savile Row.

For all the hype, fancy packaging and gorgeous stores, I wonder if once “luxury” brands can truly be luxury brands if they do any of the following:

1. Advertise on Television, the radio or the web (print ads are acceptable).
2. Sell their products on the internet or via catalog.
3. Have stores or products for sale anywhere near a shopping mall or airport.
4. Have stores anywhere but Paris, London, Geneva, Dubai, Milan, New York, Monaco, Tokyo, and Hong Kong.
5. Don’t have a store in at least one of the above cities.
6. Aren’t known for custom/one-of-a-kind products.
7. Aren’t enjoyed by royalty.
8. Don’t charge a ridiculous premium to keep poseurs at bay.
9. Don’t require setting an appointment before a sale.
10. Don’t have the best artisans in the world working on their products.

True luxury brands don’t really need to advertise. The last thing they want is to be discovered by the masses. Their market is the world’s old money families who grew up with them. The world’s wealthiest. They want clients with the means to project the level of sophistication, impeccable taste and flawless quality that their products embody. Most celebrities are liabilities to them – The Britneys and the rest of the tabloid crowd need not request an appointment. They would rather stick to Kings, Sultans,Princes of industry and true fashion mavens.

Trust me when I tell you that luxury brands aren’t available in Greenville, SC or Cleveland Ohio. Luxury brands don’t print their mark on cotton T-shirts or baseball caps. And luxury brands don’t use bar codes on their packaging.

Oh, and by the way, Rodeo Drive is a complete sham – just like the promise of massclusivity.

Check out the rest of this very interesting presentation by Idris over on Slideshare.

Have a great Thursday, everyone. 🙂

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For the next three days, I will be bringing you interesting bits of insight from the other side of the big pond. Because I want you to be able to read and understand these posts, I will translate everything into English (yes, free of charge.)

How about that!

(If you want to read the meat of this post in its original French, the link go here.)

Jean-Noël Kapferer (HEC).

2007 was characterized by the success of extremes: Low cost and luxury brands in mass market like Apple, H&M or Nespresso. We observed a polarization phenomenon in the market.

On the one hand, certain brands positioned in the value-priced corner further discounted their products, like Ikea and Easyjet for example. The Logan, which was Europe’s cheapest car, will soon be dethroned by a vehicle costing only $2.500 euros born of a partnership between Renault and an Indian manufacturer.

On the other hand, middle-of-the road brands which not so long ago were known for producing mass consumption products are now becoming premium brands.

(…)

Apple isn’t technically a luxury brand but it employs luxury brand strategies. This is the case with iPhone: A single distribution partner, a premium price, an exclusive service package, messaging centered on living an ideal lifestyle… all of this to develop a unique experience aesthetic and a strong sense of community. The process is the same when Nespresso launches a boutique on the Champs Elysées.

Likewise, Air France is bringing back First Class in response to its Tempo Class being challenged by low cost operators. (The advantage of business class resides in that businesses, not individual passengers foot the bill.)

(…)

Sofitel is also following this model by repositioning half of its operations as luxury properties, under its Pullman brand. This tendency by mid-market brands to restructure “up” their existing stores, properties and product lines is important.

Indeed.

While many companies still remain in the soft, mushy center, the ones with a bit more insight into how the world has changed in the last couple of decades are taking steps to a) differentiate themselves from their competitors and b) stand for something. This is driving brand… or rather value proposition polarization.

As a brand manager, you really need to routinely ask yourself two basic questions:

1) Why should anyone do business with you instead of the guy across the street? Name 3 things. You have thirty seconds.

2) What’s your value prop? Are you primarily value (volume) or are you primarily luxury (margin)? (Yes, even if you want to be both, you have to choose one.)

Examples of volume: Ford, Bic, Motorola, Coors, Sears, Magnavox, Sony, rows 10+, Food Lion, Dasani.

Examples of luxury: Jaguar, Mont Blanc, iPhone, Heineken, Polo, Philips, B&O, rows 1-5, Whole Foods, Perrier.

Some brands do manage to cross the volume/margin barrier, but they are few and far between. They are the Starbucks, Nike, Apple and other mass-market relative lovebrands of the world. (I say relative because being a lovebrand is neither here nor there: Nike may not be the lovebrand it once was, and Starbucks’ star may not be shining as brightly a year or two from now as it did three or four years ago. Here today, gone tomorrow… Consumers, after all, are fickle.)

How to build a Lovebrand, in 5 simple (albeit major) steps:

Step 1) Start with a luxury value prop foundation.
Step 2) Develop volume-friendly products.
Step 3) Create a distribution channel that focuses on both breadth and depth.
Step 4) Love your customers even more than they love you.
Step 5) Keep your eye on the ball (Step 1)

Of course, the devil is in the details, but you have to start somewhere. 😉

Is there a future for middle-of-the road brands? Sure. Why not? For companies more concerned about maintaining a certain level of revenue this year – these are generally companies that take a “if it isn’t broken, don’t fix it” approach and don’t put much stake in innovation or growth strategies. I don’t see these types of companies disappearing anytime soon, but they should already be seeing a downturn in their market share, profit margins and new customer acquisitions. At best, they can expect to sustain perhaps up to 6% growth for another year or two – assuming they are already there now – before that growth suddenly slows and becomes negative.

Mark my words: that downturn will not be gradual. It will happen within a quarter or two at the most. Not good.

The soft middle may seem like a safe place to be if you’re either too dumb or too scared to read the writing on the wall… but hey, some execs are happy to just show up and collect a paycheck until it’s time to float their resume to the next flunkie status-quo company. That is the reality of this world. The tendency for proactive brands to clearly and deliberately realign their value propositition along the line of either value/commodity or its polar opposite (luxury/premium products) is as clear an indicator as I’ve ever seen of the impending doom of the soft middle’s “business as usual” model – at least when it comes to mass-market products.

There is simply a) too much information available to consumers and b) there are too many convenient channels through which consumers can purchase products from a variety of pricepoints for middle-of-the-road companies to have a fighting chance against brands with clear and polarized value props.

Have a great Thursday, everyone. We’ll be back with Part 2 tomorrow.

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The folks at NameWire (the team behind the Strategic Name Development Blog) posted an interesting piece last week about company names and the fear of commitment. One of the terms I came across in the post was “transumerism.” I had seen it before, but I have to admit that I had forgotten all about it. Since it was hyperlinked, I clicked on it, and found this fantastic article from Trendwatching.com that put it all in perspective… and then some.

So… what are transumers? According to Trendwatching.com:

TRANSUMERS are consumers driven by experiences (instead of the ‘fixed’), by entertainment, by discovery, by fighting boredom, who increasingly live a transient lifestyle, freeing themselves from the hassles of permanent ownership and possessions. The fixed is replaced by an obsession with the here and now, an ever-shorter satisfaction span, and a lust to collect as many experiences and stories as possible.* Hey, the past is, well, over, and the future is uncertain, so all that remains is the present, living for the ‘now’.

Sounds a little existensialist? Okay… The term initially began thus: transumers are consumers in transition (like travelers). That was it. The trend just focused on them and “the many novel and innovative shopping opportunities at airports, train stations and hotels catering to this crowd.”

The term, by the way, was coined by Fitch – the global design and business consultancy – back in 2003.

Things have obviously changed since then, and the trend is evolving fast.

So why should anyone care about transumers? We’re getting to that. Here’s a multi-part tip:

Observation #1:Luxury is an ever-reliable indicator of what next generations will consider basic necessities (thus often revealing the Next Big Thing).”

Observation #2:Luxury consumers are spending more, in many cases lots more, on life-changing experiences, while their need for luxury goods is waning.”*

Conclusion:
With experiences starting to trump goods, many fixed items run the risk of becoming synonymous with boredom, with hassle, with quickly-out-of-date, with maintenance, with taking up too large a part of budgets, if not lives.

Now let’s look at the definition of a transumer again:

TRANSUMERS are consumers driven by experiences (instead of the ‘fixed’), by entertainment, by discovery, by fighting boredom, who increasingly live a transient lifestyle, freeing themselves from the hassles of permanent ownership and possessions. The fixed is replaced by an obsession with the here and now, an ever-shorter satisfaction span, and a lust to collect as many experiences and stories as possible.* Hey, the past is, well, over, and the future is uncertain, so all that remains is the present, living for the ‘now’.

For better or for worse, this trend is growing fast. Think about how most people buy technology now, from MP3 players and digital cameras to laptops and cell phones. Think about recreational gear like golf clubs, triathlon bikes, sunglasses, tennis rackets and fishing poles. Think about clothes and accessories. Even big ticket items like cars and large flat screen TV’s. Think about the appeal of Starbucks, Whole Foods, Aveda, and all of the other stores whose bread and butter isn’t the quality of the product itself, but the entire experience surrounding a consumer’s interaction with that product and the brand in general.

I would venture to say that transumerism is probably much more relevant to US consumers under the age of 40 than over the age of 60… but that’s just a blind assumption.

Okay, maybe not so blind, but whatever.

I really urge you to read Trendwatching.com’s brilliant little primer on transumerism, and find out more about how transumers interact with spaces, surprise, pleasure, freedom, and causes. It’s a great read.

It’s also a fascinating take on shifting consumer behaviors and how smart branding can help companies take full advantage of this growing trend.

Have a great Tuesday, everyone. 😉

* Spending on luxury experiences in the US, including travel, dining, entertainment, spas and beauty services and home services, nearly doubled, from an average of USD 11,632 in 2004 to USD 22,746 in 2005: a 95.5 percent increase” (source: Pam Danzinger, Unity Marketing).

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