Sunday, October 18, 2009

What Makes A Luxury Brand - Service!

It has become increasingly clear to me in the past twelve months that Luxury brands are becoming truly luxury again. The economic euphoria of the last ten years created many brands that benefitted by uncontrolled spending by consumers. This unprecedented spending created markets for luxury products that were trademark badges but not real luxury brands. They did not measure up in quality and features but even when they didn’t it was ok with the consumer because money was no object and many aspirational consumers wanted trademark (badge)prestige not real luxury. Image, quality and a long term relationship with the brand were not important just the image.

We now have a new reality that I believe isn’t new it’s just as it should be. And this just happens to be the way it was for many years leading up to the recent cycle. It is my contention that luxury brands have always been about more than just the label and the tangible product. A true luxury brand is just as much about the service that goes with the product as it is about the product itself. Pre-purchase service, the purchase process, the selling retailers image and reputation, the service after the sale and of course the ongoing relationship that the brand has with the owner after the sale is over.

These elements were often ignored or considered unimportant by both the brand and the consumer during a period of exuberant sales and spending. There was so much spending and so many customers a brand didn’t have to provide service or worry about a long term relationship. That party is over and the market has reset and there is a new, old reality. True Luxury brands will benefit from this change and the pretenders will fail. Authentic Luxury brands have long relationships with their customers including service, access, selective distribution and attention to detail in everything they do. The luxury consumers’ time is valuable and they want to own brands that understand this. They also want assistance and confidence that if something is wrong it won’t be a hassle to get it resolved…it’s more than just a product or badge.

I believe this is good - the brands that understand this will benefit greatly!

Tuesday, May 12, 2009

Strategies for gaining uplift in a downshift

We recently completed our CMO Council, North American board meeting in NYC. The topics were wide ranging but the first topic discussed was an exploration of:

Strategies for gaining uplift in a downshift

Below are my favorites from the discussion and best practices sharing from the board. Many of these might be common sense to some but my experience tells me that most marketers become very focused on doing less of the same rather than doing what’s critical for the long term health of the business.

  1. Pay attention to your best customers…do NOT take them for granted!

  2. Think about “value added” service in addition to the tangible product you are selling?

  3. Redirect discretionary spending to future activity to reassure your current customers that you are positioning for the future vs. advertising and new customer development.

  4. Work more closely with the sales team – no time for turf battles. You will win or lose together…look around there are less of you.

  5. Focus – what is your point of differentiation? Invest in it and nothing else during this difficult period.

Thursday, May 7, 2009

Spencer Stuart CMO Summit

I just returned from the Spencer Stuart CMO Summit in NYC where the topic of…What’s Next? Reinventing Marketing for the Next Chapter was discussed by a distinguished panel from great brands like Visa, Walgreen, US Olympic Committee, HP, Franke and others. My key take-aways from the panel discussion were:
1. Marketing in a challenged economy in more important than any other time. Brands and companies that target their reduced resources and are aggressive will be big winners when the economy turns around.
2. Brands, Company’s and their CMO’s must have a singular purpose and focus to unify the organization and to ensure the customer/consumer understands and gets the message.
3. The trend continues away from traditional media to digital. The general consensus was that the leading marketers will have already are in the process of shipping up to 40% of the communication spend to digital (web, social media, etc).
4. The final take-away and probably the most critical was the notion of… Picking your bets as a marketer and than commit and don’t waver!

Wednesday, March 25, 2009

What happened to the Mid Market?

Has the market become commoditized or polarized and what’s the cause?

Since the post war boom business school professors, marketers and business leaders operated under the belief that there were three distinct consumer segments in the US market. The Luxury segment that accounted for five to ten percent of the market, the mid or mass market that accounted for sixty to seventy percent and the low end or commodity segment which accounted for twenty to thirty percent of the market. The classic bell shaped curve.

Has the classic model and curve been turned upside down, flattened or shifted to the bottom? Have marketers and businesses adjusted or have they been so focused on the daily grind of running a business that they have not even noticed the shift?

It is clear to me that the middle market has shifted over the last ten years and is certain to deteriorate further during the current economic down turn. The critical question is why did this happen and do businesses leaders recognize the changes and are they prepared to adjust?

There are at least three contributing factors that either caused the shift or are the result of the shift or maybe both.

The retailing landscape was forever changed by Wal-Mart. Is the Wal-Martization of America a reflection of a societal shift or did it cause the shift? Why did so many department stores fail? The market is littered with a long list of department stores that have failed or have been absorbed by a few remaining department stores that are struggling to survive. This phenomenon is not exclusive to the general merchandise categories but virtually every consumer goods category. Hardware and appliances are dominated by Home Depot and Lowes and electronics by Best Buy to mention a few. Drugs and groceries by a few chains, yes Wal-Mart is in these businesses also.

Why is the bastion of middle America the “Mall” dying? Is it Wal-Mart or is the middle/mass market that drove the success of these venues in the sixties, seventies and eighties gone? Does the death of the department store that anchors the mall make this high overhead venue and business model unsustainable?

What impact has the internet had on the mass market? It has evolved from an electronic library to communication tool to electronic catalogs and who knows what’s next all within the last ten years. The internet changes dramatically how businesses reach consumers with both information and the purchase process. The internet drives prices down as a result of the low overhead and cost to set up a business as compared to the investment required for a brick and mortar store or paper catalog. Marketing/advertising is a fraction of the cost because search engines, social networking sites, etc do the marketing for free or a fraction of the cost.

Where did all the respected everyman brands go? The failure of the US auto industry has many causes but certainly has contributor to the shifting market segments in America. Not that many years ago the average American dreamed of a new Chevrolet, Buick, Oldsmobile or Dodge. They also dreamed of a new RCA or Zenith in the living room. Didn’t every home and sports team have a closet full of Wilson and Spaulding products just a few years ago? What caused these once great middle market brands to fail? Was it Wal-Mart, is society changing or is this simply capitalism at work…the strong and smart survive?

The demise of manufacturing in America has been reported for two decades. The media and union whipping boy is China and when the capitalism Jeanie got out of the bottle there was no chance of getting it back in. China has clearly changed the world forever but the idea that it’s simply cheap labor is missing the bigger point. There is no arguing that the Chinese work for less than Americans and Europeans do but it’s no different than what our grand parents worked for in the 30’s and 40’s. Their emergence into capitalism is just sixty years behind the western world. That does however translates into a competitive advantage on a number of fronts and cheap labor is simply a small part of it. If it was only cheap labor there are lots of other places you could get that. Several points that the media never discusses are the low investment cost today because of the advances in technology. The cellular revolution means no telephone polls in China as an example. Politics of course plays a role because China is a proud country and focuses as a culture on the big picture, the future not today or next year. Yes they manipulate their currency but they also make “investments” in infrastructure and advancing their society through subsidized raw materials, land and equipment. To them it's an investment in the future to Westerners its unfair competition, you can be the judge but you can’t change it! The other point that I rarely hear discussed is the work ethic and the human pursuit of a better life that is very much a part of our culture and society but it often seems that the media doesn’t believe the “foreigners” are entitled. This is a large part of their success as a people much like it was for us a generation or two ago.

Did all of the above change the American consumer so quickly that we didn’t even notice? The pace of change today is so much faster than it was just a decade ago. Businesses coming and going, brands coming and going is almost invisible or entertaining to the American consumer. It’s all about new and having something first or having something someone else does not. This “I have one and you don’t” attitude used to be an affluent consumer attitude that only money could provide. Now low cost manufacturing, China, low cost distribution, Wal-Mart and the Internet have both created an environment where everything is available to everyone and someone is always willing to sell it to you for less. Brand and product managers used to discuss positioning, distribution strategy and pricing strategy. Now brand managers talk about volume and margins this month not this year. So maybe America is the mass market we all learned about in school it just isn’t middle any more…is everything a commodity except the very high end?

So it’s the proverbial chicken or the egg question? Who is to blame for the commoditization of America? The consumer, China, Wal-Mart, technology our government or is it a natural evolution? It may not matter but business leaders and marketers better pay attention because more change and turmoil is on the way.

Sunday, March 8, 2009

Chief Marketing Officer Council

As a recently appointed advisory board member of the CMO Council I invite you to visit our website at

The The Chief Marketing Officer (CMO) Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide-range of global industries. Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide-range of global industries. The CMO Council's 4,000 members control more than $120 billion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. In total, the CMO Council and it's strategic interest communities include over 12,000 global executives across 90 countries in multiple industries, segments and markets. Regional chapters and advisory boards are active in the Americas, Europe, Asia Pacific, Middle East and Africa. The Council's strategic interest groups include the Coalition to Leverage and Optimize Sales Effectiveness (CLOSE), Brand Management Institute, and the Forum to Advance the Mobile Experience (FAME).

Saturday, January 17, 2009

White Paper: The Growth Dilemma for Premium Brands

The following is an Introduction to a white paper on the The Common Traps and Pitfalls of successfully Growing Premium brands

What Causes Premium Brands to Stagnate or Decline?

The root cause is a combination of many of the same issues that helped create the current financial crisis. A focus on quick financial reward resulting in tactical rather than strategic leadership!

There are numerous traps that must be avoided by ownership/management that often permanently damage and impact the future viability of premium brands. These common traps and misconceptions can be classified into three categories:

1. Endless Cycle of Turmoil and Short Term Orientation
2. Market share vs. Profit
3. Not Understanding and Committing to your Brand

The mistakes rarely exist individually and it is my experience that they often are all present in poor performing businesses. The endless cycle of these two strategic mistakes is often clouded by a cycle of turmoil and short term thinking that often needlessly destroys or devalues once vibrant and successful businesses/brands.

If you would like to read the entire white paper please go to the following link. I welcome your comments and I hope you will come back for more debate and sharing.