Final Presentation

Today was the last session of our "managing luxury brands" course and we all presented our brand extension.

Although I was really nervous I think I have managed to present really well. I really enjoyed presenting it like a pitch to an existing brand, particularly because this is what we will have to do in our jobs in the future.

All i all this seminar increased my knowledge about brand management and especially creating a brand extension challenged me because I needed to show a lot of creative thinking. Although at the beginning I wasn't sure how to start the assignment, by now I am really proud of my work and I am happy I continued putting a lot of effort in, to overcome my concerns and make it a good and logical assignment.


As I said before, today was the last session of the seminar so it will also be the end of this blog in it's current form. Especially because I like going to exhibitions and keeping up with what is going on in the luxury industry, it was great to share my opinion and experiences.

I will try to keep it going and may even report about my consultancy project next semester.

Guestlectures on sustainability and charity, two important aspects of Luxury Brand Management

Today we had two guest lectures, one about “sustainability and luxury brand management” and one about “charity and luxury”.

The presentation about sustainability was really interesting because not only common topics such as pollution and the right use of resources were raised but a wide picture of what sustainability means and what it includes was drawn.

Anette Lundbey (the guest speaker) made clear that “sustainability refers to the long-term maintenance of systems according to environmental, economic and social considerations” (Lundbey, 2012) and that those three factors cannot be separated but the picture has to be seen as a whole. She also explained that sustainability is a controversial topic especially because most humans struggle with thinking generations ahead (Lundbey, 2012). But as she said "we have to learn to think about generations ahead because without taking care of our environment there soon will not be an eco-system anymore, which means that there would not be an economy either" (Lundbey, 2012).

Some of her examples were very shocking and really made me think about the topic in more depth. When she was talking about 10 to 12 year old children, who are almost blind because they have stitched paper-thin textiles since they were little children (Lundbey, 2012) for example, this really opened my eyes. Instead of just seeing the beautiful sides of luxury we really have to start looking at what is on the other side of the coin, especially as future brand managers.

The way in which Nespresso developed their “ecolaboration” for example seemed to be exemplary as in order to get the best quality of coffee they incorporated with coffee farmers in Columbia, who promise to offer the highest standard of quality because in return Nespresso invests in their Businesses and trains them on how to use their resources efficiently (Lundbey, 2012).

The second guest speaker was Noor Al-Khillidar, the founder of the Iraqi Orphan Foundation in London. Because she was born in Iraq but was happily raised in the UK, enjoying the highest standards of technology and education, she had the feeling she wanted to give something back to her home country and therefore founded a charity to raise money for children in the Iraq.

To raise the money she organizes different events and collaborates with high end luxury brands such as Chanel who sometimes sponsor her events (Al-Khillidar, 2012). According to her, this is a win-win situation for both – for her as a sponsor because higher awareness can be raised for an event if big brands are involved, as well as for luxury brands as they can demonstrate their engagement in charity and therefore show corporate social responsibility (Al-Khillidar, 2012) .  

I personally think that charity events are a very controversial topic. Although they are a great way for collecting donations, which is the most important, people often donate money because of the wrong reasons such as prestige or social acceptance. Although this does not really matter as long as the money can be collected and reaches the ones who need it the most, I think charity events should be evaluated critically. Especially as a luxury brand you have to show that you are really committed to the charity you support because otherwise people will loose trust in you and your brand image might be affected negatively.

All in all both lectures were really interesting and relevant to the current luxury market.

References:

Lundbey, A. (27.11.2012). Sustainability and Luxury Brand Management. London: European Business School.

Al-Khillidar, N. (27.11.2012). Charity and Luxury Brands. London: European Business School. 

 

Digital PR - how important social media is for luxury brands

Today I would like to talk about a guest lecture we have had in class. The guest speaker, Matthew Zorpas, has its own Digital PR company, works as a brand consultant and is the creator of the famous blog, “thegentlemenblogger” (http://www.thegentlemanblogger.com/) in which he is talking about mens fashion and brands. To get an impression, simply watch the video shown in the link below.

Source: http://www.youtube.com/watch?v=jPEbHam9mC4

What I thought was really interesting is that although he is working with luxury brands on a daily basis he is convinced that there is no right definition of what luxury is. As he said, although he is consulting big fashion brands like Gucci, every single one of his clients defines luxury differently. So instead of defining what luxury is, he just stated that in his opinion it is crucial for luxury brands to be creative and tell stories, no matter what they are about as long as they can create a dream (Zorpas, 2012). Furthermore within the context of storytelling luxury brands should never tell lies or promise anything they cannot offer because luxury consumers are very educated and demanding and will instantly realize wrong promises. (Zorpas, 2012)

Although Matthew was talking about luxury in general, the main message of his presentation was the importance of communicating directly with customers, especially through the use of social media such as Twitter, blogs, facebook and youtube. In his opinion Twitter is particularly interesting and effective because on Twitter luxury brands clients actively choose to follow you rather than you bombarding them with promotional emails or post. Furthermore the use of social media offers the brand the opportunity to receive feedback, listen to and directly interact with customers. In Matthews opinion the use of social media is not only a great opportunity for brands but has completely overtaken the role of public relations nowadays. Twitter in particular according to him is “the most influential media in terms of communications at the moment” (Zorpas, 2012) as it allows

·      personal branding

·      customers’ feedback

·      hiring people

·      direct traffic

·      reading news

·      networking

·      notifying customers

·      event updates

·      providing live coverage

·      seting up meetings

·      supporting your social media strategy (Zorpas, 2012).

Although I do agree with him on the importance of using social media as well as on it’s opportunities and advantages, I do think that classical PR still plays an important role in the luxury Business. In my opinion online PR and classical PR need to be combined and none of them should be neglected.  Furthermore in my opinion due to the restriction of words for tweets, it is hard to use Twitter effectively and to bring your message across. The pictures below show two tweets from luxury brands, one from Burberry and one from Christian Louboutin. The fact that Burberry for example tweeted an image which is not shown unless you click on the link in my opinion is not very practical and not many people will make this effort. Furthermore I think that hashtags in tweets like the one from Burberry are very disturbing because they make it hard to actually read tweets.

Source: Twitter (2012).

Furthermore it was really interesting, that Matthew mentioned the fact that many brands are still not really confident about using the Internet and ask him as a consultant whether they should go online. His reaction to this question was really strong as he said “If you question online – you are out of the game. You do not have a choice” (Zorpas, 2012). I think that he is quite right about this point because even if a brand decides not to sell online they do have to be present online. Especially as a luxury brand to make people trust you and become loyal customers, you have to be transparent, out there and tell your story.

So all in all I think, Matthews presentation provided very valuable information about social media although I disagree with him on the effectiveness of Twitter.

References: 

The gentlemen blogger (2012). Fashion blog. Available from: http://www.thegentlemanblogger.com/ (Accessed 13.11.2012)

Twitter (2012). Newsfeed. Available from: https://twitter.com/ (Accessed 24.11.2012) 

Youtube (2012). Matthew Zorpas Promo. Available from: http://www.youtube.com/watch?v=jPEbHam9mC4 (Accessed: 13.11.2012)

Zorpas, M. (13.11.2012). Presentation on luxury brands and social media. London: European Business School. 

Service - the importance of CRM

Today we had another seminar on service, in particular we were talking about Customer Relationship Management (CRM) as well as about "complaining".

First of all I would like to talk about CRM, which I have learned is really, really important, no matter which industry you are in or which service you are offering. The main reason for the importance of CRM is the fact that it is much easier and cheaper to keep existing customers happy than to attract new ones (Harrison, 2012). Therefore maintaining good relationships with existing customers and trying to fulfil or even exceed their needs and wishes is crucial for being successful.

Although every customer is important, as a brand you have to make sure you segment your customers and treat them differently depending on their buying status. The framework shown in Figure 1 shows a way of doing so. 

Figure 1

Source: Harrison, J. (2012).

As you can see your client base can be divided into four (or more, depending on the strategy you are using) groups, rating customers from “poor relationship customers” to “good-relationship customers” (Harrison, 2012).

In this case four groups have been identified, which are explained below:

1. Platinum:

“The platinum clients constitute a very small percentage of the customer base, they do however contribute a large share to the firms profits.  They are not price sensitive but expect the highest service levels. They are the 20 percent of the population providing 80 percent of the sales.” (Harrison, 2012)

2. Gold:

“The gold tier has a larger number of clients than the platinum tier, they do however contribute less profit than the platinum clients. They are more price sensitive and slightly less committed to the brand.” (Harrison, 2012)

3. Iron:

“Iron customers provide a customer/client base and can give companies the economies of scale. Hence, they are often important so that a company can build and maintain a certain capacity level, particularly important in certain services such as hospitality. This is important for servicing platinum and gold tiers as well. They are only marginally profitable and may be called ‘day trippers’, they are only marginally profitable.” (Harrison, 2012)

4. Lead:

“Tend to generate low revenues, but require same level of service as the above group . The question is do we work on them through the obstacles to Luxury?”  (Harrison, 2012)

In my opinion the framework explained above is a great method of segmenting customers and implementing strategies to reach them. I am also very persuaded of this concept because we were using it in a company I have worked for and it proved to be very efficient and to the point. In this case we for example offered pre-launch events for “Platinum”- customers to make them feel special and maintain loyal and sent out gift cards with the slogan “Forget me not” to customers of the “Lead”-segment to further engage with them and make them become more loyal.

Another framework which we were talking about in class that is very interesting, is the one shown in Figure 2. It basically also shows the four different categories, explained above, but it also allows you to see the size of the different categories.

Figure 2

Source: Harrison, J. (2012).

So according to this framework, customers’ loyalty increases with the level of satisfaction of the service.

But although satisfied customers are more likely to become loyal it is also very, very important to deal with unsatisfied customers and to try to convince them of the service/brand (Harrison, 2012).

Therefore brands have to come up with strategies for “service recovery”, hence they have to decide on things such as return policies, responses to complains and compensation, having in mind why customers complain and what it is what they expect (Harrison, 2012). Furthermore as a brand it is crucial to train your staff so they know how to deal with complains. This is particularly important because, although customers might be upset about something, in my opinion a member of staff always has the possibility to change that perception and turn an unhappy customer into a happy and loyal customer.

To explain this in a bit more detail I will give a personal example of an experience I have had at a restaurant and club called “Bodo’s Schloss”, which opened in London a few weeks ago.

When I went to Bodo’s Schloss the first time, for their opening, I was absolutely amazed by the location as well as the service. Although the invitation said that dinner will be served till 10 pm we totally forgot about that and were really disappointed when we arrived and were told they do not serve food anymore. But what really impressed me was that they instantly offered to prepare a cold starter for us so we do not have to stay hungry all night long. This offer was amazing, especially because it was their opening night and they were really busy.

So, impressed by this service and the location, I booked a table for dinner a few weeks later because I had visitors from Germany and felt this was a great restaurant to take them to.

But the disappointment already started when we saw our table. Although I have booked a table for 8 people, we were offered a very, very small table, which in our opinion was designed for a maximum of five people. But in pleasant anticipation we did not complain, especially because we saw that all other tables were gone already and that even groups of 10 people were placed on tables with the size of ours.

When it came to the order my friends tried to make their order in German, just because it is an Austrian restaurant so we were expecting them to stick to their identity and hire staff which can also speak German. But they haven’t….So never mind we thought, let’s just order a few drinks. And we asked for “Radler”, which is an Austrian drink, a mixture between beer and lemonade. Although we could see the waitress has never heard of that drink, she pretended to know and came back with something completely different.

I do not have to say that the quality of the starter was a disaster, because by that time we already didn’t expect anything great anymore. After waiting for the main course for an hour, we were served in two groups so four of us had to wait another half an hour and started eating by the time the others were done with their main course.

By that time I already complained three times but the waitress did not even apologize.

After waiting one more hour for one Gin Tonic I asked to see the manager, who apologized and explained that the waitress just started working at Bodo’s Schloss, but she did not even offer any compensation. When I asked for compensation she offered a free shot for all of us, which I thought was really disappointing. I would have expected her to apologize to the whole table not only to me because I was the one who complained, to reduce the bill and to offer any kind of compensation without me asking for it.

So although I still like the location and the atmosphere and the main course was not too bad, I will never go there again because of the way in which we were treated by their staff. Furthermore I have spread a really negative word of mouth, because I was really disappointed by them and do not want my friends to go there and make the same experience. I could therefore be defined as a “Irate” type of complainer, hence someone that is likely to spread a negative word of mouth (Harrison, 2012). Especially because the restaurant is new, I would have understood there are still a few things to fix and I would have come back even after that night, but not after the staff has clearly shown that they do not even care about our satisfaction of their service.

So as I said before, good service has the power to change every bad experience - but bad service sticks to customers' minds and will make them stay away from your brand.

References:

Harrison, J. (06.11.2012). Seminar on “managing luxury brands”. London: European Business School.

Brand Extensions

Today we learned more about brand extensions, which in my opinion is very beneficial because “brand extension as a marketing strategy has become even more attractive in today’s environment where developing a new product costs a lot of money and can be time consuming” (Vukasovic, 2012).

A brand extension generally is “referred to as the strategy of using an established brand name for new products (goods or services)” (Lockhart & Ford, 2005). The greatest advantage of extending a brand probably is that brands can benefit from the reputation they already have and consumers are more likely to trust and buy the new product quickly as they relate it to the image of the umbrella brand. “This is particularly so when using an established brand to introduce a new product in a different product category” (Lockhart & Ford, 2005).  On the other hand “the greatest risk in the expansion of the brand is that there may be a fading of the original personality of the brand” (Vukasovic, 2012), when the brand extension does not meet the expectations of the customers.

A brand can be extended "horizontally or vertically" (Vukasovic, 2012) in four different ways, as shown in Figure 1.

The brand extension I have chosen for my assignment is horizontally, as I am suggesting a Private Jet Service for Four Seasons Hotels, which would be a completely new Business for them and can therefore be described as a “total expansion” as defined in Figure 1.

Figure 1

Source: Vukasovic (2012).

All in all I think that extending a brand generally is a great way to make the most of your reputation and save costs when you are trying to enter a new industry but it also has to be planned carefully and a great idea must stand behind it because nowadays nearly every brand is extending its business so we are lavished with all those brand extensions and therefore became more selective.

References:

Vukasovic, T. (2012). Searching for competitive advantage with the brand extension process. Journal of Product & Brand Management, Vol. 21 Iss: 7 pp. 492 – 498.

Lockhart, A. and Ford, E. (2005). How consumers evaluate brand extensions. Managing Intellectual Property, April Supplement, pp. 23-25.

Marketing Mix - The little black jacket

As I have mentioned before - when I was talking about Saatchi Gallery - art is an interesting field for luxury brands and can be a great marketing tool as well. Furthermore according to Tina Mermiri  „large art organisations are sometimes seen as very successful brands“ themselves (Mermiri, 2010).

Karl Lagerfeld for example has shown his great sense of creativity and business last week by placing an exhibition at Saatchi Gallery London.

The exhibition was called „the little black jacket“ and consisted of „over 100 black and white photographs of Karl Lagerfeld‘s favourite muses wearing the label's iconic jacket - both men and women - fill four expansive rooms, all taken by the Chanel helmer himself“ (Alexander, 2012). The pictures showed international actors, models, celebrities as well as rappers and classical music artists (Chanel, 2012) .

Source: All pictures were taken by myself, Katinka von Flotow.


As this exhibition, in my opinion, was a great marketing strategy, I would like to discuss this in more detail with the help of the marketing mix (product, place, promotion and price) (Schiffman&Kanuk, 2010, p.569), which was discussed in class. -->

1. Product
Althought the photographs show international stars the focus of the exhibition lies on „the little black jacket“. The jacket itself has been designed by Coco Chanel in the 1950s and ever since has been a part of every collection with small changes (Chanel, 2012). To understand how difficult it is to make this jacket and to demonstrate its high quality a video has been created which can be viewed here:

Source: http://www.youtube.com/watch?v=UIYSW9_CCCI

The little black jacket is one of Chanel‘s signature products so therefore it makes sense to create an exhibition around it.


2. Place
As I have mentioned before Saatchi Gallery in London is a luxury brand itself. Furthermore it lies in a sophisticated shopping area near Sloane Square (Kings Road), and the next Chanel shop can be reached within 3 minutes walking distance. Saatchi Gallery is popular for showing modern art and the works of young artists while having very sophisticated visitors, so therefore the image of the place reflects well the core values of the brand and the venue attracts the right target customers of Chanel.

„The little black jacket“ is a touring exhibition that also takes place in metropolises like Berlin, Paris, Sydney, Moskau, Hong Kong, Taipei, New York and Tokyo (Chanel, 2012). It is therefore guaranteed that a wide, international target market will be reached.


3. Promotion
The exhibition has been announced through www.chanel.com as well as an own website (http://thelittleblackjacket.chanel.com/). There has also been an enormous online press coverage - so fashion magazines such as Vogue announced the dates online, too. Moreover, city magazines such as Time Out London also reported about the event. Although I have not been to a Chanel shop recently I am pretty sure that there has been some kind of promotion in the shops as well - maybe in form of a postcard or personal invitations to VIP clients.

As part of the exhibition there was a great promotion going on in the last room. Every visitor could choose a poster for free from a range of three different photographs that were part of the exhibition (Chanel, 2012). This was not only clever in relation to surprising the visitors and letting them take home a free piece and a tangiable memory of the exhibition but also because those posters were so big and given away in transparent plastic bags that people around Sloane Square had to become aware of the exhibition and therefore higher traffic was guaranteed. The fact that people were queing for more than 15 minutes to get a free pictures showed how effecitve this promotion was.


Furthermore a book with all the images as well as the history of the little black jacket has been produced and can be bought in different venues, in Chanel boutiques as well as online.

 

Source: http://www.lady-blog.de/wp-content/uploads/2012/08/the-little-black-jacket.jpg

Finally it has to be mentioned that Chanel also decided to design some typical London Black cabs to promote the exhibition. 

Source: http://farm9.staticflickr.com/8472/8130313803_0f027c82a3_n.jpg

4. Price
When it comes to dicussing the price one has to take a look at both - the price of the product and the price (admission fee) for seeing the exhibition. The price of the little black jacket is more than 1000 GBP (Chanel, 2012). But as I said before the little black jacket is one of Chanel‘s iconic products and therefore it makes sense to create a big story around it and make people dream by showing amazing pictures of celebrities wearing the jacket. Even if people cannot afford the jacket now this exhibition makes the little black jacket an aspirational product, increases brand awareness and brand visibility and therefore might lead to increasing sales in the future.
Besides the price of the jacket it has to be mentioned that visiting the exhibition was free so people did not have to pay any entrance fees. Therefore there was no barrier to visit the exhibition and as I said before this was a great way of increasing brand awareness.

So all in all after having discussed the exhibition in great detail, the marketing mix shows, that Karl Lagerfeld has done a great marketing coup, which will hopefully result in incresed sales in the future and in an even better perception of the brand than there has been before.

References:

Alexander, E. (2012). Chanel opens little black jacket exhibition. Available from: http://www.vogue.co.uk/news/2012/10/12/chanel-opens-little-black-jacket-exhibition (Accessed: 31.10.2012).

Chanel (2012). The little black jacket. London: Saatchi Gallery.

Mermiri, T. (2010). Arts Sponsorship: The facts, trends and potentail. Journal of Sponsorship, Volume 3, Number 4, p.304-320.

Schiffman, L.G. and Kanuk, L.L. (2010). Consumer Behaviour, 10^th edition.

New Jersey: Prentice Hall.

The little black jacket (2012). Exhibition Website. Available from: (http://thelittleblackjacket.chanel.com/) (Accessed: 31.10.2012)

von Flotow, Katinka (2012). Images Chanel Exhibition 28.10.2012. London: Saatchi Gallery.

The anti-laws of marketing - how to market a luxury brand

Today I would like to talk about the “anti-laws of marketing”, which have been established by Kapferer and Bastien in 2009 and are listed below.

1. Forget about “positioning“, luxury is not comparative

2. Does your product have enough flaws?

3. Don’t pander to your customers’ wishes 
4. Keep non-enthusiasts out

5. Don’t respond the rising demand

6. Dominate the client

7. Make it difficult for clients to buy

8. Protect clients from non-clients, the big from the small

9. The role of advertising is not to sell

10. Communicate to those whom you are not targeting

11. The presumed price should always seem higher than the actual price

12. Luxury sets the price, price does not set luxury

13. Raise your prices as time goes on in order to increase demand

14. Keep raising the average price of the product range

15. Do not sell

16. Keep stars out of your advertising

17. Cultivate closeness to the arts for initiates

18. Don’t relocate your factories

In my opinion every brand manager working for a luxury brand should know about them and keep them in mind, but some of them cannot always be converted to a brand but rather develop themselves over time.

As we have already spoken about the anti-laws in class and some of them are pretty obvious today, I would like to concentrate on the ones I find are the most interesting.

First of all I would like to talk about law number 9 and 10 because I think these are crucial for marketing luxury goods. Although nearly every advertisement assumes the customer knows about the brand and it’s identity it is crucial to further educate consumers and tell your story. So existing customers can get engaged even more by further experiencing it and new customers get the opportunity to get to know the brand and through the creation of a dream they are more likely to aspire purchasing a product from the brand in the future. Cartier for example has recently created an amazing video, which can be watched below.
The video....

• Reflects their brand identity perfectly
• Creates a dream 
• Engages new customers by showing their star products as well as existing customers by showing new products 
• and creates a emotions.

Source: http://www.youtube.com/watch?v=9RZPmKC2c2o&feature=youtu.be&hd=1

Although Cartier for example definitely is not very accessible in terms of their pricing the brand has a great reputation and is well-known even by people who cannot afford to buy their products. This is also very important because most people who buy branded products want others to recognize them. So there would be no point in buying expensive, branded jewellery when no one knows about the brand or recognizes the product.

Furthermore I would like to be responsive to the law “don’t relocate your factories” (Kapferer & Bastien, 2009). The location of a luxury brand’s factories and its head office is very important because people buy into the culture of your brand. So as a luxury watch brand for example you should stay in Switzerland, as a luxury car manufacturer do not plan to leave Germany and as a luxury fashion brand make sure you get the best textiles from Italy. A brand that has recently done a big mistake in terms of location for example is Yves Saint Laurent, which decided to move its head office from France to America and rename the brand to “Saint Laurent Paris” (Amed, 2012). This decision has created an huge public outcry in the world of fashion because by taking this decision, they seemed to have forgotten about their heritage and identity. To make it worst after realizing the consequences of this decision they rowed back and announced that the name “Saint Laurent Paris” will only be used in the logo (Amed, 2012). But the decision to move the head office to America is made – and according to press has already damaged the brand enormously.  

 Source: http://www.businessoffashion.com/2012/10/a-wake-up-call-for-ysls-pr-team.html

So as I said earlier on, in my opinion, knowing about Kapferer's anti-laws is very important but brand managers should not blindly try to apply them but think about the fir with their brand, the consequences and the feasibility.

References: 

Kapferer, J.N. and Bastien, V. (2009). The luxury strategy. Break the rules of marketing to build luxury brands.

London and Philadelphia: Kogan Page.

Amed, I. (2012). A wake-up call for YSL’s PR team.

Available from: http://www.businessoffashion.com/2012/10/a-wake-up-call-for-ysls-pr-team.html (Accessed: 19.10.2012)