Insights

Your Sales are Great. Your Brand is Not.

Tue, 27 Sep 2011 07:23:00 -0700

The Strategy

The explosion of interest in luxury clothing brands (Prada, Coach, Armani, etc.) by consumers in the past 5 years has recently caught my attention. I've never really considered myself a luxury consumer, and generally opt for value-driven purchases (quality/cost), but this phenomenon has genuinely intrigued me as a marketer. Part of this expanded interest has been driven by the brands themselves, as they create more depth in their brand architecture to make room for popular interest and attempt to separate their gateway brands from their parent brand, expand their distribution to make their products more accessible, and generally enhance engagement with mainstream consumers.

For a few months, I considered it to be a reasonable strategy. After all, BMW has been consistently successful with their tiered 1-,3-,5-,6-, and 7-series approach to their automobiles. Similarly, many traditional electronics manufacturers implement a tiered approach to their products (e.g. Samsung's Galaxy series of smartphones). Why wouldn't it work with clothing? There are two reasons.

The Problem

First, the problem is that clothing is more than an aspirational good- it is also how individuals brand themselves. To that effect, the brand of clothing and the brand of the individual are closely interrelated, continually affecting the positioning of each other. The brand of the individual and the company are co-dependent. An unsavourly individual exhibiting a luxury brand will likely degrade its positioning, while a celebrity doing the same will likely enhance its positioning. Thus, you might consider it a "law" of branding that any product with a co-depenent branding environment requires at least as much "corrective" activity as it has erosional activity in order to ensure the desired positioning of the brand and maintenance of its value,

Second, my concern is further elevated by the relative permanence of clothing. While fashion can move at a quick pace, the physical good, in most cases, will outlive any particular trend. With a brand catering to fashion-forward individuals, this clothing must go somewhere once it is considered unfashionable (as defined by the owner). To that, I have noted more and more "high end" brands being worn by individuals whom many would believe live non-aspirational lifestyles, thereby lowering the prestige of the particular brand. Similarly, a larger volume of product on the market means correspondingly larger volumes receiving price discounting, further eroding the prestige positioning of the product.

One example of the relative failure of this strategy is Armani. Armani introduced its mass-market Armani Exchange brand in 1991, and now has dozens of stores in suburban malls around North America. For the reasons stated above, as well as their lackluster financial performance shown below, I believe that their tiered brand strategy has failed in the long-term. To illustrate this, I was prompted to write this article by a man begging for money, wearing an Armani Exchange t-shirt, clearly obtained through a second-hand store. My perceptions of the brand had already been eroded by unsophisticated suburban youth wearing similar shirts. Neither of these groups represent a lifestyle that I aspire to achieve.

The Success

Two companies who have absolutely taken a long-term approach to their brands are Abercrombie and Apple. Apple is extraordinarily careful with their brand. Beyond the obvious techniques that they use to define their category and build hype, Apple has a lot going on behind the scenes. For example, Apple prohibits its mobile phone carriers and retailers from advertising many of its products with or comparing it to any others. They also control pricing very closely, ensuring that no discounts or bonuses are given to customers unless retailers are explicitly invited to do so.

Abercrombie has taken control of its brand in a more interesting way. In August, the brand offered to pay cast members of Jersey Shore to not wear its brand. This demonstrates commitment to the long-term health of their brand. Although the cast may not have taken the payment or stopped wearing the clothing, fans of the show (and characters) may take offense to the request and stop wearing the clothing. This would certainly meet the criteria for success from Abercrombie's point of view.

Long-Term Focus is Critical

While I've focused a lot on fashion brands in this article, I consider it to be an analogy for management of any brand. A brand is a tool to create long-term sales success and protect a company from extreme revenue variability. When branding decisions are made in haste and sales become the primary goal, brands can begin to suffer quickly, and often, that harm cannot be undone. I challenge all marketers to pay closer attention to their branding decisions both before and after making them. While sales may be building in the short term, in the case of immediate and substantial sales objectives, such a gain is likely to be superficial.

Insights

Your Sales are Great. Your Brand is Not.

The Hidden Sting of Co-branding

Experience Needed

Kicking Your Startup's Brand into High Gear

The New Face of Branding Strategy

Cruzing to a Bailout (Redux)

Successes with a Passion for Winning

Chatr & Mobile Phone Market Penetration, A Step Forward

Is Your Organization Synchronized?

Y&R's Brand Asset Valuator Measurement Strategies

Integration, Integration, Integration! Evaluating Far Coast Coffee.

Solving Problems Faster, Better, and More Easily

The Value of Having a Passion for Winning

Time to Get Serious: Product Placement & Branding

Y&R's Brand Asset Valuator & Strategic Brand Positioning