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Ideations_SepOct2006

Ideations_SepOct2006

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Interbrand Design Forum's Ideations Newsletter - September, October 2006
Interbrand Design Forum's Ideations Newsletter - September, October 2006

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05/09/2014

 
Some interesting brand dramas have been playing out in the marketthis year. Long established names have found themselves popular with unintended groups, which has skewed their image for the worse.Burberry, Britain’s luxury clothing brand (complete with royalwarrants), is recovering from its adoption by a segment called“chavs.” These unemployed under-educated young people, known
for ostentation and raucous behavior, have become identied with the
Burberry tartan, the way Goths wear black and rappers drink Cristal.Despite this added exposure, Burberry sales did not goup. The numbers went down. It found itself with atainted image as wearers of their brand were barredfrom pubs for being hooligans.“Luckily, Burberry didn’t over-react in the short term or condemn this new segment. The brand is 150 years old andable to look at the long-term effect on its marque status,”observes Bill Chidley, vice president, strategy andresearch for Design Forum. “They are managing to adapt without becoming too rigid, turning off their core customer or limitingfuture brand expansion.” The apparel maker has simply decided toabandon trendier items like chav-favored baseball caps in favor of areturn to the discrete lines it became famous for.About one hundred years ago, the consumer packaged goodsindustry created brands to gain the trust of shoppers faced with agrowing number of choices. Manufacturers become brands becauseof the integrity and superiority of their goods. But if not carefully
managed, manufacturers’ brands can be negatively inuenced by
the retail channel. For example, Nordic Track was a premiumexercise brand for years, with its own direct sales channels and their own branded stores. That changed when they agreed to go mass.“It can be argued that they suffered brand erosion when they lostexclusivity and became available through retailers like Sears,” saysChidley. “Tread carefully the channel may corrupt your brand andreduce your margins. Then how do you get it back in control?”Consumers associate innovative manufacturer Bose with a simple but elegant lifestyle. Its audio systems have been hot for forty years.Part of the brand’s status may also be its limited accessibility. Thenear-legendary Wave Radio is sold only by Bose, allowing themaker to protect its margins, brand experience and marquee status.“Interestingly, Bose sells some of their home entertainment products through Sam’s Club,” says Chidley. “But they’re notcheaper. They get the same margin through the warehouse clubchannel as they do direct. They’re reaching a new audience and at
the same time winning the ght to manage their brand.”
Differentiation is paramount in retail. Smart retailers constantlystrive to offer something unique, whether it’s the mix or theexperience delivery.“Not only can you be hijacked by a segment or diminished by a channel,
if you take your eye off differentiation, you may be dened by the
category,” warns Chidley. “The top three or four drug store chains in theU.S. are virtually interchangeable. Fast casual restaurants have a similar 
challenge. The category is in control. The public dened the categoryand the category responds in a way that lls the vacuum, rolling
stores out quickly to grab market, doing the same thing over and over.“You may be the category leader, but you still need to push for differentiation. Target’s pharmacy, for instance, set itself apart withinnovative prescription packaging via Clear Rx. They are actuallyinjecting some ‘Targetness’ to the pharmacy experience throughcoolness and customer insight.”Although it’s not a retail brand, there’s a lesson to be learned fromPabst Blue Ribbon, a lawnmower beer that made marketing newsthis year. Advertising experts have praised PBR’s clever strategyof “letting itself” be hijacked by young hipsters. But perhaps it’sless marketing genius and more short term luck.Right now it’s fashionable to hate marketing. Miller, the makers of Pabst, brewed a completely unremarkable low-priced beer. Hip,marketing-resistant 20-somethings defaulted to Pabst. It isn’theavily promoted, and it’s cheap and plentiful.“Being the indistinguishable brand is not a good long-termstrategy,” says Chidley. In fact, the beer’s appeal to the younger 
customer is already waning. And Pabst’s inertia will be difcult to
overcome if they move to regain control of the brand.Consumers have started to behave differently. The democratizationof luxury means every group now aspires to exclusive brands.There are shifts toward ethical spending and organic food, gender shifts in who’s buying what, trends and anti-trends.“The wise retailers are making necessary adjustments, but in atop-down manner as part of a brand strategy,” says Chidley. “It’sanother reminder of the power of the consumer and the importanceof remaining in constant dialogue with them. They can’t steal your  brand if they’re a part of it.”
September/October 2006
A Report on the Current State of Retail produced by 
 
September/October 2006
Chairman’s Commentary 
 
Making the Value Judgment
A Retail Publication by:
7575 Paragon Road, Dayton, Ohio 45459Phone: 937.439.4400 Fax: 937.439.4340Email: retail@designorum.comBranch Ofces: Chicago, London,Los Angeles, New York, Paris,San FranciscoD. Lee Carpenter, Chairman & CEOJill Davis, EditorJorge Sanclemente, Design/ProductionFor more inormation or to be placedon our mailing list, visit out website,www.designorum.comand complete the contact orm.Reprints o articles or excerpts without the express written permissiono Design Forum is prohibited.Ideations is printed bimonthly.Subscriptions: $125 annually in the U.S.;$150 elsewhere.© 2006
Every August when the “Top Global Brands”issue of 
 BusinessWeek 
arrives, I look for thenames of retailers. Out of the one hundredcompanies listed, not counting the automotivecompanies, there’s about ten—McDonald’s,Gap, Ikea, Amazon.com, Starbucks and a fewmore quick service restaurants. I look forwardto the day when more retailers give those other companies a run for their money.The list will always be dominated by companieswith clarity about what they offer. These arethe companies that manage their brands withskill, despite the market’s ups and downs.They command higher margins and stock prices, and that’s whatit’s all about here at C-level.Brand articulation is less concrete for retailers, who need to think aboutwho they are as a brand, as opposed to being just a box full of stuff.
It wasn’t all that long ago that famous names who entered the ckle
and merciless retail arena came away bloody. Liz Claiborne closed
its stores. Tommy Hilger got out of retail and is trying to get its
 brand back under control. The demise of the Sears and Kmart brandsand their once-powerful private labels prove that even old-timers cancave under competitive pressure. And Disney sold its stores.It’s only in the last few years that retailers have started to get seriousabout their intangible assets—the keys to shareholder value. Todayeverybody gets it. What you stand for is equally as important aswhat you sell. Sometimes it’s more important. Brand in somecompanies accounts for the bulk of overall value. For Apple,according to
 BusinessWeek’s
2001 report, brand value equaled aremarkable 80 percent of market capitalization. Apple’s retail storeswere designed to evoke the elite creative attitude of their brand,especially in Steve Job’s big glass iCube on Fifth Avenue.Companies who make the list also have the advantage when itcomes to reinventing themselves, the way our client, AT&T, has
 begun to do as they move into retail. Their stores will be unied
and consistent around the globe, across all products, services andmarkets. Their customers will not be confused, nor will their employees, because the entire organization is steeped in brand.There have been times when Design Forum’s ability to help has beenlessened because clients chose to rush headlong into execution. Theyskipped brand strategy in favor of operational issues: pricing,merchandising, marketing, real estate and supply chain. But that’snot your brand. You need to know what you stand for in the heartsand minds of your chosen customer.Understanding your brand helps you make the choices that keep you
fresh and relevant. Tommy Hilger is experimenting with anupscale concept with its H Hilger stores. Liz Claiborne failed in
their recent bid for J. Jill stores. I see little hope for Sears and Kmartas long as they starve the brand and continue to work from the oldfear-based competition paradigm. In the case of Disney Vault 28,Disney’s latest, very high-end attempt at retail, they’re trying tomake their classic animated characters appear contemporary. Thatdoesn’t seem brand-right to me. Putting a pimp Mickey Mouse onan $80 t-shirt isn’t my idea of a fresh mix. In fact, I’m not altogether sure Disney has the depth and breadth to support a retail store. ButI’m all for taking a calculated risk.Great brands do have a human and cultural perspective. Sure, youcan follow trends, but just following trends doesn’t make you a brand. You need to clarify your brand, research the behavior of your selected targets, apply those insights to every touch point, and bringthe brand to life—from the emotional level to the most practical
level of inuencing the purchase. That’s what puts you on the list.
To anyone who used to think branding was a parlor game,Interbrand’s annual brand value calculation for 
 BusinessWeek 
 shows otherwise. The ability of a great brand to deliver proven
value to the consumer ows straight to the bottom line.
Thoughtfully,D. Lee Carpenter 
Chairman & CEO

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