Confusing your brand with your logo!

As a marketer I’ve often heard colleagues or senior management question if the marketing material we are producing within the organization is ‘within brand guidelines’, or if ‘our logo and key visual is positioned correctly, as we need to communicate our brand effectively’. Whilst these are fair questions, and the visual is important, the logo is only one part the brand jigsaw. The intangible elements of a brand, that aren’t immediately obvious, are just as important to perception, experience and overall success of the entire brand.

Take for instance Hermes, the purveyor of the famous Birkin bags where the retail value for one bag can range anywhere from $7,000 to $150,000 depending on specifications. Each bag is hand-sewn, buffed, painted, and polished, taking several days to finish, with the average bag taking 48 hours to create. French leather workers must have at least three years of training before graduating to Birkin duty. The quality that exists within these hidden details and the meticulous craftsmanship is what generates the desire for such a brand and reflects the true experience of owning a Hermes product. Wrap any customers purchase in a signature Hermes orange box with the horse drawn carriage logo stamped on the cover and it makes for a desirable shopping experience.

When Tom Ford left Gucci and started his own label in 2004 he knew that ‘name recognition is only as good as what you produce, just as a logo is as only as valuable as what it’s on. ’ So when Ford began looking for a partner he inked a deal with Ermenegildo Zegna, the Italian luxury fashion house known for specializing in high quality menswear since 1910. Zegna, who make everything from suits to shirts, ties and sportswear, handle the manufacturing and shipping of the Tom Ford collections. By partnering with Zegna, Ford had charge over the fabrics used in each collection, control of the distribution, and full management of his own showrooms and staff. What Ford always understood from his time rejuvenating Gucci, was that what makes a truly unique brand is a multi-sensory shopping experience. Everything from the bottle design in his fragrance line to the layout of his first store on Madison Avenue in New York, which mirrored his own living room, are all designed to add to the customer experience and emulate the Tom Ford lifestyle.

A remarkable brand, that is better than the competition, is a mixture of key tangible or intangible experiences every time the customer engages with it. So aside from the image and raw materials used to create a product, thought and attention needs to be given to every brand touchpoint, from the customer service team through to the sales representatives.

When Nespresso, the pioneer and market leader in high-quality portioned coffee, shifted its strategy focus from the office-coffee sector to the premium household market it seized the opportunity to create a direct marketing channel to stay close to the consumer, the Nespresso Club.  This marketing solution, an integral part of the brands customer relationship management, handles calls and customer enquires along with providing the following services –

•  Around the clock ordering – consumers can place orders 24/7 through the Nespresso Club call centre, fax, mail, online and mobile
• Rapid delivery of capsules – product delivered within two days
• Personalized advice – trained customer service executives are on hand for technical assistance
•  Recycling service for used capsules

The Nespresso Club acts as a complete database for all of its members. Membership is obligatory - to buy capsules, both business and private customers need to become members of the club by providing contact details and machine characteristics. Exact customer information is collected at the point of sale, which allows Nespresso to create a personalized relationship from the start. This gives Nepresso the opportunity to communicate with specific customer segments based on purchasing patterns and share information on an individual basis.

Major brands used to be able to rely on their image and reputation to carry them forward. However, in what has become an increasing connected economy, where people’s lives have become saturated with advertising in both online and offline media, companies need to be ready to engage at every touchpoint where consumers interact with their brand. Just like the products or services they represent, brands are continually trying to find that one unique position in the minds of the consumer that sums up what it means to buy in to a particular brand name. Taglines like ‘Powered by Blackberry’ may be memorable, but in the end they don’t make consumers rush out and buy the product unless they are aligning the innovation and the user experience to deliver on the promise. To be successful in the future, organisations need to realize their marketing department is not simply a crayons, canvas and poster paint department but instead a strategic business function that needs to be involved in all areas of the business that impact the customer experience and perception of the brand.

A 90's symbol of materialism, consumerism and excess consumption

The casual luxury brand Juicy Couture, best known for its rhinestone-encrusted tracksuits, announced recently that it is closing all of its U.S. stores by the end of June 2014 with the aim of a rebranding and reopening US sites in 2015, along with further international expansion in Europe, the Middle East and Asia.

With sales falling by 18% since 2008 before it was bought by New York-based global brand development and licensing firm Authentic Brands Group (ABG) in 2013, where did it all go wrong for Juicy? There are a number of factors, but one in particular stands out clearly: the designs and style have barely changed since its glory days of the early noughties. Juicy quickly positioned itself as a product leader in the luxury casualwear category for the aspirational customer, creating one of the hottest, most sought-after and recognizable brands in fashion. Its value proposition was based on product leadership, but instead of focusing on innovation, creativity and staying one step ahead of competitors, Juicy just never evolved.  It stuck to the same velour tracksuit formula and became a symbol for pre-recession celebrity status.

Its marketing strategy never moved on either. Unlike other luxury brands who adjusted their strategies to ‘play on heritage’ (Hermes), ‘pioneer digital media’ (Burberry) or ‘focus on innovation’ (Alexander McQueen), Juicy relied on their old trusted approach in a world that was rapidly changing in the face of the 2008 economic crisis. Consumer values were changing too, attitudes to spending exhibited a return to traditional values, driven by consumers searching for quality, affordability, and connection. No longer were consumers prepared to pay over top prices to be associated with a symbol of materialism, consumerism and excess consumption.

In fact, the very celebrities who helped build the brand, may also have contributed to its downfall. Paris Hilton, who encapsulates the phenomenon of famous for being famous with TV shows like the ‘The Simple Life’, quickly became the wrong brand type ambassador in the new post-recession reality. Associations with Britney Spears and Kevin Federline’s marriage, where members of the wedding party wore Juicy tracksuits emblazoned with ’Pimp Daddy’ and ‘the Maids’ , was not the kind of celebrity endorsement a luxury brand would typically pursue.

The rise in competition from brands like Lululemon, along with the development of more sporty chic lines from Nike and Adidas also impacted the Juicy’s growth. Lululemon have managed to update their fashions each season and in fact create and sense of scarcity with their product, unlike Juicy who became almost ubiquitous.

So what now? According to Upstart Business Journal ‘Authentic Brands Group is expanding on its premium Juicy Couture Black Label Collection with new offerings in intimates, children's wear and footwear, with a focus on opening girl’s and intimates freestanding shops internationally, along with an expectation to see an additional 127 Juicy Couture stores and shop in shops open over the next five years in major cities across the globe.’ This, combined with the expected rebranding of all US stores, an increase in retail locations in key international markets, partnerships with designers such as Steve Madden and a re-launch of JuicyCouture.com, is it enough to restore the brand to its former glory?

Although a spokesperson for Juicy who spoke with Vogue magazine said that ‘All of our plans are consistent with the premium image of Juicy Couture globally’, their recent actions would suggest otherwise. The distribution deal signed with Kohl’s seems like an unusual shift in strategy for a premium retailer. Kohl’s, a company based on operational excellence business model, focuses more on lower pricing and moving volume rather than associating itself with the aspirational shopper once pursued by Juicy. Business Insider reported late last year that even Kohl’s itself is in trouble.

The international decentralized business structure seems flawed too. According to Fashion United, Leonard Green & Partners are reproducing Juicy’ s international business plan back in the US which sees Juicy in Asia run by ImagineX, in Europe by Folli Follie, with the new US boutiques created as joint ventures between ABG and a partner yet to be decided. At such a critical time in the business is it really a wise decision to relinquish control and place faith in the hands of other leaders in foreign markets to make critical strategic and business decisions.

What ABG appears to be doing with Juicy is the opposite of what many premium brands have done when they have begun the process of refocusing the business. Take for instance Tom Ford’s rejuvenation of the YSL brand in the early 2000’s, his realignment of the brand with its core values and identity, reigning in all licensing deals,along with the injection of a high dose of sexy, cool glamour thrust YSL back into the limelight and made the brand a symbol of high end luxury again. Similarly Dolce and Gabanna, in 2011, discontinued its diffusion line D&G, and began phasing out many of the licensing agreements, including pefumes and eyewear so that it could refocus on the original Dolce and Gabanna brand.

By trying to rebuild their premium brand, expand internationally and cater for the price conscious consumer Juicy risks spreading its brand equity too thin, losing its direction and failing to remain focused on the core customer. The real aim should be to consolidate and reaffirm Juicy’s core value and identity, and cater for the low end mass market at their peril. 

Retail is Detail - Except When it Goes Digital

Neelesh Bhatnagar, CEO of Emax Electronics, wrote a rather mediocre article for GulfNews last week on the future development of m-commerce in the Gulf region. His views on m-commerce are hardly ground breaking, and in actual fact somewhat tunnel visioned.

The idea that mobile is the future of e-commerce isn’t new, in fact wamda.com reported in 2013 that shoppers in the Gulf already prefer smartphones to computers or tablets when shopping outside their homes. Bhatnagar’s opinion on the current state of m-commerce is ‘retail mobile commerce hasn’t yet gained similar traction despite the fact that the Gulf registers one of the world’s highest smartphone penetration rates’ and suggests ‘one reason could be that retailers themselves are late in embracing m-commerce.’ However, taking a look at 2013 PayPal Insights e-commerce report, mobile transactions already represent 10% of e-commerce in the Middle East (a level similar to the rest of the world), and are set to reach close to 20% of transactions in the region by 2015. The rate of growth is expected to  accelerate from a current 1.3 billion transactions to 5 billion within the next two years.

Given the level of smart phone penetration in the Middle East, it’s already hard to even define m-commerce in the region, let alone measure it. Can a customer shopping in one store, who uses their smartphone to find a lower price at another, and then orders it electronically for in-store pickup, be considered an m-commerce transaction? Is it m-commerce if a customer orders from a smartphone or tablet but exchanges the item at a local store? In a recent report titled ‘The New Digital Divide’ from Deloitte Digital in the US, 69% of survey respondents say they already check the web before they head to stores; 36% say they use digital devices like smartphones while shopping in stores.

Bhatnagar’s puts forward his other theory that ‘has to do with consumers and retailers’ suspicion of the security and safety of m-commerce transactions. ’It would seem however, Middle East shoppers are already relatively comfortable with online shopping and what’s interesting is trade between online shoppers in the Middle East and businesses based in the region makes up only 10% of total spend. Most of these shoppers are not spending at companies based in the Arab world; the majority of online shopping is done in the US (35%); Asia (30%) and Europe (25%), with the Middle East accounting for 10% of e-trade. This would indicate shoppers in this region have long been comfortable with mobile shopping  and now it’s up to retailers need to play catch-up with their already tech savvy customers.

The rise of m-commerce and the rapid adoption of e-commerce in general goes far beyond the creation of new purchasing channels, and instead represents a change in overall buying habits. For companies to really embrace this new era of retail digitization, they need to realize that a whole new shopping experience is being created – omni-channel retailing. The name signifies a trend in retailing towards the use of multi-channel approaches to engage customers - mobile, tablet, television, direct mailing, physical stores, pop-shops and websites to name a few.

Although I agree with Bhatnagar that ‘M-era consumers are connected around the clock, just a click away from browsing stores all over the world and it takes them only a few clicks to make purchases,’ and his opinion that retailers need ‘to adapt to the evolving requirements of consumers if they are keen to seize the huge opportunity provided by m-commerce and sustain the business in the future’, rapid growth in e-commerce is not the only issue affecting traditional retailing in the region. There are a number of other factors that present challenges for foreign retailers operating in the local marketplace.

With a growing population and record numbers of tourists flocking to the UAE, retailers seem to be under the impression customers will always be there. However, in a region where out of stock scenarios are frequent, checkout lines are long, return policies differ to European and US standards and stores are staffed by sales associates from South East Asia whose English or Arabic is most likely to be their second language, customers are growing more comfortable with onmi-channel and less tolerant of the experience they encounter in store. This is already evident in 2013 Paypal Insight report claiming that most of those polled said that they prefer online to offline shopping thanks to convenience (26%), lower prices (18%), and product variety (15%).

As foreign companies and brands require a local partnership to trade outside of a free zone, partnerships are usually formed with major local Emirati groups such as Landmark Group, Al Chalhoub, or Al Tayer. By law, the partnership is at least 51% owned by the local company, hence not under full control of the parent company, which causes a disruption in the alignment of the business functions. Certain key systems such as the overall supply chain can become inconsistent, due to non-integrated IT systems. Take for instance a European customer, used to an onmi-channel shopping experience in Western retailing, who orders online from a brand’s global website, but then takes it to be exchanged or refunded at a local UAE store. Due to the brand’s local independence from the parent company, he will be told by the store assistant that the process cannot be completed, and instead must return to the item through the postal service to the global head office. How can global brands operating in the local market place expect to offer a seamless, uninterrupted shopping experience when experiences differ from country to country in what is supposed to be an increasingly connected world.

Furthermore, Tina Oberoi, Chief Operating Officer of franchise retail at Lals, recently stated that  ‘UAE retailers tend to add a certain percentage over the price in the country of origin of the brand,’ highlighting that ‘margins in fashion are definitely good, even in the mid-market space’. With 18% of shoppers already preferring online shopping due to lower prices, is this really a sustainable trend in the industry? It would appear the omni-channel experience for retailers in the Middle East will be difficult to achieve unless an alignment of all operating policies and standards is implemented at a global level.

The mere adoption of m-commerce technology by Middle East retailers is not enough, nor is Bhatnagar’s other obvious solution of creating ‘the fastest ways to deliver the purchased goods to mobile buyers’. The real challenge for the retailer will be to create innovations that sync the online and offline experience, exceeding customers’ expectations to generate profitable growth.

There is no doubt that Burberry is one of the most successful examples of a brand that has harnessed digital channels as a way of delivering unique experiences. Probably the most well documented integration of the online and offline experience, Burberry underwent a seven year transformation from a floundering, disregarded, over-licensed, decentralised brand, to becoming one of the most innovative and desirable luxury brands. From live-streamed catwalk shows, viral social media campaigns and online communities, all have been instrumental in engaging fans and spreading awareness.

Digital experiences such as the interactive ‘Burberry Kisses’ campaign allows mobile users to share ‘kisses’ via a desktop camera or touchscreen device, to ‘Burberry Bespoke’, a service which allows customers to create their own customized trench coats online, all serve as a purpose to humanise technology in order to interact with the consumer in a more personal way. Burberry has become as much a media content company as a design house, and this content driven strategy appears to have paid off, with Bloomberg reporting Burberry sales to have risen 14% to $866 million for the three months to the end of 2013 compared to 2012.

What today’s Middle East consumer expects is the advantage of digital platforms to provide broad product selections, reviews, product information and opportunities to compare pricing and product specifications online. But with the ‘shopping mall experience’ so ingrained into the Middle East shopping experience, the traditional advantages of handling a product and personal service at physical stores will always exist. Retailers that can learn to harmonize both the online and offline experience will be the companies that dominate their category in the future.