Monday, November 30, 2015

Strategic positioning of luxury brands

“The basic approach of positioning is not to create something new and different, but to manipulate what’s already in the mind, to retie the connections that already exist,” said Al Ries and Jack Trout in their book Positioning: The battle for your mind.
It is all about battling for your mind. The classical definition of positioning is a marketing strategy that aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer. So let us understand the phases of this extraordinary make-or-break tool.

The quote has a classical approach to brand positioning but primarily is referring to positioning of an existing brand.
First, let me discuss the strategy for debut positioning of a brand in the luxury space. When you conceive of launching a brand in the luxury space the step is to study the market. The existing players or rather your competition and how they have positioned themselves all this while will give you a fair idea of the positioning that you are looking at.
Strategically, if the brand has a strong recall then it is prudent to find a new positioning for your brand. In case the existing brand is new, you may even try to replace its positioning.
For example, when the incumbent is a brand that is positioning itself as a brand with heritage and legacy, your move will be to position your brand as youthful or rather “cool”. Yes, luxury brand can be positioned as “a cool brand”. The greatest advantage of such a brand positioning that is connected to youth is that it appeals not only to the young people who can afford, but also to the young at heart people who want to be associated or who want to sport a brand that is “cool” and sporty and youthful. Tom Ford is such a brand that has appealed to the youthfulness of the clients. And small wonder, not only youth but also clients from more senior demography even James Bond have been loyal to Tom Ford brand. Other top designers like Michael Kors and Marc Jacobs have also made a niche for themselves by appealing to the youthfulness and vibrancy of their clients with their labels.
So when you are conceiving of a luxury brand, its positing will make or break it.
Now let us examine the positioning or rather re-positioning of an existing luxury brand. When I saw Rolls Royce launching a Wraith, I wondered for a while, “how is this sporty looking car fitting into the family of RR beside Phantom and Ghost?” The reason is simple. RR doesn’t want to confine its positioning to a brand of legacy and heritage that is associated with a certain level of power and seniority. A similar example is Louis Vuitton. LV’s brand ambassadors have classically been Bono, Angelina Jolie and Sean Connery. This was essentially “Core Values” campaign about how “a single journey can change your life”. The idea was to create aspiration for the youth and create a pull for both the young and the not-so-young. However, they realized it is time to tap into the market that they are missing out on. So the then creative director Marc Jacobs designed the Damier series of designs to attract youth and to reposition LV brand as youthful.
Now let us discuss the third and final facet or rather a dilemma that every luxury brand faces. It is a choice between exclusivity and dilution. When a brand is snob and will price itself at such a level that it is crowding out or alienating a greater part of the potential clients, it is gaining exclusivity. It remains an aspiration. For people who can’t afford, some resolve to buying first copies and fakes. However, some other brands make the pricing in such a manner so as to include a large pool of clients who are ready to invest significantly on a first copy. So they are drawing that money and making luxury brands affordable. Welcome to the most tricky client cluster, the Masstige. Handling this segment is the toughest for any brand manager. To what extent can you dilute your brand to gain volume and tap into the wide pool of counterfeits and provide clients with originals that they can afford. It can be a key chain or a coin purse or a wallet or a belt, it is all about flaunting the label, that too original. The pride associated with it is enormous, so the aspiration to buy bigger product only grows and the brands get a new set of wider client pool.
The only risk being brand dilution. Such a dilution may position the brand away from exclusivity and result in loss of loyal big-ticket clients who want exclusive rights to “luxe”.
So, be it positioning a new luxury brand or repositioning an existing brand or even handling exclusivity versus dilution debate, the efficacy of the job of a brand custodian lies is in his or her power of knowledge of the brand. The more you know your brand, you will know how best to position it.
Let your quest for luxury continue.

In Conversation with Mahul Brahma: The CEO Magazine

Communications and Branding Expert

The CEO Team • New Delhi
Q: From a senior editor you have become an expert on communications and branding. It must be an interesting journey. Please share with our readers.
It really was a very interesting journey indeed. I started my Corporate Communicator career as Media Advisor to Mr Sanjiv Goenka, Chairman of RP-SG Group, and as a PRO of CESC. Being the spokesperson of the power utility company and handling media from the other side of the table is a very challenging task. It was baptism by fire. I later joined Ambuja Neotia as Head of Corporate Communications and Branding and media advisor to MrHarshavardhan Neotia, Chairman and MD of the group. I am currently Head of Corporate Communications and Branding for a Tata Steel and SAIL joint venture, mjunction. I am the brand custodian and responsible for making the mjunction brand most admired. Being a part of Tata group has a great advantage as I get to connect with the entire Tata family including the Chairman Mr Cyrus Mistry. In the book “Intrapreneurs@mjunction” the author has also thanked me in the acknowledgement segment for my contribution in bringing out the book.
Media has been very kind to frequently seek my opinion and thoughts as an expert in Branding and Communications in their stories. I love sharing my ideas and thoughts on communication and branding with live audience in open forums during my speaking sessions at esteemed institutions like IIM Calcutta and industry bodies like CII and ASSOCHAM. I am also an active member of Public Relations Society of India (PRSI).
Q: You have been an accomplished journalist. Please share with us the story?
Journalism was my passion. I have been a journalist for over a decade. I have been lucky to work with some brilliant editors and journalists. I started my career with The Economic Timesin Kolkata in 2002. Then I moved to Mumbai and started working with Reuters and then joined the launch team of DNA in 2005. Soon after, I moved back to The Economic Times and started managing the Op-Ed page while extensively writing on entrepreneurship. I have held Senior Editorial positions in BusinessWorld magazine andCNBC TV18 Group’s Newswire18. In my last stint as a journalist, I was a Senior Editor with the India partner of the New York Times, Financial Chronicle (FC). I have written Editorials, Op-eds and on luxury extensively, I was also editor of a luxury supplement.
I am currently a columnist with The Economic Times on luxury branding. I write on the world of “luxe” and how it can be strategically marketed, positioned, branded and on its various other unknown facets.
I have also co-authored a book that was launched by Ms Jaya Bachchan in Kolkata titled “Durga: A woman of Substance”.
Q: Tell us a bit of your early life and educational background.
I was born on 15th February, 1981 in Kolkata in a Brahmo family. I graduated in Economics from St Xavier’s College, Calcutta and I am currently an advisor on entrepreneurship to SXC Entrepreneurship Development Cell. I completed my Masters in Economics from University of Calcutta and I was a ranker. I am currently pursuing my PhD in Economics.

Why e-commerce in luxury will fail

In order to fully understand the inherent contradiction in incoherence at the core of the marriage between e-commerce and luxury and why it is destined for a divorce or a failure, let us first look into these two individually.
E-commerce or e-retail has been a game changer. The valuation game in which these biggies have entered into is a completely new premise for any business. Their valuation is increasing at the cost of making losses. But the million dollar question is how are they sustaining it? They are sustaining it because of the valuation game that will fetch them a buyer with very deep pockets. The buyer will look into the transactional value and the spectrum of offerings, so the focus is that and not profit. It is a great joy run for us consumers as the unrealistic discounts offered at the cost of company money may be funded by a private equity fund in China.
But as all good things come to an end, the risk of the bubble bursting is imminent. Business models can’t run on losses. Period.
E-commerce has changed the way we shop. Even a few years back, we couldn’t even fathom buying clothes or shoes without trying them on, but today it has become the norm. It has penetrated our lives like the way mobile phones have. Shopping has never been this convenient and cost-effective.

(Photo credit: Getty Images)
The core reason behind the success of e-commerce in India is our love for price-sensitivity. We love discounts, we love value for our money. The entire machinery of e-commerce or e-retail runs on unrealistic deals and discounts.
And this is where the meeting of hearts between ecommerce and luxury doesn’t happen. So let us understand the premises on which luxury buying is based in India.
I have oft repeated in my columns that luxury comes from the word “luxe” which means dazzle. Anything, as long it makes you dazzle, is luxury for you and you will pay a premium for it.
Luxe is a purely experiential phenomenon as it is heavily dependent on how your senses perceive something. If your senses feel dazzled, you are convinced to shell out that premium for a luxury brand.
Exciting and convincing our senses via a laptop, tab or mobile screen is next to impossible. And that is why the ecommerce companies try the same strategy of heavy discounts that they try for premium products. Unfortunately, this story of crazy discounts opens another can of worms. Welcome to the world of luxury counterfeits that are sold online. (Read my column: The world of luxury counterfeits just a click away:
So with a seller’s warranty and not a manufacturer’s warranty, you never know you are getting a great deal or a counterfeit.
My friend very recently sought my advise for buying an Omega through a ecommerce website which was offering a discount of 40 per cent. But Omega was not offering that discount at any of its retail outlets. Although the price was realistic, I advised her against it as you will never know for sure without the manufacturer’s warranty, in this case Omega, whether it is an original or a counterfeit.

(Photo credit: Getty Images)
When you are paying a heavy premium for a luxury purchase you are paying for the experience. You walk into a luxury boutique, the way you are greeted with a smile and offered a special treatment from the word go, it is bound to make you feel good and special. The boutique manager will make you realize that you are almost on the verge of entering an exclusive and elite club with an amazing history and legacy -- it is just a purchase away. Then your senses, which are already feeling special, actually experiences the goods feel more special. For example, you are wearing the latest Omega watch that James Bond is sporting in the upcoming movie “Spectre” on your wrist and looking at the mirror, how can you not feel elated? You have already “bonded” with that timepiece. You just know this is the one. The boutique manager keeps pampering you, sometimes even with a glass of Champagne. So finally when you make the payment, it feels so justified and incidentally also “value for money”. You will revel in that Bond moment.
The entire ambience, the entire experience cannot be created online by any ecommerce company, even via simulation. No matter how much convenience or best deals you are offered, luxury shopping can’t happen without experience. It is not worth the money for the buyer and no amount of discount can replicate that experience.
So value of money as understood by e-commerce and e-retail players are not the same in case of luxury buying. In the former, it is just the hefty discounts, but in the latter, it is experiential worth of money.
So, no wonder the marriage between e-commerce and luxury is destined for failure.
Let your quest for luxury continue.