Category Archives: Luxury

Branding by Design: The Impact of Fashion on the Automobile Industry

by James D. Roumeliotis

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Lamborghini Boss

In the book, “Fascinate: Your 7 Triggers to Persuasion and Captivation”, author Sally Hogshead stated that marketers must strive to fascinate people beyond the bounds of rationality. Companies must activate such mental triggers as lust, mystique, power, trust, and vice.

Though the marketing and branding folks are relied upon for their artistic output to create a buzz and compel consumers to buy, the industrial designers of car brands work diligently on fashion inspired creations for new model launches.

Like an outfit, an automobile should wrap its owner in a new outer shell, both protective and decorative. Premium cars like extraordinary clothes, invoke a whole new life as the glamor of both comes from the promise of escape and transformation.

The automobile as eye candy

Fine arts, fashion and luxury brands have long crossed paths creating a blend of culture, merchandising and branding. The similarities could not be more striking with cars and fashion. Seems European auto designers have always had this ethos ingrained as demonstrated with their design flair. The Italian industrial design houses such as Pininfarina, Italdesign and Bertone are renowned for churning-out architectural inspired automobile designs. In the past and present, Pininfarina has been employed by a wide variety of high-end automobile manufacturers, including Ferrari, Maserati and Rolls Royce.

Italians are very proud of their brands such as Panerai or a Lamborghini. They epitomize the essence of style. Even smaller motorized vehicles such as the Vespa convey savoir fair with simplicity.

Fiat & Gucci: complementary collaborators

The Fiat 500 is no exception. Once again, the firm is partnering with Gucci. The 500C by Gucci is offered in two colors, white with satin chrome accents or black with shined-up chrome bits. On both, a black soft-top covers occupants. Gucci’s color scheme signature runs down the middle. At all four corners sit 16-inch alloy wheels sporting the Gucci double-G logo in the center. Inside, a Gucci print adorns the seats and the fashion house’s moniker can be found sprinkled liberally throughout. When Fiat revealed the hardtop version of the Gucci 500, more than 3,000 pre-orders came flooding into the automaker’s website.

Bob Lutz prior to his retirement at GM

After holding top executive positions at BMW, Ford, Chrysler respectively, Bob Lutz had a very good idea what a car company and its car models should look like, which he didn’t find when he was hired at GM in 2001. Within days of arriving at GM, Lutz began reviewing the future model lineup and was shocked to discover that none of the models he reviewed, as he put it, “had any charm or ornamentation to delight the eye”.

The Cadillac CTS (2001 model) “lacked any charm or warmth.”

In his experience, there was an internal battle between the design team, what he regarded as “the car guys” vs. “the bean counters”. Read here the people in finance. Although now retired, Lutz can proudly claim that he was instrumental for the changeover to a sleeker line-up. GM sales figures show it has succeeded in generating committed buyers.

Fast forward more than a decade and this time Cadillac has moved its headquarters from the automobile manufacturing capital, Detroit, to the trendy SoHo district of Manhattan so as to establish a new brand identity in this luxury international city — as it yearns to convey a global avant-garde identity. At a New York Fashion Week party, in September (2015), celebrating Public School, GMs luxury brand enticed its onlookers with a sneak peak of its successor to the brand’s best-selling SRX SUV, by utilizing a hired helicopter to fly across the Hudson River carrying a XT5 SUV on a platform underneath it. More on this here http://bloom.bg/1EYmHft

The Rolls-Royce Wraith – high fashion on wheels

The latest motor carriage to be inspired by the world of fashion and film is the epitome of luxury cars – Rolls Royce Motors with its 2013 coupé Wraith model. The automotive brand to the well healed describes this 624bhp, $285,000 priced two-door as a debonair gentleman’s GT – a highly refined, luxurious and exclusive like its stablemates, but more dramatic and exciting than any of them. To add more pizazz, the designer edition of the Wraith model will be customized with the finest materials as per the customer’s specific taste and choices.

According to Giles Taylor, director of design at Rolls Royce, “There’s a sense of effortless grace and elegance, but at the same time something more contemporary and daring.” The interior is equally elegant and sophisticated. It is flawlessly outfitted with fine silks along with inspiration drawn from haute couture as evidenced by hints from the materials, color palettes and the techniques applied. It is the ideal combination of power, style and drama.

Two supermodels along with their new fashion statement -- the Rolls Royce Wraith.

Two supermodels along with their new fashion statement — the Rolls Royce Wraith.

Branding by design

Product design is key to a great brand. Design is the elemental differentiator with competitors. Eye catching sex appeal builds the emotional bond and turns owners into enthusiasts.

“It’s all about integrating design and brand,” says Joe Doucet, founder of Joe Doucet Studio.

“We need to cease thinking of them as different disciplines. The essence of the Apple brand comes through its design. Take the logo off a BMW and you still know it’s a BMW.”

Design also needs to be part of the strategic plan from the start, embraced by the CEO and across the Board.

“A brand is not your logo or ID system,” says Robert Brunner, founder of the design shop Ammunition and author of ‘Do You Matter: How Great Design Will Make People Love Your Company.’

“It’s a gut feeling people have about you. When two or more people have the same feeling, you have a brand. You get that feeling via smart design, which creates the experiences people have with the brand. Everything you do creates the brand experience; ergo design is your brand.”

Striking success at Audi

Premium brand Audi has come a long way with a big streak since its prolonged slump in the late 1980s and early 1990s. Today, the firm continues to surpass its own benchmarks. As one proud owner succinctly stated, “It’s elegant without being ostentatious.”

If you think fashion”, new Audi cars are akin to a well-put-together outfit. They are considered “classics” upon release. They are prominent not only for their impeccable sophistication and styling but also for the brand’s hard found creative innovation. Luxury and comfort are blended in a seamless mix. New technologies and taste trends are calculated to coincide with market shifts. The firm’s signature LED highlights reshaped an entire industry to become the standard.

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Hyundai’s economic aesthetic appeal

In automobile parlance, Hyundai is a relative newcomer to this game, but the firm has learned quickly and converted previous Toyota and Honda evangelicals to switch. Jessica Caldwell, a senior analyst with Edmunds.com, claims that Hyundai is operating from a much older playbook.

“What Hyundai did was nothing new,” she says. “They developed the oldest formula in the book: Have a good design at a good price.”

Caldwell further states that she’s surprised that other car companies haven’t caught on to Hyundai’s “secret” sooner.

“That, to me, is Car making 101,” she says. “You would think that it’s not that hard to figure out. And I just think it’s interesting that people think that Hyundai’s success is so surprising. But, if you look at it, it’s not at all. I mean, of course people are going to buy something that looks good and is not expensive. I think, regardless if you’re buying a refrigerator, a shirt, or a computer, that formula is always going to work.”

Lookout for the Fashion Patrol

As Fashionistas and celebrities piled into New York City during the Mercedes-Benz Fashion Week in February, the fashion police were out in full force. To capture attention, MB deployed its “fashion force” in CLS 63 AMGs four-door sports coupe painted in police-livery black and white, with sirens and yellow flashing lights.

It was fast enough to stop anyone in the middle of a styling faux pas. The ultra stylish police officers, though, were more interested in looking-out for some of the city’s most fashionable citizens, who were rewarded with a ride to their next destination. Other participants won prizes, which included seats to the highly prized fashion shows themselves.

“Mercedes-Benz has a natural affinity with the world of fashion with cars that appeal to those with a strong sense of style,” said Lisa Holladay, manager of brand experience for Mercedes-Benz USA. “The 2012 CLS 63 AMG four-door coupe is the perfect vehicle for the Mercedes-Benz Fashion Force initiative with its fascinating design and significant curb appeal.”

Along with its affinity in the fashion domain, Mercedes also has a micro-site, named “Avant Garde Diaries” depicting scenes and visual stories of its cars with fashion industry icons.

Victoria Beckham and the Range Rover Evoque

Victoria Beckham, the former pop star and wife of renowned footballer David, has earned critical acclaim for her finely tailored, ultra chic fashion line, winning the Designer Brand of the Year award at the 2011 British Fashion Awards.

Likewise, her special-edition, 200 unit, Range Rover Evoque line boasts a hand-finished matte grey paint, 20″ black alloy wheels and rose-gold detailing. With Rover head designer Gerry McGovern, she spent 18 months on the SUV working from elements like jewelry and textile. The results are distinctive. She was reported stating that the car must appeal to both men and women.

Applying design cleverly makes a difference with brand perception. Thus, a fashion design culture needs to be strategic, not an afterthought.

When you consider the planning, demands in the fashion and car industry are similar. Grab the customer’s attention. Use innovation and design to generate passion and commitment. By doing so, you are able to build brand loyalty with staying power and revenue generation. Who knows, you could be at the forefront of starting a new cult!

YOUR VIEWS ARE ENCOURAGED

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Sensorial Purveyors: Creating an Enticing Ambiance in the Hotel Domain

by James D. Roumeliotis

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There was a discussion on Linkedin’s “Luxury & Lifestyle Professionals” group which posed the question: “What is the first thing you check-out when you step into a 5 star hotel?” As you might expect, being subjective in nature, various responses were offered by the group’s participants. Some of them mentioned, the bedding, while others would state it’s the linen, the bathroom, the main lobby, overall amenities, or simply the courtesy from staff just to name a few. There didn’t seem to be an overall single consensus.

It doesn’t necessarily take an expert in the hospitality domain to ascertain what constitutes the right feel of an attractive hotel – one that exploits the 5 senses to attract and retain guests (aka customers/patrons). One needs to recognize aesthetics, be discerning in his/her tastes and expectations, as well as have stayed in various hotels over time to truly appreciate what in fact matters.

Hotel as a Lifestyle
Savvy brands are finding ways to engage all consumer senses to strengthen the brand experience. When affluent guests choose a hotel to stay at, they desire a look and feel better than their primary residence. The hotel is no longer just a place to sleep. It has developed into a home away from home. It’s a lifestyle!

The “hotel as lifestyle” creator, Ian Schrager of Studio 54 fame, has achieved international recognition for concepts that have revolutionized both the entertainment and hospitality industries. His passionate commitment to the modern lifestyle has been expressed through a series of pioneering concepts in the hospitality industry. His keen instincts for the mood and feel of popular culture were honed during the 1970s and 1980s, when he and his late business partner, Steve Rubell, created Studio 54 and Palladium. In 1984, they turned their attention to Morgans Hotel in New York and introduced the concept of “boutique hotel” to the world, and is today one the hottest segments in hospitality.

Boutique Hotel vs. Corporate Chains
“Boutique hotel” is a term to describe hotels which often contain luxury facilities of varying size in unique or intimate settings with full service accommodations. Sometimes known as “design hotels” or “lifestyle hotels”, boutique hotels began appearing in the 1980s in major cities across North America and Europe – mainly in the U.K. These hospitality properties are characteristically furnished in a themed, stylish and unique manner. Boutique hotels generally are known to have less than 100 rooms. Their limited capacity enables them to enhance the customer experience through personalized service, as well as to customize their property and operations. An intimate atmosphere is usually regarded as a vital part of a “boutique” hotel. This includes cozier premises, quality amenities; conceptual dining outlets that become destinations in their own right, and an environment whereby the hotel staff recognize what your needs and desires are, rather than just responding to what you ask.

Several multinational hotel chains are taking advantage of the boutique hotel trend and competition and growing their own upscale and luxury boutique collections with an international expansion. For guests, the collections present an alternative to somewhat indistinguishable properties along with rigid brand standards, whereas, the stand-alone alternative hotel properties possess a distinct personality. As a major hotel chain group, Starwood Hotels and Resorts led the way with the boutique brand in the late 1990s by launching W, which now has more than 50 properties worldwide. This brand offers a modern, sophisticated residential design with an emphasis on elegance and utmost comfort. While sharing a common aesthetic and commitment to service, each W Hotel has its own distinct personality reflecting the flavor of its particular city and neighborhood. Accor, on the other hand, launched MGallery and plans for the collection to reach 100 properties by 2015. Not to be outdone, other chains such as Marriot and InterContinental have also got themselves into the boutique hotel domain not without their challenges though.

Luxury names such as Giorgio Armani, Versace, Missoni and Bulgari are exploiting their cachet and design savoir-faire turning it into a lifestyle with their version of branded boutique style hotels. The first Armani hotel opened in Dubai in 2010, located in the Burj Khalifa tower, the tallest building in the world – in partnership with Emaar Properties, one of the biggest property developers in the Middle East.

The Overall Experience – Sensory Marketing alongside Atmosphere
As in every service sector, with an upscale hotel, every customer touch-point should offer a superb experience. Hotel brands need to use an integrated approach across their various touch points to engage their customers. For example, it’s crucial that the customers have an experience that matches the perception created by the advertisement when they visit the property, or even when they place a call to the hotel reservations center.

Today, the hotel industry is adapting and modifying its offer to differentiate, as well as respond to an increasingly discerning customer through innovative approaches utilizing elements of sensory marketing. During their stay, guests should be subjected to an ambiance which captures their five senses. Ambiance is identified as the decor, the service, the behavior of the staff, and how all these factors add up to create a feeling of care and enhance emotions. It’s the aesthetics, lighting, and the smell, cleanliness of the facilities, the amenities and the intangible factors that contribute to a great customer experience. This entails a combination of “sensory marketing” and “atmosphere” in action. According to the American Marketing Association (AMA), “sensory marketing” is techniques which aim to seduce the consumer by using his/her senses to influence his/her feelings and behaviors, whereas “atmosphere”, in marketing terms, is the physical characteristics of business premises such as architecture, layout, signs and displays, color, lighting, temperature, noise, and smell creating an image in the customer’s mind.

Westin, who are a part of the Starwood Group, a few years ago began diffusing a signature fragrance in all of their hotel lobbies and they coupled that by standardizing the music in all the lobbies as well ─ regardless of the Westin property one visits anywhere in the world. Combining and integrating different auditory, olfactory, visual, and even tactile elements to attract, retain and seducing customers, create cozy moments of comfort along with unparalleled enjoyment.

A high-end resort developer and operator, Kerzner International, renowned for its One&Only luxury resorts brand has as its core value, “Blow away the customer.” The company walks the talk by impressing its guests through grandiose entrances, facilities, overall ambiance and luxury amenities – then making absolutely certain that they are pampered throughout their stay. It’s all an integrated, well orchestrated and flattering process. Nothing is left to chance although it does take a coordinated team effort to make it all happen flawlessly.

Martin Lindstrom, a brand strategist who has written six books on brands and consumer behavior, asserts that if the consumer’s senses are more involved, it further connects him/her with the brand which may create an increase in willingness to pay more. Consequently, it differentiates the brand and turns brand loyalists into brand advocates.

The Online experience – Case Study: Four Seasons Hotels
Luxury hotel chain Four Seasons recently unveiled a new website that reportedly cost a whopping $18 million to develop. It uses a holistic digital media strategy to enhance the total online experience and give a visual taste of what can be anticipated at their properties.

Extensive research around digital consumption of luxury consumers, both in the travel sector and across other categories, was conducted for the development of the new website. The result of the investment is a fancy, colorful website, with a new booking process, social media integration and personal profile technology that allows users to set preferences and create a more targeted online experience. It is also optimized for mobile, which provides access to a reduced size version of the site, and includes videos, room rates and booking capabilities. In addition, locations and experiences are showcased through photo-rich, informative property and destination pages.

“Four Seasons has always provided an unparalleled hotel experience, and this level of service and engagement extends into our online presence,” says Susan Helstab, Executive Vice President Marketing, Four Seasons Hotels and Resorts. “The new website anchors our already strong digital presence online, in social media and with the various communities we facilitate.”

 

The Sum of its Parts
Emotion captured by the five senses is the key to success for a sensory marketing experience.
The quality and feel of materials used all over the premises, quality of amenities, vivid color palettes widely used, the furniture design, look and atmosphere of public areas which encourage social interaction, clever use of lighting and its intensity, as well as the sounds and smell throughout should be well integrated tactile elements to attract, seduce and retain guests/customers.

However, along with inviting areas, delightful service is also a crucial ingredient necessary to ensure a memorable total customer experience. The online customer encounter, along with all other touch points, also carries significance for the hospitality brands.

The design-led boutique lifestyle hotel sector has evolved from a small niche to a recognized and trendy category worldwide which has also attracted the major hotel chains into the sector with stand-alone brands of their own.

___________________

Your thoughts are encouraged.

CONTACT ME to receive a complimentary slide presentation on “Ambiance Creations: exploiting the 5 senses to attract and retain customers.”

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Contemporary Sales Approach: The consultative salesperson as the ally

by James D. Roumeliotis

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Today’s approach to marketing & sales must be smooth and sophisticated. Pressuring people and the “hard’ sale are relics of a bygone era. The films, ‘Boiler Room’ and ‘Glengarry Glen Ross’ highlight the former pushy tactics.

Although I realize that a more suave sales technique is needed to woo the customer, the stereotypes of brash sales forces persist on a small scale. Think of cultures where the words “Hello my friend…” are still considered coins of the realm. Culture is partly responsible for the nature of this marketing style, and the other reason is a lack of regulatory procedures.

Let’s face facts. Business is about sales. No sales revenue, no business. You can have the greatest products or the finest service. If no one recognizes this and the offerings do not convert into receipts, there is only a limited time you will be allowed to remain open unless you are running an NGO. Speaking of NGOs, even they need to raise money. Their sales pitch might be different owing to the nature of their organization’s activities, but it is still a sales pitch.

The Sales Function

What makes sales an interesting subject is the nature of how the sale is conducted. When client need and desire are matched to the offering, the products or services sell themselves. The sales force become the bridge; provide information or even counsel. They should in theory also become part of a positive experience. This principle should hold true in any organization, public or private, large or small.

A contemporary salesperson should be a listener more than a talker. The offering must be tailored to fit the customer’s needs. When it is handled in this manner, the customer makes an “intelligent” buyer behavioral decision.

A smart and well-trained sales team recognizes that understanding human psychology and diplomacy acts as a form of persuasion.

Liked v. Valued

As in any profession, most sales people appreciate being liked and trusted by their clientele. The key I have found is the concept of value. When clients sense that you value their needs, you understand the principle of caring. Do not make any client feel that they are just part of “turnover”. Authenticity must be genuine. Anyone can tell a fake from the real McCoy.

Bought vs. Sold

Marketing strategist Seth Godin states in his blog that there are products that are “bought”, and there are products that are “sold”. “Some things are bought – such as bottled water, airplane tickets and chewing gum. The vendor sets up shop and then waits, patiently, for someone to come along and decide to buy.

Other things are sold – such as cars, placement of advertising in magazines and life insurance. If no salesperson is present, if no pitch is made, nothing happens.”

Seth goes-on to stress: “Both are important. Both require a budget and a schedule and a commitment. Confusion sets in when you’re not sure if your product or service is bought or sold, or worse, if you are a salesperson just waiting for people to buy.”

If a company’s products or services need to be “sold”, there are different sets of challenges to overcome. These include:

– Clarifying how the products or services can make prospective clients’ lives better;

– Creating and expressing an emotional connection to your niche audience/prospects – whether it’s cool, innovative, or rebel etc.

– Indicating to your audience/prospects what they get to lose by not acquiring the products or services.

When it comes to a product or service being “bought”, not much effort is required in convincing prospective clients that they should purchase, but that they should buy yours. Even perceived necessities need to be marketed and sold – It’s just that they have a different focus.

Sales Online

The Internet and social media have had an effect and changed the way customers are buying. Their selling process has been reduced to a mere buying process; although the consumer continues to seek guidance in their purchases.

This is where the “value’ factor plays a role. Sales staff should always look for ways to offer solutions to keep their customers satisfied. It is thought that a quarter of all Online shopping is made by frequent “shopping lovers” whose influence spread the word to others about joys of online shopping whenever they have the opportunity. They represent an ideal target for retailers who should not be taken for granted.

Think Zappos!

Pull vs. Push

Push marketing and pull marketing are different yet complementary marketing methods for promoting a business – most notably online.

Push marketing is more traditional methods of advertising – essentially, you are pushing your message to your audience, regardless of whether they want to receive your message or not. Push marketing focuses on product features and awaits the audience to respond. Examples of push marketing include email marketing, website advertising, and cold calling.

Pull marketing is more proactive, pulling the customers toward your brand/product with targeted messages they care about. Pull marketing is all about brand building. Examples of pull marketing include media interviews, public speaking, and word of mouth advertising.

Consultative Sales = CRM

What differentiates a consultative sales process from a traditional presentation of features and benefits is the relationship that is established between the prospect and the salesperson at the beginning stages of the sales cycle. Traditional product salespeople rely mainly on their product and service expertise and may not pay enough attention to the relationship aspect. For an effective consultative sales conversation to develop, a prospect must believe that the sales consultant has practical and credible expertise and someone that the client wants to work with.

The contemporary approach to selling is when the sales person guides the prospective customer in making sound purchase decisions – someone seen as an ally and adviser. This can be accomplished by keeping the following in consideration:

– Clearly identify the prospect’s needs – does the product or service proposed fill-it?

– Is the price offered deemed value for the money?

Ensure a long-term relationship by achieving customer satisfaction.
To do this requires some skills – either instinctively or acquired through training and practice. This includes:

– The capability to understand what the prospect wants;

– The knack to recognize, through ample product knowledge including features, which of the products and services are deemed most appropriate for the prospect;

– The ability to convey the specific benefits gained by using specific products and/or services that are meaningful to this customer;

– The capacity to deliver the “package” (products or services). Focus on the desired results expected by the prospective client.

Luxury Brand Management: Selling the Intangible

Selling luxury products or services in a sluggish economy is no easy task. Focus on the affluent. Simply put, such consumers buy no matter what the state of the economy.
Next step is not to sell them on the product or service per-se but rather on what the true meaning of luxury represents:

• Self-expression
• An exceptional experience
• Made/formed with authenticity
• Craftsmanship & quality
• Created/produced in small numbers – rarity factor
• Emotional bonding
• Upscale mystique
• Status and prestige

This is what affluent buyers are looking for. All high-end purchases must have a storyline, pedigree or heritage. Pressure of any kind is pointless here. Think Ralph Lauren. RL sales teams never pressure clients. Ralph’s “dream” has either made the sale or it hasn’t. The sales team is just there to advise and be of assistance. Shared beliefs, attitudes, and values between sales team and client can push the sale forward because it is one of bonding and mutual recognition of being part of the “club”.

Any one who understands the points of being an “brand ambassador” knows what I am taking about here.

The Bottom Line

As in all professions, sales techniques continue to evolve and adapt to the nature of the times in which we live. Great service, good pricing and loyal relationships have become yesterday’s sales standards. Using the consultative sales approach and providing clients with value-added solutions is compulsory in today’s business arena.

Salespeople should evolve as businesses do. Today’s clients demand a partnership arrangement. Since all of us are also clients is it any wonder?

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Customer Devotion: Sweep them off their feet – indefinitely

by James D. Roumeliotis

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Image result for customer devotion

We constantly hear remarks and stories of deplorable customer service. I would think that brands would be more attentive and proactive. Unfortunately, this is not the case. You would have thought that they would make “devotion” a coherent strategy.

It should begin with the “trust” factor. Seth Godin, the much regarded marketer, asserts, “Institutions and relationships don’t work without trust. It’s not an accident that a gold standard in business is being able to do business on a handshake. Today, though, it’s easier than ever to build a facade of trust but not actually deliver. “Read the fine print,” the financial institutions, cruise ship operators and business partners tell us after they’ve failed to honor what we thought they promised.”

“Devotion” on the other hand, is instinctive – an emotional connection to you, your brand, your company, and your products. It’s what your customers (new, existing or former) are saying about you on Twitter, Facebook and other online social networks.

Customer experience as the key competitive differentiator

Your best defense and your competitive differentiator is your ability to create great experiences for your customers. It goes without much thought that loyal customers come back and purchase more because they get their needs served and/or problems solved.

Marty Neumeier puts it clearly in his book, “The Brand Gap: The brand is not what you say it is. It’s what they say it is.” Talking to prospects and customers is paramount to get a sense of what they’re thinking. What values are your customers receiving from your business along with its products or services? How does that experience compare with what other similar providers you may know deliver? Then how does what the consumers have said about the brand experience line up with what the company believes it delivers?

If we compare the customer experiences of say, Best Buy vs. Amazon, the differences are quite evident as to who is doing a proper job making their customers content and devoted. When a client mistakenly purchases the wrong DVD at Best Buy – one he already had and returns the next day to exchange it for the correct one and all he hears from the customer service staff member is, “Sorry, DVDs are “software” and can’t be returned or exchanged once sold – no exceptions!”, it makes you think how aggravating it is to do business with that big box retailer. Amazon, on the other hand, not only allows easy return or exchange for DVDs without restrictions; the company will even buy back ones you’re finished with. Moreover, even if the customer is outside the return window or is otherwise technically not entitled to do what he’s/she’s asking to do, the company will go out of its way to bend its policies in the interest of happy customers and the enduring customer relationship. The difference? Amazon does what customers want – it completely crafts its business practices, its systems, and its people to support it, whereas, Best Buy does what would be most convenient for the company for consumers to want but don’t, then hope for the best. That’s not a consumer driven strategy by any stretch of the imagination.

Customer loyalty in the luxury domain

Over in the luxury sector, sought after by discerning clientele, the product itself does not suffice. Hermès has impeccable products, the top-tier of luxury goods,” said Milton Pedraza, CEO of the Luxury Institute, New York. “In terms of what customers want, they have the top design, quality and craftsmanship. What Hermès may need, however, is a refresher course in customer experience.”

“Consumers tell us in research and anecdotally Hermès is the pinnacle of product delivery, but they could become far better in customer experience,” Mr. Pedraza said.

Automobile manufacturer Audi focuses relentlessly on being the number one premium car brand, and number one for customer satisfaction among competing brands. This approach is firmly rooted in building satisfaction and loyalty among existing customers so when it’s time to replace their car they buy another Audi. In developing a clear differentiation from its competitors, they don’t solely emphasize the quality of their cars – they add the pizzazz of customer experience and service. Achieving this relies in part on two key factors defined by the executives at Audi: delivering excellent customer satisfaction, and making Audi the best place to work in order to attract the best quality people, who will deliver that customer experience.

What can those on the front lines do to enhance the customer experience?

There are companies which spend a significant amount of money in marketing to entice prospects into a paying customer. However, once the prospect is at the stage of dealing with a company’s staff, the outcome lies in the hands of those employees who many are not adequately trained, if at all, to offer a positive experience. This type of “human marketing” undoubtedly moves beyond the marketing department. It’s about every employee and manager in the company delivering on the promise made to the new customer and giving them additional reasons to purchase repeatedly from the same outfit and receive recommendations too. In essence, this requires all employees and managers to be on the same page and understand that their job is to retain happy customers. The name of the game is to build a lasting, profitable relationship with them, and turn them loyal and devoted, thus, repeat customers who become passionate and recommend/refer your company to their friends, family and business associates.

Whether it’s B2C or B2B, sales and marketing people should co-exist, as well as the people in finance who are normally not considered marketing oriented but rather analytical. Equally trained to be customer centric is the receptionist, delivery people, and in the manufacturing industry, the product development division should be well versed with their target consumers’ requirements.

Founded in 1997 in the UK, YO! Sushi brought the concept of a Japanese “kaiten” sushi bar that delivers food to customers via a conveyor belt traveling 8cm (about 3 inches) per second. It has become the original and most famous sushi brand in the UK. The experience is fun and exciting, whilst the food is considered, by many of its patrons, revolutionary and made lovingly. Simon Woodroffe, its visionary entrepreneur and founder, built his business beyond the “buy”. For him the profit is in the “buy again.” He doesn’t want you to just come and eat at his restaurant once, he wants you to become a customer for life and repeat buy from his establishment, so that his marketing spend on initially attracting you to his restaurant in the first place can be recovered. By the time you are on your second and third visit, he has recovered his marketing investment in getting you as a customer, and you are now becoming a profitable, loyal and devoted repeat customer.

All employees should be considered as an entire marketing team. As such, they must be placed at the center of the business and continually developed, inspired, trained and given the tools to perform at the highest level. There is no such thing as an ideal time to do so – regardless of the economic downturn as all companies must work harder to attract and retain customers.

Take into account that:
– In a progressive customer driven entity, training and developing the human assets should be an ongoing process;
– Companies should be an enemy of the “status quo”;
– Mystery shopping (in person and/or by phone, as well as online) should be frequently conducted to get a sense of what an actual customer experiences – then taking action to rectify and improve the experience.

Case Study: Zappos

The following is the Zappos business mantra which should serve as inspiration for customer driven enterprises.

What customers get to see displayed prominently on the web site:
o 24/7 1-800 number on every page
o Free shipping
o Free return shipping
o 365-day return policy
What customers will experience:
o Fast, accurate fulfillment
o Most customers are “surprise”-upgraded to overnight shipping
o Creating a “WOW” factor
o Friendly, helpful “above and beyond” customer service
o Occasionally direct customers to competitors’ web sites
What’s done behind the scenes?
o No call times, no sales-based performance goals for representatives
o The telephone is considered for them one of the best branding devices available.
o Run warehouse 24/7. Inventory all products (no drop-shipping).
o 5 weeks of culture, core values, customer service, and warehouse training for everyone in Las Vegas office.
o A Culture Book
o Interviews & performance reviews are 50% based on core values and culture fit.

All employees should be marketers

• What are you and your team presently doing to make certain that your active customers don’t belong to your competitors tomorrow?

• How is the present customer experience perceived with your organization, product and/or service? How would you describe your internal culture, core values, and customer service policies/procedures?

• Finally: Are your customers devoted, loyal, or simply bored doing business with your organization?

Devotion should be considered a walking and talking advertisement – a potent word-of-mouth. Consequently, customer devotion should be the ultimate goal of every business leader and sales professional.

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Perceived Quality: Why Brands Are Intangible

by James D. Roumeliotis and Violetta Ihalainen

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A study of 33 publicly traded firms over a 4-year period, as measured by the EquiTrend method, illustrated that perceived quality had an impact on stock yields ─ a key business performance measure.

The study looked at American Express, AT&T, Avon, Citicorp, Coke, Kodak, Ford, Goodyear, IBM, Kellogg’s, and 23 other firms for which the corporate brand drove a substantial amount of sales and profits. Not surprisingly, the influence of perceived quality was nearly as great as that of Return On Investment (ROI).

“Perceived Quality” is considered the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose and compared to its alternatives/competition.

“Quality” Is Subjective

According to academics Scott Maynes and Valarie Zeithaml, as there is no general agreement on standards for the skewed term “quality”, a consumer’s judgment about a product’s excellence and superiority is an intangible aspect of a brand. As a result, objective quality is moot, and all quality evaluations are considered to be subjective.

This argument supports the premise that quality is determined by customers’ perceptions, based on individual values. Consequently, perceived quality is defined as a measure of belief.

Branding Activities Impact Consumer Perceptions

Branding activities are all a brand does that impacts consumer perceptions of the brand including product improvements, customer service, user manuals/quick-start guides, and discounts amongst others.

A notable example is with the branding activities Hyundai performed in the automobile industry that raised the product quality perception with both its dealers and consumers. The South Korean automobile manufacturer offered an extended warranty on all its vehicle models to encourage confidence. It worked superbly as demonstrated by their sales which peaked over the last few years.

Great advertising, great packaging and price are also key components. With consumer electronics and software, usability is the main component.

What Influences Perceived Quality in a Product and a Service Provider?

According to David Aaker, a brand strategist and author on the subject matter, perceived quality generates value. As for measurements in the product context, he identifies the following elements:

1. Performance: How well does a washing machine clean clothes?

2. Features: Does toothpaste have a convenient dispenser?

3. Conformance with specifications: What is the incidence of defects?

4. Reliability: Will the lawn mower work properly each time it is used?

5. Durability: How long will the lawn mower last?

6. Serviceability: Is the service system efficient, competent, and convenient?

7. Fit and finish: Does the product look and feel like a quality product?

Within the service context, he considers:

1. Tangibles:
Do the physical facilities, equipment, and appearance of personnel imply quality?

2. Reliability:
Will the accounting work be performed dependably and accurately?

3. Competence:
Does the repair shop staff have the knowledge and skill to get the job done right? Do they convey trust and confidence?

4. Responsiveness: Is the sales staff willing to help customers and provide prompt service?

5. Empathy: Does the bank provide caring, individualized attention to its customers?

Perceived Quality in the Luxury Domain

Although there are no extensive studies on perceived quality in the luxury market, marketing and branding experts, with emphasis in the luxury domain, contend that in the business of luxury, customers perceive quality in a product when they experience high-quality materials and service, when a product performs its function, as well as when it has desirable features, reliability, durability and design.

Luxury consumers also perceive quality based on service received prior to purchase, at the point of purchase and following their purchase. Superior service during the purchasing experience positively affects attitudes and future behavior towards the brand. Customers with little experience of luxury products are especially influenced by service factors.

A shopping atmosphere which exploits the five senses with the presence of sophisticated music, luxurious fixtures and exceptional service creates a mystique that is key to the luxury experience. Such an atmosphere can help persuade shoppers to make purchases that do not necessarily seem sensible in economic terms.

Similarly, exquisite packaging, such as perfume in a beautiful bottle, helps satisfy the ‘need for beauty’ and creates a link between the consumer and the aesthetic values of a luxury brand.

The same experts above, argue that premium prices are associated with prestige ─ the major indication of superior quality.

Making Perceived Quality Equate Actual Quality

Marketing and brand managers shouldn’t overlook the perceived quality concept. They must make consumer perceptions of quality match actual quality by following three recommendations along these lines:

1) Communicate the information about product quality to their customers continuously by utilizing integrated marketing communications tools such as public relations, advertising, sales promotion, personal selling etc.

2) Avoid boasting about product/service quality excessively despite the presence of high-level quality, otherwise, it can make customers feel as if the products and/or services can’t satisfy them as they greatly anticipated previously.

3) Pay attention to the factors affecting the quality of products/services such as pricing, advertising, warranty issues, and brand image etc. These can influence perceived quality directly. For example, using a low pricing strategy excessively can make the perceived product quality decrease because most consumers often equate cheap products with a low-end consumer sector. Consequently, brand image will lose its luster.

Conclusion

Financial performance is deemed to be linked to a brand’s perceived quality – a distinct relationship between them.

Perceived quality is an intangible and overall feeling about a brand and can’t essentially be objectively determined, partly because it is a perception and also because judgments about what is important to customers differ sharply in their personalities, needs, and preferences. However, perceived quality is based on essential factors which include characteristics of the products to which the brand is attached to such as performance and reliability.

In the luxury sector, customers expect luxury brands to be expensive; to satisfy them, luxury products should be in a higher price range. The scarcity of a product also affects the perception of quality during the purchasing experience.

____________________________

References

Maynes (1976)
Zeithaml (1988)
Chevalier and Mazzalovo (2008)
Dubois and Laurent (1999)

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The Anatomy of Brand Loyalty

by James D. Roumeliotis

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It’s no secret that there is a strong relationship between customer experience and brand loyalty. A recent Forrester Research report revealed that customer experience leaders have a 14 percentage point advantage in encouraging their customers’ “willingness to buy more, reluctance to switch, and likelihood to recommend.”

Function, features and benefits are an integral part of a product. However, they don’t matter as much as the perception of use value inherent in the brand’s promise.

Today, even online retailers have undertaken to create customer-centric strategies that drive brand loyalty. With a plethora of competition and better educated consumers, this has become more critical than ever before. However, how does one create and execute engaging customer experiences online or offline that will maximize brand loyalty?

Negligent Brands

Many brands are myopic to the point that they unintentionally and unknowingly allow their dissatisfied customers to go away without a thought. Front-line staff is either not trained properly and/or lacks the proper attitude to handle clientele appropriately.

During the industrial era, consumers would simply purchase what was produced, shopping where that product was available and paying the price the retailer demanded. In essence, the manufacturer and the store were in position of strength.

As products and consumers have changed over the years, the concept of ‘brand loyalty’ and ‘consumer insight’ came about. As we progressed into the new millennium, the transparency and unrestricted information available on the internet has changed all of that. Today consumers are not only better informed but they are also in control. They can make or break a brand through their actions.
So what does this say about listening?

Consumers will no longer refrain from informing companies on what may have gone wrong ─ whether it’s a particular brand or a competitor’s. With the numerous platforms for consumers to make their voices heard online, brands have to be very reactive and not allow anything to chance. In an age when the consumer’s outcries and influences spread quickly, the results can signify lost sales and a deterioration of brand loyalty.

By listening attentively – especially through the various online social venues, should keep a brand from becoming the next Netflix, Tropicana or Gap ─ each one with their costly blunders.

As for low prices, though they may seem attractive to shoppers, prices can only go so low. Retailers, whether in bricks & mortar or not, need to look beyond the quick sale and start to focus on building brand loyalty. Commodities find it hard to maintain loyal customers.

What contributes to Brand loyalty?

Brand loyalty is about building an emotional, and in some cases, irrational, attachment in a product. The most ideal example is when thousands of people line-up, regardless of weather conditions, to get their hands on the latest iPhone or iPad. This happens because Apple has built an emotional attachment to their products by creating a lifestyle choice rather than a product purchase.

It’s about how it makes you feel. Same goes for baby boomers, whether accountants or attorneys or business executives who purchase a Harley Davidson motorcycle and ride them for about four or five hours every Sunday afternoon. The bike makes them feel like a rebel – sort of an escape.

A study (2004) conducted by brand expert J. N. Kapferer reported that brand loyalty contributes to successful marketing programs, sales initiatives and product development.

The key aspect of brand loyalty is the consumer decision — which can be made both consciously and unconsciously to repurchase a brand continually. A consumer makes this decision that the brand is perceived the one that offers the right product features, identity or level of quality at the right price, thus establishing a positive image of the brand. Since brand loyalty leads to future purchases, it can be considered a valuable strategic asset for companies.

Brand loyalty requires trust as it’s a key factor in the development of brand loyalty. An additional and often overlooked principle in brand management is this: When a brand is successful, it’s because customers value an emotional experience more than a functional benefit. When the brand delivers on client expectations – and beyond, trust is earned, strong connections are made and ultimately, brand value grows.

As 2011 began, the top three U.S. coffee brands, when it comes to their own customer’s report of their degree of brand loyalty and engagement, are:

1. Dunkin Donuts;
2. Starbucks;
3. McDonalds (McCafe)

In Mr. Schultz’s new book, “Pour Your Heart into It,” he describes how the brand was built “one cup at a time.” This could not have been further than the truth as every brand thrives through a constant repeat of individual positive transactions. Unfortunately, many brands take consumers for granted once a business or new retail location is up-and-running.

Branding in the Luxury Sector – the Differentiators

Luxury brands rely on committed customers, who often provide “walking advertisements”/brand ambassadors ─ also known as indirect marketing. Evidence from academics suggests that this phenomenon has a strong presence in the luxury sector and may have a double positive effect on enhancing a brand’s overall image and status.

Consumers who trust a brand and its name are more likely to trust the quality of new and existing products. This leads to faithfulness, repeat business and positive word-of-mouth.

With luxury retailers, emphasis should be placed on providing a service or an experience that causes the luxury shopper to shift his/her spending from one brand to another. Giving your customer prestige or special recognition for buying your product or service should be a standard offering.

Simply thanking him/her who just spent $1 million at your luxury boutique isn’t adequate. A generous and memorable offering should be made rather than something that can be duplicated and repackaged by a competitor – whether online or offline.

Rewarding points, for example, will no longer make a large impact in demonstrating appreciation as it has become quite ubiquitous. It may be utilized toward buying an item he/she would have gotten anyway. But an “invitation-only” evening, for example, with a top designer can have much more of a positive impact.

Brand Loyalty: B2B Sector v, B2C

Brand loyalty in the B2B sector is higher than in consumer goods markets because companies in the commercial and industrial segments seek long term relationships as any experiment with a different brand will have impacts on the entire business. Therefore, it’s wrong to assume that marketing solely applies to consumer goods brands.

Among Interbrand’s 10 most valuable global brands, Microsoft, Intel, IBM and GE all generate far more B2B revenues than sales to end consumers. Consider, for example, that GE and Microsoft are hybrid brands with some direct-to-consumer sales that have helped to build the reputations of what are primarily B2B firms.

Although enterprises are selling to businesses, they want to be in touch with end consumers, with their aspirations and their needs. That is a source of competitive advantage in driving their innovation agendas can capture a larger share of channel margins and as a result, build loyalty.

The Impact of Social Marketing

Social media is proving a fertile ground for breeding brand loyalty. Recent research by eMarketer has shown that social media sites like Facebook are where consumers go to keep abreast of a brand’s products and promotions.

This is where consumers are converging and where online retailers should engage. Building a community around a brand not only increases exposure and traffic to a website, but also a very effective means of creating brand evangelists who will spread the brand’s message to a wider audience.

Starbucks has made effective use of social networking and micro-blogging such as Twitter and Facebook in interacting with their customers and measuring their interests and opinions on new branding activities. As of the beginning of 2011, the company had 1,237,169 followers on Twitter and more than 19.4 Million on Facebook.

Conclusion

When consumers are delighted by a particular brand experience, they begin to bond emotionally with the brand. They become brand loyalists and advocates – buying the brand more often and recommending it to others. This behavior serves to build the brand’s reputation.

Consumers will often purchase a brand for the first time due to its reputation. The brand, therefore, adds value and certainty to an otherwise unknown product. The stronger a brand’s reputation, the higher the value of the brand and the greater revenue it will drive for the business.

Brand loyalty has a strong presence in the luxury segment because luxury goods consumers identify with the personality of the luxury brand and see no need to search for alternatives.

B2B marketers are realizing that developing brand awareness among their customers’ customers can capture a larger share of channel margins and build loyalty that can protect them against lower-priced competitors.

Using social media to build brand loyalty to a brand’s long-term success as it creates a digital holistic platform where loyal customers converge and whose voices are heard and spread beyond.

Those merchants winning the race are delivering the kinds of recognition that make these shoppers feel truly remarkable, even in their privileged surroundings.
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Footnotes:

Article based on extensive research that has been conducted for an MBA dissertation based on the topic ‘The Influence of Brand Identity on Brand Equity in Luxury Segment’ by Violetta Ihailanen who has over 15 years of practical retail luxury experience with renowned fashion brands including Burberry amongst others along with an entrepreneurial stint.

Sources:
Chaudhuri (1995)
Jacoby and Chestnut (1978)
Kapferer (2004)
Phau and Cheong (2009)

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Branding Bottled Water: Differentiating a commodity through various tactics

by James D. Roumeliotis

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Make no mistake bottled water is a billion dollar business. All the major food & drinks groups are involved. Branding drives this market whether it is Poland Springs, Fiji water, and that trendy water of choice on the Left Bank of Paris, St. George from Corsica with its striking design bottle by the French designer, Philippe Starck.

The reasons driving the market are changes in lifestyle, attitudes towards drinks in general, and the simple fact that water is the proverbial “elixir” of life. Remember the simple fact that our bodies are made-up of 60-70% water.

Doctors recommend an average daily intake of H2O should be 8-12 eight-ounce glasses, daily. As a “commodity”, 7.56 liters/256 U.S. fluid ounces are consumed daily by an “average” household. Although prices vary according to brand, the average liter/fl. oz. price tag is equivalent to a liter/fl. oz. of petrol in Canada.

Another remarkable fact is that in the 1990s, Perrier through its clever and witty advertising campaigns worldwide made water the chic and socially acceptable drink of preference at parties and social occasions. You were now no longer forced to imbibe alcohol at a “business” lunch is meeting to seal a deal unless you wanted to.

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Defining the Luxury Brand

by James D. Roumeliotis

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Open any quality fashion or lifestyle magazine, and you will see how brands conceptualize and package luxury. The hype is deafening, and in reality can be quite confusing. Everyone wants “luxury” brands, and from a marketing point of view defy sales trends and seem recession proof.

As consumers, we want to be made to feel special. Definitions of “luxury” can vary enormously and depend on who you ask and in what context. The term “Luxury” has never been something easy to define. It is in my view, a mysterious and elusive concept. Studies highlight that no one is immune and when properly executed makes products and services highly desirable by broad market segments.

To put things into perspective, I will discuss the nature of luxury, and how luxury and premium brands differ in the marketplace although both types of products and services can be targeted to similar audiences.

Why Luxury Brands?

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