Tuesday, June 23, 2009

ARGH!

So I'm on my Google Reader and THIS is what I see.



I am so not amused. This is like the most lazy, stupidest way to promote a product. It's like, what's with that? Isn't there any other way to make your burgers seem more appealing, or is it because your burgers taste so bad that you have to sink to such low levels to promote it?

BK ads really make me angry, they are in general pretty controversial, but not in a good way--it's simply irresponsible advertising. Not that advertising has to be totally peppermint clean, but there are some moral codes that you should stick to, right? Like basic respect for the other gender.

Jimmy goes Cheap



The designer Jimmy Choo announced its collaboration with H&M for a cheaper shoes and accessories line. The fashion label is the latest in a slew of high-end designers forging partnerships with stores in order to produce cheaper and more accessible products. This trend of going down market has me wondering about the whole idea of Brand Equity: so in school, I learned that you can earn money based off of your brand if you have a well-established brand. To establish your brand, you need to figure out a couple of things that are central to your identity, and your messages have to relate to those characteristics. These characteristics will in turn, earn your brand some value and theoretically, will make people want to 1. buy your product, and 2. become loyal customers. So for example, Apple's brand is hip, great looking, and easy to use. They stick to those in all their commercials and messages, so people would want to buy an Apple product because of those 3 reasons.

For luxury products, one of the central characteristics that they all share is exclusivity, and exclusivity by way of price. In order to be a luxury line, your products must be inexplicably expensive. So a high price becomes one of the central defining characteristics of a luxury product. This characteristic is usually reinforced in all of the marketing for luxury lines -- most print ads for fashion houses give off the expensive vibe. So if designers such as Jimmy Choo are lowering their prices, then can they still be categorized under "Luxury"? If they have both cheap and expensive products, then how much of the brand image is the label compromising?

I guess my main issue is that when you have a brand that wants to be both accessible and exclusive at the same time, it's hard to make it work. Many brands have solved the problem by introducing separate lines within the same label, such as Marc by Marc Jacobs and Michael by Michael Kors. And I guess it's a good solution for now...but the Marc Jacobs brand (the main brand) is still seen as less exclusive than say, Prada, when their products cost about the same.

Sunday, June 21, 2009

The Starbucks Factor


Starbucks profit falls 77% on store closure charges

Some nuggets:
  • This year Starbucks has taken additional steps to lure consumers to its stores. It unveiled a combination food-and-drink pairing menu priced at $3.95 and instant-coffee packets called Via. Much to his chagrin, CEO Howard Schultz has said Starbucks has become the "poster child for excess" and he wants to shake that image.
  • Starbucks has been facing declining store traffic for more than one year, jolted by weak consumer spending, especially in California and Florida, states accounting for 30% of U.S. retail sales.
  • Based on these figures, restructuring at Starbucks is showing some positive signs. In the quarter that ended Dec. 28, U.S. comparable store sales slid 10%, while the number of transactions fell 6% and the average value fell 5%.

And a reader’s comment:
Instead of closing stores Starbucks should have lowered their prices. Lattes are the first thing financial advisors advise clients to cut out of their daily budgets to save money. Compare Starbucks earnings results to McD's or any other fast food joint. Fortune500Earnings (http://www.fortune500earnings.com) is a good venue to do that. Lower your prices $0.50 and retain more customers.

And my thoughts (a bit rambly, it's Sunday, sorry)

Maybe I’m crazy, but isn’t the reason why anyone would buy Starbucks because it IS a premium brand? Starbucks’s entire value rests on its image – its snobby, bourgeois, yuppy image…the image is what drew customers in the first place, not the coffee. Why would you want to de-value that? When Dunkin Donuts rolled out with their cheaper version of lattes, they designed it to look like high-end coffee to attract those customers. The DD coffees were no longer the construction workers' coffee, suddenly you see BMWs rolling up to DD Drive-Thrus. DD brought themselves up to Starbucks's level by offering premium coffees, I don't get why Starbucks would then want to undercut their own brand. Like Prada isn't lowering their prices just because Steve Madden made a shoe that looks exactly like theirs. I don't get why Schultz has a problem with this Starbucks brand image, it does represent excess, it does represent luxury--what's wrong with that? Starbucks IS seen as elitist, but so are all the other luxury brands. Hermes farms their own alligators -- I don't know how much more elitist you can get -- yet demand for their product is still through the roof. Not comparing a Starbucks latte to a Birkin, but in their own respective industries, both are seen as luxurious, unnecessary brands, and it is because of that that both companies have made money. And yeah it's a recession, and yeah financial advisors advise clients to stop drinking coffee, but 1. coffee is physically addictive, and 2. for a habitual Starbucks drinker to stop drinking Starbucks is really hard. It is, because that means they must admit to the world that they can't afford Starbucks coffee anymore, which, to a habitual Starbucks drinker (yuppy, middle-upper class, snobby), is REALLY HARD TO DO. So I think, personally, that Starbucks should emphasize their premium-ness, instead of lowering it, because that is their money maker. When it comes down to the bottom of it all, Starbucks is simply not a cheap brand.

Tuesday, June 16, 2009

Welcome to the Real World


Back from my 3-week vacay in China! And boy, was I surprised/shocked by the sheer potential buying power of that country. The level of consumerism in China is something that I have never seen in my life, ever. If China's in a recession, no one sent out the memo.

Switching subjects a bit...the thing that I kept on noticing over and over again in China was the amount of fake stuff that was floating around. There were so many fake LVs, Chanels, Burberrys...you name it, they've got it. I mean, this homeless guy begging in front of a temple was wearing a fake Gucci bag. I wonder what Vogue may say to that -- maybe Zoolander really had it right, derelict is the next big thing.

And these fake products look exactly like the real ones, there are no awkward looking C's on the chanel logos, the LV's were placed exactly where they were supposed to be placed. Really, I could not distinguish the difference, and every time I saw someone carrying a branded luxury product, I found myself wondering, is that real -- and does it matter? I mean, if I can get the same bag for hundreds of dollars cheaper and no one would know, why wouldn't I?

This whole fake stuff business just begs the question of what do you do when there's an entire population that couldnt give two squats about whether they have the real thing or the fake thing? Does brand equity even matter then? I found the pervasive thinking in China to be "As long as the bags look real, it's good enough". These petty fake bag shops are benefitting from the multi-million dollar campaigns that luxury fashion houses are spending on building up their brand. Everyone's gotta make a living, right? And this is the challenge that faces luxury brands in the Chinese market. Why spend the money on the real thing if no one notices, or worse, if everyone thinks that you're carrying a fake bag anyway? It may be worth it for the companies to allocate some of the multi-million dollar brand building campaigns to combat this whole fake stuff. And I think the way to do it is not through the legal system, but through culture and peer pressure. Just think: if Louis Vuitton started a whole campaign in China about the differences between fake and real, and drove home the point that only the real ones are symbols of status and success, maybe people would start thinking differently. That instead of "looks real is good enough", maybe they would shift towards "only real is good enough".

Part of the reason for why I think a campaign that demotes fakeness and promotes realness would be successful is because of the Chinese culture. It really is an interesting culture. 5,000 years of history has left the country with tons of traditions, and status and appearance have become two very important values. There's a thing (for the lack of a better word) in China called "face", similar to honor but not really. Everyone wants to preserve "face", they want to be seen as a positive, successful, and generally good person. To "lose face" is more than embarrassing, it is downright unacceptable to some. This tradition of preserving "face" has led an entire population to value status and appearance. This is why, when you step out into the streets of Beijing, girls are dressed impeccably and women wear heels everywhere, even to climb the Great Wall. Everyone who is anyone or wants to be anyone knows that first, you've got to look the part. Marketers can tap into that whole "face" notion, and link fake bags to the idea of losing face. That by purchasing a fake bag, you are not showing off your success or status, but rather you are demoting yourself through your innate admittance of your inability to purchase a real one. Harsh, I know, but have you seen the level of fake crap in China? I'm convinced that there is absolutely no notion of intellectual or artistic property there.