Brand Experience, Not Product Branding: Cutting Through the Clutter

by James D. Roumeliotis

Products in the same class-categories struggle to differentiate themselves. Consumers often take brands for granted. Purchases are not so much conscious brand selection as choice by default. The two following examples highlight this. Going out for coffee in North America usually dictates a visit to Starbucks. When sparkling water is ordered at a restaurant, Perrier appears almost by magic.

The age of the internet has made copying competitors’ products, marketing strategies, and overall business practices to name a few. It’s not enough to merely compete at a product and pricing level which doesn’t take long to be outdone. Anyone can lower prices. What begs the question is where you draw the line before your profit margins are eroded to the point of no return and many ramifications for a business. Savvy marketers look beyond pricing and product features. Instead, they search for sustained ways to market their brand rather than their product.

 

“Branding” redefined for the new era

 To begin with, a “Brand” is a promise of something that will be delivered by a business. This promise comes in a form of quality, an experience and a certain expectation in the mind of the consumer. It includes the Unique Selling Proposition (UPS). Marketing, on the other hand, is about spreading compelling messages to your target audience while branding is a combination of words and action. Marketing is extroverted and communicates quickly, while branding is introverted and a slow process if it’s to produce any real impact. Effective marketing activities are vital in developing a brand. When combined successfully, branding and marketing create and promote value, trust, loyalty and confidence in a company’s image, products and services.

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.

A branding strategy should consist of:

• Brand Positioning – Position is a descriptive sentence, slogan or image the brand is known for in the mind of the consumer and which the company delivers on it consistently. This is what sets the product or service apart from competitors.

• Brand Identity – This is every visual expression of the brand, whether in print, television, digital or the iconic (Pullman) brown color identifying the trucks and delivery staff of the UPS courier company.
  

• Brand Experience – Generally speaking, brands that are designed for a lifestyle should have a much higher emotional value to consumers than ones based on features like cost or benefits alone.

• Storytelling – Brands build relationships by the stories they tell. Stories add personality to products which customers can better relate to and feel affinity with. Luxury brands boast their pedigree.

• Engaging with your target audience – this is conducted through social media and asking for feedback. Simply put, engaged customers help you build your business.

The holistic selling proposition

Consumers today are more brand conscience, yet there are companies which continue to spend money advertising and selling product rather than brand. They place emphasis on price and quality as differentiators despite these two being overused by many copycats. Successful brands take a holistic approach to selling by exploiting the 5 senses which now constitute the brand. This is accomplished by what I regard as “ambiance marketing” and “sensory/sensorial branding”, through a captivating designed setting, yet alluring. This adds character and invites clients to truly feel the brand experience.

To put the aforementioned into perspective, consider the following:

• Visual – lighting, décor, colors, layout…you can get a real sense of movement using these elements.
• Auditory – music, effects, volume, vibrations…you set the tone and the energy of the room with your sonic selections.
• Tactile – textures, comfort, climate…this is all about how your guests interact with the environment.  This is a big thing to consider when you are designing the layout.
• Olfactory – fragrance, emotion, ambiance…this sense is under-rated and powerful. Of all our senses, the sense of smell is most closely linked to emotion and memory. You can use something as simple as burning incense or candles to something far more complex like computer controlled scent machines to enhance your environment. This could just be the extra touch needed to set the mood.
• Gustative – with food establishments, the challenge is in finding the perfect balance between sour, salty, sweet, and bitter during menu designs and beverage selections.  The presentation also makes an impact on the overall image.

Developing the customer relationship through customer experiences

The Total Customer Experience is the sum total of the interactions that a customer has with a company’s products, people, and processes. It goes from the moment when customers see an ad to the moment when they accept delivery of a product and beyond.

According to Bain & Company, a leading management consultancy firm, out of 362 leading companies surveyed, 80% believe they deliver a superior customer experience, but only 8% of their customers agree.

The experiences customers go through with your business determine the ultimate perception of your brand and image. Customer experiences also spread the word (offline/online) to others (friends, relatives etc.) about your brand/image. That said, each customer contact (“touch points”) should be handled with the utmost care to ensure that the total brand experience a person has is constant. This requires proper training and occasionally evaluating employee performance. Moreover, improvements may be necessary with systems, technology, methods, services, products and even physical premises. Complacency should be replaced with continuous improvement.

Creating a lifestyle brand through emotional attachment

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 brand that is designed for a lifestyle should have a much higher emotional value to consumers than one based on features like cost or benefits alone. The goal of a lifestyle brand is to become a way that people can utilize it to relate to one another. Those brands are an attempt to sell an identity, or an image, rather than a product and what it actually does.

Lifestyle brands have gained an increased share of the luxury market such as BMW, Armani, W Hotels, Louis Vuitton and Rolex ‒ just to name a few. These have given way to consumers to buy products that they associate with a “luxurious life.” They are essentially a status symbol. Abercrombie & Fitch has created a lifestyle based on a preppy, young elite lifestyle. Their retail outlets reflect this way of life through their luxurious store ambiance, attractive associates and images portraying young people living the Abercrombie & Fitch way.

 

B2B branding differentiation

Consumers are attracted to brands’ nonsensical benefits such as status, affinity, self-comfort and prestige, whereas, Business-to-Business (B2B) customers make their purchase decisions based on practical rationale including pricing, product performance and specifications, Moreover, brand loyalty in the B2B sector is higher than in consumer goods markets because companies in the commercial and industrial segments seek satisfying and long term relationships since jumping from supplier to supplier can cause havoc and inconsistencies with product quality control. Consequently, developing brand loyalty among enterprise customers can capture a larger share can increase profit margins while protecting them against lower-priced competitors.

The final take

The key to success is to market your brand, not your product. Contrary to popular belief, a brand is not a logo, label or product but rather a relationship with your customers. Branding positively adds value to your company including brand equity. This is considered intangible brand value.

A company can define itself as a lifestyle brand when its products promote a more than a product with key benefits and attributes. Note however that lifestyle branding is more than just promoting “a way of life.” It is a product or service that provides consumers with an emotional attachment to the lifestyle of the brand.

One way to overcome the ‘price only’ differentiation, which erodes profits and does not generate loyalty, is for a company to consider building a lifelong relationship with each customer. To do so, requires that each customer enjoys a positive and hassle-free transaction with each touch point. The goal is also to reduce or eliminate customer problems altogether, but that begins prior to and during the first contact with the customer. All problems should be documented, reviewed and corrected without much delay. Hiring the right people is vital, so is training them properly, as well as empowering them to deliver a remarkable customer experience.

When promoting brands, consider that earned media trumps paid media and enhances the brand image. With adverts, consumers don’t care what marketers say. According to the 2011 Nielsen Group report, “False” is the term 89% of consumers closely associated with advertising campaigns.

Whether a product or service ‒ is a luxury brand or falls into another category, it is how you stand out from the crowd that distinguishes you. Know your target audience, get inside their heads and understand how they think and feel. What are their fears, emotions and anxieties? Once you’ve understood this quite well, you then manage the brand consistently.

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Education Management: Paradigm Shift Through Broad-mindedness and Design Thinking

A viewpoint by James D. Roumeliotis

Change is everywhere and whether it’s our hometown or in our daily activities, adjustment and fine tuning is inevitable. The challenge to traditional education should be no exception and applies to all levels – whether it’s the elementary school, the vocational center or the college. Cookie cutter thinking ought to be replaced with personalization, customization, as well as design thinking.

Evolution in technological advancements, increased stress levels and different attitudes and values from students, as compared to their parents, have all influenced and changed how education is achieved today. Instead, students continue to be told what to learn, how to behave, how and when to learn it, and then are evaluated in ways that may not reflect the diverse intelligences that exist in every student population.

From Standardized Schools to Personalized Learning

Most will agree that education should be perpetual. Since we ought to continuously hone our academic skills along with applied skills, learning at all academic institutions, including workshops and seminars, should cause students to enjoy rather than endure the sessions.

The profile of our learners has changed over time. Today, they are digitally wired including Web 2.0+, video games, and carrying their tablets and/or smart-phones everywhere they go. While many educators today bemoan that these learners are difficult to engage, game designers on the other hand are successful at attracting a plethora of loyalists. It’s a dilemma for educators who still grapple with getting students to master something that is time consuming and challenging, as well as derive pleasure from it.

Creativity expert Sir Ken Robinson, an outspoken critic of the existing educational model, challenges the way we’re educating our children. He champions a radical rethink of our school systems, to cultivate creativity and acknowledge multiple types of intelligence. He strongly encourages moving away from the industrial method by reforming it and personalizing it to the people we’re teaching. In the follow-up to his fabled 2006 TED talk, Sir Ken Robinson makes the case for a radical shift from standardized schools to personalized learning – creating conditions where students’ natural talents can flourish.

John Rassias, the William R. Kenan Professor at Dartmouth College in New Hampshire, U.S.A., and developer of the innovative and highly effective approach to teaching languages, known as the Rassias Method® or the Dartmouth Intensive Language Model, claims that unlike the conventional way, his technique is widely successful because it aims to:

“…make the participant feel comfortable and natural with the language in a short period of time” involving “teaching procedures and dramatic techniques which seek to eliminate inhibitions and create an atmosphere of free expression from the very first day of class.”

Prof. Rassias has written several books and is the subject of more than 400 articles in regional, national and the international press. At his talks he preaches the importance of teaching heart-to-heart. Since his approach has been utilized by all language departments at Dartmouth College (including Chinese, French, German, Modern Greek, Hebrew, Italian, Japanese, Latin, Portuguese, Russian, and Spanish), the number of foreign language majors has steadily increased. This statistic stands out as a startling reversal of the national trend in recent years of declining enrollments in foreign language courses. Teachers in other colleges introducing the Rassias Method report similar renewals of interest.

Design Thinking – the Next Competitive Advantage

Classrooms and schools across the world are facing design challenges every single day, from teacher feedback systems to daily schedules. The challenges educators are confronted with are real, complex, and varied. As such, they require new perspectives, new tools, and new approaches. Design Thinking from Ideo, the company that conceived the idea, is one such method. Ideo is an international design firm and innovation consultancy founded in Palo Alto, California.

The following graphic was developed by Design Thinking for Educators to explain the process of design thinking:

Source: http://www.designthinkingforeducators.com/design-thinking

What are some ways we are seeing the application of design thinking within education? According to Ideo’s CEO & President, Tim Brown:

“We’re seeing people use design thinking to create change at multiple levels—from national education reform to individual classroom needs. Teachers find it to be an engaging pedagogical approach, because in order to create new solutions, you cannot help but learn about people and their interests, about business or math or science or engineering. Plus, while students are learning the specific knowledge set required to develop a relevant and buildable solution, they’re also developing highly valuable skills such as empathy, the ability to collaborate, to deal with ambiguity, and of course, to create.”

He further elaborates:

“We’re also seeing teachers use design thinking to redesign the curriculum around experiences that engage students, and shift their physical classrooms based on feedback from students. We’re seeing school leaders engage faculty to develop a shared philosophy on teaching and learning; district administration using design to re-imagine tools they create to help teachers be successful. We’re even seeing community volunteer groups engage in a process to help redesign schools that are less successful within their state system. Each of these stories alone is not the answer to whole-scale education reform—but if you multiply these activities by three million teachers across this country, and magnify that by the organizations that are creating new, human-centered tools and services to support our students—it can add up to a big impact on the system.”

A working design thinking example of the above is Michael Schurr, a 2nd grade teacher in New York. He realized that he never asked his students what would make them comfortable in the classroom. He decided to talk directly with his students to figure out the best design for their environment.

Based on his students’ input, he was able to redesign his classroom to better address the needs and desires of his students. He lowered the bulletin boards so that his students could actually see the content he’d spent hours assembling, and created a more comfortable semi-private space for the students to study by rethinking the student cubbyhole space. His students are more engaged, and move more fluidly in the classroom space. Now Michael consistently engages his students in helping him more effectively shape their learning experience. Essentially, Michael is using design to re-imagine his classroom through the lens of his students’ needs.

The Unconventional MBA Program: Where Art, Science and Craft Meet

Unlike the traditional case-study approach, one truly global MBA program has been redefined and totally revamped. Class sessions involve everyone, with a 50-50 rule that gives participating managers half of all class time to spend in conversation with colleagues, learning from one another’s insights and suggestions. This breaks away from traditional lecture formats where only the professor is considered the expert in the room. The unique 50-50 rule ensures that the focus remains on experience, nurturing discussions that often become much more intensive and educational than an average case study, simply because participants have an interest in helping their colleagues resolve their business issue at hand. Welcome to The International Masters in Practicing Management (IMPM) – a real alternative to the mainstream of MBAs.

It is designed for highly experienced managers and entrepreneurs, enabling them to refine their leadership skills and make a lasting impact on their organization. Its design and processes were inspired by the lifelong study of managerial practice by Professor Henry Mintzberg, the Canadian management authority, who has taught on the IMPM since its foundation.

The program focuses on five modules designed around managerial mind sets rather than functional silos. Each module lasts approximately ten days and is delivered in a different country such as the U.K., Canada, India, China and Brazil.

Participants move between concept based training and their real life experiences, and also benefit from peer to peer learning, with observation, visits, and feedback.

Over 50 leading companies and organizations from around the world have sent staff to participate.

Disruptive Innovation in the Higher Education Industry – Free University Online Courses

In the last few years, we have begun to witness the accessibility for all with free online courses/modules with the platform known as massive open online course or “MOOC”. Udacity, Coursera, EdX and Academic Earth are the most popular well funded providers that connect students to the world’s top universities and scholars.  Their aim is to provide everyone with the opportunity to earn a world-class education whether looking to advance a career or take courses of interest.

According to Wikipedia, a massive open online course (MOOC) is an online course aiming at large-scale interactive participation and open access via the web. In addition to traditional course materials such as videos, readings, and problem sets, MOOCs provide interactive user forums that help build a community for the students, professors, and teacher assistants.

Salman Khan, a 36-year-old former hedge fund analyst, founded what’s considered the classroom revolution. It is revered by many including Bill Gates who called Khan “The world’s favorite teacher.”  Today, the Khan Academy, which Khan himself established as a result of tutoring his niece and nephew, now has 3,400 short video tutorials, most of which Khan made himself along with 10 million students.

Team Dynamics – Workshop Approach to Learning

For many, lectures, workshops or seminars can be weary – certainly not an enjoyable experience to endure.  Even if you’re not the funniest or most entertaining speaker/presenter around, you can prepare your content so that it resonates with your audience. To be in that position requires speakers and facilitators to design their talks, seminars or workshops geared for even those with brief attention spans.

When it comes to bringing engaging and provocative business workshops, Team Business is a good case in point. The programs were developed in South Africa in the mid nineties. Over the years, the educational organization has expanded overseas and teaches senior high school students, college/university students, as well as company management level staff about entrepreneurship and team dynamics via hands on, interactive entertaining simulations (unlike computer-based) in 3–6 hour sessions. The program learning outcomes include business and financial literacy, team dynamics lessons and the importance of face-to-face communication.

Workshops have been conducted at mid-size to large corporations, as well as at Ivy League schools such as Wharton, Tuck and Georgetown. Team Business also works with International Business Schools in Europe. In all our business simulation workshops, teams run their own companies in competition with other teams. Competition breeds creativity and their level of success is based on the business decisions they make and on how well team members lead and interact with each other. Time pressures and a dynamic environment bring hidden individual traits to the surface where behavioral models can be examined in a safe and constructive way.

When conducting workshops and seminars the following ought to be considered.

-       The average attention span is between 45 minutes to an hour;

-       Use storytelling without exaggerating. Most enjoy listening to other people’s experiences;

-       Utilize stimulating multimedia presentations such as engaging slides (mainly with images like a storyboard), videos, demonstrations, several examples of practical concept implementation, and more.

-       Rather than creating standard slides with the default MS Power Point Presentation software, get bold using cloud based alternatives such as Prezi; Do away with excess bullet points, dreary graphs, cheesy colors, and other overwhelming visual distractions. Apply the KISS method when creating slides;

-       Presentations should be personalized by making them specifically relevant to the audience being addressed;

-       To further engage with the audience, handouts and/or worksheets should be given which also prevent attendees from having to take notes when, instead, should be paying their undivided attention to the presenter and his/her visual material;

-       Consider group discussions which will give the audience a chance to better understand the workshop and delve into areas the presentation may not have covered.

-       The speaker should be animated with his/her voice and enthusiasm resonating across the audience.

Coaching Ourselves – a Unique Take on Ongoing Corporate Training

Coaching Ourselves is an organization which was born out of its founder’s frustration searching for a way to help his management team work through the difficult challenges resulting from the dot com crash at the time. It brings management development directly into the workplace where groups of managers get together for 90 minute meetings, with or without a facilitator, to talk about work, guided by one of over 70 Coaching Ourselves management topics.  The chosen topics stimulate and guide discussion. This enables reflection, collaborative learning, team bonding, and management development.

Coaching Ourselves works with over 40 world renowned management and business thinkers to develop the topics including David Ulrich, Michael Beer, Marshall Goldsmith and Henry Mintzberg covering a wide range of managerial concepts and competencies and available in six languages. They are licensed to organizations for use in programs and initiatives aimed at all levels of management. Its mission is to help as many managers as possible to improve their practice of management.

The Abstract – Looking Beyond the Ineffective Status Quo

Like most events in our life, there is continuous progress whether evolutionary or revolutionary. Moreover, there are practical changes which improve the way we go about doing things and designing objects to enhance our lives – think technology. The education system should not be immune to progress. Complacency breeds mediocrity.

To move forward with vital changes/improvements begins with a positive attitude, an open mindset, fortitude and empowering those that look to us for nurturing and leadership. Education ministries and school administrators ought to cut down on their bloated and stifling bureaucracy  by permitting forward thinkers to tinker with and reform the antiquated public school/educational model. There must be no mixing of politics and education. Instead, teachers should be accountable for improving the system as it’s their call and area of professional expertise ‒ along with continuous honing of their knowledge/skills.

Schools which are highly regarded by students and peers are those that have strong leadership/headmasters with a vision which creates a vibrant culture. This includes teachers who constantly update their professional skills, plan effective lessons, are enthusiastic and creative. Moreover, well-functioning and forward thinking schools deliver a broad and flexible curriculum. Extra subjects, such as foreign languages and/or vocational courses are taught alongside the usual subjects. No cookie cutter approach or subject matter.  Successful schools also consider the needs of each individual student.

Finland’s educational system is renowned as consistently at the very top of global educational rankings because it takes an unconventional, yet practical approach along with a first rate structure of the system. In addition, its teachers are highly trained and well compensated, their students are not tested until they reach their teens, there isn’t much homework – and surprisingly, there are no private schools in that country.

Purging of and replacing the status quo requires forward and design thinking, as well as actual implementation in the classroom of the following:

-       Re-designing the classroom setting/ambiance;

-       Encouraging creativity with students through empowerment – it’s not the same as giving away control of the classroom but rather helping students take control of their own education;

-       Making learning/subject matter stimulating, empathetic, and engaging.

There’s an old Chinese proverb: “If you are planning for one year plant grain, for ten years plant trees, but for 100 years educate the people.” Let’s not get left behind! Time to think about the future, as well as time to teach children to think and not just remember. Since we can’t change government behavior overnight, the least we can do is make a difference by focusing on the variables that we can control to the best of our ability along with resources readily available.

Finally, we have to eliminate the corporate mentality from education, where students are seen as a ‘product’ and parents as ‘customers’. There is no reason why public schools can’t be at the same caliber as private schools. Are inept or discouraged administrators to blame – or perhaps a failed existing structure which is out of touch? As demonstrated by MOOC, education doesn’t need to be a privilege but rather a right with equal access anywhere for all who possess the appetite to learn. Isn’t that what true democratization of education is about?

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An interview with author, lecturer and business catalyst James D. Roumeliotis

Author, lecturer and business catalyst, James D. Roumeliotis, describes his book, “Entrepreneurial Essentials: Unconventional Business Wisdom & Bold Tactics” along with his overall business philosophy with some practical and refreshing ideas.

You may order the book here: http://www.amazon.com/dp/B008QYVO2U/

Mass Customization & Personalization: The Pinnacle of Differentiation and Brand Loyalty

by James D. Roumeliotis

There was a time when customized products and personalized services were catered exclusively for the discerning and well heeled.

London’s Savile Row stands as a testament to personalized luxury.   In a world full of luxury dumbed down and mainstream, there has been an up-shift by certain manufacturers trying to offer tailored ranges and services to a wider audience.

This development is technically referred to as “mass customization” and “mass personalization”.  So why the shift?

Simply put, clients are demanding more and don’t share the same sense of brand loyalty as previous generations. Marketing strategists believe that focus must be on generating a community tied to customer satisfaction.  I won’t call this CRM on steroids but the analogy could hold.

With ever increased competition, brands must show genuine benefit to hold the client’s attention as well as affection. The trend is quite sweeping once you start to examine the determinants. Look at fashion apparel, beauty care products, shoes, bicycles, laptops, and even smart phones. All claim they are perfect for customization.

Mass Customization vs. Mass Personalization

According to Wikipedia, the definition of the term “mass customization” in marketing, manufacturing, call centers and management, is the use of flexible computer-aided manufacturing systems to produce custom output.

These systems combine the low unit cost of mass production processes with the flexibility of individual customization.

“Mass personalization” on the other hand, is the custom tailoring by a company in accordance with its end users tastes and preferences.

The main difference between the two concepts is the ability for a company to give its customers an opportunity to create and choose product specifications. There are however limits.

The Financial Times lists “personalized production” among six other factors driving the future of manufacturing – namely network manufacturing, technological innovation, industrial democracy, boutique manufacturing, cluster dynamics, and environmental imperatives.

A case in point: Pomarfin is a small family owned Finnish footwear company. With strong competition from Asian manufacturers, the firm decided to change its strategy.  It carefully looked at the adaptation to the mass customization paradigm, alongside a revision of its business model. Its choices were to either outsource the manufacturing of its shoes to China and simply become an ubiquitous brand, or differentiate itself while keeping its production in Europe.  It chose the latter, by deciding to compete in mass customization, making made-to-measure shoes for discerning and affluent men.  Pomarfin then introduced the clever concept of installing and utilizing a foot scanner in retail stores, which sells its shoes. The client’s foot gets scanned and the image is then uploaded to a server and sent to the firm’s manufacturing plant.  The client then decides if he wants his exact fitting shoes shipped directly to his address of choice or picked up at the retailer.

Moreover, as an additional convenience, the customer can reorder custom shoes through Pomarfin’s website. To be fair and retain loyalty with its retailing partners, Pomarfin pays them a royalty for life for each new pair of shoes purchased by a customer sent its way.

Broad Marketing of Bespoke Products & Services

Clients have simply become more demanding. They expect more, and have no loyalty to brands that do not come up with the experience to match the product or service hype. This trend is both at the B2C and B2B level.

Everyone it seems is looking for the enviable win-win scenario.

It is natural to think that bespoke is the sole domain of the fashion industry whether shoes, suits, shirts or haute couture. These items with their stress on handmade carry heavy price tags and are geared to people with a high DPI.

You would be mistaken to believe that this is not possible for a mass market. For example, Dell computers was the first firm to offer customization to their entire range. In fact, designing your own computer needs with a consultant is the DNA of this organization. Dell understood that this type of differentiation would mark them apart from anyone else in the industry.

Other consumer goods operations quickly followed suit. For example, Adidas AG launched the miAdidas unit which offers custom sports shoes. Nestle delivered a market coup to the coffee industry with Nespresso, bringing single serve coffee into the home and office. Now you can serve different types of coffee within a group with no effort.

Individuality is a Sign of Personality: The Way Forward

The mass customization trend has been a rolling bandwagon. Understanding and harvesting this demand is easier said than done. Smart firms generally respond by building production facilities and systems with an increasing number of modifications in order to produce and deliver individualized units as per customer’s preference.

This certainly has its benefits and drawbacks:

Advantages
- Allows customers to create customized products
- Products deliver excellent value for money
- Makes comparative shopping difficult
- Shifts the focus from price to benefits
- Economies of scale/mass efficiency
- Manufacturer can justify charging a premium
- Easily differentiated against similar products
- Provides deeper form of customer engagement and data

Disadvantages:
- Increased overall complexity
- A significant initial investment + per unit cost of production
- Layover time – takes longer to manufacture
- No return policy on custom orders

Progress in manufacturing technology such as computer-aided manufacturing (CAM) and computer-aided design (CAD) have increased the flexibility, as well as the efficiency of the modern-day factory to achieve build-to-order products.

Source: Emerald Insight

Ordinary is for the Mainstream – Do Luxury Brands Have Your Number?

Traditionally, the wealthy have great purchasing power. In theory, they are sophisticated and unafraid to express their taste as trendsetters and style mavens. They can also be the hardest segment to market to effectively because they are spoiled for choice.

Yet billions are spent catering to the tastes of this ever growing segment. Take the Paris Fashion Week shows and you can see the parade, the fanfare, and the glitz. Everyone is here: the paparazzi, fashionistas, and even fashion bloggers. Is it any wonder? Everyone craves glamor and it’s big business.

If you are one of the Jet-Set, do you want to be just mainstream? Of course, you don’t. The luxury trade has got your number, no matter how idiosyncratic your taste or preferences. Need private banking where professionalism and discretion are key? You got it. Want to stay in a boutique hotel so exclusive that few even know it exists? It’s there for the taking.

The providers of these services use what I refer to as “Bespoke Marketing” along with “Sensorial Branding” to differentiate their message and total customer experience respectively. These branding exercises are narrow in scope and speak of privilege the way its understood among the cognoscenti.

It is typical for certain shoppers at Louis Vuitton on the Champs-Elysees in Paris to serve the right customers flutes of champagne while they try things on or discuss their luggage needs upstairs. It must be said that LV knows how to coddle their clients.  As I am sure you can appreciate, LV is not the only store in this town to offer VIP red carpet treatment. Most major luxury firms do likewise such as Cartier, Dior, and Chanel.

Need a personalized briefcase? Why not pop over to Hermes? They are awaiting your next visit. The world of Hermes personifies exclusivity. Open one of their in-house magazines, and a special universe is revealed. The key beyond outstanding products is the creation of something bordering on revelation. The store itself has become a stage set, and sales pros are the players who embody the firm’s DNA.

Bespoke is the middle name of this institution. Real luxury brands understand this concept like Stradivarius handcrafted violins.

Needless to say, the term “luxury” has been misused over the years. It is mysterious and elusive. In essence, it revolves around subjective criteria referred to as lifestyle.

Gary Harwood at HKLM, one of the founders and directors of a leading strategic branding and communication design consultancy, stated:

“A luxury brand is very expensive, exclusive and very rare – not meant for everyone. When it ceases to be these things, then it’s lost its exclusive cachet. Commoditizing luxury brands and making them more accessible to the middle market puts them at risk of becoming ordinary, common and less desirable. And the more available a brand is, the less luxurious it becomes.”

Perfume connoisseurs are taking their choices a notch above most as the top-end of the fragrance industry is a very personalized one. Consequently, niche perfumes for the discerning and well-to-do are growing rapidly. This sector is creating new trends in the beauty and fashion world through an artisan approach.  Customers visiting bespoke perfumery shops expect highly trained staff to advise on fragrances. A great “nose” knows different clients value different scents, and thus will prescribe like an old fashioned doctor, who used to make house calls. Chemistry and diet also play a role in developing your own signature perfume.

Quite sophisticated and personalized indeed. But then, isn’t this the true symbiotic meaning of luxury?

The Final Take

“Mass customization” and “mass personalization” (or “build-to-order marketing” and “one-to-one marketing”) in delivering either products or services when properly implemented, bring about across-the-board improvements in all dimensions of a business. This includes, price, responsiveness, quality, and a positive experience. Competitiveness and operational effectiveness of a company also improve.

However, mass customization also has a few drawbacks as it does come with a cost. Along with a substantial initial investment in manufacturing equipment upgrades, the primary challenge in pursuing mass customization stems from increased complexity in its operations. A higher level of product customization requires greater product variety, which, in turn, entails greater number of parts, processes, suppliers, retailers, and distribution channels. As a result, bigger challenges exist to manage all those aspects of the business from raw material procurement to production and eventually to distribution. In addition, an increase in product variety has the effect of introducing greater uncertainty in demand realizations, increase in manufacturing cycle times, as well as an increase in shipment lead times.

In the luxury sector, traditionally there hasn’t been any shortage of customization for the ultra-high-net-worth. Exclusive and bespoke travel companies provide tailor made adventures and excursions, whereas, the ultra luxury and exotic automobile sectors such as Rolls Royce and Ferrari respectively offer a wide array of customization options. Each vehicle coming out of the studio will be completely unique and guided by a personal designer at the manufacturers.

“Good things come to those who wait.” Or so the saying goes.

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Ambiance Marketing/Sensory Branding — in IMAGES

Today, consumer purchase decisions are increasingly driven by consumers’ hearts. With ambiance marketing/sensory branding, a custom designed attractive setting, yet alluring with captivating style, invites customers to truly feel the brand experience by adding character. This is accomplished by connecting the emotions to a product or service, and infusing it with a tangible and intangible essence that remain in the customers’ minds.

See images and videos which depict the essence of ambiance marketing/sensory branding.

CLICK ON THE IMAGE for the link to the images/video page

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The Business Model: Prelude to the Business Plan

Traditionally, entrepreneurs know they need a road map we all call “The Business Plan.”  Some see this as a necessary evil and others welcome the concise texture of not launching a venture blind.

Average business plans describe the new venture’s offer to its target market. It also explains how the organization will reach its goals.

Such plans should include:
A) Brief bios on the key players
B) A section detailing the sales and marketing strategy section
C) The organizational structure of the project team or organization
D) Detailed operations description
E) Financial projections
F) Capital investment required to launch the product/organization

These days building a plan is simple enough. You can go to a bank or online and purchase a business plan template. You can even choose the option of hiring consultants who will set the plan up for you.

However, nobody can tell you what you want the business to be. No, I’m not referring to the ‘executive summary’, which is part and parcel of any coherent b-plan. It is my advice that prior to building your business plan, you need something else: call it a viable business model.

The Vision Thing

If the mantra in hospitality chants “location – location – location”, then an entrepreneur’s should be “vision – vision – vision”. Putting the vision on paper is crucial. It will help you secure financing, attract investors and even partners.

New Ventures need this to articulate how the new organization is going to achieve its operational, sales, marketing and financial goals.

Established Enterprises use this tool to depict their objectives in detail. There is a step-by-step engagement and procedure to move forward never forgetting the next level. I call this strategy the “Prelude to business planning”. You simply must have a model first. How can you test an hypothesis without a model? Simply put, you cannot.

Once this initial step has been accomplished, the business plan will be simpler to prepare as the foundation of the organizational structure can be produced. The idiom “putting the cart before the horse” clearly reminds us of this erroneous and common approach.

The business model also makes it easier to visualize and analyze a business from the customer’s perspective. A simple illustration of an apparel retailer’s business model is to make money by selling a specific line of clothing to consumers whose taste and budget are aligned with the store’s offering.

Anatomy of the Business Model

What is a clear definition of a “business model”?

What does it entail?

According to Investopedia.com it is regarded as:

The plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.

Dr. Alex Osterwalder, a sought after speaker and advisor with a particular focus on business model innovation, strategic management and management innovation, as well as co-author of the business bestselling book “Business Model Generation”, produced a more succinct definition:

A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, cultural, or other forms of value). The process of business model construction is part of business strategy.

Developing a business model seems to be an overwhelming and a somber task. However, to alleviate those concerns, Dr. Osterwalder is further credited for creating an ingenious and popular visual version of the conventional business model.

His consists of nine building blocks which focus on the big picture as follows:

1) Customer Segments: Describing who a company offers value to
2) Value Proposition: Describing a company’s offer
3) Channels: Describing how a company reaches its customers
4) Customer Relationships: Describing the relationships a company builds
5) Revenue Streams: Describing how a company makes money
6) Key Resources: Describing what capabilities are required to make the operation function including your suppliers
7) Key Activities: Describing what activities are required to make the operation function
8) Key Partners: The partners that leverage the business model (if applicable)
9) Cost Structure: Describing the costs of a business model

The first 4 (right half of the model) are portrayed as the ‘front stage’ of the business where the client experiences transactions, whereas, numbers 5 to 9 (left half of the model) are the backstage where the action takes place to make the right half (‘front stage’) work seamlessly. The client doesn’t see this part. It’s analogous to a performance in a theater.

The above business model can be sketched on the wall on what is referred to as the “The Business Model Canvas” (see sample image below). A business can turn up with several business models but choose the most ideal for its circumstance after having tested each one through brainstorming, simulations and/or by approaching its intended market for feedback.

Nespresso, the Alluring Business Model

If there is a business success story worth noting and plotting on a business model canvas as an attractive case in point, it should be Nespresso. This brand of high-end single serving espresso coffee systems is a standalone operating unit of the Swiss food conglomerate Nestle SA and its fastest growing brands. Reportedly, Nespresso sales have been increasing by as much as 20% on average for the last several years and earns 4% of Nestle’s total annual revenues.

Nespresso has registered numerous patents for concept including its signature colored capsules containing the ground coffee. Initially, Nespresso wasn’t much of a success with its original business model as its sales channel, back in 1986, was based on the coffee machine partners’ own sales reps touting the distinctive looking apparatus and capsules in the office coffee sectors of Switzerland, Japan and Italy. In 1989, their coffee system is introduced to the consumer/household sector which became a sensation and opened up a new category altogether in the single serving market.

Nespresso’s strategy circumvents the wholesalers and dominant supermarkets. It’s positioned itself as an exclusive luxury good. Taking a branding page from genuine luxury houses, such as Hermes and Chanel, Nespresso too controls its own distribution channels. though its machines are sold in department and fine retail stores, Its capsules are sold solely via online, by phone orders or at its more than 300 boutiques in prime locations throughout the world. This is by far its most successful business model as the company controls pricing and has an intimate relationship with its customers – most notably with regards to the total customer experience and its proactive customer service. Recognize George Clooney in its ads? He’s been a strong connection to the brand which seems to work – at least for the female audience.

Business Reassessment: Strategic Planning Tool

Business models don’t merely apply to start-ups. They equally vital for growing and established businesses which should re-evaluate their business model when revenues are dropping or when working on strategic planning.

An organization should not be operated as a static entity but rather as a progressive and innovative type with foresight to changing economic, technological and market conditions. This includes at looking at new distribution channels and revenue streams.

A case in point are the companies that make up the recording industry. For decades, they had an attitude of arrogant superiority until the day the digital download era came upon them. This development caught them off guard despite the imminent warnings, Having been built on a brick-and- mortar distribution model, they were too complacent to adapt despite the threats and decline in revenues.

Rather than re-evaluate their business model, focus on innovation and ultimately transform by embracing an opportunity, Time Music Group, and several other members of the recording industry, chose a path of least resistance. They decided to hire an army of attorneys and began to aggressively hunt and sue the illegal downloaders, including minors.

Through legal means, they successfully shut down websites such as Napster, BitTorrent and others. Meantime, online music start-ups such as Ritmoteca.com came along and conceived a novel way to distribute and monetize digital downloads. As of April 2008, the largest online music store is Apple’s iTunes Store, with around 80% of the market (source: theregister.co.uk).

Closing Memo

Whether starting a new business or moving an existing one to a new direction, a business model is the first strategy to consider developing prior to the business plan. The former is a proprietary method used to acquire, service, and retain customers. It makes you think through your business plan, which in turn communicates the business model. Both should synchronize.

The business model need not be a chore to design. By utilizing a creative one page visual orientation named “Business Model Generation”, developed by Dr. Alex Osterwalder, one can view the business holistically.

Several business models should be considered, their hypothesis validated in the real world and finally the most ideal model chosen.

It took Nespresso almost 30 years, since its first patent, to refine its business model.

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Entrepreneurship — in Quotes & Images

Entrepreneurship is not for the insecure. It takes a good idea, a burning desire to execute it, and the right personal characteristics  including:

- At least some fundamental business knowledge

- Passion

- Drive

- Resilience

- Perseverance

- Persistence

- Curiosity and and open-mindedness

- Willing to take calculated risks

Below is a collection of images that speak for themselves pertaining to entrepreneurship and the entrepreneur.

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Source: Uploaded by user via James D. Roumeliotis on Pinterest

Click the image to learn…

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Learn the significance of all of the above images BUT with the TEXT version in this book.