How Many Lives Does a Jaguar Have?

So Tata Motors is doing a lot to revamp the Jaguar brand. It purchased the Jaguar and Land Rover brands from Ford for $2.3B. Ford, which lost $800M on the sale, seems to have shed its heavy baggage, but can Tata bring this cat back to life?

There are mixed reactions from industry on the effectiveness of the luxe auto’s new advertising campaign, which is aimed at making an emotional connection with auto enthusiasts. Professors from the University of Michigan and MIT said it missed the mark, while a consulting firm out in LA stuck its neck out to say that the campaign is “avant-garde enough to definitely capture consumers’ attention and put Jaguar on the radar screen of more potential luxury customers”.

All those opinions don’t matter. Let’s see what the sales numbers say in a year. It will surely be an improvement for Jaguar to get 18,000 to 20,000 people to test-drive its cars, as opposed to the the 300 to 400 who try them out annually in the United States. Wow only 300 to 400. Anything above that will be a remarkable improvement.

What Apple Can Teach You About Not Having To Compete On Price

I found this great article at www.fastcompany.com. The major take aways for businesses that do not want to compete on price are:

  1. Develop Powerful Branding – Effective and unique branding puts your product in a competitive space that has little to do with price, and more to do with being cool, trendy (or timeless), and of great quality.
  2. Strategic Marketing – This encompasses the four Ps of marketing and much more. In luxury marketing you need to be thinking about the four Es (exclusivity, emotion, engagement, and experience). While Apple won’t admit that they intentionally create product shortages in order to create a buzz, it is certainly part of the reason why customers are willing to pay huge premiums to have their products as soon as they are released.
  3. Excellent customer service – Customer service is something you can not afford to lack. From getting customer’s to try your products and services to keeping them loyal, customer service is the lynch pin that sets you appart from competitors.
  4. A product that doesn’t disappoint – All of the above won’t mean anything if you don’t have a stellar product. Take a page from companies like Apple and Patagonia who are committed first to making the best product possible.

If a product can’t live up to the expectations set by its marketing, it won’t be successful for the long term

I had promised to provide some tips on how luxury firms might want to go about pursuing successful (and sustainable) business strategies. A good friend of mine has a blog with some cool points for any business to follow. Welcome him to WordPress by giving him a read. I thought he had some good examples.

Kurt Hunter

Countless research studies confirm that it costs a small business 10X more money and resources to attract a new customer. So why do most small (and many large) businesses continue to focus solely on new customer acquisition? It’s like having a cow farm and not building a fence around the field to keep them from running away!  Small business owners should focus on three critical areas:

1. Creating marketing systems that  attract highly qualified prospects

2. Creating sales systems that convert those prospects to customers

3. Creating nurturing systems that WOW current customers so they not only buy again but also recommend your products and services (this is where the majority of businesses fail)

When a prospect becomes a customer, the following should automatically occur:

The prospect is updated to a client in your database>the customer is segmented based on profitability to your company (Gold, Silver, Bronze)>each segment (Gold, Silver, Bronze)…

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Part 2 – This Thing Called Luxury

Building on the confusion of yesterday’s post, today’s entry focuses on the academic justification for a firm’s participation in the luxury segment. Though what appears below is very intellectual, it is very similar to the thoughts I had on the matter long before I ever knew I wanted to work in the luxury segment.

In his work covering business strategy, Michael Porter explains that there are two main categories, in which a firm’s competitive strengths fall: cost leadership and differentiation. Depending on the firm’s market focus (broad or niche), and the uniqueness of its products (custom or commodity) and services, Porter posits four generic strategies a firm can use to develop a competitive advantage. Continue reading

Part 1 – This Thing Called Luxury

Yesterday, I got into an intense discussion with two of my classmates about the strategic justifications for my focus on the “luxury” segment. While my colleagues were making an argument for the limited market size demerits of luxury products, I tried to explain my thesis of luxury goods/services in a transactional framework. In the end, both sides came to similar conclusions. I’ll attempt to take you through the debate first from an abstract level.

If a customer asked me: “why do you consider your product/service a luxury?”, I’d say to them: Continue reading

Commitment – Staying on Course

There is nothing more deliberate than having a goal. Goals if done the SMART way can really help you develop in every aspect of your life – personally and professionally. The last time I set a goal on this blog, it was the “30-day Challenge“, where I committed to publishing at least one post per day for 30 days. Seems like since then, I let the other aspects of my life (like the intense MBA program at W&M) take over my blogging responsibilities (yes, I do believe I have an obligation to the readers that spend a “click” to come to my part of the blogosphere).

Today, I am making another commitment – longer than 30 days, but less punishing in frequency. I am going to publish one post per week for the next three months. I call it the Post Per Week challenge (lets call it the PPW Challenge). Later today, I’ll publish the first PPW post. Here’s a peek at what I am thinking for the post. Continue reading

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Fair and Square at JCPenney

So early this morning, I got an email from JCPenney with the following message:

As you may know, Ron Jonhson (formerly of Apple and Target) now heads the retail giant that goes as far back as the era of shopping catalogs. In facing the huge challenge of transforming one of America’s most unloved retail brands, he’s definitely relying on  the many lessons he learned in his 30 years of retail experience.

Today, JCPenney is rolling out a revamped pricing structure and a simplified return policy. The company is moving to “an everyday low price model” by getting rid of coupons and ineffective sales promos. Drawing on what I have learned from Ron Hess in my Customer Experience Management class, the dimensions of pricing and returns most probably have the most impact on customer satisfaction at JCPenney (which drives customer loyalty and profitability in the service-profit chain).

Though pricing is a common complaint of most customers, Ron Johnson’s approach to simplifying this satisfaction component has strong justifications. By making JCPenney’s pricing less complex, Mr. Johnson is trying to eliminate the “buyer’s remorse” felt by customers who purchase items at full price – only to find them heavily discounted in one of the 500+ yearly sales promotions at the company. Below is an excerpt from an interview with the JCP CEO on the retailer’s new policies. It was conducted by Anne D’Innocenzio of The Associated Press.

Q: How did you come up with the new pricing strategy?

A: Pricing is actually a pretty simple and straight forward thing. Customers will not pay literally a penny more than the true value of the product. And as I have been watching the department stores for the past decade, I have been struck by the extraordinary amount of promotional activity, which to me, didn’t feel like it was appropriate for a department store. My instinct was that it wasn’t a good thing.

Q: Won’t shoppers be turned off because they won’t see the big markdowns?

A: I wouldn’t assume they like the pricing strategy. I think they’re insulted by it.

Q: Who are you targeting?

A: We are going after all Americans. We would like to be the store for everyone.

Q: What are your plans to make the shopping experience more exciting?

A: We are going to make the store a place people love to come — just to come. Because they can get support before they’re ready to buy. They can get great support when they want to buy and they can come in after they buy. We’ll transform the buying experience not unlike what we did at Apple.

Q: When will we start to see improvements?

A: You’ll start to see the experience change month by month. Everyone thinks it’s an overnight success but it never is. I was at Apple from 2000 to 2011, but it wasn’t until 2004 that the iPod became an important part of people’s lives. It wasn’t until 2007 that Apple reinvented the phone. It wasn’t until 2009 that Apple launched the iPad. But we look at it today and we feel Apple had always been beloved. It took time and this will take time as well.

Q: What ideals have you embraced from Steve Jobs?

A: The importance of doing everything you do to your very best. And that the journey is the reward. If you do things well one at a time, you end up in a really good place. Don’t get ahead of yourself. Control the things you can.

Q: Other than Apple, which stores do you admire?

A: I admire lots of stores. Whole Foods is a great store. I just like their passion for food. It shows up in everything they do. It shows up in their packaging, their presentation and their employees. Starbucks. It truly has created a community. As I travel around the world, I just know that if I go to Starbucks I will have a great experience.

Rant on How Your Crazy Ideas Define You

As we end the first month of 2012, thoughts of the progress I have made with blog and my other luxe pursuits baffle me. Here’s my summary of it all…

Sometimes you never know what will come of your crazy ideas. Before you know it, you have a brand. The brand isn’t really yours. It belongs to those who identify and personalize it in their hearts and minds.

Your brand is the befitting proxy for your beliefs, tastes, vision, and passions, whether or not you are physically present in the many conversations, transactions, and encounters people have with it.

Beyond all material success, the pursuit of an identity is the single most indomitable challenge some of us will ever undertake.

Here’s to pursuing the weird ideas that make us who we are. The worst that can happen is that you fail. Failures are necessary transit points to success. Even if you fail at something, you are closer to finding out just who you are.

Keep thinking, stay hungry, and embrace the beautiful struggle.

– Edmund Amoye Continue reading

Perfume Giants Fined $53M for Price Fixing

In Paris, major perfume giants have been fined for colluding to keep prices high. This is an update to a 2006 case prosecuted by French agencies monitoring competition in the luxe capital. A total of 13 companies are named in the decision, which concerns collusion practices that took place from 1997 till 2000.

For details on the developing story, click here.

Take part in a poll on my recent post: Christian Louboutin vs. YSL: A Battle of Trademarks.

Update: Swiss Watch Industry Shakeout

In Dec. 2011, I wrote a post about how Swatch Group was “Creating a Shakeout in the Swiss Watch Industry“. Today I just read an update to that event. The Reuters article gives a clearer picture of Swatch’s overall strategy to make things more difficult for strong rivals such as LVMH.

Christian Louboutin vs. YSL: A Battle of Trademarks

Today in my class on Customer Experience Management (the name makes it sound contrived but it’s a great class) we had some discussion on this article about the trademark battles between Christian Louboutin and Yves Saint Laurent (owned by PPR). If you would rather watch a video than read the backstory, here is a video.

From a business standpoint, it makes perfect sense for Louboutin to go after other manufacturers that could “cramp its style” – but does it honestly matter in the business of fashion where imitation is rampant and normal? Moreover, if Louboutin is successful, will it hinder the creative process that drives fashion? My answers are “no” and “yes” in that order, but I’d love to hear what some of our fashionista readers think. I’ll even give you the opportunity to write your own post on this topic if you have more than four lines of thoughts on the issue.  Continue reading

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Luxe Value: Interbrand’s Best Global Brands

If I have not said “thank you” to my many readers, I’ll say it now:

THANK YOU FOR READING MY BLOG.

My comrades at W&M and WordPress.com have been phenomenal in spreading my posts all over the internet. I wake up a lot of mornings surprised to see the array of readers I have from all over the world, looking in on my scribbled thoughts. I’ve gone from having only one reader – my wife – to getting as many as 100 unique views on days when I do my job right. For me, the metrics don’t really matter as a marketing strength, but as a reflection of interest. So thanks for your interest. I really appreciate it. Let’s grow together in 2012.

Ok, on to today’s rant…

Last year, in October to be exact, Interbrand published a list of the top brands in the world. It’s no different from what they do every year. Take a look at the list here.

Continue reading

China’s Jewelry Rush

Sometimes, finding good topics for this blog can prove quite challenging. So, I’m always thankful for the readers who send in great material – some of which I am using in today’s post.

First, you should know that the luxury goods and services market in China is growing at an astronomical rate. Forecasts indicate that Chinese luxe will grow at a rate of 20% CAGR by 2015, at which time it will be the second largest market in the world.

One sector of luxury in China that is doing very well is jewelry. Estimated at a worth of $39 billion, the Chinese jewelry market is growing at around 15% per year. Growth has been fueled by a couple of factors:

  • A growing middle class living outside of the tier one cities are spending more on gems and gold.
  • Rising inflation concerns in the region are making gold more attractive as a hedging instrument; and
  • Lastly, the wealthiest segment of the Chinese population are been getting richer.

What is most surprising is the fact in spite of the availability of world renowned jewelry manufacturers and retailers such as Swarovski and Cartier, Chinese consumers are paying increasing attention to homegrown brands – specifically Chow Tai Fook (CTF). The company, owned by billionaire Cheng Yu-tung recently went public. With 1500 outlets and 2010 sales of $4.5 billion, CTF is twice the size of Tiffany & Co.

I’ll leave you with a graphic from The Economist, developed by George Washington University and L2 (a think-tank). It asserts that CTF, as a brand, outperforms well-known international brands in the hearts and minds of Chinese consumers.

Aman Resorts: A Tough Sell for DLF

Amangiri – Utah, USA

Two weeks ago, there was some news that China-based conglomerate, HNA, had sent in a bid to buy Aman Resorts, a collection of unique luxury resorts in some of the most sought-after destinations in the world. Aman Resorts, which is owned by DLF, an Indian development company, represents the company’s biggest non-core asset.

To bring you up to date, DLF currently has a net debt of more than $4 billion and is looking to raise as much as $650 million to shore up its debt levels and put some cash on its balance sheet. In 2007, the company had bought a 97% stake in Aman Resorts based on a $400 million valuation, while the remaining three percent was held by Aman founder Adrian Zecha. Considering that the purchase was made right before the global financial crisis, DLF has been desperately looking for a buyer for this property.

HNA Hotels and Resorts is part of China-based HNA Group. With assets exceeding $30 billion, the group has its tentacles in airlines, hotels, airport management, real estate, retail, financial services, logistics, and tourism. Annual revenues are around $10 billion (as of Dec. 2011). The hospitality segment of the group consists of a total of 43 luxury hotels and resorts in China and Europe (40 in China and three hotel assets in Brussels and Belgium).

Reports are out that HNA is out of the bidding process for Aman Resorts, since it never received any feedback on its undisclosed bid. Reuters reports that “bids came in the $300-$315 million range”, which means that the market feels these luxury assets are overpriced. This is a huge setback for DLF considering the list of companies interested in Aman Resorts. They include:

  • Malaysian sovereign wealth fund, Khazanah
  • LVMH, and
  • Kingdom Holdings, which owns a 47.5% stake in the Four Seasons chain of luxury hotels

It’s looking bleak for DLF, but maybe some other group will step up to take over Aman.

WSJ: Luxuries Flow Into North Korea

Though Western governments have imposed stringent trade sanctions on North Korea, luxury goods still find a way into the country – mainly by way of China. The Chinese policy of support and assistance may not be welcome by the bulk of the international community, but the influx of cell phones, iPads, and much of the latest technologies may do more harm than good for the country’s current regime.

Government workers making as little as $3 a month now make up to $15 by trading in luxury goods. As such, an entrepreneurial class is rising in the country fueled by the black market for electronics, tobacco, cars, and electrical appliances. Will the influx of western technology adversely affect the Kim dynasty in North Korea? My answer is that it will play a considerable role because many more people will have access to the most powerful weapon that ever existed – information.

Click the image to open the article

Adding Value – Train Rides and iPads

Train rides are very enjoyable for me because I get the chance to remain terrestrial. I’m not driving myself, nor am I on a bus going pretty much the same way I would have driven myself. Since train tracks do not always follow “car routes”, I get to take a more scenic view, stumbling upon sights that don’t come into my view on a regular basis. I also like to take trains at times they are sparsely occupied, so that I have a lot of space to myself. The combination of those components makes the ride an enjoyable one. However the real luxury experience can be summed up in one picture from my last trip on Amtrak: Continue reading

Haute Couture Meets Technology

A long time ago, someone once asked me a question on what kinds of business ideas interest me. I answered “anything that blends technological innovation with emerging lifestyles”. And here’s an example – Wearable Technology: Apple, Google, And The Whimsical World Of Fashion Accessories.

Luxonomics

Today’s post focuses on luxonomics (luxury economics). Since luxury goods embrace the concept of rarity, it would be an obvious deduction to assume that the more scarce a luxury product or service becomes, the more demand it enjoys. Consequently, prices can appreciate – to levels that can be absorbed by few.

Some of the factors affecting supply include:

  • Input Prices
  • Technology or Government Regulations
  • Number of Firms
  • Substitutes in Production
  • Taxes
  • Producer Expectations

Today I want to show you some “scarce” luxury products, whose supply has largely been affected  by government regulations. As the cited MSN Money slideshow states, all the products listed are affected by legal restrictions limiting their production, distribution, and sale in parts of the world. Much of the reasoning behind these bans is aimed at protecting the environment. Continue reading

Luxury is About Freedom

So, we can obviously say that relativity plays an important part in the way we think about many things – including luxury. What’s that old adage: One man’s meat is another man’s poison? I read an article from WSJ that brought this idea well into focus for me, and I think it also has some adjacent relevance to the concepts of trends and cycles.

When the great fashion designer, Yves Saint-Laurent started his own couturier in 1958, there wasn’t much in the way of pattern machines or industrial cutters for him to achieve his goal of making womenswear more affordable for the masses. In those times, the best clothing cost too much for common folk because of the time, money, and people that were required to make the ravishing clothing he designed. Today’s more affordable technology could certainly have done much for “la mode”. Continue reading

On the Shoulders of Giants

It’s been a while since I wrote something on this blog. I must apologize for my absence. I took some time off to do some studying. I watched movies, read books, and thought much about the cycle of business. My current curriculum includes books by Vance Packard, Marvin Traub, and Paco Underhill. I intend to have some of their books read by the end of Jan. 2012. You are probably wondering what those studies have to do with luxury and retail. My answer is ALOT.

From fashion to real estate, cycles are the most repetitive phenomenon. For me, business success has little to do with the present, but more with predicting the future. It’s not about what’s going on now, but what will happen in the next month. Thus, in order to get better at “seeing around corners” in the business environment, it’s important to study the past.

I am going as far back as Da Vinci, to learn from successful people who had something profound to say. Vance Packard, Marvin Traub, and Paco Underhill all bear some insight into the history of consumerism, the evolution of modern day retail, and the science of advertising.

They may not all be talking about social media, but ALL of what they say in books like The Hidden Persuaders, Like No Other Store, and Why We Buy should be part of the curriculum of any professional. I view my entrance into luxury and retail like little kids playing jump rope on a Harlem sidewalk. Imagine the little boy waiting for the perfect time to get inside the pattern that the twirling rope takes. It’s the same with business cycles – you just need to have great timing and jump to the rhythm – real well.

It is great to be back.

Real Estate is an Entrepreneurial Venture

I wrote another blog post about the real estate course at the Mason School of Business. It starts out like this:

As with the last 100 meters the 400-meter dash, the conclusion of the 2011 fall semester marks the beginning of the end of my time at Mason. As I race towards the finish line in May 2012, good thoughts come to mind, especially of the Real Estate CAM taught by Prof. Ben Bolger. The course exposed me to the nuances of an industry where success is not necessarily about reality, but your ability to create a perception, in which people want to participate. In the CAM, we covered cases analyzing the future of real estate at academic institutions using Harvard and W&M as examples; urban development in Brazil; and the redevelopment of the World Trade Center.

Click here to see the rest of it…

Pictures from NYC: Part 2

Yesterday, I forgot to mention that I have successfully completed the 30-day Challenge. I am really proud of the fact that, with exception of a few days where things were beyond my control, I was able to write a blog post every single day, for 30 days. Now that I am done, I’ll slow down just a tad to work on some other projects I have. Now on to more pictures from NYC. Continue reading

Pictures from NYC: Part 1

30-day Challenge – Day 30

In the past two months, I have been to New York City twice. In fact, the first time I was in NYC was when I interviewed the CEO of Saks for this blog. The second time I went up to the “big apple”, I was with my classmates from the Real Estate CAM (Career Acceleration Module) at the Mason School of Business.

In a previous post, I had promised to talk to you about my experiences in NYC, and now I am “making good” on that promise. I’ll start with my October 2012 trip. Continue reading

A Room With a View of Your Porsche, Ferrari, Benz, …

30-day Challenge – Day 29

In the second half of this past semester at business school, I took an immersion course in real estate – the best course I have ever taken. The course not only exposed me to the business of real estate, but also introduced me to the nuances of an industry where success is not necessarily about reality, but your ability to create a perception, in which people want to participate.

Real estate can give you a means to exercise your networking, negotiation and selling skills. At the same time, real estate allows you to be very creative in realizing your visions of developing mixed use, multi-family apartments, commercial, or industrial structures. You can literally do anything and the next lines will show that. Continue reading

Some Stuff I Read Today

30-day Challenge – Day 28

It’s been a wonderful and exhausting day. Our LuxRe Club did some consulting work for a large VA winery today, and I’ve been busy doing some necessary follow up.

Today I’m posting a link to an article, entitled “Top 8 Luxury Travel & Marketing Trends for 2012”. I recommend it not only because I read it, but because I do not believe I could give you the gist of it without omitting some important information.

If you are thinking of starting a new business catering to affluent consumers, I recommend you take the 10 minutes necessary to increase your knowledge. The article may validate or refute some of your perspective, but I can assure you that it covers a lot of ground.

I also recommend you read “To Market or not to Market? The No-Marketing Approach“. I read the following lines and couldn’t stop because it’s one of the best luxe conceptualizations I have come across:

We can live without luxury, and we are consciously aware that when we buy it we are spending our money on something we don’t need. So why, in an age of financial instability and austerity measures, is luxury spending on the rise? The decision to purchase luxury good is closely tied to the importance of freedom – freedom of choice, or the freedom to spend our money as we wish.

– Dr. Isaac Mostovicz, consulting academic

Yao Ming Launches Wine Brands

30-day Challenge – Day 27

I’m not much of a sports fan, but I couldn’t help but notice recent stories about the former Houston Rockets star, Yao Ming, releasing a line of luxury wines in his native China. Continue reading

Please Define “Rich”

30-day Challenge – Day 26

There are a lot of words and phrases to describe the typical luxury consumer. You could use: wealthy, affluent, moneyed, well off, well-to-do, prosperous, opulent, well-heeled, and a bunch of other colorful words. Though today’s luxe buyers can be segmented into different income and wealth categories, we have usually characterized luxury with the most affluent segments of society.

In my post entitled, The Pulse of Luxury, I discussed the definition of “affluent”: those earning incomes of $100,000 or more. For the longest time (or as long as I’ve been around – not too long), much of the literature has considered $100,000 as the “rich” threshold. Well, if you read that post, you will remember that I raised a question as to whether we need to keep using that description because it does not seem to take inflation into consideration or consumer sentiment. Continue reading

Second St. American Bistro Homepage - Click the picture to see the website for yourself

Night and Day: Fine Dining in Williamsburg, VA

30-day Challenge – Day 25

There is a well known adage about business success in relation to a customer’s experience:

A happy customer tells one friend, but an unhappy one tells everybody

Today, I write as both a happy and unhappy customer with experiences in the same product category, from two different brands. More importantly this post is so realistic, it serves as a practical case study on how to deliver the best customer experience possible – whether you are in the luxury, mid, or low product/service segments. Today’s post is about restaurants, and based on the title of this blog, I’m talking about fine dining. I’ll talk about two specific fine dining experiences I had on Sunday (12/11/11), while taking my darling wife on a day of dedicated DSE (dining, shopping, and entertainment) in the Williamsburg, VA area. Continue reading