Book Review: “The Management of Luxury”

The Management of Luxury

Luxury branding is the favorite topic among the readers of this blog. My previous articles on how to manage luxury brands received the most number of shares and some passionate comments and opinions.

Luxury brand management doesn’t receive the coverage it deserves, given the positive dynamics within the segment. According to Bain & Company, the number of consumers who shop for luxury products has tripled since 1995, reaching 330 million in 2013.

Given the limited amount of information on the topic I am very happy to introduce you to another book dedicated to those in charge of managing brands in the luxury segment: “The Management of Luxury-A Practitioner’s Handbook”, published Kogan Page USA in 2014.

Receiving this book was another confirmation of why I enjoy reading the printed editions: its covers have a nice velvety feel, and the choice of font and layout makes for a pleasant read. But, as I would soon discover, not an easy one.

The book is a comprehensive and multi-national collection of perspectives into the management of luxury brands. 50 contributors from 11 countries contributed to probably the most detailed and multifaceted coverage of luxury marketing I have come across.

The topics are grouped into 4 parts: the luxury market, luxury brand strategy, luxury business strategy and luxury responsibility.

Overall the book is very academic in nature and addresses the many questions any firm targeting the luxury consumer should answer: “how to enter a vast and foreign market and how to make an impact while not diluting the brand; how to optimize the retail experience and not sink millions in the process; how not only to sell online but also to be successful in doing so; and how to diversify without overstretching the scope of the firm”.

The level of detail the authors go into to illustrate the various concepts is impressive, and nothing is left to chance. The cases studies used to reinforce the key concepts cover well-known luxury brands such as Dior, Coach, Gucci, Escada and Ferrari, which reinforces the book’s practicality.

And if that wasn’t enough, the long list of notes at the end of each chapter invites the curious reader to further exploration and investigation.

One topic I particularly enjoyed was the one covered in Chapter 3, that explains the motivation behind luxury purchases.

According to the authors, there are five extrinsic (public reasons, called effects) for which people shop for luxury goods:

The Veblen Effect (showing off)-people in this category see luxury as a way to display and seek external validation of their wealth and status.

The Snob Effect-consumers in this category purchasing a luxury item makes them feel good psychologically.

The bandwagon effect- these category of luxury consumers associate luxury goods with belonging to a desired social group, like their wealthy friends, neighbors and other people they want to be associated with.

The hedonic effect—these consumers find personal pleasure in owning luxury goods.

The perfectionism effect-these consumers perceive luxury goods as a reflection of supreme quality, versus ordinary, mass-produced goods.

As I mentioned in the introduction this book is a complex read. Making the most of it requires important time commitment and taking many notes.

“The Management of Luxury” is probably the only book the specialist working in luxury brand management would need to read to feel more prepared to tackle the challenges the luxury market poses, and be able to make more informed decisions.

Book Review: Hooked: How to Build Habit-Forming Products by Nir Eyal

Hooked by Nir Eyal

The first thing I do every morning is rush to my phone and check my emails. Every evening I promise myself to follow a different morning routine: drink my cup of coffee, relax my mind and plan the day ahead. And yet when the next morning comes, I am back to the same old habit.

If you want to learn more about why that Mail icon is so addictive, Nir Eyal’s book ” Hooked: How to Build Habit-Forming Products” is an excellent start.

Nir Eyal should be a familiar name to anyone interested in the topics of gamification, consumer motivation and influencing user behavior.

He worked in the video gaming and advertising industry and became an expert in techniques that motivate and influence users. Nir has designed and taught courses at Stanford Graduate School of Business and Hasso Plattner Institute of Design, and posts regularly on his blog, which I read regularly.

When I was asked to review his book I didn’t hesitate.

Being a regular reader of Nir’s articles, I knew his book was good. The fact that it got almost perfect reviews on Amazon reinforced my belief.

“Hooked” is a reference book for developing products that will get users engaged and coming back for more. It provides a clear, practical and easy to follow road map for designing products that become first to mind for satisfying a specific need.

Just thinking of the success companies such as Facebook and Google, that are illustrative of the Hook model, is enough to realize the developing a habit forming product is good for business.

And yet surprisingly “Hooked” is among the first to address the topic comprehensively, and provide a framework with clearly defined steps.

The book focuses on how to turn a user interaction with a product into a habit. But what is a habit?

According to the book “Habits are defined as “automatic behaviors triggered by situational cues: things we do with little of no conscious thought”.

Nir’s “Hooked model” requires four ingredients: trigger, action, variable reward and investment.

In the end “through consecutive hook cycles successful products reach their ultimate goal of unprompted user engagement, bringing users back repeatedly, without depending on costly advertising or aggressive marketing”

This sounds like a dream come true for any marketer, designer, or start-up founder. But Nir is cautioning that the Hooked model should not be viewed as a “one size fits all” concept. Companies who sell infrequently bought or used products might not benefit to the full extent of using it.

The book explores each of the four elements of the Hooked model in great details and through plenty of meaningful examples. Many of the companies exemplified operate in the technology field. However these concepts can be easily extrapolated to other industries that are in need of habitual users.

What ‘s unique about this book is its practicality: the end of each chapter summarizes the key concepts are summarized as a bullet list, which makes them easy to remember. Moreover, if you are planning to make your next new product habit forming, at the end of each chapter you will find a practical “to do plan” that will help you convert the information presented into actionable steps.

Overall “Hooked “is a great read great read, and a surprisingly easy one. This book is habit-forming in itself- once you start reading it you become hooked and don’t want to put it down.

Book Review: “The Luxury Strategy” by Jean-Noël Kapferer and Vincent Bastien

The Luxury Strategy

During the month of March I decided to focus on luxury brand management. As the final chapter of my “luxurious” journey, today I am reviewing “The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands” by Jean-Noël Kapferer and Vincent Bastien.

The second edition of this book was published by Kogan Page USA in 2012.

Even since I read his book “The New Strategic Brand Management“, Jean-Noël Kapferer has become one of my favorite marketing authors. His books are insightful, well-documented, and filled with real life examples. The book I am reviewing today makes no exception.

Vincent Bastien teaches marketing at HEC School of Management Paris. Between 1988 and 1995 he was the CEO of Louis Vuitton, part of the French luxury conglomerate LVMH.

“Luxury” is a word that’s overused and often misunderstood. This books has two clear objectives: to define the true luxury brand, and provide a comprehensive luxury brand management guide.

Because, as the book illustrates, successful luxury brands shouldn’t be managed using classic brand management principles. Actually, as the title suggest, luxury brand management often requires going in the opposite direction and breaking the marketing rules as they apply to ordinary and even premium brands.

The luxury brand definition is comprehensive and consists of 6 criteria:

  • a very qualitative hedonistic experience or product made to last
  • offered at a price that far exceeds what their mere functional value would command

  • tied to a heritage, unique know-how and culture attached to the brand
  • available in purposefully restricted and controlled distribution

  • offered with personalized accompanying services
  • representing a social marker, making the owner or beneficiary feel special, with a sense of privilege.

Another important distinction the book makes is between premium and luxury brands. This separation is important in today’s overcrowded marketplace, where the two terms are often used interchangeably.

The chapter I found most interesting was “The Anti-Laws of Marketing”. Here we come to understand that luxury brands have to be managed fundamentally different. The 24 anti-laws of classic marketing listed here are sure to generate a lot of debate among marketing professionals.

Let’s take brand positioning, a fundamental brand management concept. According to the book brand positioning is not applicable to luxury brands:

Luxury is “superlative” and not “comparative”. It prefers to be faithful to an identity rather than always worrying about where it stands in relation to a competitor.

I personally disagree, as I believe positioning is applicable to all brands, luxury or otherwise. Brand positioning is relevant to all segments where consumer has to make a choice between brands, and I believe the luxury shopper makes choices as well (Ferrari vs Lamborghini, BMW vs Mercedes-Benz, etc.).

Another point of debate is the recommendation that luxury brands should avoid selling on the internet. Many will perceive this advice as simply outdated, and irrelevant given today’s fast growing digital channel.

I actually believe that, given the specificity of the luxury brand, this strategy makes a lot of sense. Luxury is characterized by very selective distribution, and a long sales cycle (the need to sell the “dream” before you sell the product). Internet provides instant availability and easy purchase, not to mention lower prices, which works against the luxury strategy.

“The Luxury Strategy” is a very intriguing book that can generate passionate discussions, depending on one’s perception of luxury.

If you are in charge of managing luxury brands, or an entrepreneur looking to add a luxury brand to your portfolio this books is worth a look. Will it change your perceptions of luxury? Probably not, but it will definitely present an original and competent point of view on luxury marketing.

If you are interested in luxury brand management, make sure to check my other related articles:

Marketing A Luxury Brand: Part 1

Marketing A Luxury Brand: Part 2

Luxury Branding: The Difference Between Premium And Luxury

Book Review: “The Consumer Mind” by Pepe Martinez

“Products are made in the factory, but brands are created in the mind”consumer_mind_lg

The quote above by Walter Landor best summarizes what  “The Consumer Mind” is about: building strong brands that become part of our daily rituals by implementing the latest advances in neuromarketing.

The book published by Kogan Page  uses a blend of theory and real world examples to illustrate how the latest developments in neuroscience could benefit the work of marketing practitioners worldwide.

Pepe Martinez is the Managing Director of Millward Brown Iberia, a global research agency specialized in advertising, marketing communication and brand equity research.

He holds a degree in Psychology from the Complutense University, Madrid (UCM) and has been working in marketing research for nearly 30 years.

As a marketer who advocates for meaningful brand positioning and differentiation, I’am always interested to learn more about how the human mind works. The emotional connection the brand establishes with its users is crucial in the decision making process and key to generating customer loyalty.

This 200 page book is based on over 2 million interviews in 30 countries. The extensive research confirms that brands are built on credibility and effective communication.

The Consumer Mind-Neuromarketing

According to the author:

“Brand have to be coherent and genuine to be credible. There has to be a relationship between what they think (their values), the emotions they convey and create (what they feel), what they say (their communications) and the actions they carry out (what they do).

A brand’s credibility is essential to attracting customers and earning their loyalty.”

When it comes to slogan development, research show that:

“When creating an advertising slogan or choosing a good claim for the brand, two important aspects must be taken into account: it should be a short, impressive and sonorous (catchy) phrase-this way it will be easy to remember and reproduce (Nike: “Just Do It”); and it should be relevant to consumers, ie it connects with their needs, emotions, desires and expectations (Nokia:”Connecting people)””

 The Consumer Mind-Succesful Brands

Chapter 14 “Brands, Communications and the Mind” was of particular interest to me, as it presents the recipe for strong brands:

Connecting with consumer’s minds

Looking after the product to the greatest extent possible

Communicating well

Protecting the brand

The key to successful brand building is uncovering your target audience expressed and implied needs and wants, and understanding how the decision making process as it relates to your category.

A communication message that combines rational and emotional benefits is works best to communicate the brand benefit.
The Consumer Mind-Brands, Communications and Emotions

Who is this book for? Brand managers and marketers involved in brand building initiatives. Communication professionals who want to improve the effectiveness of their marketing campaigns. And those passionate about how human mind works.

Book Review: “Co-opetition” by Adam Brandenburger and Barry J. Nalebuff

Co-Opetition-a revolutionary mindset that combines competition and cooperation

I rarely come across a book that changes my current business philosophy.  The book I am reviewing today did just that: it changed the way I think about strategy, competition, suppliers, and customers.

Co-opetition” is not your typical strategy book. It’s actually so unique that a new word had to be invented to summarize its core concept: co-opetition.

Co-opetion” is a combination of competition and cooperation, a duality that helps a business grow and prosper.

We tend to look at our competitors as our enemies. We can only grow at the expense of a competitor. In order for our brand to win, a competitor has to loose.

The marketplace is a war, and only the fittest survive.

This book will challenge the way you view competition by introducing a new concept: co-opetition. That is, seeing the role of competition also as a partner in creating value, a bigger pie. A bigger market increases your brand’s profits, even at the same market share.er slice.

Co-opetition

“Business is cooperation when it comes to creating a pie and competition when it comes to dividing it up.”

Think about it. It’s hard to steal market share from your competitors in particular in matured economies. Why not work with them to grow the market and benefit for a bigger slice of the pie.

The same concept can be applied in the relationship with your suppliers and customers.

“You have to listen to your customers, work with suppliers, create teams, establish strategic partnerships-even with competitors. Besides, there are a few victors when business is conducted as war. The typical result of a price war is surrendered profits all around.”

The book introduces another concept: the complementor. According to the authors,

“The complementor is the opposite of a competitor. It’s someone who makes your products and services more, rather then less, valuable…Hardware needs software, and the internet needs high-speed phone lines.”

A lot of real world examples are used to illustrate how complementors can work together for the common good: Microsoft and Intel, car manufactures and auto insurance, Compaq and ProShare.

This revolutionary strategic approach to running a business is based on the game theory.

Game Theory

Game theory was first formulated by John von Neumann and economist Oskar Morgenstern in their book “Theory of Games and Economic Behaviour”, published in 1944. In recent days this theory came to revolutionize the game of doing business.

“Contemporary game theory applies just as well to positive-sum-or win-win-games. The real value of game theory for business comes when the full theory is put into practice: when game theory is applied to the interplay between competition and cooperation.”

The books goes on and describes the components of the game theory strategy as it applies to the business world: players, added values, rules, tactics and scope (PARTS).

It also looks at a company value net, a diagram that identifies all its players and the interconnection between them: customers, competitors, suppliers, and complementors.

The Value Net

I hope this review peaked your interested for this book. “Co-opetition” is beneficial to business owners, senior managers, marketers and others involved in running and growing a business.

A New York Times and Business Week bestseller, it definitively gave my strategic thinking a new perspective, by making me see the “big picture” differently.

Make sure to check the “Best Marketing Books” page for more book recommendations and reviews.

Book Review: “Brand Together” by Nicholas Ind, Clare Fuller and Charles Trevail

Brand Together by Nicholas Ind, Clare Fuller and Charles Trevail

There is a new word that has become part of the Brand Management vocabulary: engagement. Gone are the days of one-way communication, when the consumer was bombarded with advertising messages. Brands that are successful today make the consumer part of the conversation, rather than its intended target.

Companies are working to create a two-way connection with their customers, employees and shareholders.

“Brand Together”, published in 2012 by Kogan Page USA, is a step-by-step manual that shows marketers how to initiate and nurture this connection. The keyword used throughout its pages is “co-creation” between all the parties involved in the brand relationship with the noble purpose of generating inovation and growth.

The book is divided into two parts: “Thinking it” and “Doing it”.

“Thinking it” is about designing the perfect plan to identify and engage the future brand ambassadors.  The ingredients needed for true co-creation are participation, openness, empowering and organizational involvement.

According to the authors “co-creation suggests the interaction of individuals within a framework to evolve, re-define or invent something that is new“.

Once a plan has been crafted, the second part of the book, “Doing it”, illustrates the practical plan to implement a culture of collaboration with the purpose of energizing a brand. It all starts with establishing a connection with people, understand their profound feelings, principles and values and getting the most out of this relationship.

The book makes great use of practical example of brands that have used co-creation to become stronger and more relevant: Starbucks, [yellow tail], Mozilla, Kraft and Danone.

The “Brand together” book itself is a result of co-creation.

In writing the book the authors have gathered content from several sources: published material from a variety of fields such as branding, philosophy, psychology, art and literature, and the input of 20 managers from all over the world. The process was concluded with establishing a co-creation group consisting of 236 individuals who have provided content, ideas and suggestions.

The co-creation strategy is still a new and debatable topic. If you plan to use the input from your customers, employees and shareholders in your brand building process, this book makes for a very good read.

Discover this and other great marketing books by visiting the Books page.

Book Review: “The New Strategic Brand Management” by Jean-Noel Kapferer

The first edition of this book was published in 1992 in France. The edition I had the opportunity to read and review is the 5th edition, published by Kogan Page Limited in 2012.

Jean-Noel Kapferer is a global brand strategist with a Ph.D from Northwestern University and international consulting experience stretching from Europe and North America to Asia.

If i had to use just one word to describe this book I would say it is comprehensive. Other words that would characterize it well are relevant and global.

The book is structured into 4 parts:

Part 1: Why is branding so strategic?
Part 2: The challenges of modern markets
Part 3: Creating and sustaining brand equity
Part 4: Brand valuation

As you can probably judge by its structure, this book is comprehensive because it provides guidance through the entire branding process. And it all starts with an overview of the importance of branding in the overall business strategy. Kapferer provides the modern definition of a brand:

A name that symbolizes a long term engagement, crusade or commitment to s unique set of values, embedded into products, services and behaviours, which makes the organization, person or product stand apart or stand out.”

It’s difficult to highlight a specific chapter in a book as comprehensive as this one. One thing is certain: there is plenty of useful information for Brand Managers in charge of launching, growing, rejuvenating, and taking the brand internationally. No aspect of Brand Management is left untouched: brand identity and positioning, naming, brand extensions and brand valuation, to name a few.

The book brings an interesting perspective on Asian brands, and how they differ from the European and American ones. The author’s assessment is that “despite their success measured in market share and often market dominance, these brands still lack dream power and intrinsic desirability.” I completely agree.

The book is relevant  because it addresses today’s biggest challenges in Brand Management: dealing with low cost competition and the surge in popularity of retail brands. It contains a very detailed guide on how a manufacturer’s brand can respond and emerge successful in this ongoing battle.

The section dedicated to luxury brands is intriguing. In today’s economy dominated by the invasion of low cost competitors, and where the innovation advantage is short lived, it’s hard to believe that one viable growth strategy is to launch a luxury brand. This books proves that it’s possible, and details what is takes to succeed.

Kapferer pioneered the concept of “brand identity” in Europe in 1986. He developed the “brand identity prism”, a model used by Brand Managers to assess the identity of any brand. According to this model a brand’s identity is represented by a hexagonal prism: physique, personality, culture, self-image, reflection and relationship. A very simple and yet comprehensive model with practical applications.

The content is structured in such a way that allows the reader to find the specific information that’s needed at a particular time. The books is not meant to be read as a novel, but rather be used as a reference guide by marketers involved in Brand Management.

You will not agree with everything that’s presented bwtween the covers. That being said I fully understand and respect Kapferer’s opinion on topics that I approach differently, such as growth strategy through brand extensions. That’s the beauty of Marketing: there is no right or wrong, just different avenues for reaching the same goal.

In summary, this book is a very good reference guide in the brand building process. Although not an easy read, it was well worth my time.

Buy this book on Amazon.com