CHANEL (PARIS)
INTRODUCTION
The term brand relaunch describes the restart or repositioning of a brand. Its purpose is the brand’s strategic re-alignment.
A relaunch serves to charge a brand with fresh energy by means of a revised brand strategy. The brand is positioned in the market with more focus and addresses a more specific target group. The relaunch is based on the peak performances of the company and a sustainable positioning.
A brand relaunch is necessary particularly when brand attractiveness is declining consistently. This can have serious consequences such as slumping sales figures and shrinking competitiveness.
What is important for a brand relaunch?
A brand relaunch helps to extend the life cycle of a brand. However, it offers not only opportunities but risks as well. Their effects must be considered. This is why it is enormously important from a brand strategic viewpoint that the brand core and with it the unmistakable identity of a brand takes a central role during the entire relaunch process. A strategically developed positioning is also essential; it has to be credible, attractive, superior, and therefore sustainable.
One of the most famous brand success stories is that of Jägermeister. It was known as a traditional brand that was preferred in downhome circles, however, Jägermeister kept losing attractiveness, because the brand was not evolving. It was about to become obsolete. After a rejuvenating relaunch, the brand was successfully positioned with younger consumer groups and became established as a cult beverage in the event scene.
Sometimes in business, a good brand dies. Everyone knows and respects the brand, but there’s a gap between people’s knowledge and their desire to actually buy the product. When the company can’t close that gap, the brand slowly but surely finds its way to the dustbin of history.
In 1992, the Harlem Globetrotters were heading down that path, but I thought I could get them back on the right road. I was convinced the brand still had value. So I talked things over with two bankers, who were also close friends of mine, and we got a group of investors together—mostly friends and business connections I’d made during my 25 years at Honeywell. We convinced them that the Globetrotters organization was worth buying. And over the years, we’ve been able to convert people’s knowledge about the brand into a strong financial return. We’ve closed the gap and saved the Globetrotters brand.
When I took over the organization in August 1993, the games had an annual attendance of less than 300,000; this year we’ll hit 2 million. In 1992, the company lost about $1 million on gross revenues of about $9 million; this year we’ll have about $6 million in profit on gross revenues of about $60 million.
It hasn’t been easy, of course. As I got reacquainted with the organization—I hadn’t been involved with the Globetrotters since my playing days ended in the 1960s—I found that the people running the company did not respect the players or the product and were indifferent to the customers. The whole organization probably would have crashed and burned in another two years.
To save the brand, I put into practice three operating principles that had crystallized in my mind over the course of many years at a major corporation; these principles form the core of my philosophy for running any business. First, the product had to be reinvented in order to become relevant again; second, customers had to be shown that we really cared about them; and third, an accountable organization had to be created—a real business. Before we get to that, though, you need to know a little bit more about the history of the team—and how I almost shut it down for good.
(Read more: https://hbr.org/2001/05/bringing-a-dying-brand-back-to-life)
Secretive sports car maker Ferrari opens up to Stefan Thomke about how it has bucked industry trends to achieve success.
“If you drive a Ferrari, you put premium petrol in the tank, you hit the motorway, and you step on the gas.” —Soccer star Zlatan Ibrahimovic
That purring engine. The buttery soft leather. Those sleek curves. The essence of a Ferrari transcends any one particular design element to immerse its drivers in pure, unadulterated pleasure.
“The overarching goal is to create an experience—a sensual experience,” says Harvard Business School Professor Stefan Thomke, who wrote a case study about the company in 2018.
While many companies talk about creating a customer experience through their products, Ferrari N.V. is one of the rare brands that unequivocally achieves it—making its iconic horse logo synonymous with luxury and excitement. Thomke, the William Barclay Harding Professor of Business Administration, thinks of a student he taught in Harvard’s senior executive program in Dubai, who had the opportunity to test drive one of Ferrari’s cars.
“He drove it for a few hours and couldn’t sleep that night.”
Despite its legendary success at defining its brand, it is also a company confronting modern realities. After nearly 80 years of operating as a privately owned company, Ferrari went public in 2015 (ticker symbol RACE). Meanwhile, the automotive industry has been shifting through its biggest changes in decades, with companies scrambling to keep up with the pace of innovation—including drivetrain electrification, wireless connectivity, and self-driving features.
Some of Ferrari’s competitors, including Porsche and Lamborghini, responded by adding cutting-edge technologies, increasing production, and venturing into untraditional models, such as (gasp!) sport utility vehicles. Ferrari so far has remained true to its fewer frills, more fun legacy.
“WE ARE NOT THE FASTEST OR MOST COMFORTABLE CAR ON THE MARKET, BUT THE BEST COMBINATION OF THE TWO…”
When Thomke, who teaches and writes about the management of innovation, received an email from Ferrari out of the blue asking if he wanted to study the company, he couldn’t resist the opportunity. “It’s perhaps one of the best-known and secretive companies in the world,” he says. “I wanted to lift the veil and see how they work.”
The Ferrari Way
What he found is something he termed „The Ferrari Way“ after an offhand comment from the company’s chief test driver. “I don’t know what technologies we will use in the future,” the driver said. “But I do know that any new technology will be deployed in our car the Ferrari way.”
In practice, that means a careful balancing of three elements: driving pleasure, performance, and style. As the company’s marketing head told Thomke, “We are not the fastest or most comfortable car on the market, but the best combination of the two, which makes us the most thrilling. Our concept of performance includes pleasure.”
While other sports car manufacturers try to make their cars as light as possible to aid acceleration, for example, Ferrari is not afraid to sacrifice speed for a more luxurious cockpit. “They are willing to put on a few extra pounds because the leather feels different,” says Thomke.
That goes for the car’s exterior style as well. In one case, the company increased the width of the wheelbase, diminishing the car’s performance slightly, to make it look better. As the head of design told Thomke: “Form follows function, but there is always a large margin for artistic freedom. The difference between an efficient shape and a beautiful and efficient shape can be quite large.”
Then there is that trademark Ferrari purr. The company has gone far beyond other car makers in creating an engine that not only performs well but sounds great to the driver.
“They go crazy trying to make a turbo engine sound good,” Thomke says. “Most manufacturers wouldn’t bother. It’s too much effort to find that perfect compromise.”
A strategy of scarcity
All of these elements have made Ferrari a hot commodity among high-net-worth buyers. At the same time that competitors have increased production, Ferrari has intentionally limited production to create scarcity, something Thomke calls “deprivation marketing.” The company runs waiting lists for its most sought-after models, and rewards longtime loyal customers with first chance to buy limited edition cars.
On the surface, that scarcity-generates-demand model seems destined to clash with becoming a public company. Ferrari decided to go public, in part, to improve its management rigor, Thomke says.
“Quite honestly, the company was run in a more casual way, with a great deal of informality,” he says. Being accountable to shareholders caused Ferrari to have to get serious about setting performance targets and professionalizing its organizational chart.
The danger is that in an increased rush for profits to satisfy shareholders, the company could abandon the principles that made it successful. So far, Ferrari has resisted that urge—and continued to produce cars at a level below demand.
“If anyone can walk into a dealership and get one, then it loses what makes it special,” Thomke says. “For the model to work, you have to keep prices up.”
The company has also bucked industry trends by moving deliberately on adding technologies to its cars. While it has installed hybrid drivetrains to some of its newer models, it has eschewed connectivity and self-driving features in favor of focusing on core elements, such as more powerful engines. The decision seems to be working, Thomke says, with profits up 46 percent last year.
“At the end of the day, what matters is results, and they are outperforming their peer group.”
Beware of oversteering
Ferrari’s story contains lessons for companies faced with technological disruption.
“When industries undergo technological change, many executives worry they are not reacting quickly enough, or they are underresponding,” Thomke says. It can be just as dangerous to over-respond, to change merely to keep up with competitors.
The first question companies should ask when evaluating new technology is whether it has staying power. “You have to get a good sense of the trajectory and if it’s ready for prime time,” Thomke says. Equally important is whether it fits in with how a company creates and captures value. “If you change your whole value system [to use it], and the technology turns out to be a dud, you put your whole company at risk.”
In Ferrari’s case, that means sticking to its three core elements of the Ferrari Way: pleasure, performance, and style—leaving some bells and whistles to other carmakers.
“The whole value system breaks down if it’s not fun to drive anymore, if it doesn’t look great, or if it doesn’t give you great performance,” Thomke says. “If the emotional experience goes away, none of those other things matter.”
What is necessary for a successful brand relaunch? (INTROUCTION)
How did Coco Chanel manage to relaunch her brand? (I COCO CHANEL: „The Return“)
What are the reasons why a brand can „die“ and how to bring it back to life? (RESEARCH)
Describe „The Ferrari Way“ (RESEARCH) and try to transfer their „achievement policy“ to other companies. Put yourself in a role of a consultant.
Read the texts below concerning 1.„Brand Loyalty“, 2.„Customer Fatigue“ and 3.„Product Life Cycle“, invent a scenario and develop a marketing strategy for a relaunch of a „dying brand“.
1. Case for Brand Loyalty (Harvard Business Publishing. Education)
Brand loyalty is one of the core concepts of the marketing discipline that has enjoyed practical and academic attention for over 75 years. The era of relationship marketing, with its focus on retaining customers for life, has instilled yet greater interest in the concept, precipitating unprecedented growth in frequency programs designed to lock in customer loyalties over time. Despite this rich history, many questions remain about the definition, measurement, and significance of brand loyalty. Some state that brand loyalties are declining and that in today’s consumer world, multibrand usage–not brand loyalty–appears the norm. Others feel that the concept of loyalty itself is not outmoded or outdated, but rather that new theoretical and methodological perspectives are required that can revitalize what has become a theoretically uninspired, overly simplistic, and conceptually limiting idea.
https://hbsp.harvard.edu/product/598023-PDF-ENG
2. What´s the Cure for the Customer Fatigue? (Harvard Working Knowledge: Business Research for Business Leaders)
There’s widespread agreement that customers are sick and tired—of the barrage of irrelevant products and services, the glut of marketing messages, the coddling and the patronizing, and the broken promises. (…)
Sellers must reengage with customers, but not by „creating a communications campaign,“ cautions Jerry Michalski, president of the consulting firm Sociate (Mill Valley, California), „because that approach has pretty much lost its credibility.“ Get out of the advertising mentality, which focuses on the messages your company is trying to get across to customers, and spend more time trying to discern what customers are trying to say to you.
Getting closer to customers starts with new ways of thinking about the people who buy your products and services. After that comes organizational realignment: changing people’s jobs so they can develop an appreciation for how customers‘ needs for products and services are intertwined with their desires for certain types of experiences. For example, sometimes the exclusivity of a product—“I’ve got something very few others have“—is its primary attraction. When this motivation is at work, you’re more likely to make customers genuinely happy not by chasing after them and carpet-bombing them with pitches but by teasing them into chasing after you. But fine-tuning your offerings based on a deeper understanding of customers‘ motivation isn’t enough: Trustworthiness matters more than ever, and the only lasting cure for customer fatigue is delivering on your promises of providing real value.
Getting past customers as data points
„Companies have forgotten how to talk to people,“ says Michalski. As supply chains developed during the Industrial Revolution, sellers lost direct contact with the end users of their products. „Then the media revolution suddenly separated everybody again,“ forcing them to interact through machines.
Today nearly everybody inside a company collects consumer data, but nobody has a complete understanding of the customer as a human being. Not surprisingly, companies‘ assessments of customers‘ needs and preferences often lack imagination and nuance.
„If there’s one word we have to kill, it’s ‚consumer,'“ Michalski continues. It diminishes the richness of the interaction by viewing people as automatons that reflexively acquire and use goods and services in response to a particular economic itch. The term „customer,“ however, helps companies understand the buyer-seller relationship in terms of a broader exchange of information, ideas, and feelings.
Most organizational structures aren’t set up to alert employees to when they’re not treating customers holistically—like human beings with a wide range of emotions and motivations that change over time, instead of as data points. As workforces have become more specialized, says Goodman, firms have tended to organize their marketing by brand, business unit, region, or sales channel, and not by relationship with the customer.
As a result, many marketing departments, and even entire firms, have an increasingly fragmented view of customers. The remedy, Goodman suggests, is a „customer segment-driven approach“ in which companies identify the „four or five critical segments that are going to drive their business across product and service lines.“
For example, a financial services company might segment its customer base into the following categories: boomers who are downscaling, shifting to lower-paying but more emotionally rewarding jobs; boomers who are financially responsible for the care for their aging parents; parents saving for their children’s education; and single women looking to buy a home. By assigning one group of service reps to each segment and training those reps to sell the company’s entire line of products and services to that segment—instead of having reps for each product or service make separate contacts with each customer—the company acquires a richer view of the customer’s needs and desires, a subtler understanding of how its brands fit into the customer’s lifestyle and changing life circumstances compared to competing brands.
Selling an experience
The better equipped your company is to view and treat your customers as whole human beings, the wider the range of opportunities it can envision for engaging in relationships with them. „Two hundred years ago, 97% of people lived or worked on farms,“ says James H. Gilmore, coauthor of The Experience Economy. „They made their own clothes, their own meals, their own tools.“ But eventually it became advantageous for them to pay others to do those things for them, either because they could make more money doing something else or because they wanted to spend the time satisfying some other human need. And therein lies a key to discovering new ways of making customers happy.
„The customer is whoever sends you a check,“ Gilmore continues. „Everybody else could become a customer if you can envision offerings that they would pay you for“ (see „Thinking Beyond Products and Services“). For example: creating opportunities for „direct contact, whether it’s a physical or a virtual place, to spend time together.“ Such experiences can offer value by „restoring some of the relationships“ destroyed by technological innovation.
Gilmore believes that „more of life should become a paid-for experience. Charge explicitly for the time people spend with you“ at this place you’ve created, he recommends, and then „talk with them or observe their behavior during that time.“ This is exactly what American Girl Place in Chicago does: It charges admission to a live, in-store theater production and to a fancy dining experience. It’s more than a retail store, encouraging customers to spend time in a place themed around the company’s line of dolls from different eras of American history. The interaction is not about the customer’s desire for a toy, says Gilmore. „It’s about an experience that promotes child development and helps parents instill values in their children.“
But a customer’s desires aren’t always so noble, notes Stephen Brown, professor of marketing research at the University of Ulster in Northern Ireland. „Customers aren’t the paragons they’re made out to be. Marketers should stop pandering to them. Treat ‚em mean, keep ‚em keen.“
Companies need to understand that today’s jaded customers see right through their manipulative ad campaigns. „We’re dealing with very, very sophisticated customers,“ says Brown. His analysis of people’s interpretations of advertisements reveals that even straightforward pitches get viewed with suspicion. Marketing must become equally sophisticated, he concludes; proceeding from „a deeper understanding of what people want than would ever emerge from the bowels of a data mine.“ Marketers must realize when customers want to be romanced, teased, even „tormented by deliciously insatiable desire“ [„Torment Your Customers (They’ll Love It),“ Harvard Business Review, October 2001]. Play to such emotions, advises Gilmore. „Do the stratification and intentionally design offerings that will not appeal to everyone because not everyone will want or be able to afford them.“
Or, if having their imaginations stirred is what customers really want, tantalize and torment them by creating offerings that change regularly or have an aura of mystery or unpredictability. The point here is that interpersonal relationships require a variety of experiences to sustain their vitality, and customer relationships are no exception. So if your customers are showing signs of fatigue, try spicing things up. After all, desire often increases with unattainability.
From experience to relationship: the role of trust
Crafting an array of experiences that deliver what they promise and satisfy customers‘ various desires isn’t sufficient to create a real relationship. When a flaw developed in one of Intel’s chips and the company did a poor job of acknowledging it and making it up to customers, the message behind its „Intel Inside“ ad campaign—trust only those computers that have the Intel logo—started to sound hollow, and the company lost respect in its customers‘ eyes.
In a genuine relationship, customers see your company as trustworthy, which means that your marketing is backed up by authentic organizational behavior. „You can’t just say, ‚I’m trustworthy,'“ says Michalski. „You can only behave that way“ every day. And „if you screw up, then admit it.“ That’s the only way you’ll be able to maintain your trustworthiness. Such admissions are rarely easy to make, but in an increasingly transparent business climate, people will know when you slip up, and so the consequences of not admitting your Mist Akes grow ever more painful.
https://hbswk.hbs.edu/archive/what-s-the-cure-for-customer-fatigue
3. Exploit the Product Life Cycle (Harvard Business Review: Marketing)
Most alert and thoughtful senior marketing executives are by now familiar with the concept of the product life cycle. Even a handful of uniquely cosmopolitan and up-to-date corporate presidents have familiarized themselves with this tantalizing concept. Yet a recent survey I took of such executives found none who used the concept in any strategic way whatever, and pitifully few who used it in any kind of tactical way. It has remained—as have so many fascinating theories in economics, physics, and sex—a remarkably durable but almost totally unemployed and seemingly unemployable piece of professional baggage whose presence in the rhetoric of professional discussions adds a much coveted but apparently unattainable legitimacy to the idea that marketing management is somehow a profession. There is, furthermore, a persistent feeling that the life cycle concept adds luster and believability to the insistent claim in certain circles that marketing is close to being some sort of science.1
This project intends to show that a brand can have a chance to revive, especially when it was unique before its popularity declined.
Its aim is also to suggest some steps necessary to bring it back to life.
It should encourage the reflection on how to develop permanent brand loyalty and avoid customer fatigue as well as product obscolence.
