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October 19, 2004
Branding rant for the day
Yes, here I am spewing out the "B" word again -- and i will every day until more of you get it. What the public doesn't know is how much the retailer has terrorized the manufacturer from branding its product. And who has this benefited? I'll tell you who -- the Asians and the retailers. Full disclosure: I am a retail brat -- my dad started a business 50 years ago that my siblings now run. They were just as guilty as all the rest of the retailers out there -- tearing off the brand name so they couldn't be shopped. I understand the emotional argument. But it's short-sighted.
A retailer (not my dad!) sells a chair at $199 -- that looks a lot like the chair at $299 -- but isn't the same as the $499 chair. What's the difference? If we know the brand is say, Hjellegjerde, we know their sling leather chairs have straps that have been engineered, tested and reinforced to withstand 400 lbs of a person falling into it. Knock-offs don't. My Coach bag is the same way -- I can buy the knock off at Macy's for $49 -- and the strap rips out in 3 months (specially with all the junk I carry around). My Coach will last until I have grown so sick of it I want to beat it to death. I am willing to pay that premium for quality. That's the power of an informed consumer.
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The relationship between the larger manufacturers and the dealers they utilize remains viable because a larger manufacturer needs a dealer or retailer “on the ground” to sell, service and deliver their products. Office furniture, for example, can involve tedious installation, re-organization and assembly. A larger manufacturer simply cannot service all customers in all regions of the country. It is much more cost-effective to have regional and local dealers servicing their products out in the field on a daily basis. This relationship is much like the auto industry – the items are high-priced machines that need consistent service. Ford wouldn’t be able to sell cars and trucks directly to the consumer – around the globe – and then service each and every vehicle on a daily basis. It wouldn’t be cost effective. Because of this “need-based” relationship, and in return for their service, dealers and retailers are given pricing breaks and other benefits (adding their logo or brand to another) in order to keep the relationship strong and vital.
Another marketing challenge that larger manufacturers – Herman Miller, Steelcase, Haworth, Knoll, etc… - face is that their end-user is not their real customer. The real customer is the corporation they’re selling the product to and as a result, the end-user is not marketed to directly. Most often, large manufacturers focus on innovation in design, benefits (such as long warranties, competitive information, ergonomic financial impact, etc…) to impact the facilities manager or purchasing officer who is more concerned with cost, both long and short-term, and the amount of down-time a new furniture installation will create.
So how do you directly impact the customer with your brand on a more personal basis? That’s a tricky question. Take a large computer company for example. IBM sells directly to customers, sells through dealers, and also utilizes corporate relationships to sell directly to large organizations. The way a company can manage this is to simplify its product offering to the consumer, draw a line between the branches of the company that deal with large corporate customers and smaller customers (general consumer) and eliminate (most) consistent service needs to a consumer's physical product -at least for a given period of time. In the furniture industry, many of the larger companies have tried to sell directly to the consumer – simplifying the product offering and creating a web-based purchase system that allows direct selling. Most of these have failed – and the reason they have failed is not because the idea is a bad one. They have failed to change the way they market, promote and do public relations – the continued use of the “traditional channels” doesn’t work when selling to the consumer or the small business owner. A small business owner wants a desk and a chair that will work – and not cost them a lot of time or money. Amazon.com still utilizes the old “door-nailed-to-posts” approach for desks in their office. Small business owners and consumers want something that is cost effective and won’t keep them up at night. They aren’t concerned with the design aesthetics, the outstanding ergonomic features of enhanced lumbar support – they don’t have time for it. They want to sit and work for as little capital investment as possible. Period.
Marketing ideas for de-mystifying furniture brands – and reaching the small-business owner or consumer:
- Separate the products sold to dealers and offered directly to customers – make a clear distinction so that there isn’t any “desk or chair” envy happening in the world of the dealer – you need them on the ground to service your larger customers and more complicated products.
- Design products that consumers can #1 afford and #2 purchase easily without having to spend a lot of time thinking, installing or servicing down the road. Paying an award-winning designer loads of money to design something that you want to be in-expensive and easy to service is a contradiction. Small businesses and the average consumer don’t care who designed their chair or desk – they care about the work at hand and the price they’re paying – they’re time is their livelihood.
- Don’t try to market these new products or this new sub-brand through the traditional channels. Of all the small business owners in the United States (or general consumers for that matter) how many actually read Architectural Record? Probably less than 10%. How many of them will attend Neocon next June? Even less – probably 1%. So why spend time, money or effort trying to market in those areas – get out of the comfort zone and hit the streets. Find the events and locations they tend to frequent and get to them directly. Sell your line on Ebay. Advertise in Sports Illustrated or a Bridal Magazine. Start a website that offers community support for similar business owners. DO SOMETHING DIFFERENT.
- Get over the notion that you have to hold the same standards of quality, design and innovation over the head of your new, customer/small business-centered brand. You don’t. Again, the average small business owner or consumer doesn’t know the difference between an Aeron chair and an X-99 – they just know they’re both way, way out of their price range. You can set up a brand that is separate to the larger entity – a dotted-line relationship – and keep things simple, easy and in-expensive. Amazingly, you can do all of this without sacrificing the holy name of your parent organization within the larger architect and designer community.
Founded in September 1998, Lambert, Edwards & Associates, Inc. has always believed that a solid public relations and investor relations practice boils down to adding value to every client. Our firm has continually focused on positively impacting clients and their businesses, the community we serve and the individuals we counsel on a daily basis. With this commitment firmly in place, we have emerged as Michigan's largest investor relations firm and one of the largest independent public relations firms in the state. Executives at Lambert, Edwards & Associates have a broad level of experience in public relations and marketing working for corporations such as Herman Miller, Inc. and Microsoft. We serve a broad range of clients in industries such as retailing, consumer products, manufacturing, healthcare, furniture, finance and technology. Visit www.lambert-edwards.com or email [email protected].
Posted by: Eric Lubbers | Nov 11, 2004 9:51:06 AM
My name is Anthony Mora. I'm President and CEO of Anthony Mora Communications, Inc., a public relations firm based in Los Angeles, and the author of Spin to Win, a how-to book on pr.
The furniture industry needs to come of age. The consumer and the media love style stories. Stories about fashion are style stories, stories about design are style stories, and stories about cosmetics are style stories.
The furniture world has lost it's way. It is either nuts-and-bolts functional or very expensive and snobby. It is seldom fun and stylish. A furniture designer should be in W or InStyle or Entertainment Tonight just as often as a clothing designer.
Keeping the consumer in the dark about price points is also absurd. A smart furniture designer and/or furniture retailer will emerge who will stand the industry on its head by breaking all of the rules. He
or she will set the trend, drag the industry kicking and screaming out of the dark ages and, whether they want to or not, the others will follow.
Posted by: Anthony Mora | Nov 11, 2004 10:53:08 AM
For 200 years furniture was a cottage industry of small manufacturers in U.S. with no real dominant players. Additionally, furniture also has always been low margin business. Result was no money for marketing pros or for brand building advertising. Only well-known consumer brands are La-Z-Boy and two bedding brands, Serta and Sealy, and bedding mfgring. has higher margins than furn.
Because mfgrs. wanted to sell more than one retailer in a market, and retailer didn't want brand on mdse., because that allows customers to shop price between retailers on same stuff. If mdse. not identified, customer can't be sure it's the same mdse., so can't shop price.
Pricing is a retailer activity. In furn., retailers need 50-54% margins. They can price to whatever the traffic will bear, then reduce from large markups for sales. Lamps, for instance, often are marked up as much as 400-500%, then a 50% off sale still yields, better than full margins. Also, furn. always been a fashion industry. People buy the look they want, and don't know, many don't care what the hell it's made out of.
TODAY MOST CASE GOODS COME FROM FAR EAST. ALL PRETTY MUCH THE SAME, AND NONE OF MFGRS. OR IMPORTERS CARES ABOUT BRAND. NOT AN ISSUE. ONCE A CUSTOMER KNOWS THE LOOK SHE WANTS, IT'S A COMMODITY BUSINESS FROM THERE ON. MOST UPHOLSTERY STILL MADE IN U.S., BUT THAT, TOO, IS CHANGING. NOW UPHOLSTERY BEING IMPORTED FROM FAR EAST. THAT WILL LESSEN EVEN MORE THE IMPORTANCE OF BRAND.
IT'S ALMOST USELESS FOR A MFGR. TO SPEND MILLIONS TO BUILD BRAND BECAUSE RETAIL FURN. SALESMAN HAS THE LAST SAY. IF CUSTOMER COMES IN LOOKING FOR A BRAND SOFA, SAY AT $1,200, SALESMAN CAN TELL HER, HERE'S ANOTHER JUST LIKE IT FROM A SMALLER MAKER THAT'S JUST AS GOOD, BUT $200 CHEAPER BECAUSE THEY DON'T NATIONALLY ADVERTISE. IN ANY BIG TICKET ITEM, IF THERE ARE MANY DIFFERENT BRANDS ON RETAIL STORE, RETAIL SALESMAN HAS THE LAST SAY. HE CAN SELL WHATEVER HE WANTS TO, UNLIKE A HONDA DEALER THAT SELLS ONLY HONDA.
JOHN MALMO, 40 YEARS REPRESENTING FURN. MFGRS. AND RETAILERS.
Posted by: John Malmo | Nov 11, 2004 12:04:53 PM
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