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Chief Industry Analyst, Marshal Cohen, and President, Foodservice, Dave Jenkins, speaking
Event Web site March 6-7, 2007
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Insights Mission
HomeCover Story
Power Brands Sell Globally (But Still Market Locally)
By Marshal Cohen, Chief Industry Analyst
This article is based on Marshal's presentation at the National Retail Federation's 2007 Annual Convention, "Retail's Big Show," held in January.
As the Web becomes a more popular shopping venue, the idea that your brands and products are focused solely on your local (or national) market is outdated. To empower your brands to compete more successfully on the international stage, it’s important to identify and leverage three overarching global consumer themes and trends: Convenience, Customization, and Indulgence.
Convenience
“Convenience” can have different meanings. When it comes to consumers, though, the definition is very simple, and broad: in an increasingly complex world full of too many choices, true convenience is something that makes the consumer’s product choices easier to make.
That’s why successful companies are finding ways to cut through the product marketing chaff, in order to provide consumers with easier choices that fit their lifestyles. Even so, greater choice and convenience do not necessarily go hand in hand.
Many people automatically assume that more choices means greater convenience, but they couldn’t be more wrong. Making decisions is hard work in today’s 24/7 world; everything is a decision. Even determining where and what to eat now entails a dizzying array of choices – in restaurants, take-out, in the car, cooking from scratch, heat-and-serve meals, and on and on. It boggles consumers’ minds.
Smart retailers are striving to make their sales processes more convenient, in order to provide a simple, cross-channel shopping experience. As more – and older – people migrate to shopping online, offering a seamless retail experience is paramount. Among multi-channel retailers, the more a shopping site mimics the offline brick-and-mortar shopping experience (and vice-versa), the more likely the store will garner more sales and brand loyalty.
This multi-channel retail trend is true in the U.S. and in many other parts of the world – and that’s primarily due to greater global penetration of home-computer technology. In 2000, countries that are now in the E.U. showed PC-ownership penetration at less than 50 percent. In the U.K., for example, penetration was 26% in 2000, and reached 63 percent in 2006. That means many more potential global customers for your products, no matter where your company is based.
Customization
With so many product choices available, consumers now expect a certain amount of customization (or at least personalization) when it comes to the products they choose. This trend is most apparent in the fashion and apparel sector, where custom suits and shirts have been a mainstay for a certain level of consumer. Now, however, customized apparel and footwear is within reach of many more consumers – and it’s happening online, as well.
Too many retailers are still caught in the commoditized approach to retailing, but mass marketing is not for everybody. When people buy products nowadays, they aren’t looking for a uniform approach where everybody adheres to the same aesthetic. They’re looking for something that allows them to insert some of their own personality flair into the mix.
Customization is as important when it comes to region and location, as it is when it comes to specific products. Successful retailers must think globally and locally, if they want to make real bottom-line gains. Certain brands do better than others in certain regions (at certain times of the year) and can vary widely from the national or global averages. Understanding the key regional differences is as important to marketing efforts as realizing that retail is increasingly global. For example, the share of home theater systems sold in San Diego can be wildly different from those sold in Denver.
Indulgence
Another key consumer trend at work both globally and locally is the concept of indulgence and luxury; however, luxury truly is in the eye of the beholder. Three main categories fit under the “luxury” umbrella:
- Pure luxury, which is exemplified by traditional high-ticket brands like Rolex and Rolls-Royce.
- Aspirational luxury, which allows consumers to buy into key “pure luxury” brands, but at a lower price (e.g., entry-level Mercedes Benz models).
- Affordable luxury, which lets consumers experience luxury-level quality, at a comparatively low price (e.g., cashmere sweaters sold at specialty stores and mass merchants for under $100).
Consumers are increasing their focus on taking care of themselves, and they reward themselves with products and services that make them feel pampered. Not only is this concept of personal luxury (at whatever level) driving consumer activity around the world, but it’s now reaching young and old consumers alike. For example, even teens and pre-teens these days are opting for professional facials and manicures, long before the first line or wrinkle appears.
Even when it comes to a popular mainstream product like coffee, we’re noticing a market shift toward luxury and indulgence. While worldwide sales of coffee are flattening, specialty coffee sales are on the rise.
Power Brands
Companies and brands that find ways to combine all three overarching global consumer themes and trends into one product have the ability to formulate power brands. And while it’s often simple to align a brand with one or even two of these trends, companies that can leverage all three are poised for the greatest success. After all, in today’s world we’re no longer simply selling standalone brands or products, we are selling a complete consumer experience.