№3(59)
September 2017
ISSN
1990-4126

Russian

«Architecton: proceedings of higher education» № 44 December 2013

Design


Chernakova Natalia V.

MSc. In Product Design in Business Context.
Research supervisor: Michael J. Rodber. Loughboro University,
Lestershire, UK, e-mail: chernakova@me.com

BRAND MANAGEMENT WHEN STARTING A NEW PRODUCT FOR REGIONAL MARKET


The article raises the issues of strategy for promoting famous brands in new contexts using, as an example, a premium product, a Luis Vuitton man's watch. The author reviews the strengths and weaknesses of the brand, its positioning on the market, compares sales markets, consumer perception in different countries, and the frequently used toolkit of brand management. Ways to deal with failures in advertising are proposed.

Key words: brand, brand management, product promotion strategy, regional markets, new product development, Luis Vuitton


 

Brand is defined by the American Marketing Association as a name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. Initially the word ‘brand’ meant a symbol burned for cattle identification.

Today, a brand is something more than just a physically perceivable or visible attribute of a firm or a product; it is about not only product recognizability but also internal contents, a set of values that make up the image of the company. These are services and emotional impact, i.e. intangible qualities that a consumer gets when interacting with goods or services. Such emotional references fill the brands with a kind of power. They create sustainable relationships and form whole communities of users by the same principles as underlie religious communities. People worship this or that product and start attruibting all who possess them to a group of people with similar interests.

Positioning is understood as identifynig and occuping a market position for a company, product or service that would make it favourably distinct from competitors. Positioning is in relation to a specific target group of consumers for whom the advantages and uniqueness are created and offered.

New Product Development is the complete process of developing a new product, including the early phase of the search for the right position and direction, improving the quality of the product and reducing the number of «failures». The second phase is aspiration to successful implementation focused on the achievement of a maximal tangible and intangible value of the goods.

This study was carried out by the author within the framework of the Master’s degree graduate project at Loughborough University, UK.

The objective was to gather and review research data for identifying the strengths and weaknesses of this bran on the Russian market, ensure that the results of the study are taken into account in developing a new product for the Russian regional market and perform the positioning of the company on the Russian market.

Nowadays, consumers are surrounded by millions of brands. Every day a customer makes his choice towards one or another branded product. What are the differences in perception between people all over the planet? What are the instruments brand-giants use in order to catch customers attention in new markets? How will selling a product in Russia differ from selling a product, for example, in the UK? How to reach a result desirable for both customers and producers? How to overcome difficulties an already successful product meets in a new market? All these issues will be covered in the article with reference to a premium segment product – a Louis Vuitton men’s watch.

Louis Vuitton is a manufacturer of luxury-segment goods. Founded in 1854 in Paris by Louis Vuitoon, it is still in existence. Initially, the company manufactured travelling accessories, such as boxes and trunks. Today, their product range includes collections of clothes and accessories for both men and women, various travelling accessories, leather goods, and canvas, a material that is durable and does not soak due to wax impregnation), shoes, jewellery, and watches. The boutiques provide for the possibility of ordering bags and watches from customer-chosen material (customized goods). Thus, Louis Vuitton is one of the most successful representatives of the luxury segement. In 2013, Louis Vuitton ranked first in the luxury segment - for seven years on end (valued at 22 billion US dollars) according the annual rating of the most valuable luxury brands of the planet held by Millward Brown, US [6].

Fig. 1. Vuitton logo incorporated into thte ornament on the bag. Source: http://www.kismetbazaar.net  

FIg. 2. New Louis Vuitton logo for menswear – masculine and dynamic. Source: http://www.ilvoelv.com

 

Fig. 1. Vuitton logo incorporated into thte ornament on the bag. Source:http://www.kismetbazaar.net

FIg. 2. New Louis Vuitton logo for menswear – masculine and dynamic. Source: http://www.ilvoelv.com

A part that brand takes in customers’ lives

Brands have consolidated a solid position in consumers’ minds. A customer goes outside, putting on his Nike’s in order to have a coffee from Starbucks. On his way back, he gets a pack of Parmalat milk. He does it without thinking, as he does this combination day by day. His choice is done on a subconscious level. In 90 percent of cases, a customer makes his choice on this level of his mind [1, p. 163]. Choosing Starbuck he would unlikely visit another chain’s coffee shop across the street. He would never choose Adidas or Puma over the clear design of Nike. Today branding is a synonym of religion. More and more they capture our minds, forming the lifestyle that we strive to obtain. Consumers are becoming a part of a brand-society.

Luxury brands are the most desirable among Russian customers today. Russians deliberately spend their savings in order to get closer to the desirable premium segment. We have to admit that there is no such a cult of luxury brands in any other country as in Russia. The roots of this problem go back to the consumption history of post-communist society. Due to unstable economic situation, saving was perilous. It was less risky to spend today in order not to lose tomorrow. Thus, the middle class in Russia is more likely to spend on goods rather than save for educational purpose or to make a large acquisition. This situation has formed a lifestyle, a new approach to spending in Russia. The brand is a means of meeting one’s needs, expressing oneself, establishing social relationships and maintaining cultural models [4]

Difficulties companies face

According to IPX Marketing Group, 21 000 new brands appear each year. After just one year almost all of them disappear. Why do new trademarks have no point to stand out? They have difficulties obtaining a memorizable identity that would bind customers emotionally to their company. What is a secret of success behind branded goods? How can they stand out from the crowd? Would a product be able to go through the two-dimensional marketing, which CEOs didn’t even think of before? A number of large-scale neurophysiological studies prove that emotions help us distinguish what is important to us, and brands are capable of affecting us emotionally. There are various tools for producing an impact on customers’ minds, such legends, stories, advertisements, specific scents and sounds [1, c.20]. Thus, such brands as Apple, L’Oreal or Harley Davidson will always stay at their height because there is a certain image, a legend, a ‘blue-sky’ dream behind each of them. It is hard for new brands to reach a certain level of customer trust, but it is even harder to stay on.

Comparison of Louis Vuitton’s position today in the world and in Russia

Let us consider the successful brand like Louis Vuitton in the Russian market context. The product Louis Vuitton is struggling for is a men’s wristwatch. The company, producing various luxury goods, was a novice in the watch business in 1997, the year of the launch of this product after a long evaluation of the watch body. Louis Viutton’s wristwatch history started with the Tambour model launched in 2002. Its design followed Louis Vuitton’s philosophy and positioning - a little massive but refined in details. The range now includes sports, truly professional (e.g. yachting), jeweled and sophisticated tourbillion models. Today, as well as ten years ago, Tambour is the company’s central, emblem model - a truly French watch, very elegant and joyful but with a firm character. [5]. This model demonstrated that the French brand arrived into the watchmaking world for ever. In 2001, the company set up its own manufacturing facility at La Chaux-de-Fonds, where professionals implemented Louis Viutton design ideas and created its own movements. The 12 letters of the brand’s name along the circumference are correspondent with the 12 hours; the brown dial and the yellow second hand are references to the colour gamut of the company’s famous bags collection. Customization is also available.

Although the product was well designed, it was not successful enough. With the aim of promoting it, the company launched a menswear line of clothing, created its own logo, more masculine and dynamic. All models at catwalk shows ahd wear it as an inherent part of ‘Louis Vuitton Look’. The company opened a new boutique selling only watches and high jewelry on in Place Vendôme in Paris next to competitors, Rolex and Blancpain. Beyond any doubt, Louis Vuitton is one of the world’s strongest brands, one of the leading players on the market of luxury goods, a daring, experienced and powerful trademark that is capable of setting targets and attaining them. But with each next season, the Louis Vuitton watches increasingly less look like a ‘cool’ and thoroughly verified marketing product, as they are becoming independent and perfect articles in their own right [5].

 

Fig. 3. Tambour watch in classical and sport materials. The company offers complete customization. Source: http://oceanictime.blogspot.it/2011/06/louis-vuitton-tambour-diver-chronograph.html;  http://blog.perpetuelle.com/tag/louis-vuitton/

Although successful on the Europeanmarket, Louis Vuitton is facing a difficulty as its luxurious timepiece has been completely unsuccessful in Russia. The Swiss-made watches stay untouched in boutique’s windows despite having all the components of success: highest quality Swiss movements, Louis Vuitton monograms, and unique design. Nothing helps: neither innovative materials and technologies, nor the brand’s reputation. At the same time, the product is really outstanding. Nevertheless, Russian customers are loyal to the brand’s travel products, such as bags and truncks, which enjoy good demand in this country.

Strategies for further changes

Such a product as a watch is an indepensable accessory even in the digital age. It is a sign of status rather than functionality. A wristwatch is a thing one takes pride in, and an indicator of taste. It is passed from father to son, etc. Thus, Patek Philippe’s advertisement states, “You never actually own a Patek Philippe. You merely look after it for the next generation”.

Why do some products keep higher positions in the top-lists of all sorts of magazines, whilst others never leave the exhibition stand? Let’s draw an analogy with the Chanel wristwatch J12 that was launched in 2007, one decade later than Louis Vuitton. Chanel J12 has become a ‘must have’ in the target segment. Made of ceramics, it is either black or white. Its conservative style is not diversified. Nevertheless, it took just a few years for make customers aware of it and raise demand for J12 to the top. We all know that the Chanel brand has had great advertising campaigns, as well as Louis Vuitton. There is nothing more common and trivial than ads in print media. What does a customer see on the back cover of each and every issue, be it a local, nation-wide or international magazine? The J12 watch. As for Louis Vuitton’s advertising campaigns, they are more likely to promote baggage and bags and travel accessories, keeping their watches in the background or ignoring them at all.

Within the framework of this project, the author has carried out a number of studies and interviews with stakeholders, which suggest the following conclusions. Firstly, in customers’ minds there is a stereotype that has formed in relation to the Louis Vuitton brand. “This is a frequently faked baggage brand”. “Nothing against the original, but fakes are massive”. “I would never get a watch from LV, I consider it is not a proper watchmaking company”. “High quality, a lot of goods that are convenient for travelling”. Among Russian consumers in the 22-35 age group (the sample included 100 individuals), the level of trust is various, ranging from absolute trust to the original goods to the opinion that this brand is often imitated. This, however, does not stop them, and they choose the recognizable monogram on the company’s traditional products.

The brand has to re-position itself in order to correct the attitude towards the company. Customers ought to be involved in Louis Vuitton World, making it more emotional. They have to increase the level of trust towards LV as a high watchmaking brand. Research among target customers clearly shows what guides their choice. Generally, the consumer’s attitude towards a product is evolves over his/her entire lifetime, so that Rolex is the timepiece of high standards and quality. A suit must be Italian, and a perfume from France. The result is a list of dream-goods manufacturing countries from the conservative customer’s point of view. Assumingly, there are a few Swiss watchmakers. All of them are of a high standard. All of them are equipped with the same ETA movement. The rest is the history of a company, its reputation, and, of course, the design. Shop assistants at watch boutiques in London, Paris and Yekaterinburg have told me during the interviews which watches are more popular amongst the Russian clientele. As a rule, these are not the most expensive models but they shold from the most prestigious brands. A Russian is ready to pay as much as they can afford. A Breguet, a Rolex, a Hublot – these are their favorites. They prefer sport to classics, luster to modesty, heavy detailing to minimalism, gold and platinum to steel.

Overcoming failures in the target market

There are several ways for Louis Vuitton to overcome failures in the Russian market, the approach being comprehensive.

Firstly, it is advertising. The consumer should learn about Louis Viutton as a top-quality watchmaker. Watches have to contextually surround customers everywhere. Celebrities should be involved in representing the company. There should be a well thought-out plan for integrating the watch into the environment.

Another option is to launch a poplar, more accessible and recognizable product (a bag) for contextual promotion of the watch with help of an ornament on the bag or a key ring.

Secondly, the company could open boutiques to sell watches and jewelry only. These must be separate from accessory and clothing boutiques, which interfere with brand perception.

Society events are an inherent part of any promotion activity, such as Louis Vuitton Cup sailing competition, which should be represented in Russia too.

Moreover, the company could be offered to launch a product specially designed for the Russian consumer. Within my project, I developed a product using elements with indirect Russian references and Russia’s historical heritage. Specifically, the watch crown is shaped like the dome of the Russian arhtodox church. The second hand is coloured as the Swiss flag to confirm that all Louis Vuitton’s are made in Switzerland. It is decorated with rose and yellow gold, precious stones, and mother-of-pearl. Thus, the very appearance of the product is to have a subconscious impact on the customer, influencing his/her choice [1].

In the interviews in the target segment, the choice in favour of Louis Vuitton was made by 65% of women as a gift for men. At thte same time, 38% of men wold choose Louis Vuitton when buying their first watch and 60% when buying their second or third, etc. watch. Thus, the number of those inclined to buy the watch increased twice compared with the results of the pre-project study.

Fig. 4. A Louis Vuitton model developed by the author of this article based on the results of her research into customer preferences in Russia, and competitors’ models.

Fig. 5. An example from the buyer preference survey

Conclusion

Thus, in the contemporary competitive world of brands, it is increasingly more difficult to win the consumer’s attention. A brand creates an emotional connection to the product by means of advertising. Desire to keep customers is a major driver for developing production, inviting contemporary artists, and improving the product overall. All of these factors add value to a brand.

Collaborative projects have a positive impact on the final product and on design evolution in general. Major brands can afford to invite the luminaries of art, design and marketing. A producer shapes the customer’s taste and educates them offering more and more perfect goods. No doubt, Louis Vuitton has all potentialities to be recognized and to be successful in Russia. To achieve this, they might need to consider carrying out a number of actions in the Russian market in order to enhance the brand value.

It is important to ensure emotional positioning of the company, create animage that would be close to the heart of the consumer, participate in charitable activities, engage celebrities, correctly place the product contextually in an environment that would be associated with a specific lifestyle with a successful businessman (sportsman, actor, politician) wearing the company’s product. The watch needs to be widely advertised so that it becomes better known on the regional market and as recognizable as the other products of this brand. The LV watches could be sold through specialised boutiques; in paralle, a new product could be launched in limited quantity, developed in accordance with the tastes and preferences of the Russian consumers identified in the study.

Thus, the development of a new top-quality product does not yet guarantee customer demand. It is essential to come up with an advertising strategy, create a brand’s positive image and provide technological advantages and unqie design solutions.

Postscript

Right after this article has been submitted, Louis Viutton is holding a scandalous advertizing campaign on the Red Square, building an exhibition pavilion in the form a huge suitcase between GUM and the Kremlin.

Fig. 6. Louis Vuitton advertizing campaign on the Red Square. Source: http://www.salon.com/2013/11/27/russia_outraged_by_giant_louis_vuitton_suitcase/

The exhibition is designed to demonstrate the travelling bags, suitcases and purses of celebrities and historic personalities who ever used LV branded products. Louis Vuitton’s intention is to transfer the funds from ticket sales to the Naked Heart Foundation founded by Natalia Vodianova.

If the pavilion had an image of the Louis Vuitton watch, the public repercussions and broad coverage by the mass media would undoubtedly help the company promote this product on the Russian market. This opportunity, however, has been missed.



References

  1. Lindstrom, M. (2012) Buyology. Moscow, Alpina Business Books
  2. Ollins, W. (2012) On B®and. London: Thames and Hudson.
  3. Katz, R. (2012) Managing Creativity and Innovation. Boston, Massachusetts: Harvard Business School Press.
  4. Dmonin, V. N. (2004) Branding: New Technologies in Russia. Saint-Petersburg: Piter. (in Russian)
  5. Istomina, Е. S. As Accurate as a Diamond. About the collection Tambour Monogram Louis Vuitton [Online] Available from: http://www.kommersant.ru/doc/2266157 (in Russian)
  6. Brand experience gets personal[Online] Available from: http://www.millwardbrown.com/BrandZ/Top_100_Global_Brands/Categories/con...
  7. The Kremlin demands immediate removal of the Louis Vuitton pavilion on the Red Square [Online] ITAR-TASS: Russian Information Agency. Available from: http://www.itar-tass.com/obschestvo/793558 (in Russian)


Russian text of this article

ISSN 1990-4126  Registration MCM el. № ФС 77-70832 of 30.08.2017 © USUAA, 2004-2017  © Architecton, 2004-2017