165. How to Run A Business: Superbrand Secrets From The Fashion Industry

16 takeaways from this video:

00:00:08 The mere presence of a logo is enough to make the person wearing the logo appear to be more athletic, more popular, cooler and more friendly.

00:04:05 Louis Vuitton began in 1854 making expensive luggage for royalty, and have since branched out into luxury clothing. In 2010, Louis Vuitton was valued at £12,503,000,000. In 1977 Louis Vuitton had but two stores in France. Today, in addition to their online store, Louis Vuitton has over 400 boutiques around the world.

Fashion brands must walk a fine line between selling to the masses while not losing their exclusivity to the rich. They must make their low end products affordable, but the affordability mustn’t appear too obvious.

00:05:20 The pyramid model is a 3-tier model consisting of:

  1. Image & Branding Strategy – at the top brands offer very high-quality, limited-edition, custom-made products; anything your heart desires so long as you either have the budget to afford it or are a celebrity able to deliver positive, global exposure. Most fashion brands actually lose money at this level, including it as a part of their advertising and marketing budget.
  2. High-End Market – luxury brands offer expensive pre-made, middle-range products you can purchase at a boutique or online.
  3. Low-End Market – at the bottom of this pyramid lies the brand’s most significant source of income: perfumes, wallets, scarves, umbrellas, jewelry, sunglasses, etc.

[EDITOR’S NOTE: Recall in Rory Sutherland’s talk The Next Revolution Will Be Psychological Not Technological that value is created through marketing and research & development, meaning that there are only two departments in business that actually create value and make money: innovation and marketing; everything else is a cost. Further, marketing and innovation are cut from the same cloth. In business you can either find out what people want and then figure out how to make it, or find out something you can make and then find out how to convince people they want it.]

00:07:18 Luxottica, headquartered in Milan, Italy, “is the world’s largest eyewear companies, controlling over 70% of the world’s major eyewear brands” (Source: Wikipedia: Luxottica) with roughly 55 million sunglasses frames being produced each year, according to CEO Massimo Vian. Nearly all of the fashion luxury brand’s bottom-tier (the low end market) are manufactured by Luxottica using the same materials and production machines.

00:09:33 Burberry was founded in 1864 in Basingstoke, England by creating suits for men. In 2010 Burberry had a brand valuation of £1,150,000,000. Today, Burberry has over 497 boutiques around the world.

Burberry distinguished themselves through their unique patterned lining inside their coats. However in the 1980s, in an attempt to boost sales in the low-end third-tier market, Burberry began using their distinct lining on the exterior of sacs, belts, napkins and glasses cases. Unfortunately, this trend got out of control and the consumer demographic who took a hold of this trend happened to be ill-mannered hooligans who were seen on international news rioting and fighting in the streets.

While this image problem was isolated to only England, fashion journalists, bloggers and influencers are able to spread their message globally.

As a result, Burberry lost control of it’s image. To one consumer demographic Burberry means elite status, and for another consumer demographic Burberry is only for ‘Chavs;’ “young lower-class people who display brash and loutish behaviour and wear real or imitation designer clothes.” This, of course, resulted in a decrease in sales in Burberry’s second- and first-tiers as their more wealthier consumers didn’t want to be associated with ‘chavs.’

To regain control of their image, Burberry:

  • Brought in fashion designer Christopher Bailey, who returned Burberry to it’s elite status through fashion shows and re-restricted use of Burberry’s signature lining.
  • Took control of the conversation through customer relationship management (CRM) campaigns on social media.

[EDITOR’S NOTE: For more on Customer Relationship Management, read my interview with Client Services Director Bérénice Goales, or purchase How to Shape Human Behavior 2nd Edition.]

00:13:21 Newspapers and magazines typically operate on a 3rd-party business model, staying in business through paid advertising. But while paid advertising is effective,

consumers have gotten pretty good at ignoring blatant advertising. Therefore public relations and exposure through editorial pieces and native advertising is much more effective, and brands therefore rely on those newspapers and magazines to inform their readers about what’s available and what’s popular. Glamour Magazine’s ‘hitlist,’ for example, features the top 10 looks for the upcoming season.

The combination of a fashion brand’s top-tier branding and image strategy, marketing and advertising campaigns, and the press coverage of these fashion brand’s top-tier branding and image strategy has an undeniabe and extremely powerful effect on the human brain.

[EDITOR’S NOTE: For more about the relationship between brands and the media, watch How to Ru(i)n A Business: When Content Meets Native Advertising with John Oliver.]

00:15:58 Fashion Hire Limited enables consumers lacking the financial resources to rent fashion articles on a short-term basis. £15,000 designer handbags can be rented for as low as £100 per month.

To stay top of mind, fashion brands launch new bags as frequently as every 6 weeks.

[EDITOR’S NOTE: Recall in the documentary The Next Black: The Future of Clothing & The Quest For Climate-Positive Products that fast fashion is the move from catwalk to order as quickly as possible “to capture current fashion trends.”

Fast fashion has come about in part through clothing companies’ abilty to deliver inexpensive clothes made in countries where manufacturing costs are lower and turnaround quicker, and in part because low prices and continually changing options satisfies consumer needs.

Fast fashion has completely changed the face of the industry so much that between 2000 to 2010 human consumption of clothes has increased by a staggering 47%.

This cost of this consumption business model is having a detrimental effect to the environment. If clothing companies keep pushing fast fashion it is because consumers keep demanding it.]

00:17:58 Most of human behavior is driven by unconscious brain processes. The human brain evolved to make us better at surviving and breeding:

  • The limbic system is where humans feel emotions. This is why the acts of eating and having sex are so enjoyable.
  • The neocortex is the intellectual part of our brains and developed on top of our limbic system. While your neocortex allows you to make sense of your decisions and explain them, it doesn’t change the fact that deep down your decisions, reasoning and preferences originate with your emotions.

00:20:03 Priming is “ a process in which the processing of a target stimulus is aided or altered by the presentation of a previously presented stimulus.” When you see things that you have been primed to like, the pleasure centers in your limbic system responsible for reward, craving and addiction activate. Connect one stimulus with another enough times, and your brain unconsciously connects the two.

Humans do things, and for the most part they have no idea why they are doing them. Your neocortex is the puppet, and your limbic system is the puppet master.

This is the part of your brain brands are after.

00:22:11 More mainstream brands with their smaller marketing budgets and/or commodity products must take a different approach.

With commodity products, competiting brands differentiate themselves from others by becoming the posterchild for an emotional movement or expression.

00:23:04 Levi’s Jeans was founded in 1853 in San Francisco, California. The idea came from taking fabric used in the making of tents to create clothing for miners, who required durable clothes. In 2010 Levi’s Jeans had a brand valuation of £581,000,000.

Humans use their belongings to signal their success in life; they also use their belongings to signal their belief systems, assert their authenticity, and tell a story about who they are or want to be.

[EDITOR’S NOTE: To learn more about stories brands tell to integrate themselves into your authenticity, read my interview with Art Director Julien Hérisson.

Conversely, watch the TED Talk Why You Should Be Suspicious Of The Stories You Hear by Tyler Cowen to learn why stories shouldn’t be blindly accepted as truth.]

00:30:57 People will pay extra to purchase jeans which look used. A jeans manufacturing warehouse in India has an entire department dedicated to destroying perfectly new jeans:

  • Whiskering is the process of scraping the jeans so that the fabric threads start to come apart.
  • A grinding machine is used to round out the newly cut edges of pockets and foldes and to produce holes in the pants legs.
  • A spray gun attached to a bleach tank dulls and fades the fresh colors
  • A large dryer containing pumice stones give the pants a nice “beat all to hell” look.
  • An ironing machine is then used to recreate the natural crinkles that occur in pants after years of sitting and squatting.

This entire process seems to have been designed to let the consumer look like s/he has had experiences that in fact s/he has not.

00:33:06 Abercrombie & Fitch was founded in 1892 in Manhattan, NYC as a posh sports outfitter. Today they sell the same products as everybody else in their market, yet they charge 3-4 times as much. And consumes pay. In 2010, Abercrombie & Fitch had a brand valuation of £301,000,000.

Every exclusive club knows that more important than who you let in, is who you don’t let in.

00:40:40

Empowerment, holiness, love, sexiness… Some brands such as Coca-Cola, Adidas, and Nike have successfully infultrated the human mind in ways other brand could only dream of, building what Kalle Lasn, founder of Adbusters can only describe as a sort of ‘nuclear glow’ around their brand by investing countless months and millions of dollars on thinktanks centered on finding the perfect emotion they can exploit to build a marketing campaign around.

For innocent, unsuspecting children, getting your product onto their idols is extremely important for the success of your brand.

Which is why Adbusters is a Canada-based not-for-profit organization “concerned with the erosion of our physical and cultural environments by commercial forces…by challenging people to become participants as opposed to spectators, Adbusters takes aim at corporate disinformation, global injustice and the industries and governments who actively pollute and destroy our physical and mental commons.” Adbusters actively attempt to take these global brands on at their advertising game by propogating spoofed sub-vertisements.

00:43:55 Adidas was founded in 1924 in Herzogenaurach, Germany as military boot-makers for the German army, but has since completely permeated the sports industries. In 2010, Adidas had a brand valuation of £2,062,000,000.

[EDITOR’S NOTE: On a side note, recall in Armin Trost’s lecture Human Resources Management: Local to Global HR Department Models that Adidas and Puma, founded by Adolph Dassler and Rudolf Dassler respectively, are both headquartered in their little home town of Herzogenaurach, Bavaria because, according to a Tuesday, August 13, 2011 article in Time.com, as the “…result of miscommunication. After an allied bomb attack (during WWII), Adolf and his wife took cover in a bomb shelter already occupied by Rudolf and his family. ‘The dirty bastards are back again,’ Adolf said, apparently referring to the planes, but Rudolf thought the comment was an attack against his family.”

Also, recall in documentary The Next Black: The Future of Clothing & The Quest For Climate-Positive Products that Adidas is focusing on merging fashion with technology so humans can better understand their bodies limitations and potential.]

Gary Aspden of Adidas is responsible for identify up-and-coming trendsetters and ensuring they are constantly adorned with Adidas products. Often times these future trendsetters who are approached by mega-brands are shocked that these brands even know who they are. This makes it all that easier to snatch them up at the beginning of their ascent.

While this kind of global unconscious notoriety is highly-coveted, the required aggressive marketing technique can backfire without warning.

00:50:44 Nike was founded in 1964 in Oregan, USA under the name Blue Ribbon Sports, a small time company that designed and sold jogging shoes. In 2010, Nike had a brand valuation of £7,962,000,000.

From the very start Nike relied on cheap labor to keep their costs down and revenue high. In the 1990s, this business decision began earning them bad press as media began highlighting the company’s labor exploitation practices. The general public backlashed because once a brand reaches the level of control on the human brain which rivals religion, one character flaw can result in extreme rejection by the brand’s loyal followers.

The true secret to superbrand status is that they offer something so universal that everyone, at all layers of society, wants it whether they can afford it or not.

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