Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.

Tuesday, February 10, 2009

Brand as a Business Strategy

Interbrand Design forum, an American retail consultancy with a world-wide reputation.
has published "The Most Valuable U.S. Retail Brands 2009" in January, ranking America's best 50 brands, according to their power of generating profits in the future.

The brand of a company is no longer only the logo that distinguishes one brand from another, but according to Lee Carpenter (CEO & Chairman of Interbrand), brands incorporate a company's strategy as a whole; It is "the sum of all his or her experiences doing business with that store".
In essence, the brand is revealed in any business decision: Location of the store, layout, design of stores and products, advertising, customer service, changes in collections, even smell and choice of employees. Considering the great influence of a consistent brand strategy, how can this value be measured?
Using financial forecasting, future earnings are discounted to a present value, based on the role of a brand (Reason why people buy it) and the brand strength (risk, related to future earnings, due to market position, coverage and stability). The evaluation of companies, based on their brands might seem to lack in-dept understanding of other factors, such as management, production, supply chain or marketing, but assuming that all these factors are aligned with the creation of the brand, it "provides a way to orchestrate everything about the business... retail is branding at its best and most complex"
In order ro better understand the idea behind, one must have a look at the ranking itself:

1. Wal Mart
2. Best Buy
3. The Home Depot
11. ebay
16. Victoria's Secret
20. Tiffany & Co. 
21. Polo Ralph Lauren
27. Abercrombie & Fitch
29. American Eagle

Abercrombie & Fitch can be taken as a good example to illustrate the consistency of such business model.
Founded in 1892, Abercrombie & Fitch is a Ohio-based casual wear-retailer, selling women, men's and children's fashion in its 363 wholly-owned stores across Canada, the U.S. and the UK. Abercrombie is listed on the NYSE and descibes itself as a retailer of "casual luxury". Represented by the logo of a grey moose, Abercrombie sells jeans, sweaters, shirts, and polos of high quality and classic colours with a stylish, yet relaxed attitude, appealing to young customers (18-30), at premium prices.
Abercrombie defines its brand not solely through the clothes, but even more trough the experiences their customers make in the store, as well as the attitude that comes with it. The unique and equal design of all stores does not only differentiate them from other stores, but clearly invites only those customers that feel comfortable in those rather dom stores with loud disco music and strong smell of Abercrombie & Fitch's fragrance "Fierce".
All stores, being white on the outside with black, wooden louvers and a classic, preppy interior remind of the clothes as far as style, as well as rcognition of the brand is concerned. The staff, called "models" is not trained to help or advise, but is in charge of creating a club-like, fun atmosphere, that is casual, yet making one feel special (=cool), compared to any other clothing store. 
Abercrombie intentionally does that to alienate those customers that do not like the atmosphere, in order to make sure that only those that appreciate the experience (brand message) will buy and wear their clothes. The attitude, revealed in stores, reinforces the clothes' image and vice versa.
Having talked to a senior employee of Abercrombie, I was suprised to hear, that the idea of basing the business strategy upon the brand, is exactly what Abercrombie is implementing from its headquarter in Ohio, through a very strict and centralized business network. The brand stands for preppy, casual clothes that are to be exclusive to some degree. Accordingly the stores illustrate that attitude of style and exclusivity, aiming only at a certain target group that will buy Abercrombie & Fitch.
Finally the overall concept makes the brand well recognized, but more importantly, very strong.

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