While many luxury retailers are bracing themselves for something of a shakeout in the months ahead, Saks Fifth Avenue is exploring a decidedly more downscale territory, and says it will open a new prototype for its Off 5th stores in Orlando, Fla. Currently, there are 48 Off 5th stores in 23 states. The new version, scheduled to open in April, is bigger--26,400 square feet, compared to the 21,800 square-foot store now in the same mall--and more modern. The company describes it as "luxury in a loft environment" and says it creates "an easy shopping environment. The store will be bright and uncluttered, with no hard aisles. Over time, we believe there is meaningful new store growth opportunity for Off 5th, and we look forward to expanding this new format into other markets in the future." But bulking up its "value-priced" brand during an economic downturn--as logical as it seems--carries significant risk, says Milton F. Pedraza, CEO of The Luxury Institute. "For wealthy consumers, the existence of discount outlets definitely erodes the luxury brand. Wealthy shoppers are as knowledgeable as every other shopper, and it makes them say: 'Wait, why am I paying a premium for this brand, when it's so ubiquitous?'" Saks' announcement comes at a time when forecasts for luxury spending (okay, forecasts for all consumer spending) range from glum to gloomy. And while many luxury retailers have managed to post gains in same-store sales in December (Saks' sales rose 0.8 %), Pedraza says it was often due to deep discounts, often started early in the season. "So while stores like Burberry reported that sales were up, much of that was on heavily discounted items." Unity Marketing's Luxury Consumption Index has declined sharply in the last two quarters, falling to its lowest level since 2003. "The most vital question on luxury marketers' minds going into 2008 is how to get the luxury consumers, especially the 25 million mass affluent consumers (incomes less than $150,000) who have put a tight rein on their luxury indulgences, to begin buying again," writes Pam Danziger, president of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses, in her most recent report. That demographic schism is likely to get wider, depending how long a downturn lasts. "The truly rich are truly different," says Pedraza. "They don't need to cut back during down times the way that the merely affluent and borderline rich do," he says. "But these new and often less wealthy customers can leave as quickly as they arrived when the macroeconomic environment turns less hospitable." In a separate announcement, Saks also says it's readying the spring version of its "Want It!" campaign, set to launch March 13. Like previous efforts, the campaign will highlight a handful of key fashion trends, illustrated by graphic artist Piet Paris, combining the items with New York landmarks like the Chrysler Building, the Guggenheim, and the New York Stock Exchange. The illustrations will appear in ads, catalogs, online, on shopping bags and throughout the stores. For women, Saks has decided this season's must-haves are bangles, a chic shoulder bag, florals, a luminous face, a maxi dress, slides, a tunic and vibrant color. For men, the Want It! list includes contrasting collar and cuffs, a hoodie and light grey suits.
The Super Bowl may be suffused with testosterone, but that isn't stopping Unilever from using the game to launch a new global campaign for women's hair-care product Sunsilk. The company's hair-care division is buying time--spots are hovering around $2.5 million for half a minute--to pitch the brand with a new "Life Can't Wait" platform. The effort includes ads featuring Marilyn Monroe and--among the living--Madonna and Shakira. The ad shows watershed moments from the entertainers' lives. The Sunsilk line, which had been established in global markets, was introduced to the U.S. market in 2006 with a $100 million campaign, rivaling the company's campaign for Dove in size. The product targets 18- to-25-year-old consumers, per Chicago-based consultancy Mintel, which said in a 2006 report on the hair-care segment that Sunsilk's U.S. intro followed years of success in other markets. Mintel says the brand is the No. 1 seller in Asia, Latin America and the Middle East. The firm's report on the segment said that success in Latin America prior to its 2006 U.S. introduction could be a benefit for drawing U.S. Hispanic consumers who may already be familiar with this product. The effort, via Paris-based agency DeGrippes Gobe, contends that women think it's what's on top that matters. The company cites a survey of 3,000 consumers in six countries revealing "the universal truth" that 20-something women find having "good" hair can be a trigger for seizing opportunities. Unilever says that after the Super Bowl debut, the ads will run in such countries as India, Brazil, Thailand and Mexico. In the U.S., an outdoor campaign following the Super Bowl will support a TV and interactive push. Marquee billboards in New York, Los Angeles and Chicago will parallel home page takeovers on portals and sites like AOL, TMZ.com and MySpace. A consumer-content and social networking element asks women to upload their own "Life Can't Wait" moments at lifecantwait.com. The company will choose a winner from each country in which the company is pitching Sunsilk. Winners will become "international Sunsilk icons."
Increasingly early integration of the commercial/marketing strategy and R&D is a major key to global launch success for the big pharmaceutical companies, according to the latest report on industry launch practices from Chapel Hill, N.C.-based pharma research firm Best Practices LLC. Today, half of the dozen major drugmakers researched by Best Practices (spanning 12 successful product launches) report commencing their marketing research and planning either during Phase I of a drug's development (testing on a small sample of people) or early in Phase II (a larger human trial), reports Cameron Tew, senior manager of research and publishing for Best Practices. In contrast, even a few years ago, nearly all pharma companies were waiting until the end of Phase II or the start of Phase III of the drug R&D before addressing the commercial/marketing side. "The most successful companies now achieve 'share of voice' quickly, in a highly competitive marketplace, by creating cross-functional launch teams or committees," says Tew. "The team develops a launch strategy that integrates the scientific mission--creating a new, novel, beneficial and safe drug--with the commercial side of positioning the drug not only to the public, but to the FDA." Key aspects of "early-stage commercialism" include marketing research, forecasting, and targeting and reaching out to all important segments of thought leaders, including those willing to speak at the drugmaker's conferences and all doctors who are potential prescribers of the drug. Early strategy integration also enables a company to develop and plan implementation of a life cycle for the drug--a process that should begin three to five years prior to launch. For example, to leverage the full potential of a drug, pharma companies need to anticipate and plan for add-ons, such as extended relief versions of the drug. "The earlier a company starts to think about all of the options for a drug, the more likely it is that the drug will be sustainable," Tew stresses. The report, "Best Practices in Global Pharmaceutical Launches," profiles the launch practices, including marketing organization and investment patterns, of Merck, Eli Lilly, Wyeth, GlaxoSmithKline, Novartis, Pfizer, Johnson & Johnson, Bristol-Myers Squibb, Sanofi-Aventis, AstraZeneca, Roche and Schering-Plough. It also draws on Best Practices' proprietary databases and other private and public sources.
There have been a bevy of low-cost PCs hitting the market. Sears.com began selling $199 PCs pre-loaded with the Linux-based Freespire operating system on Thursday. The Everex Cloudbook, which uses a 1.2-GHz Via C7 processor, is priced at $399 and scheduled to hit Wal-Mart store shelves next week. But those in the biz of developing open-source software and products say marketing efforts could help to inform consumers that there's a low-cost alternative to Microsoft Windows. "One day we'd like to see ads for four Linux desktops and three Linux laptops when you walk into at a Best Buy store," says Larry Kettler, president/CEO of Linspire, which designs and supports Linux-based operating systems for PCs selling at Wal-Mart, Sears.com and other retailers. "That's our goal." Kettler says Linspire has run promotions with computer stores MicroCenter and Fry's Electronics in the past, but there are no plans to market the $199 Mirus PC now selling through Sears.com. Pre-installed with a Linspire OS version called Freespire 2.0, the Mirus PC comes with an Intel Celeron 420 1.6-GHz processor, 1-GB memory, 80-GB hard drive, as well as multimedia support for MP3, Windows Media, Real Networks, Java, Flash, ATI, nVidia, and WiFi. Interestingly, there are "severe obstacles" in marketing Linux products, says Robin Rowe, an expert in Linux and open-source technologies. "You can't carve up a marketing budget out of free; what percentage do you want?" he says, referring to the fact most open-source applications are free to users. "Another issue is getting approval to use the trademark from Linus Torvalds," which first developed the open-source software on which programmers around the world build. Marketers know what it takes to sell PCs, says Matthew Wilkins, principal analyst at research firm iSuppli, pointing to efforts by Microsoft and Intel. "It takes a lot of investment on behalf of the companies looking to sell the boxes," Wilkins says. "In this area the Linux movement sits at a disadvantage. There isn't one big company behind the open-source movement prepared to put millions into marketing and educating consumers. The typical consumer who buys PCs pre-installed with Linux tends to have more knowledge about computers." Businesses also have an appetite for Linux-based machines. Novel--along with Sun Microsystems, which announced this week the purchase of the Swedish software company MySQL for $1 billion--have major commitments to support open-source platforms, but rather than target consumers, they aim at enterprise customers with applications and servers. Sun says MySQL's product line will further support the open-source Web application platform known as LAMP, the acronym for the Linux OS, Apache, Web server, MySQL database and PHP/Perl programming languages. Sun will pay $800 million in cash and $200 million in options. The deal is expected to close by June 30.
The abbreviation for deoxyribonucleic acid has become a cliché for things marketers consider inalienable about their brands. Well, there's another definition to add: a "driver's desires, needs and attribute priorities." That's San Diego-based Strategic Vision's definition of what it calls a customer's "vehicle DNA." The consultancy has a new study that mines both sales data and ownership impressions to develop differences in likes, dislikes and perceptions among new-car buyers who identify themselves as African-American, Hispanic or Asian-American. Per the consultancy, while African-Americans are much more likely to advocate vehicles that express their individuality and success to family and friends, Latinos have a greater desire to experience exhilarating driving and performance. Asian-Americans demand a balanced, complete vehicle performance and style that matches their lives. Strategic Vision says African-Americans are attracted to vehicles that are "Powerful and Classy" (and names Chrysler's 300 as an example). Hispanic buyers look for "Aggressive and Powerful, but Confident and Protective" vehicles (Strategic Vision says Kia Sedona falls into that category). Asian buyers, looking for "the complete package, choose vehicles that are Pleasant yet Powerful, Easy Going yet Protective--all with modern design and technology ( e.g., Acura MDX)." The report's qualitative terms (describing what owners like in their vehicles) derive from SV's vehicle-experience study, in which consumers choose characteristics and imagery around their vehicles. Alex Edwards, who runs Strategic Vision's automotive practice, says the survey comprises 50 or so choices, like 'aggressive,' or 'care free', from which respondents must choose six. "We had a total 200,000 survey respondents, and of that, the majority identified themselves as Caucasian, but there were 10,000 who identify themselves as African-American or Hispanic or Asian-American," he says. Edwards says that 35% of those who said they were African-American said that they would look for powerful vehicles, "which is 45% higher than what the macro community was doing. So there was a significant increase among African-American new-car buyers looking for powerful vehicles." Edwards points out that self-identified African-Americans found Chrysler's 300C sedan to be one of the strongest vehicles in perceived quality. "One thing that's very important to get across is that for the most part, African-Americans, Caucasians and Asian-Americans look similar in our desires and priorities and what we want out of vehicles. "But there are some areas that are a little more important to various ethnicities ... African-Americans who purchase new vehicles actually have a stronger self-perception than any other group: they feel more secure, more proud of their accomplishment than any other ethnicity who purchases new vehicles, except in the attribute of trusting others. "One area they are really high in is a desire for individuality: they see themselves as highly individual, and like to be able to express themselves as individuals. When it comes to buying new vehicles they look for things that set them apart from others." The consultancy says that top brands among African-Americans are Lexus, Mercedes, Infiniti--in the luxury segment--and Honda, Ford and Chevrolet among standard brands. Hispanic Americans' top brands are Mercedes, BMW and Acura for luxury and Scion, Pontiac and Saturn for standard mass-market brands. Asian-Americans indexed to Mercedes, Audi and BMW on the lux side and Hyundai, Honda and Ford in mass-market auto brands. The firm says that the most-purchased brands by African-Americans are Nissan, Toyota, Chevrolet, Ford Honda, Dodge, Chrysler, Mercedes, Hyundai and Kia, in that order. For Hispanic consumers: Toyota, Chevrolet, Ford, Nissan, Honda, Dodge, Jeep, Hyundai VW and BMW. And for Asian-Americans: Toyota, Honda, Nissan, BMW, Mercedes, Lexus, Acura, Ford, Hyundai and Mazda, in that order. "Mercedes is doing better with Hispanic buyers than with Asian buyers," says Edwards, "but still it's the number one among both groups. One of our positions is that for new vehicle buyers, in general, their desires are very similar regardless of ethnic affiliation. But there are different priorities one should address. If, say, you are going into a highly Hispanic area, you shouldn't have a different message, but a similar message with varied accent points." He says automakers should pay attention--not just because the population of the U.S. is becoming more diverse--but also because urban areas are where cultural trends originate. "African-Americans, Asian-Americans, Latino Americans--they direct future trends and styles."