Luxury, Merc A Class, and Class & Mass Dichotomy

A recent news item in The Economic Times began with words, ‘Mercedes Benz launched its ‘A Class’ luxury hatchback in India…to competitive luxury car market.  The new Merc A Class is a compact car priced between Rs 21.93 lakh and Rs 22.73 lakh. The car is meant to target the affluent youth.  Mercedes Benz expects to sell about 100-150 units of A Class in a month.

Luxury is a complex phenomenon. Luxury brands create and command value disproportionate to good or service (embedded functionality) that they sell. In this regard high price is both an indicator and ingredient of luxury brands. This means luxury and low price are mutually exclusive. The exclusiveness and prestige on the socio-psychological plane is to a great extent is created by a price meant to exclude majority. Therefore exclusion by creating barriers to reach (un-affordability) and access (distribution) are crucial aspects of luxury brand building. Luxury brands thrive on the paradigmatic opposition between ‘class’ and ‘mass’; ‘function’ and ‘aesthetic’ and ‘form and content’. This dichotomy is essential to luxury brand building. Luxury branding is about adding layers meaning in disguise aimed to make an impact without saying anything. The purveyors of luxury therefore refrain from using verbal communication. They talk through a language comprised of symbols and signs.

The paradigmatic opposition between luxury and non-luxury stems from certain codes that set them apart: conspicuous value, uniqueness, hedonistic pleasure and quality. (1) The conspicuousness or visibility value originates from a brand’s ability to signal status wealth associated with a class (Veblen’s conspicuous consumption).  Luxury brands act as class markers.  For instance the one who drives a Rolls Royce belongs to top layer of economic hierarchy. (2) Scarcity and rarity of something endows it with uniqueness accordingly especially commissioned to master makers of jewelry, watches and carpets. This fits with human desire for uniqueness. (3) Luxury brands serve human needs to experience a certain affective states. The pleasure/ joy of indulgence in a luxury brand derived from tradition, heritage and authenticity. The sheer feel and joy of sporting a Cartier necklace or a Tiffany ring is unparalleled. Finally, quality and workmanship is essential building block for luxury brands. It is a sine qua non. Both Mercedes and BMW have lot to their credit in perfecting quality of automobile. BMW for a long period of time positioned their brand as the ‘ultimate driving machine’. This campaign has now been taken to a higher level and BMW now promises its owners an unmatched ‘joy’ / ‘pleasure’ (hedonic benefit) of driving.

The launch of Merc A class at a price point which puts the brand within the reach of a larger set of potential customers makes perfect sense considering the share objectives.  But many non-luxury companies like Hyundai and Toyota have cars which are priced higher than entry level Mercedes. This intersecting point presents an interesting dilemma for a potential car buyer. The purchase motivation beyond a certain price band is governed predominantly by symbolic considerations. The buyer ‘cross over’ so achieved by this strategy is likely certainly likely to expand the brand ownership. But fundamental question that needs to be addressed the psychographic fit of this customer segment with the target segment. 

  • Luxury is a two way street.  Brands develop their sign value from cultural resource located in the form of prestige groups within a society.  The highly selective brand owner group and its lifestyle feed back into the symbolism of luxury brands.  A large part of its symbolism is based on ‘how a brand is used’ (how a car is driven by a new money and old money) – which represents intangible core of the brands. It is this intangible core which holds a lure for luxury buying customers who seek non-material cultural transformation. Mercedes A Class prima facie violates many luxury codes. The lure of market share is genuine but it can potentially be a mirage.

 

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Political Parties, Competition, Positions and Strategies

Conflict is an inescapable aspect of business. The firms compete with each other when they target the same potential customers or employees. Competition is common to people, animals and companies. When a resource cannot be shared organisms compete. And the natural outcome of this is application of mind to outmaneuver or outwit the opponents. Politics comes very close to what transpires in a business situation. And there arises a need to craft a winning strategy in to action. One of the important starting points in strategy formulation process is analysis competition. Just as HUL fights P&G in dandruff shampoo space or Lenovo competes with Dell, Acer and HP in laptop market, political parties like BJP share the competitive landscape with other parties like the Congress, CPM, Samajwadi Party, JDU or AAP.

One of the important starting points in strategy formulation process is gaining a sound understanding of competitive landscape. This involves identification of players and their strategies. Logic demands that conflicts with the powerful must be avoided. And running into a conflict with a dominant player without a smart plan to dodge is an exercise in self destruction. Apple did not engage IBM directly in computers and Micromax did not create a conflict of interest with Nokia. Sun Tzu, a Chinese military strategist and general wrote that war is about planning and positioning. He emphasized the importance of knowledge: “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself,you will succumb in every battle”. But he laid supreme importance to winning without fighting: “The supreme art of war is to subdue the enemy without fighting.”

There are many ways in which competitive landscape can be analyzed and competitors can be identified. One such method is framework looks at players based on their market positions and strategies as: market leader, market challenger, market follower and market nicher. This framework can be useful diagnostic tool in uncovering the competitive dynamics of political landscape in India. It will be a good idea to develop strategies based on this analysis.

Leader: this position goes to the firm that enjoys highest market share, for instance Nokia and Titan are market leaders in mobile phone and wrist watch market. Congress enjoyed the largest vote share close to 28% (182 seats) in the last elections. A good leader does not rest on its laurels; rather it takes to a higher level by attacking itself and reinvention. By leading it leaves behind the follower. A good example is Intel or Gillette. Congress is taking it agenda forward by not letting the discourse on minority (Muslim reservation), oppressed (possible reservation in private sector) and poor (NAREGA) die.

Challenger:  it is a position that goes to a firm that is next to the leader and enjoys strong position but not as strong as the leader. It is this reality causes this firm to challenge the leader. The BJP is the second largest party with a vote share of 19% and seat share of 116. Challenging is all about attacking the weakness or finding weakness in the strength of the leader. Jerry does not attack the weakness of Tom, rather converts his strength into weakness by shifting the place of fight. Nirma attacked HUL from the flank (economy detergent) and Ujala hit Reckitt Benckiser’s strong brand Robin by mounting a ‘by pass attack’ strategy. The current regime led by PM Manmohan Singh shows many chinks in armour of Congress led UPA which include inflation and corruption (governance deficit, trust deficit), which can be potential targets of criticism.

Follower: Like a challenger a follower is also a strong player but lacks dominance. As the name suggests its style of functioning is to join the ranks and not challenge the equilibrium.  Political parties that do not differ much in their ideologies with a dominant party (inclusion, secularism, backward and minority class considerations) come in this category. For instance parties like Samajwadi (UP) Party or JDU or BSP or NCP share political discourse with the Congress. 

Nicher: A niche brand or company is the one which concentrates its efforts on a space which is left out by major players for some reasons.  In the political context there are parties which focus on a small market segment (geographic or identity group). Some of the examples include TDP in Andhra Pradesh or BJD in Odisha or INLD in Haryana or Shiv Sena in Maharastra. Niche firms build their success on the basis of narrow specialization. For instance Rolex operates in super premium niche of watch market and Thorogood makes shoes for fire fighters. Anchor toothpaste occupies niche comprising of vegetarians and Creative Line woolens brand is aimed at women group of customers. Sticking to knitting is the best way forward for niche brands. Ambition to move on to a bigger market may come at the cost of their specialization which will have a corrosive effect on their core. For instance Trinamool’s active participation in Centre’s politics has shifted its centre to the periphery. Naveen Patnaik’s singular focus on Odisha exemplifies true niche strategy.

The battle for the next general elections is all set to begin and traces of minor skirmishes are becoming visible. With the Congress and the BJP pitted against each other in leader and challenger positions, the most obvious and move of least contemplation is to attach each other. But this is unlikely to yield outcomes significantly different from the outcomes of the last round of fight. The strategy does not lie in mounting more and bigger attack on each other, rather creating a paradigmatic change in the way people arrive at their preferences.

Justice, Learning, Marketing and Culture of Civility

One of the top most deliverables for the State is to ensure provision of justice. The concept of injustice is based violation. It happens somebody’s rights are violated or an unjust/ wrong act happens. Many expressions are related to injustice including breach of law, wrongdoing, misconduct, and unrighteousness. The rape in Delhi has lent a loud noise on the issue of injustice to which women in our country are subjected to everyday because of violations of different kinds. Getting the people to behave in the rightful way is a great challenge. This involves preempting the potential transgressions from happening. Ultimately it is about bringing a behavioral change.
In the marketing world, companies succeed by bringing about a behavioral change of their customers. They make people to learn to act in a particular manner. Companies and brands condition their customers to behave in a certain way that their objectives are realized. Take for example when groceries run out we rush to a specific store or we take a detour to locate a brand of our preference. We learn which brand offers the best value and when brands can be switched. Beneath the apparent randomness of our behavior lay a system of learning/thinking that equips us not to commit any kind of behavioral violation or ease hurt would be invited.
If we are oriented not to commit violations in consumption then why are laws violated rampantly? Market is a big learning place/space. Marketers bank upon various learning theories to bring about desired learning in their prospects. These are: classical conditioning, instrumental conditioning, rote learning, vicarious and cognitive learning. One of the important determinants of learning is reinforcement; it increases the likelihood of occurrence of a response. It strengthens the behavior.
Reinforcement is anything that follows a behavior and it may come as a pleasant or unpleasant happening. Consider how brands reinforce their purchase by offering a reward (positive reinforcement) or prevention of something undesirable (negative reinforcement): praise (Gucci), happiness (McDonald’s), confidence (Cinthol), accident saved (Ceat), and prevented body odor (Rexona), avoided theft (Harrison). Another type of reinforcement is punishment (unpleasant consequence after response) which ensures learning that a given behavior is not repeated. We learn not to buy petrol from a filling station (short delivery) or not to go to a shop (poor service).


Where do we learn to avoid law violating conduct or adopt lawful conduct? Unlike marketplace where stimulus-response- reinforcement work in tandem to bring strong learning about what to approach and what to avoid, there exists no workshop for civil conduct. As people begin to spend more time out of home, public spaces can be turned into open schools of learning. The first learning about the acceptance of violation begins with the road usage which later is generalized as an overall attitude toward legal system. If violations on the roads, especially the minor one, are made non-negotiable (reinforce with punishment) it will go a long way in building a culture of righteous conduct.

Victims on road, ‘It’s not my job’, ‘Going beyond the call of duty’, and Emotional buy-in

On Saturday (Jan 5, 2013) various news papers reported the callousness with which victims of Delhi rape were treated. As they lay injured on road exposed to the chill of December, badly brutalized, mentally wrecked, police personnel squabbled on jurisdiction instead of rushing to help them.

There are hundreds of fabled instances in service marketing that demonstrate how good organizations train people to  go beyond the call of duty to satisfy customers. These include how a FedEx employee climbed a barbed wire fence risking his own life to deliver a package containing blood to a patient and a UPS manager hired an entire plane and diverted two others to make a delivery. Disney cast members are trained to anticipate customer needs and respond to them immediately. A nine year old burn patient needed a cream. Since it was not available  nearby, a call was made to the supplier company. The customer service representative made it available knowing that it involved working on a holiday and breaking the rule of not entertaining an order of less than fifty cases.

Services involve intersection between customer (citizen) and provider (police).  These points of intersections tend to be human unlike a computerized robot welding a part on an assembly line. Automated manufacturing systems rely upon SOPs to preempt deviations (quality failures).  Rules and SOPs have made a way into service systems in a big way. For instance McDonald’s service  consists of a number of activity based SOPs like order taking and assembling a burger. SOPs are developed to achieve standardization but an over reliance upon them can have a dehumanizing effect. Consider how disgusting it is to deal with frontline people like human robots such as air- stewards and call center employees. The quest for efficiency pulls organizations into standardization mode but it may not be the most desirable way of dealing with situations that involve human interactions.

Service encounters involve an interplay between customer expectations and delivery by service personnel. Therefore the first starting point for developing quality systems  (SOPs) is to fully and accurately understand customer expectations. This involves a complex exercise into knowing and delivering. But in the given case (brutalized bleeding victims on the road) does it really need rocket science to discover and deliver what is expected? It is likely to make your heart pound and the impulse to help can’t be controlled. But the squabble over jurisdiction signifies how emotions are mediated by mind- when you need to feel you think. Some emotions are universal like happiness, sorrow, surprise, anger and disgust. We are surprised at the mechanical response of police and why they did not feel anger and sadness to go beyond the call of their duty to help the victim.

Exceptional situations call for extraordinary response.  Mostly crime creates exceptional situation for the victim but  for police or doctors it may just be an ordinary situation (‘we see this every day’) which gives rise to the concept of the job (the work you have to perform). This gives rise to important questions: does the repetition of dealing with crime (victims) make people insensitive (used to)? How does a rape or murder degenerate into a statistic and hence our attitude to dealing with the victim? How do emotions get mediated by reason?

Policing is a serious business that involves lives of people. Many service organizations look for ‘emotional buy in’ in selecting people for the job involving customers beyond qualifications (indicators of IQ). That is, how emotionally satisfying a job is for a person in term of its ‘meaningfulness’.  When a person opts for a job for ‘existence’ reasons (need based, salary, power, and progression) the work becomes an ‘imposition’ from the organization. The performance in such situations is unlikely to transcend the requirement barrier to avoid penalty. On the other hand if job offers meaning beyond the ‘existence’ considerations (I want to help people in need/ contribution beyond self) the performance is likely to transcend the minimum performance standards. This explains why lowly activities like sweeping floors or cleaning shoes become highly valuable and meaningful (higher order contribution) in a Gurudwara or a temple.

In certain jobs it is very important that ‘right’ kind of people are attracted. Policing is one of them. Policing is transformational, it provides opportunity to people to ‘make a difference’ in society. This discourse on ‘higher order’ contribution and ‘meaningfulness’ is unlikely to ring bell with all therefore it is important to revisit our recruitment system and ensure that people with right kind of mental makeup join the service.

Honey Singh, Lyrics, Images, Rape, Identity and YOLO generation

Who am I? What do I stand for? Where am I going?

These questions are so simple that they don’t get any attention. Simple is obvious and obvious is ignored. The YOLO generation – you only live once, especially in their twenties do not have comfort of latching on to cultural categorizations to construct their self and the new is not yet fully emerged. The windmills of liberalization and globalization have rendered the old structures obsolete. The new generation is caught in the situation where the old is not completely gone and the new has not yet fully emerged. The khap diktats, civil society outburst, consumerist culture, rise of the nonsensical movies and lyrics, are all manifestation of this chasm and friction. With the blurring of boundaries the new generation is left on its own to seek answers to the above questions.

The people of the new nomadic tribe are robbed of identity and their privileges that stemmed from fixed social structures. Take a macro look in a metro station or a mall, the humanity stands homogenized but take a closer look and everyone seems to be on a perpetual identity construction voyage. The deeply entrenched power structures are shaken and there is emergence of the new ones. Market is now supplier of symbolic material and consumption is no longer about satisfaction but identity construction.  A Scorpio and an Audi radically differ from each other in their supply of symbolic meaning to one at the steering wheel. Both can’t latch on the old identity structures based on who they are, therefore brand is commissioned for both identity creation and signification.

When the system fails to provide the notions of identity, people are free to make a choice. It is now upon the will of an individual to construct the person he or she wants to be. Consumption in this context gets beyond the realm of utility to acquire symbolism. The choice although free, operates within the overall constraint imposed by a set of possible selves made available in a socio-cultural context. It is not that people choose from a set of infinite selves. Media supplies a limited set of images, symbols and models differing in narrative. Popular media is one big supplier of images and models which are picked by people in arriving at their identity definitions. Primafacie people are said to be free to make a choice but it operates with a constraint imposed by total available set. Culture industries provide repertoire of symbolic products out of which free will is exerted. Bacardi ad says ‘be what you wanna be…’ but images of people portrayed- supply of symbols- narrowly push to you to be ‘the kind of person you should be’.

Each aspect of the environment is laden with symbolism. Popular media as an important part of culture producing industry is a dominant supplier of identity construction resource. The expression of this process manifests in choices that people make – what we buy and how we behave. This influence is so subtle and sub conscious that it escapes conscious scrutiny. The codes of behavior are implicitly established.  Bacardi has very successfully managed to create a new symbolism around rum and establish acceptance of white rum in the youth market. Relationship can only get sanctified if you wear a platinum band, so are you a part of group called ‘platinum people’? Love has got a new expression.

When the identity is fluid and undefined and when we look out to symbols in identity construction process is a song by Honey Singh a potential threat? If diamonds which have very little practical utility can be ‘women’s best friend’ and chocolate can say it ‘better than words’, lyrics can certainly creep into our consciousness taking a sub-conscious route. The blanks of mind are imprinted with ideas supplied by the media to a great extent. The expression of the concept contained in the lyrics would be dangerous, even if it happens in one exceptional case.

Citizen movement, business and democracy

Systems are designed to deliver. Business organizations are meant to ‘create customer’ by providing satisfying value. ‘Consumption is the sole end and purpose of all production’ (Adam Smith). Consumer formed the centre of neo classical economics. Marshall proposed that goods that provide consumer with greatest satisfaction, pleasure or utility will be bought. But are consumers actually provided with goods which do greatest good for them or for the producers? The market mechanism eventually creates a power structure tilted in favor of the producers and consumers generally are reduced to receiving end.

Consumer movement took roots in the US in early twenties with the publication of a number of books which brought the fraudulent and unfair business practices. In response to subversion of consumer interest the fragmented atomized structure of consumer system began to organize into a cohesive countervailing force. An organized chorus was raised for the State to enact legislation designed to protect consumer interest against unscrupulous business practices. The response of business to this development was predictable. Consumer movement was perceived to be a direct threat.

Democratic system produces two classes by a process of free electoral selection. The exercise of franchise produces an asymmetric power distribution. The very idea of ‘for the people, by the people and of the people’ gets subverted when people here implies the people elected not the electorate. The organization of people either as consumers or citizens is symptomatic of malaise in the system.
Faced with disillusionment, initially it is an attempt in communication which can escalate into seizure. The business took organizing consumers with a pinch of salt, like a threat to their interest. Similar seems to be the response of people in power to recent outpouring of people on Indian streets.

 

There cannot be a better gift than an idea for improvement. Many companies consider consumer complaints as free feedback about what plagues the system. The complainers are often rewarded and encouraged. British Airways under stewardship of Sir Marshall systematically promoted complaining behavior in order to discover areas of improvement. Systems exist for the so called ‘subjects’. The recent public outcries about laws against sexual crimes and corruption are two important ‘ingredients or features’ that people want from ‘product’ of governance. These two presented a golden brand revitalization opportunity to politicians and political parties but they failed miserably.

Like marketers and their products must reflect the needs and wants of their consumers, the government must produce outcomes that are in sync with the sentiment of its people.

Levi Strauss, Growth, Brands and Architecture

Every marketer must walk through market to reach profit goal. Revenue is essential for profit, the surplus left after deducting costs. The revenue goals and profit targets necessitate participation in market or markets. The growth imperative manifests in targets related to market share, sale and profits. Firms pursue their growth differently, a choice involving considerations of horizontal and vertical participation in the market. Branding and brands are important in this context.
Levi Strauss & Co has come a long way since 1873 which invented riveted tough denim wear (‘waist overalls’). The leather patch with an image of two horses pulling the jeans apart was used to demonstrate the pant’s strength. Within the rough jeans wear the company went on to increase its market participation by launching products meant for different segments like ‘Koveralls’ (one piece play wear for children), 501 (made exclusively from 10 oz. red selvage denim), jeans for the ladies by the name of Lady Levi’s, Lighter Blue line (sportswear), Preshrunk and STA-PREST (wrinkle free), wear in corduroy and polyester (to keep up with style changes). This way the brand went on to expand its reach to many jeans consumer segments. In 1996 LVC was introduced based on the reproductions of clothing from the Levi’s Archives. Then came super low waist jeans for women.


In early eighties the Company in an attempt to expand its footprint in upscale dressier clothing market created Levi’s Tailored Classics (LTC) line. The purpose was to tap ready to wear formal wear segment. But the brand failed to appeal to the sense and sensibilities of the target customers. The obvious question was what credibility a hard core denim wear brand has got to offer a classic range of suits which can be picked off the racks. Second if these were tailored then how these are available pre-fabricated off the rack? Levi name did not make sense to this segment and the line was discontinued.


With the progression of time, the concept of dress further fragmented from the binary classes of formal and informal wear. The dress besides operating at the functional level also functions at the symbolic level. A lot about a wearer is expressed by what he or she wears in terms of class, affiliation, personality, attitude and life style. The highly formal dipped in the starch formal clothing was pushed aside by a new generation of entrepreneurs and professionals (25-45 years baby boomers) who were free spirited white collar workers and wanted clothing to reflect their orientation (relaxed not tensed). Dockers brand was introduced in 1986 making company’s foray into what is called Khaki (non denim) market. This sub brand was created to take a plunge into emergent business casual clothing which young people wanted. It was a segment in sandwiched in between highly formal and highly casual jeans wear segments. This brand saw innovation such as StainDefender, Never Iron and Thermal Adapt. The brand was later extended into sunglasses, bed linens, & bath categories.
The Company’s portfolio was further expanded in 2003 with the launch of ‘Signature by Levi’ brand. The idea was to reach out to men, women and children with a product denim and non denim casual range of clothing. In terms of price this was an attempt to capture value conscious customer who aspired to own a Levi. The brand ‘Signature’ sought to appropriate style, quality and fashion and affordability and the words ‘by Levi Strauss’ directly supported it by making an explicit endorsement. Signature promised ‘Superior Fit, Comfort and Style’ to its customers. This move of the certainly allows the company to expand its presence by going out of its top end niche (minimum price 2200 rupees) which contributes to top end metrics like sales and share. But this strategy has its own risks. This kind of reaching out to the lower price points (between Rs. 799 and Rs. 1,499) can harm the mother brand by diluting its equity (exclusivity and class connotations). Titan reached out to economy segment by ‘Sonata’ brand with endorsement coming from ‘Tata’.
Later in 2006, the Company made a course correction by changing the Signature brand into ‘dENiZEN’ this was probably done to protect the Levi brand from potential image dilution harm. The dENiZEN brand was also a response driven by a strategy to fight local brands like Killer and Flying Machine. This brand was slightly differently positioned as a younger brand. In the visual communication ‘dENiZEN’ name stands dominantly out signifying something independent and different which supported by words ‘from Levi’s’. Unlike in its previous avatar as which used the expression either ‘Levi Strauss Signature’ or ‘Signature by Levi Strauss’ the identity of two brands were merged which signified a ‘different kind of Levi’ . But dENiZEN’s branding seeks to reconcile two opposing ends of belongingness and un-belongingness. When one sees the signage of dENiZEN, it signifies there is somebody new and different (denim and non-denim, trendier, young, economy and gender neutral) on the block but it comes from the house of Levis (credibility and trust).
In a new brand consolidation exercise, Levi Strauss & Co is in the process of phasing out its dENiZEN brand from markets other than North America. The Company will instead focus on its core Levi’s brand.