`Traditional marketing is not enough`Q&A: J Bernd Schmitt

`Traditional marketing is not enough`

Q&A: J Bernd Schmitt

Pradipta Mukherjee / Kolkata August 19, 2008, 5:11 IST

Brands are built around customer experiences, says Bernd Schmitt, the chief executive officer of The EX Group, a consulting firm focused on innovation and customer experience. He believes that Indian companies can tap the growth momentum simply by innovating and reinventing themselves. Entrepreneurs can succeed only if they invest in charting out differentiation strategies, in terms of not just lower price points but also customer experiences. Schmitt, one of the world’s recognised observers of brand dynamics, was in India recently to address Confederation of Indian Industry’s brand conclave when Pradipta Mukherjee caught up with him. Edited excerpts:

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How can Indian companies grow and evolve in the face of competition and inflation?
Companies should constantly innovate to create better customer experiences. However, innovations should be for better consumer experiences, and not just in terms of product features.

Take, for instance, the iPod. The product is built around great music but look how it has been positioned as a complete lifestyle product, taking the perception beyond just the storage capacity and a long list of features.

So if brands are built around customer experiences, they are bound to enjoy a higher brand recall, which would automatically convert into higher sales generation.

The most crucial element of any brand is clearly the customer experience. For instance, the Taj Hotel can put all sorts of advertising campaign about itself, but ultimately what the guest experiences is the true point for the brand.

Again, the success of Apple on a global scale has to do with what the customers wanted. The iPod is not just another MP3 player, but a lifestyle brand, but instead of presenting a long list of functional features and benefits, Apple ads persuade with 60s’ music themes. Apple stores stand out through their design and have become hangout places for young customers. So the traditional way of marketing, which is looking just at features, is really not enough and is over.

Again, in the airlines industry, Indian airlines like Jet Airways or Kingfisher are probably benchmarked against Singapore Airlines, which is known for its customer experience, in terms of the seating arrangements and the overall environment of the aircraft.

In luxury cars, Audi is catching up with the more well-known Mercedes Benz, which has a more traditional image. India should really focus on building a global brand and in order to reach that objective. Outside-industry-benchmarking and out-of-the-box-thinking are of immense importance.

How do brands manage the same recall after acquisitions when the ownership changes?
Companies should have clear focus on what they want to do with the brands after acquisitions. Distinct strategies can either enhance the brand acquired or completely destroy it.

For instance, there was this US-based skincare and cosmetics brand, Bliss. It was first acquired by LVMH. Soon after nobody knew what happened to Bliss as LVMH did not know what to do with it. After about three years, Bliss was bought by W Hotels, which introduced this innovative chain, Bliss SPA.

Traditionally, people would think a fashion brand can connect better with a skincare brand than a hotel chain would. But here we have an example of how LVMH, which is an established fashion brand, failed to create synergies with a skincare brand. On the other hand, a hotel chain, which we do not directly associate with skincare, used Bliss to associate with wellness and beauty, just what the brand stood for in the first place, enhancing its image further.

So, acquisitions can be successful only if the company buying a brand has very clear vision on what it plans to do with the brands.

A lot of brands go in for image makeovers over time? How can a company successfully contemplate image makeovers?
Whenever a company or brand goes for an image makeover, it is always to contemporise itself and become more relevant to the changing trends.

For instance, Burberry used to sell traditional English wear. With changing times, it launched an extensive range of fashion wear and other outfits that modern-day customers wanted. It still sells what it was selling earlier, so it retained its core image, but introduced newer lines to compliment the range.

So all brands should retain what is good about it and do away with the non-essentials when contemplating an image makeover. Implementation of image makeover should reflect in retail outlets and even on company websites. Also, image makeovers could help brands re-chart a new customer. The dominant middle class in India has certain aspirations and brands, even during makeovers, should keep that in mind.

How can start-ups stand out in the face of competition?
The key to success lies in charting out differentiation strategies, not just in terms of lower price points but also always in terms of customer experiences.

Take, for instance, the iPhone. It is something any entrepreneur could have done but it just needed a little bit of out-of-the-box thinking.

Another example is that of Google. By the time Google entered the market in the 1990s, there were already Yahoo, Hotmail and numerous other similar online services. But Google stood out just by focusing on the whole customer experience, in terms of simplicity, speed of execution, understandable solutions to all requirements, and relevance. This led Google to become the market leader and a multi billion dollar business in a matter of 10 years.

Similarly, start-ups should always have a differentiation strategy in place.

For instance, there is this Abercrombie & Fitch, a US-based clothing store. It came up at a time when there were several other clothing stores in the market. How it differentiated itself is by adding the club concept to its store. Customers cannot see from outside the products available in the store. The store from the outside looks like a night club and Abercrombie & Fitch even has these bouncers standing outside. Inside, the store is completely dark with blasting music, just like a club. A customer has to shuffle through the dark while purchasing. A customer even has to shout while talking to the sales people, but then everyone shouts inside a club.

How can established brands grow in the face of competition?
Simply by innovating and reinventing. Customers should feel that there is always something happening with the brand. Brands should be willing to take risks. For instance, all employees in Google are encouraged to spend 20 per cent of their time on thinking out of the box.

But companies need to encourage employees to take risks. Projects may fail sometimes. Companies need to analyse why they failed instead of just pulling up the employees.

Innovation almost always spawns instant replication by competitors. How can companies ensure against this?
Nobody can ensure that. Everything can be replicated. But the focus should always be on customer experience. All other companies can replicate but it depends on how well the original idea was implemented, the thought process that went into it, which copy-cats may never be able to replicate.

Again, what worked once may not work always. For instance, the differentiation strategy that Abercrombie & Fitch adopted may not work in other countries and even in other cities. So replication is not always successful.

The death of Alexander Solzhenitsyn gives Russia a chance to reflect on authoritarianism

An icon of his age

Aug 4th 2008
The death of Alexander Solzhenitsyn gives Russia a chance to reflect on authoritarianism

AP

PROPHETS are without honour in their own country—at least until they die. For most of his adult life in the Soviet Union, Alexander Solzhenitsyn was persecuted. In exile in the West from 1974, his gloomy philippics and increasingly turgid prose aroused more bafflement than appreciation. After he returned to Russia in 1994, he was welcomed but then ignored.

His death is a chance to make amends, although whether a Russia that is increasingly nostalgic for its totalitarian past will choose to take it is another matter. In an online poll (admittedly wildly unscientific) taken in recent weeks, the totalitarian leader Joseph Stalin is a front-runner for the title of greatest Russian. It was criticism of Stalin, expressed privately in a letter to a friend, that landed Mr Solzhenitsyn with an eight-year sentence in the camps. It counted for little that he was a twice-decorated artillery officer, on the front-line of the Red Army’s triumph over Nazi Germany.

Having experienced the crimes of Stalinism at first hand, he exposed them in both fiction and factual form. “One Day in the Life of Ivan Denisovich”, published in 1962, gave Soviet citizens their first opportunity to read about the brutality, squalor, humiliation and fear of daily life in a prison camp, all told in the matter-of-fact style of a Russian folk tale. “The Gulag Archipelago” described the system, its tortures, rules and subculture, in relentless, gruesome, encyclopedic form. Modern scholars, able to research the subject with a freedom that Mr Solzhenitsyn could never have dreamed of, say it is astonishingly accurate.

His other books are more patchy. Although he detested the ravages of communist rule on Russian language and culture, the clunky techniques of Socialist Realism are all too visible in works such as “The Cancer Ward”. His later works are mostly panoramic histories of Russia in the past century that most readers found impenetrable. His latest work, a lengthy series of reflections on Jewish-Russian relations, prompted charges of anti-semitism that he furiously denied.

Mr Solzhenitsyn was a loyal communist in his youth. As a young man, he dreamed of writing a history of the Russian revolution, oblivious to the Stalinist terror going on around him. As a bright, young maths student, he once said he could easily have ended up being recruited by the NKVD, the secret police, to perpetrate terror. Instead he became its most potent critic. His political awakening came from long talks in prison with Arnold Susi, an Estonian lawyer jailed for being a minister in a non-communist government. That friendship survived for many years after both men were released.

As well as the gulag, Mr Solzhenitsyn’s titanic willpower triumphed over other adversaries: cancer, censorship and Soviet bureaucratic intimidation. In 1970 he won the Nobel prize for literature, but declined to accept it in person for fear that he would not be allowed to return to the Soviet Union. But by 1974, the Soviet authorities had had enough: he was bundled onto a plane to West Germany, to spend two decades abroad. Those in the West who had championed his cause were disconcerted to find that he saw the capitalist system as little better than communism. He denounced materialism and moral emptiness, and lived in increasing seclusion in a remote corner of New England.

As communism collapsed, his books, once read only in flimsy, blurred carbon copies, could all be published legally inside the Soviet Union. But he detested the man who brought that about: Boris Yeltsin, the first freely-elected leader in Russia’s history, spurning his offer of a state decoration. He could not, he said accept honours from a man who had brought misery on his people.

To the consternation of some of his supporters, he did accept an award from the ex-KGB officer who became Mr Yeltsin’s successor, Vladimir Putin. He even seemed to downplay Mr Putin’s role in the KGB, saying that every country needed an intelligence service. Yet, although he praised the self-respect and stability that Russia had regained under Mr Putin, he remained deeply critical of its politics and the corruption and greed that capitalism had exposed and fuelled.

That message, often delivered in sententious, near messianic tones, had little appeal. A television programme consisting largely of all but unwatchable monologues lingered painfully on the airwaves and then died, unlamented. Few read his books.

But his death is a chance for Russia’s rulers to say what they think about totalitarianism. Was the collapse of the Soviet Union the “geopolitical catastrophe” of the last century? Or is the real disaster the failure of an independent Russia to cast off the chains of authoritarianism and empire? If Russia’s new president, Dmitry Medvedev, goes beyond simply offering condolences to the Solzhenitsyn family, his thoughts on that would be eagerly awaited.