by: Geoff Ficke
Many of the inventors and entrepreneurs we deal with in our consumer product marketing business approach us with dreams of selling product to the masses. This can be lucrative and a proper launch strategy in cases where all of the stars in the galaxy line up properly. How often does that happen?
Mass marketing success is contingent on economies of scale, production advantages and large budgets for penetrating a clamorous commercial environment. Large, established companies, think Procter & Gamble, Unilever, Rubbermaid, have all of the tools needed to launch products into this maelstrom. Most small entities and individuals do not.
Our preferred strategy is often to create a branding strategy based on exclusivity. When a product is sold in a limited distribution basis, available in select stores, and usually at a higher price than similar products, consumers tend to attach a higher perceived value to these items.
There are numerous examples of exclusivity that can be used as a template when considering the proper strategy to utilize for a new consumer product launch. Retailers that sell high-end limited distribution products are very profitable and enjoy exceedingly high profiles. Bloomingdales, Tourneau, Neiman Marcus, Harvery Nichols, Harrod’s, and Ralph Lauren are just a few of the stores that appeal to the “carriage trade”. These stores seek goods of high quality, that can be priced at a premium, and that are not available from competitive outlets. This creates a loyal customer for the types of merchandise that can only be found in these doors.
Automobiles, jewelry, ready-to-wear, cosmetics, watches and home décor are only a few product categories where exclusivity is validated as a marketing and branding strategy.
Ferrarri, Mercedes-Benz, Porsche and Jaguar are world famous automobiles franchises. Ferrarri has created a worldwide thirst for these sleek, super fast, super priced sports cars with the “Prancing Horse” on the hood. There are only a handful of authorized Ferrarri dealers in the United States. Production is kept very small and all cars are typically sold two years before they are produced. This insures that value for used vehicles remains very high. Indeed, many old Ferrarri’s appreciate in value, something that can be said of very automobile brands.
Rolex, Baume Mercier, Audemars Piguet, Chopard and Patek Phillippe are a smattering of the very expensive watch brands that are considered to be prized for their exclusivity, beauty, artisan craftsmanship and perceived value. They are sold in very few retail stores. The very fact that they are hard to find, expensive to buy and limited production makes each of these watches highly desirable.
Cosmetics houses at the highest end of the market differentiate themselves by limiting distribution to a select few stores in any given trading area. Clarins, La Prarie, Guerlain, Crème de la Mer, and Estee Lauder are very choosy about where their products are placed. This insures that consumers recognize that by their very lack of availability these products are special, and therefore, justify higher retail price points.
We look at hundreds of new products each year. A select few offer that unique blend of novel consumer features and performance benefits that insure success. A strategy we often use to launch such products is built on exclusivity, at least initially. It is very easy to “knock yourself off” and replicate high-end success with less expensive mass-market versions of your product. If you do not secure this space, competitors certainly will.
Alfred Sloan, the business and organizational genius that created General Motors in the 1920’s, crafted the multi-price point strategy of offering something for everyone. Cadillac was exclusively for the rich. Buick and Oldsmobile were positioned for the middle class, older customers, seeking unobtrusive styling and soft rides. Pontiac was sportier and Chevrolet was the mass market, entry level brand. Sloan recognized that today’s Chevy driver, as they prospered and aged, would move up the GM food chain.
Charles Revson adapted this multi-level channel distribution strategy with Revlon cosmetics. Etherea was his very exclusive carriage trade brand. Ultima II was for fine department stores. For broader distribution in general department stores and boutiques Revson sold his Revlon brand. These Revlon corporate lines were each differentiated by price point, packaging, product claims and performance. He offered something for every range of consumer.
There are a number of advantages to an exclusivity strategy. Typically initial inventory build out is mitigated, freeing up capital for sales promotion. Limited distribution means that the entrepreneur can be more attentive to each individual door carrying their items. Fewer doors can mean that product features and benefits can be demonstrated to individual consumers. This creates word of mouth and referrals. It minimizes the need for expensive media advertising. In-store merchandising is more manageable when distribution is limited. The opportunity to grow organically, the turtle approach; often enables the new company to establish a much more stable foundation from which to expand.
A type of exclusivity strategy can be constructed for products in virtually any category. From liquor, to beer, to hardware, to foodstuff, to lingerie, to pet products, the list goes on endlessly, there are opportunities to successfully commercialize ideas and make them successful using limited distribution techniques. This tried and true methodology is under-utilized, but often the best way to penetrate a very tough marketplace.