Your business of premium products is on fire. New products and
new lines in more stores. Sales are up. You have lowered costs by manufacturing
overseas. This quarter’s profits are greatly beating expectations.
Several years later same store sales are declining,
especially the premium locations. Popularity with prime wealthy consumers has
declined. What happened?
Fast Company covered the decline of American Premium Fashion
Brands in their article below. All had common business mistakes.
- Watering brand down by selling though large department and outlet stores.
- Lowering product design quality to meet price points on new lines.
- Leaving local master producers for overseas production.
- Slower reaction to changing consumer tastes increases inventory.
- More sales due to inventory overstocks.
- Declining consumer interest due to overexposure and quality fails.
Premium products are sold in elegant stores with superior
service. Not by serve yourself stores and factory stores. The lower price /
higher sales mean less cachet. Why should we aspire to buy a common product?
In the 90’s lock industry, foreign grade 2 locks were
becoming popular due to low costs. At Sargent we analyzed the product and found
the structure quality was good, but the finish quality was less. Also found the
lock cylinders were lacked consistent quality. To successfully introduce lower
cost products, we limited sales to 2 common finishes and installed our own lock
cylinders. The performance and interchangeability of the key system kept
customers re-orders and new sales. This prevented brand dilution and increased
market share.
Recovering from branding mistakes is difficult. Companies
are presenting themselves as a warm, inclusive brand more in line with current
Millennial Culture. Others are curating product lines to keep focus. Michael
Kors is limiting sales to maintain prices.
Much harder to recover, than to maintain your brand’s image.
Don’t dilute you brand because it sounds like easy money.
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