How offers become almost impossible to copy
WHAT ARE YOU SELLING? By understanding what you are actually selling, you can find your unique abilities and become sustainably competitive.
Sitting on the plane home from Monaco and have just, together with some Bearing colleagues, run our innovation management program at Monaco’s business school and the MBA program of Luxury Goods.
All the big brands send their business developers to this program, and business development is what it turned into – for all of us. The trip led to reflection, and it all started with a discussion about Lady Gaga planning to pour blood and other more compromising body fluids into her new perfume.
So what am I selling?
Not long ago, an unnamed person in the Harley-Davidson’s group executive board, said that what they are actually selling is the opportunity for a 43-year-old accountant to dress in black leather, ride through a small town and scare people.
I asked the same question to the MBA students at the Luxury Goods program, i.e. what they are actually selling. It was obvious that the question was not new to them, but it still sparked debate and discussion.
New technology has entered the scene and it is no longer about expensive products impossible for ordinary people to buy, but even more about identity, recognition, lifestyle and building your own personal, individual brand. Technology becomes a part of the luxury to express oneself and to be special.
Somewhat incisively you could call it techno-avant-gardism, in which new technologies and channels in all forms become key elements for positioning oneself.
Examples of things that we probably will see more of are shoes communicating with our mobile and giving us updates on how we move, and smart solutions on how to easily scan body measurements for custom-made deliveries of clothing, furniture, vehicles and experiences of various kinds.
This is good news in a business where you no longer can create exclusivity with the price. More and more people can afford to buy luxuries at the same time as copying has made it very difficult to justify high prices. Identical copies with a nearly equal quality will sooner or later enter the market.
Basically, it has always been about identity and positioning, and this is what the luxury goods industry is selling in the reality. The price is irrelevant to most people. There are great opportunities for innovation in this field.
How do I avoid being copied?
Perhaps you remember how IKEA was copied in China? An entire warehouse, including the dress code of the employees, was copied. What is not as simple to copy is the DNA of a company, the inner mechanism, viewpoint, leadership, culture, personalities, knowledge, skills, relations, locality, creativity and working methods.
All of these mechanisms, often called capabilities, make up the basis to create value for customers – mechanisms that are difficult to copy. This is the mother of inventions, the very fine mechanics and the source.
By asking myself questions about what I am really good at, what I am actually selling and what the customers perceive that they are buying, I can begin to innovate my business model. Then I am also able to generate values that are difficult to copy. This is also the key to success for the luxury industry.
The automotive industry is working hard on new business models, such as Toyota who is experimenting with offering a monthly car including everything. Recently, several car makers have launched "branded" cars with luxury brands like Gucci, one of them is Fiat. That is an innovation of the customer experience.
Creating a luxurious feeling or exclusivity is not enough. Consumption as such is one of the important keys where customers are offered to take a stand, belong to a group and its values. The group must not be too large, but still large enough to be recognized.