Know-How Exchange : Strategy

Dear Salim,

A new brand, name, logo and so on might look nice, but in truth, these things won't do your company a great deal of marketing good. They don't, as a general rule, advance the notion of company X as top provider of ABC. They might be nice as eye candy, but when it comes to cinching the sale, they're not all they're cracked up to be.

To become the best in the luxury kitchen category your company needs to put out, it needs to complete a high end kitchen: soup to nuts, for a high end client at no cost to the client, with the written consent and understanding that the results (photographs, testimonials, walk throughs, etc.,.) and name, photographs of the happy customer can then be used by the company in their marketing mail shots as social proof to mail to other people in that income bracket.

You do this by pulling a list of high net worth addresses and mailing to them by postal code and by street. Then you follow up by phone and in personal, nose to nose appointments where you outline the benefits to the customer of the final result and what it can do for their social standing, and for the value of their home.

I hope this helps.

Gary Bloomer
The Direct Response Marketing Guy™
Princeton, NJ, USA

First example: When Honda was just a motorcycle company, a case was run at Harvard Business School about whether its entry -- as Honda -- into the U.S. automotive market made sense. The answer was a no-brainer. Americans don''t buy cars from motorcycle companies.

Five years later Honda was even better known for its cars in the U.S. than its motorcycles.

Counter-example: When Toyota wanted to go premium, it not only came up with a new name, Lexus, for the car, but a new auto dealership chain. Another success.

I would try some split testing. Consider making some kind of on-line offer for a fantastic custom kitchen to a select group of high net worth, high income individuals. Follow up with telephone calls and interviews. Do it (a) as NEW ENTITY and (b) as PREMIUM LINE from known company.

Perhaps you can also do a similar "bricks" experiment with a high end home building company. It shows in its model homes very similar luxury kitchens, one from (a) and one from (b). How do people respond?

Regards,
JH

You say "The company is a well-known middle/high end company, who manufactures and sells hand-made, customized, exclusive kitchens and cabinets." Question - do you differentiate between high end and luxury? Does your company already sell to luxury customers?

If the company does not currently sell to luxury customers, then a new brand may work. But if it already does, then creating the new brand risks not getting the benefit of the current product line's good name.

Along with the cases J. Hamilton said, Honda launching Acura is another example of a success.

Many companies launch lower products when the product category is new. They come out with a new product or technology and sell it for as much as possible, skimming off as much profit as possible. As costs come down and they have satisfied these high paying customers, they start looking at making a lower end product to reach a larger market.

Up-marketing is more common in mature product fields. Companies start in at lower price points, and as they gain a reputation of being quality manufacturers, they upmarket themselves. Actually, Honda cars not just came out with the luxury brand Acura, they also up-marketed each of their product lines (Toyota and others did the same). If you compare a Civic now to one from the 80s, you'll see it is a much larger and more finessed product.