American Luxury Brand Case Studies Essay

Arrowood Times are not promising for boutique American wineries, with many closing, plowing under their fields, or selling | | | |out to larger interests who have the resources to survive the down market. The worldwide glut of wine grapes from a | | | |succession of bumper harvests, increased competition from bottom tier and lower cost imports (among them Chile, Australia and| | | |South Africa) has California in a tailspin. There is also a Californian producer nicknamed â€Å"Two Buck Chuck† selling wines at | | | |US-3/bottle, 10 million bottles sold in the USA so far this year alone. Another indicator is the fall in demand for organic | | | |produce. During the boom years, consumers were prepared to pay premium prices for certified organic fruits and vegetables. | | | |Only the most efficient and well-managed farms will survive the collapse of that segment of market, which also supplies | | | |grapes to the organic winemakers. | | | | | | | |Arrowood typifies the small boutique Sonoma winery: in business 15 years, their name made on well-regarded wines in low | | | |production from a beautiful state-of-the-art facility. The brand is always fully subscribed for its yearly limited edition | | | |bottlings. The company cannot surrender its premium cachet by backing off on pricing, which begins at /bottle from the | | | |winery, higher at retail. Two years ago Arrowood unsuccessfully attempted to position high-end Syrah as a new trend, charging| | | |prices comparable to high-end Cabernets. The public was not so easily convinced. Demand is down for their commercial | | | |production, and today they have inventory of Syrahs, which can’t be offered at less than originally asked, without devaluing | | | |the brand. | | | | | | | |Best & Co. | | | | | | | | Best & Co., originally a multi-storied department store on Lower Fifth Avenue, New York City, stayed in business for nearly a| | | |century before closing its doors in the 1960s. Oriented exclusively for children, Best relaunched two years ago under the new| | | |stewardship of Susie Hilfiger. The legacy brand was renowned for its fine quality merchandise and exceptional customer | | | |service, founded upon the idea that children are important. Hilfiger opened a Connecticut store, resurrecting the original | | | |logos and interior design, and subsequently added a high-end boutique in Bergdorf Goodman’s Manhattan location. In addition, | | | |the company has both online and catalog channels for offering their fine line of house brands and imports. | | | | | | | |Blackglama This Seattle-based fur cooperative established its brand with the highly regarded â€Å"What Becomes a Legend Most? † | | | |campaign, almost thirty years ago. A spinoff of the parent brand named American Legend Mink, Blackglama created its brand | | | |perception by associations with personalities of international stature, among them Callas, Dietrich, Garbo, Hepburn, Loren | | | |and Pavarotti, captured in artistic black and white photography. Since 2002 the brand has reinforced its franchise with the | | | |relaunch of its classic campaign featuring an international supermodel. Throughout its brand life, Blackglama has been | | | |uncompromising in price, sophistication and quality, always holding to the top tier. A true American luxury brand. | | | | | | | |Cadillac Cadillac Motors, which later became a division of General Motors, dates from the early days of mass-produced | | | |automobiles. It is the oldest surviving American luxury car brand. Once a synonym for the highest quality in vehicles, by the| | | |1950s the brand had become the favorite of Texan oil millionaires, Arab potentates and Elvis Presley, who habitually gave | | | |them away by the dozens to his entourage. Cadillac began to lose market share in the 70s with increased competition from | | | |Ford’s Lincoln division, and the introduction of other luxury vehicles –primarily of Japanese manufacture- who marketed to a | | | |younger, newly-affluent demographic. Cadillac unsuccessfully responded by attempting a downsized model, Cimarron, 1982-88, | | | |driving brand perception lower. Today, Cadillac is perceived as retiree’s car, while it retains some small segment of the | | | |limousine business. A partnership with Pininfarina 1987-1993 produced a visionary prototype, Alante, intended to compete with| | | |the Mercedes SL. Cadillac launched the Escalade, a hybrid SUV in 2000. In today’s hyper-competitive environment with a | | | |climate of weakened sales on all fronts, the glory days of a top-tier luxury brand seem to be history. In an attempt to | | | |recapture the magic, this summer Cadillac released a ,000 limited-production 2-seat sportscar, the XLR. | | | | | | | |Callaway Clubs This manufacturer of high end golf clubs since 1982 has a reputation as the best in the business. They scored | | | |a major product success story in the 1990s with their signature top-of-the-line â€Å"Big Bertha† titanium driver, a technological| | | |innovation which transformed the game through its distance-enhancing features. They continue to expand their line of clubs, | | | |but low-end brand extensions such as active wear, luggage and footwear prevent Callaway from reaching the highest luxury | | | |tier. | | | | | | | |Harley-Davidson The iconic American motorcycle sustains a proud history, enduring product quality and a high price point. In | | | |the face of increased competition in 1987, Harley sent a management team to Japan to learn about superior production | | | |techniques. Today’s median customer is 55 years old, a buyer who recognizes that the brand personifies the outlaw | | | |sensibilities, romance of the open road, and the American Dream of unbridled freedom. However, numerous brand extensions and | | | |licenses, many of them downmarket, i. e. cigarettes and clocks, have kept Harley in the middle levels of the luxury category. | | | | | | | |Hamilton An American watchmaker, founded in 1892 in Lancaster, PA, known for innovative case design and watch technology. | | | |Hamilton today is a member of The Swatch Group, the largest watch producer and distributor in the world, thus losing some of | | | |its uniquely American imprint. Association with Hollywood movies like â€Å"Men In Black†, and an entry level price point of under| | | |0 keeps the company short of luxury. But superior collectible designs and a high historical profile, including introducing | | | |Pulsar, the world’s first digital watch, suggest a brand occasionally skirting the luxury franchise. | | | | | | | |Hummer A classic instance of brand hijacking, where consumers attach attributes to a product that its manufacturer never | | | |intended. The Humvee originated as a government contract vehicle, designed for the military. Survivalists, conservatives, and| | | |yuppies adopted it as their signature icon vehicle, with some cachet attached to its 0,000 price tag. It has since become the| | | |Rapper car of choice, and a popular status vehicle. After unexpected market demand, Hummer – an Indiana-based division of GM-| | | |recently introduced two low-cost, downsized models in the ,000 range, thus moving the brand below its prior designation as | | | |premium luxury. | | | | | | | |Hyatt An interesting attempt in progress to enter the luxury lodging space in Europe. Hyatt’s new five-star Park Hyatt | | | |Paris-Vendome hotel hopes to compete with properties such as the Ritz, Georges V, and Au Duc de Lorraine. They break from the| | | |tradition of Belle Epoque style, relying on ultramodern design, younger staff, while continuing to emphasize first-class | | | |service. It’s a brave undertaking, what with their existing perception as a middle-level American hospitality brand. It takes| | | |several years to establish a hotel property, so the jury will be out for some time. | | | | | | | |Kiehl’s A family-owned pharmacy, in business since 1851 at the same single NYC location, manufacturing its own vast, | | | |proprietary line of skin care products. The company has built some distribution at other retail outlets. Brand image relies | | | |on generic style packaging and no advertising, a high service and satisfaction proposition, product integrity and community | | | |involvement. Kiehl’s narrow product focus, body care products, occupies a space at the mid-level price point, thus holding | | | |it, perception-wise, a tier below the luxury category, despite department store outlets in the luxury cosmetics area. In | | | |recent history the brand has gained a cult following in the entertainment industry, and stars have consequently promoted the | | | |product line. In response to improved demand, Kiehl’s recently began a retail expansion in 8 cities with their own | | | |storefronts, designed to resemble a traditional pharmacy. Kiehl’s also created an equine line of show-quality standard | | | |grooming products for horses and ponies. The association with the equestrian world adds some higher value perception to the | | | |brand, despite its mid-range price point and no-image packaging. | | | | | | | |Lincoln This ubiquitous sub-brand was created by Ford to compete with Cadillac’s luxury franchise. It has since supplanted | | | |Cadillac as preferred limousine brand and is now primarily associated with the ‘town car’, on which most high-end car service| | | |fleets are built. Two years ago Lincoln attempted to create a hybrid fusion vehicle called the Blackwood, which one critic | | | |called â€Å"neither practical pickup nor luxury-car stand-in†, and the model was in release only one year before being | | | |discontinued. Lincoln has benefited from the launch of a successful SUV called Navigator. | | | | | | | |NetJets This company is the premier provider in the private jet transportation category, with the largest market share, over | | | |fifty percent worldwide. NetJets sells partial or full shares in new jet ownership to corporate clients and individuals with | | | |a high net worth of million or more. The business model is a unique one, with a number of avenues for tax advantage, and with| | | |a system of buyback and plan conversion guarantees starting at the low end for about 5,000 per year. NetJets is wholly owned | | | |by Berkshire Hathaway, whose boss Warren Buffet was originally a satisfied NetJets customer. He eventually purchased the | | | |entire company, and his deep pockets back the undertaking. NetJets dominates the category, with a fleet of over 450 new, | | ||luxurious aircraft of varying capacities and distance capabilities, a sister company in Europe, in-house safety and training | | | |programs and its own team of meteorologists and dispatchers. No other jet transportation provider in the world can compare. | | | |In fact, competing firms are struggling with older aircraft and anaemic balance sheets. As a strategy to take more business | | | |from the smaller charter companies, NetJets adopted the Marquis Jet Card, a lower price point, lower minimum dollar | | | |entry-level commitment available in units as small as 0,000. The card has performed significantly better than projected. The | | | |company markets itself as the utmost in safety, comfort and security, partnering with Ritz Carlton for service staff | | | |training, and the Mayo Clinic for on-demand medical resources. Advertising and brand messaging are quite confused, delivering| | | |multiple concepts often at odds with each other. But advertising probably does not figure greatly in NetJets’ success. The | | | |most frequently heard challenge to their sales people concerns high cost; an inflexible and uncompromising pricing policy has| | | |stood the brand well. Plus, Buffet’s ownership is enough to convey the distinction and premium luxury prestige conferred by | | | |association with the world’s second richest man. | | | | | | | |Panavision This company has an unblemished 50 year reputation for providing the finest quality cameras and lenses for the | | | |motion picture industry. While not widely known to the general public, Panavision’s reach is universal and international in | | | |the film community, regarded as the best in its category. | | | | | | | |Ritz Carlton The respected hotel chain was acquired in 1998 by Marriott, after a period of expansion into new locations and | | | |properties. The original Boston hotel was immortalized by F. Scott Fitzgerald in the short story â€Å"The Diamond As Big As The | | | |Ritz†. Upholding a standard of excellence in service, the company motto is â€Å"We are Ladies and Gentlemen serving Ladies and | | | |Gentlemen. † The company prides itself on its Gold Standards, a highly refined system of directives which each employee must | | | |know and understand, a proven technique developed to sustain the brand’s preeminence. Ritz Carlton partners with NetJets in | | | |flight service training, an indication of the exacting standards this fine business model upholds. | | | | | | | |Rosewood Hotels & Resorts Founded in 1987 by Caroline Rose Hunt of Dallas, Texas. â€Å"The moment guests set foot in one of our | | | |hotels or resorts they enter a private world of rare and refined luxury. At the heart of each property is our dedication to | | | |uncompromising quality and exemplary personal service. † The winner of numerous industry and media awards, Rosewood has trophy| | | |properties in the USA, the Caribbean, Asia and the Middle East. A solid premium luxury brand. | | | | | | | |St. Regis The premium luxury division of the Starwood Group, who also run the Westin and W brands, among a range of niche | | | |hospitality groups. Another division, called The Luxury Collection, falls lower in the actual luxury category, bringing | | | |together over 70 international properties, many from the Sheraton Group. St. Regis is a good example of a counterfeit brand, | | | |who bases its reputation on a single legacy property built in 1904. The actual property was acquired by Starwood in 1998, and| | | |the parent company soon added properties under the St. Regis brand name in nine other cities. The flagship NY property and | | | |its affiliates worldwide do reflect the highest standards of hospitality, and so far in their short history deserve the | | | |luxury designation. | | | | | | | |Technicolor The company rose to prominence providing the highest quality in celluloid film stock and processing in an 80-year| | | |franchise, as unchallenged category leader. Technicolor has high associations with the Golden Age of post WWII cinema. The | | | |company has adapted much of its business to new technologies, but it may be the end of their brand domination owing to | | | |inroads made by competitive digital imaging providers. | | | | | | | |Tiffany The quintessential American brand, with old world style and Beaux Arts luxury associations dating back to 1837. | | | |Tiffany’s first store opened in NYC with a policy that every article be marked with a non-negotiable selling price, | | | |accompanied by a guarantee of exceptional quality and customer satisfaction. The company soon innovated the signature blue | | | |bag and sales by catalog. Towards the turn of the century Louis Comfort Tiffany further grew the brand’s prestige with | | | |breathtaking Art Nouveau experimentations in lamps and glasswork. Robber barons relied on Tiffany for everything from fine | | | |china, leaded glass windows, silver goods and engraved stationery to opulent gems. During his 30 year tenure, the legendary | | | |Jean Schlumberger added to the company’s lustre with his elegant and sophisticated jewelry, which combined brilliant | | | |craftsmanship and superior taste in materials. Tiffany’s democratization began in the 1950s when Truman Capote’s story, | | | |â€Å"Breakfast at Tiffany’s† turned the brand into a household word. As Schlumberger’s career began to wane in the 1970s, | | | |Tiffany’s classical glamour began to fade, and the firm sought renewal by releasing a signature fragrance, a puzzling and | | | |incongruous brand extension which seems at odds with the original franchise. Other attempts to create new magic for the brand| | | |include the licensing of designs by Paloma Picasso, whose family name carries the cachet of fine art; but her designs for | | | |silver earrings brought brand perception downmarket, as did comparable designs by Elsa Peretti at a similar low price point. | | | |Tiffany’s history barely reconciles today with its current state: a brand gone slightly south, with a faint memory of a | | | |company who once popularized the iconic myth of The Tiffany Diamond. However, Tiffany’s recent financial performance is a | | | |success story. The stock price has gone from to in the last 12 months, validating the mass-merchandising strategy with | | | |bottom-line results. | | | | | | | |Wolfgang Puck A gradual downmarket slide. Puck’s origins as a celebrity chef in California led to his first brand extension | | | |as author of a best-selling cookbook. Excerpted from his web site, â€Å"†¦the culinary empire he has built since the early 1980s | | | |consists of: the group of fine dining restaurants through which he first rose to prominence; his extensive catering and | | | |events business, which gains international attention through its flagship event, the annual Governors Ball following the | | | | Oscars; and Wolfgang Puck Worldwide, Inc., the corporation that controls the Wolfgang Puck ® brand in areas as diverse as | | | |casual and quick-service dining, consumer packaged foods, cookware, book publishing, television, radio and internet | | | |programming, and other franchising, licensing, and merchandising activities. † Puck’s presence in packaged frozen food | | | |products, his industrial-sized Las Vegas location and 75 fast food airport franchises weigh heavily on his former luxury | | | |cachet. He is no longer luxury, simply a high-end mass-market conglomerate. | | | | | | | |Harry Winston Sparse, well-chosen high-ticket, high-visibility advertising and promotion has helped this premium luxury brand| | | |maintain its associations with opulence, new money, and decadence. While Winston has the biggest and most valuable stones, | | | |its designs are no longer considered the most remarkable artistically, simply extravagant, perhaps a bit vulgar. Harry | | | |Winston Ultimate Timepieces, founded in 1998 and based in Geneva, has introduced the new ,000 Opus One Tourbillon watch, | | | |enclosed in a platinum casing, garlanded in gold and diamonds, with Swiss movement. The parent company will always be | | | |associated with the Hope Diamond, which it acquired in 1949 and later donated to the Smithsonian Institution. Could it be | | | |that the brand is tainted or dragged downmarket by associations with rappers, celebrity athletes, Texan oil millionaires and | | | |curvaceous film starlets on Oscar night?