Luxury thrives in a parallel marketing universe

Earlier this month, I blogged about how UK bargain hunters are buying, buying, buying at 99p Stores, contributing to the retailer's sharply higher turnover and profits.

At the same time, luxury products are thriving in what may be a parallel marketing universe. Burberry has rebounded, Mulberry's profits are higher (see its collection above), Prada is still popular and LVMH continues to do well. In this universe, segmentation by brand loyalty and brand aspiration is just as important as segmentation by household income.

Much of the upmarket activity is taking place in Asia, where appetite for top brands has always been strong. China's millionaires aren't only buying luxe products; they're also seeking upmarket travel experiences (while remaining loyal to well-known brands such as Shangri-La hotels). As CNN International recently reported, 'kaching, kaching, kaching'! And there's no end in sight as Asia's economies move ahead.

London 2012: Adidas versus Nike -- Again

During the 2008 Summer Olympics in Beijing, Nike and Adidas spent lavishly to reach the crowds in the stadiums and the gigantic global audience viewing events from afar. Adidas was an official Olympic sponsor, and Nike sponsored Chinese teams in 22 sports during the Games. 

'Our marketing campaign for China is the largest we have ever done in a single country', an Adidas official said at the time. 'We see this as a marketing platform that will help us to achieve market leadership in China this year'.

Now the two global brands are looking ahead to marketing battles during the 2012 Summer Olympics in London. Nike holds more UK market share than Adidas at the moment, and it continues kitting out national teams such as the US Olympic team.


Adidas is again an official Olympic partner, and it plans to leverage that position for higher brand preference and sales. It's also hoping to sell official Olympics merchandise outside the UK.

In just over 400 days, the London Games will open, and the battle for market share will heat up once more. Will Adidas overtake Nike as the UK's top sports brand?

China's Huawei targets Europe and America

Huawei, which made its name in telecommunications, is getting ready for a major marketing initiative in Europe and the US. This fast-growing firm (less than 25 years old) already has 110,000 employees. Its expanding portfolio of offerings includes products classified as "cloud" (applications and software for storage), "pipe" (networks), or "devices" (smart phones and other equipment for home and industrial use).

For the past decade, Huawei has been establishing research and development centers outside China to get to know global customers' needs and prepare goods and services for multiple markets.

Now Huawei--not yet a globally-recognised brand--is planning to challenge some of the best-known brands in the business world with advanced smart phones and tablet computers. It has agreements with mobile operators in several European nations and is lining up distributors for retail placements.

To succeed, Huawei will have to convince would-be buyers (and retail partners) that its brand stands for something unique and superior. Price is always a factor, especially in a mature market such as that of smart phones. The tablet market is currently hot; Apple is the dominant brand, and every time it releases a new iPad, customers respond.

Still, innovation can capture attention and grab market share in almost any segment of the mobile and tablet markets. Will Huawei achieve its ambitious growth goals?

Retailing: Big sales from bargain hunters

The retail chain 99p Stores has had a successful run because so many shoppers are pinching pence while the economy remains stalled. In fact, the decade-old chain's profits are three times higher than its profits of just one year ago. The one-price strategy has clearly been very effective in attracting buyers and retaining shopper loyalty.

Now 99p Stores is expanding into more UK storefronts left empty by failing retailers, aiming for more than 170 branches by the end of 2011 and up to 600 branches by the end of this decade. The chain is looking at European continent expansion, as well.

Given the chain's high-tech distribution system, it can reportedly wring a 20% profit margin from nearly every range it sells. Low prices on everyday merchandise bring shoppers back again and again for household purchases (and maybe an impulse buy or two along the way). According to the Independent, the top sellers at 99p Stores are mouthwash, pain reliever, snacks, soft drinks, teabags, toilet paper and tissues.

Will shoppers change their habits when the economy improves?

Hotel Chocolat's Recipe for Success

Updating the case study in Chapter 4 of my Essential Guide to Marketing Planning, here's a look at what the upmarket chocolatier Hotel Chocolat has been doing.

Currently, the company operates dozens of stores across the UK as well as in one in Boston and three in the Middle East. Just this week, the firm announced plans for three new UK stores. Its distribution strategy also includes selling through selected John Lewis stores.

One of the firm's marketing specialities is segmentation by occasion (holidays, birthday, wedding, thank you and more), age, gender and lifestyle (vegan and alcohol-free, for example). Hotel Chocolat offers a full range of "genres" (milk chocolate, dark chocolate, white chocolate and so on) and provides corporate buyers with bespoke chocolate gifts, among other products.

Chocolatiers don't typically operate their own hotels, but that's one of the initiatives that sets Hotel Chocolat apart from competitors. Its Chocolate Hotel in Saint Lucia, West Indies, is adjacent to the firm's Rabot Estate Cocoa Plantation. Not just for chocolate lovers, the hotel's marketing mixes the mystique of a Caribbean holiday with a taste of social responsibility (a la eco-tourism). 

Another unusual move: When Hotel Chocolat wanted to raise money for expansion, it offered members of its chocolate tasting club a "chocolate bond," including twice-monthly dividends paid in chocolate treats.

For social media marketing, Hotel Chocolat uses Twitter and Facebook plus its own blog, "Tales from Tree to Bar." Want to see the hotel or cocoa plantation? Tune into the firm's YouTube channel.

Lenovo aims for UK growth

"Lenovo is as well-known in China as Coca-Cola is in the US", says chief executive Milko van Duijl in a recent Telegraph interview. One in three PCs purchased in China (the computer company's home market) is a Lenovo.

Trouble is, Lenovo has little brand recognition among consumers in the UK, where Lenovo aims for growth later this year, following a marketing campaign in Germany. The company is also planning for growth in the US, another large market for computer sales.

Many corporate computer users around the world know the ThinkPad name, which IBM once marketed and sold to Lenovo in 2005 when IBM left the PC business.

UK consumers, however, need more of an introduction to Lenovo. For example, Lenovo's UK Twitter account has fewer than 1,000 followers (right now, anyway). Its Facebook page has even fewer "likes."  To see recent commercials and product demos, tune in on its YouTube channel. The brand isn't new, but it's largely unfamiliar to the UK public.

A high-profile, multi-media marketing programme will be needed to give Lenovo the recognition, preference and purchases it needs to prosper in the UK.

The cookie rule and e-privacy

The European Union's Internet privacy directive affecting cookies is now in effect, but UK regulators are delaying implementation for a year.

The directive, intended to protect consumer privacy, requires that Internet users be informed of why each Web site wants to store individual info via cookies. Users will have to give their consent for cookies to be stored on their computers.

Neither customer-requested cookies (such as those indicating a paid subscription) nor necessary cookies (such as those that are needed when customers click to put a product into an online shopping basket) are covered by the directive.

Exactly how to accomplish the purpose of improving e-privacy without hurting the user's online experience isn't entirely clear, however. Should a site provide the information via pop-ups, which many users find irritating and intrusive? Should it request that users indicate their preferences when they sign up? Not surprisingly, companies are confused about how to proceed.

Meanwhile, browse the YourOnlineChoices UK site to learn more about browser settings for cookies (see left), Internet tracking and related issues.