RadioShowPodcast

SHOWNOTES

LuxuryRetailing,UpmarketBrands,DavideBonanni,InterviewWith:ilSignoreDavideBonanni(KnightedinItaly)

Episode102

ReleasedtoiTunes:7October2016

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BUSINESSPLANNINGWewritesophisticatedbusinessplansfororganisationsthatprovideablueprinttoachieveitsobjectives.Documentationiscomprehensiveandeasytofollow,likeanoperationsmanual–stepbystep.Allourbusinessplanningisbasedonfactandrealmarketconditionssotheyarerelevantandachievable.

RESEARCHWeconductmarketresearchtodeterminetheviabilityofamarketorproduct.Wedocustomersatisfactionresearchtofindoutwhatanorganisation’scustomerthinkofitsproductsandservices.Wealsoconductbrandresearchtodeterminetheattitudesheldbythemarkettowardsanorganisation.

MARKETINGSTRATEGYANDBRANDWepreparestrategicmarketingplansforourclientsthatprovideforgrowthofsales,increaseinmarginsandgrowthofthebrand.Ourfocusisnotonlytocreatewealth,buttocreateabrandthatishighlyvaluable,soitisworththemostmoneypossibleintheeventabusinessissold–ortheownerisnolongerinvolved.

ADVERTISINGANDPROMOTIONWeunderstandthemostcostefficientandthemosteffectivewaytospendmoneyonadvertising.Wecreateadvertisingfortelevision,radio,musicaljingles,newspapers,displayads,outdoorbillboards,cinema,online(Google,internetbannersetc.)andforthesponsoringofevents,teamsetc.

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EVENTMANAGEMENTWeplan,executeandassesseventsfororganisations,suchasproductlaunces,professionalseminars,tradeshows,fundraisingdinners,auctions,conferences,sportingeventsandentertainmentshows.Wewillmanagealllogisticsforevents,includingticketing(bothphysicalandelectronic)aswellasback-endsystemstohandlesales,statisticsandthecreationofaCustomerRelationshipManagementdatabase.

CONSULTINGANDTURN-KEYPLANNINGWewillcreateforyouaworld-class,modernbusinesssystemthatwillscaleseamlessly,allowingyoutogrowalargebusinessthatiseasytorun,issuperefficientandsignificantlymoreprofitable.Wesupportorganisationsfrombeginningtoend:fromresearchtostrategicplanning,itsimplementation,thetrainingofstaffonsystemsuponrollout,systemsoperationsanditsongoingrefinementandimprovement.

DIGITALONLINEANDWEBSITEWecreate:websites,eCommercesolutions,Facebook,YouTube,Twitter&LinkedInsocialstrategies,YellowPagesdigitaladvice,searchengineoptimisation,iTunesworldwidesales,Appleapps(iPhone,iPad,iBooks),Google,Bing,Yahoolistingsandaffiliaterevenueforyou.

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PUBLICRELATIONSANDLOBBYINGWeplanandexecuteproductlaunches,opendays,facilitytours,tradeshows,pressreleases,publicity,mediarelations,pressconferences,lobbying,informationevents,competitions&giveaways.Wealsododirectmailcampaigns.

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ONLINEEVENTBROADCASTING,WEBCASTS&WEBINARSWecreateengaging,highconversiononlinebroadcastsfororganisationsworldwide.Wedevelopprofessionalqualitycontentthatconveysyourmessagewithpower.Whetheryouwanttoselltobusinessesorindividuals;educateandinform;influencepublicopinion;generateleadsglobally;streamyourliveeventonlinetotheworld;recordandpostforopenreplay;orrunanonlinesummit;wehavetheproductioncapabilityandonlinevideocapacitytobeaglobalstar.

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PRESENTATIONSANDMULTIMEDIADISPLAYSWecreatestunningsalespresentationsthathavehighimpactandgetresults.Publicdisplaykiosks(touchscreeninformationdirectories).Educationalinteractivelearningaids.Shopwindowdisplaystosellitems.POSdisplays.Shoppingmalldisplays(foradvertisingandinformation).

About the Podcast WeproduceaweeklyradioshowthatisdistributedgloballythroughiTunesandonStitcherRadioasapodcast.Theshowisdesignedspecificallyfordecisionmakers:entrepreneurs,businessowners,high-levelmanagersandBoardDirectorswhotypicallycontrolsignificantplantandhumancapital.Eachepisodeputsanotherpieceofgoldinyourpocket,representingdifferenttopicsrelatedtorunningahigh-performingbusiness.Youwillgetempiricallyproven,strategicadvicethatwillresultinmoreprofitforyou.Areascoveredinclude:strategicmarketing,businessdevelopment,salesperformance,advertising,publicrelations,socialmediapromotions,eCommerce,large-scalefundraising,researchandhowtobuildaglobalbusinessproperly.Youwillcollecthigh-levelcontentfromhostMrStevenMarioCavallo,TheBusinessFirm'sfounder;andyouwillalsogettheopportunitytohaveabusinessproblemyouaredealingwith,solved.Youcansubmitanaudiorecordingofareal-lifebusinessissuebyemailinganmp3fileto:answers@thebusinessfirm.comauYou’llalsoenjoyasky-highviewfromtheTowerofSuccesswhereyou’llsitalongsideSteveninTheBusinessFirmPresidentialLoungeandpickthebrainsoftheverybestbusinessthoughtleadersintheworld,duringaninterview.Youareinvitedineveryepisodetolistentointerviewswithincredible,world-leadinginformationsharedbysomeofthebusinessworld'smostexpertthoughtleaders.Guestsincludetoppractitioners,entrepreneurs,ProfessorsfromthegreatestUniversitiesoftheworld,successfulbusinessowners,coachesandmentors,industryleaders,authorsandotherhigh-achieving,credibleindividuals.Ifyoufittheabovedescription,havecontentofvaluetobusinessownersandareaconfidentspeaker,pleaseapplytobecomeaninterviewedguestbyemailingusat:guest@thebusinessfirm.com.auThisistheshowthatwillhelpyouinyourduty,ofbeinganeffectivebusinessleader.TheBusinessFirmRadioShowisproducedinAdelaide,SouthAustraliaweeklyandreleasedinternationallytoourworldwideaudience:thedecisionmakersandentrepreneurswhoarebuildingourglobaleconomy.SubscribetoTheBusinessFirmPodcastoniTunesandnevermissanepisodeagain,asitwillautomaticallyappearforyoutolistentoonyourdevice,atyourownconvenience.Inadditiontoenjoyingthefreeinformationonthepodcast,youarewelcometoafreeseatinthenextWebinar(onlineseminar)whereStevenwillbepresentingvitalaspectsofmarketingscienceandbusinessdevelopment.Topicscoveredinclude:howadvertisingREALLYworksandhowtoonlyspendmoneyonwhatACTUALLYgivesreturns.Learnhowtosell20%morewithoutanyextracustomers;andwerevealthetruthaboutconsumerbehaviourandHOWbuyersactuallychoosebetweenyourbrandandyourcompetitors’.Plus,you'lllearnthethreebiggestpiecesofmisinformationthatwastesmoneyandleadstonothing–thingsthatnearlyeveryonehasalreadybeensuckedintodoing!Thisinformationistotallyunknownbyyourcompetitors(andthefalse'gurus');soknowingitisalucrativeadvantageyoucaneasilygetoveryourcompetitors.Doyourselfafavourandattendthenextwebinar.Itwillendyourvulnerabilitytomisinformationandcanfinallystemtheflowofsomanyunnecessaryexpensesyouareprobablyalreadyincurring.There’snocost,noobligationandyou’llmakemoneyfromtheinformation.Checkwhenthenextoneisonat:www.thebusinessfirm.com.au/webinars.html

Discussion Inthisepisode,StevenMarioCavallodiscussesluxuryretailing,upmarketbrandsandsellinghighendgoodsandservices.Whatareluxurygoodsorservices?(definedusingtermsineconomics)Ineconomics,inferiorgoodsareitemsthatexhibitanegativeelasticityofdemand;thatis,anincreaseinincomewillleadtoadecreaseindemandforthatgoodandmayleadtoashifttomoreluxurygood.Examplesofinferiorgoodsinclude:cabbage,cheapcarbrandslikeHyundai,genericlabelFMCGs,somefinancialgoodssuchaspawn-brokerloansandmanyoftheitemsfoundindiscountstoresorcategorykillers.Normalgoodsareanygoodsforwhichdemandincreaseswhenincomeincreases,andfallswhenincomedecreasesbutpriceremainsconstant,i.e.withapositiveincomeelasticityofdemand.Examplesareholidaysandmosttechproducts.Superiorgoodsmakeupalargerproportionofconsumptionasincomerises,andthereforeareatypeofnormalgood(accordingtobuyerbehaviourtheory).Superiorgoodsmusthavetwoeconomiccharacteristics:itmustbescarceanditmusthaveahighprice.Thescarcityofthegoodcanbenatural(suchasdiamonds)orartificial(bywayoflimiteddistribution);however,consumersmustrecognisethegoodasdistinguishablybetter.Owningsuchagoodsignifies"abundance"inpersonalwealthandconfersprestigeuntotheowner.Aluxurygoodisagoodforwhichdemandincreasesmorethanproportionallyasincomerises,andisacontrasttoa"necessitygood",forwhichdemandincreasesproportionallylessthanincome.Luxurygoodsaresaidtohavehigh-incomeelasticityofdemand:aspeoplebecomewealthier,theywillbuymoreandmoreoftheluxurygood.Thisalsomeans,however,thatshouldtherebeadeclineinincomeits.demandwilldrop.Iftheelasticityofdemandisgreaterthan1.0,itisaluxurygood.Priceelasticityofthisnaturerepresentsawonderfulcommercialadvantageingoodeconomictimes…(story…e.g.ofladiesfashionboutiqueonKingWilliamRoadduring1991Australianrecession).Theincomeelasticityofasuperiorgoodisabove1.0bydefinition.Asuperiorgoodalsomaybealuxurygoodthatisnotpurchasedatallbelowacertainlevelofincome.Exampleswouldincludesmokedsalmonandcaviarandmostotherexpensivedelicacies.Theprestige-valueofsomesuperiorgoodsissohighthatapricedeclinewouldlowerdemand;inwhichcasetheyarereferredtoasVeblengoods.ExamplesofVeblemgoodsareultra-luxuryitemssuchasRollsRoycecars,iconicwinessuchasPenfoldGrangeHermitage,handmadejewelleryfromItaly,exclusiveperfumesfromFranceandRolexwatchesfromSwitzerland.Theultrahighpriceoftheseitems(whichisknowntoall)isusedbypurchasersasastatussymbol.ThesegoodsareatoddswiththeLawofDemandinthatiftheirpriceweretobeloweredthentheywouldexperienceadecreaseindemand.Inanygivenmarket,regardlessofthegoodorservice,thereexistbuyerswillingandabletospendsignificantlymorethantheaveragemarketpriceperpurchaseoccasion.Therefore,almostallmarketshavealuxurysegment.Wellknownindustriesinclude:automobiles(BMW,Mercedes,Ferrari,Maserati,Jaguar);yachts(SunReef),wines(PenfoldGrangeHermitage,ChateauMargaux)bottledwater(Perrier),coffee(Illy),foods(TreMariepanettone),watches(Rolex,Breitling),clothes(GiorgioArmani,GianniVersace,Zegna),jewellery(Bvlgari,Cartier),electronics(Apple)andhighfidelityaudio(BangandOlufsen,Bose,Denon,VAF).Whilethenumberofunitssoldintheluxurysegmentisrelativelysmall,theprofitabilityperunitisveryhigh.Providingtherestoftherangeprovideseconomiesofscaletocoverfixeddistributioncosts,itmakessenseformanybusinessestodevelopaluxuryofferingtocapturespendfromtheaffluentbuyer.Inmanycaseshowever,ifamassmanufacturerisperceivedasunappealing,thenitisbettertolaunchtheluxuryproductunderanewbrand:forexample,whenToyotawantedtosellcarsatthehigherendoftheautomotivemarket,theybadgedtheircarsasLexus,ratherthanToyotas.Whataboutyourownbusiness?Areyoualuxurybrand?Orareyouinapositiontolaunchaluxurybrand?Letusvisitsomeofwhatittakestobesuccessfulinluxuryretail.

Letuslookatthethreemainmacroeconomicdriversthatfuelthegrowthofluxurybrands:

• Globalisationo Internationaltourismo Web-based,instant,borderlesscommunicationsspreadingbrandawarenessaroundtheworldo Theexpansionofdistributionsystemsaroundtheworldofluxurybrandso Integrationofworldviews,productideasandculture(socio-politicalstandardisation)o Growingmiddleclass(andnewmillionaires)intheformerthirdworldo Leadstoconspicuousconsumption(toshowoffwealth)

• Consolidationo Themergerandacquisitionofmanysmallercompaniesintomuchlargerones.Forinstance,

LVMHacquiredHengLong´sleatherbusinessinSingaporeinOctober2011o Theplayersintheluxurymarketaremergingandcooperatinginordertogaingreatercontrol

overrawmaterialssupply,inordertoproduceexclusivegoodsandlowertheirtotalmanufacturingcosts.

o Theownershipofbrandsacrossmanycategorieso Independentbusinessesclosingandbeingreplacedbyfranchisesoffamousbrands

• Diversificationo Existingmainstreambrandscreatealuxuryentrantinanewmarket(e.g.Toyotacreatingthe

Lexusbrand)o Allianceswithacomplementarycompany(MobilandBMW)o Trademarkandbrandlicensing(youdon’townthebrand,just‘loan’it)e.g.Appleallowsthird-

partymanufacturerstocreateproductsthatworkwiththeirhardware.Thelicenseeswinbecausetheybuildabusiness,andthelicensoroftheluxurybrand(Apple)formsanentireaccessoriesindustryaroundtheircoreproduct,atnocosttothem;andcollectlicensingfeesintheprocess

Somestatisticsonluxurybrandretailing.

Largestmarkets:• Italy• France• Germany• Switzerland• U.S.• U.K.• Japan• Spain• Brazil• China• Russia• Australia

AccordingtoEuroMonitorInternational,thelargestluxurybrandsin2016are:GiorgioArmani,Prada,Gucci,Tod’s,Dolce&Gabbana,LVMH,Moët,Hennessy,LouisVuitton.Theglobalmarketforluxurybrandsisexpectedtogrowatanaverageworldrateof3.5%toreachalmostUSD400billionby2020.Mostofthisgrowthwilloccurindevelopingcountries(Asia,Africa)duetoimprovedstandardsofliving.TheChinesemarketforluxurygoodsisexpectedtobesome900billionEurosinthenextfewyears.ThisisenormousincentiveforthelargeluxurybrandsfromEuropeandAmericatocreatedistributionthere.However,itisimportantthatadvertisingincountriesoutsidethebrands’homecountryisdonecarefullyandwithregardforthedifferencesinculture.(storyofDisneyLandinParis:mistakes…wine,food,carriages,)Howtoavoidthesemistakes.Howtosuccessfullymanagealuxurybrand?Letuslookatthebusinessofluxuryretailingthroughthelensofthemarketingmixaswetouchonafewofthemostimportantaspectsthatpertaintomanagement.

ProductReferstothephysicalgoodorallthefeaturesoftheserviceoffering.Whatyoucando:

• Productmixo WIDTH:thebreadthofdifferentproductsthatafirmsellstotheircustomerso focussolelyandsellonlyonetypeofproducttospecialisein(Rolexonlymakeswatches)o offernumeroustypesofproductsfordiversemarkets(Versacemakesclothes,hotels,jewellery)o DEPTH:thenumberofvarietiesateachwidth(forexample,aluxurywatchmakerwouldhavea

depthoftwoifitsoldtwotypesofwatches(roundfaceandsquareface)andeachwereavailableintwocolours.

• ProductLineStretchingo Oftenusedtoadda‘highend’producttoanexistingrange(e.g.agedbalsamicvinegarfrom

Modena,pricedwellabovenormal)• Quality

o Features(luxuryitemsmustsurpasscustomerexpectations:e.g.theNovoteloverlookingDarlingHarbourinSydneylacksnothing(room,food,view,transport,etc.)butatthesametime,mustavoidgimmickyextras:e.g.cupholdersinaFerrari)

o Engineering&design(blueprintforhowgooditwillbe)e.g.(BMWsdrivebetterthanFordsforareason!)

o Builtproduction&conformitytodesignspecs(howwellitismanufactured)o Materials(onlythefinestwoolisusedinaZegnasuit)o Stringentqualitycontrolinmanufacture/servicedelivery(zerotoleranceoferrors)o Striveforimpeccablecustomersatisfaction

• Trytoextendtheproductlifecyclefortimelesspieces(Steinwaygrandpianos)• Maintainmodelheritageovertime(e.g.RolexstillmakePerpetualOyster;AlfaRomeostillmake

Giulietta)• Aimfor‘shockandawe’thatyourofferingcannotbemeaningfullycomparedtoanyother

AugmentedProduct

o Warrantieso Packagingo Softwareo Deliveryo Trainingo Certificatesordocumentation(e.g.SalvadorDalilithographyfromPeggyGuggenheimMuseuminVenice

camewithaframedcertificateofauthenticityo Inductionorceremony(e.g.serviceofferingscomewithtoursetc.)o Serviceentitlements(e.g.prestigecarinsurancepoliciescomewitha‘replacewithnew’feature)o Loyaltyprivileges(clubmembershipetc.)o Service(talkaboutthisalittlelater)o Ambiance(talkaboutthisalittlelater)

PriceAlwayssethightoreflectthevalueofthebrandandtherealityofthecoststructureofproducingandretailingluxurygoods.RemembertheeffectofloweringpriceonVeblengoods’elasticity?Byitsverynature,luxuryretailingcouldonlyeveruseamarketskimmingpricestrategyanyway.Tonotdoso,istonolongerbealuxurybrand.Discountsshouldneverbeusedastheyreducethe‘referenceprice’intheconsumermarketAnybundlingmustbewithcomplementaryitemsofequalluxurystatusWhilemaintainingyourretailprice,usethird-partyfinanceoptionstoreducebarrierstopurchaseinanefforttogrowsalesatfullprofitability(e.g.BMWpartnerswithafinancecompanyonrepaymentloansandleasearrangementssotheycanofferinhouse,moreprospectivebuyerstheopportunitytofinanciallymanageapurchaseofaBMW).Forsomeluxuryservices,thiscanalsobeachievedusingasubscriptionmodelforsales.PlaceDistributionshouldremainlimitedandverytightlycontrolled.Luxurybrandsmustresistthetemptationtodramaticallyincreasethenumberofphysicalstorestheysupply,astheincreaseinshorttermsalescanseriouslyjeopardisetheprofitabilityofthebrandlongterm.

Becarefulwiththetypeofdistributionchannel–pickthemosthighlyregardedchannelinyourcategory.Forexample,luxurycosmeticsshouldonlyeverbesoldthroughhigh-endchemists,beautysalonsandpremiumdepartmentstoreslikeDavidJones.Choosesocioeconomiclocationscarefullye.g.boutiquerealestateatWestLakes/Tennyson/Grange/Henley,notElizabeth.Documentyourluxurybrand’shighstandardsandtrainyourdistributors,thenpolicetheirupholdingthosestandards.Wherenecessary,eliminatedistributorsthatdonotupholdthebrand’sstandards.Whereverappropriate,requireyourdistributorstostockonlyyourproduct.(Maynotalwaysbepossible:e.g.apenretailercouldnotfeasiblystockonlyMontBlancpens;butaMercedesBenzdealerwouldneverbeallowedtoalsostockBMWs;andGuccifranchiseesonlystockGucciproducts).Wheredeliverisrequired,ensureyouusetheverybestdeliveryserviceandthatthedriverinteractswithyourcustomerinamannerthatbefitsthebrand.PromotionObviously,mustconveyluxury,exclusivity,prestige,afeelingof‘beingspecial’acrossallpartsofthepromotionalmix;bothintermsofstrategyandexecution.Salesstaffmustalwaysspeaktocustomersinawaythatrepresentsthetotalvalueoftheproduct(i.e.boththecoreandaugmentedaspectsoftheoffering)soastojustifythehighercost.Onlyuseappropriatemediavehicles:e.g.chooseglossynationalmagazinesasopposedtoaneighbourhoodnewspaper.Alwaysusethehighestpossiblestockonprintedmaterials(e.g.thickpaper)Ensurethehighestpossibleproductionvalues:e.g.videosmustbeprofessionallymadeinhighdefinition/cinematiceffect;websitemustbestunning;andgraphicdesignmustbeworldclass.Anythinglesscheapensthebrand.Ifyoudoanysalespromotionsinordertoachieveshorttermsalesboosts,thesemustNEVERresultinadiscountintheretailprice.Usecobrandingpartnershipsorserviceaddonsinsteadtoincreasetheperceivedvalue.Forexample,aluxuryshoeshopcouldincludeavouchertofor‘executivefootmassage’witheverypairsold,butonlyforalimitedtime.Websitesmustbefunctionpristine,beresponsive,ofimpeccabletasteandintegratedwiththecorporatebrandNote:Foramorethoroughdiscussiononservices,pleaselistentoepisode103ofTheBusinessFirmpodcastiniTunes.PhysicalEvidenceItgoeswithoutsayingthatthequalityofallphysicalevidencethatisassociatedwithluxurybrandsmustbeextremelyhighandmustconveyalltheprestigeandtheuniquecharacterofthebrand.Ifyouaresellingaluxuryservicesuchassuchasanoperaperformanceorexecutivecoaching,thenyoumustworkextrahardatdevelopingexquisitephysicalevidencetoprovidethecuesyourcustomersneedinordertomakeanassessmentofthequalityofyourbrand,inparticularifyousellahighcredenceservicetheycan’teasilyassessthequalityof,suchaschemicalengineering,medicaladvice,marketingconsulting,computernetworksmaintenanceetc.Butforallluxurybusinesses,eventhosesellingphysicalgoods;physicalevidenceprovidesmaterialproofthatreducespurchaseapprehensionandtheconfidencethattheluxuryitemindeedoffersthevalueitpromises.Keepinmindthatinteractionswithothercustomerswillhavealargeimpactonbuyersofyourluxurybrand.(protectclientsfromnon-clients)Physicalenvironmentinwhichbrandisboughtorconsumedo Ambience(luxuryhealthspaversusagrottygym)o Spatiallayout(plusimpactonserviceconsumption)e.g.Applestoreso Corporatebranding(signs,symbols,artefacts)ErmenegildoZegnastorehaveidenticalo Buildingitself&design&elevation&viewo Interiorso Packaging(lastchancepitch&differentiator)i.e.coulddoentireepisodeonpackaging!

o Paperwork(invoices,tickets,programmes)o Furnishingso Signage(highquality,professionallyinstalled,perfectfinish,integratedwithbrand)o Uniforms,dresscodeo BusinesscardsListencarefully!Thetwobiggestdeterminantsofyourorganisationsabilitytodeliverhighlevelsofcustomerservicequality(whichiscriticaltoluxurybrands)aretwomarketingmixvariablesofPeopleandProcesses.Infact,themostwidelyusedmeasureofcustomerservicethatisusedinmanagementpractiseisintheSERVQUALmodel,whichtracks:reliability,responsiveness,competence,access,courtesy,communication,credibility,security,understandingthecustomerandtangibles.Ofallofthese,onlythelastrelatesdirectlytothephysicalproduct.AltheothersarefunctionsofthePeopleandtheProcessvariables.PeopleBeginwithaproperunderstandingofwhomthecustomerexpectstodealwithwheninteractingwitharepresentativeofyourbrand.Thebrandpromisecomestolifeinthepeoplethatrepresentit.Buyersbuyfrompeoplethattheylikeandtheycanrelateto,sotheattitude,skillsandappearanceofallstaffneedstobefirstclass–eventhosethatyoudon’tcontrol(e.g.couriersetc.).So,aquickvisitofaspectsrelatingtopeople…Thebestproduct,engineering,promotion(ads,pr),physicalenvironmentetc.canberuinedinamomentwhentheattitudeorthecompetenceoreventhepersonalityofthepersonsellingitisnotuptospeed.Thisappliestoallcommerce,butespeciallysoinluxuryretail.

o Mustfirstbemodelledbyleadershipo Developclearexpectationso CreateappropriateSOPs,trainingprogrammes,helpmanuals,supervisorysystems(forbelonging&

recognition),rewardsetc.o Recruitment

o Policiesthatprecludeamateurintakeofstaff(forcedprofessionalrecruiters)o Jobdescriptionsthatfilterapplicants

o Traininganddevelopmento Frontlinemanagemento Learningorganisation(allowforsalesstafffeedbackloops>productdevelopment)

o Rewardsandincentiveso Monitoringperformanceisveryimportant(particularlyinluxuryservicese.g.theoutputofapoorly

performingcarworkercanbekeptfromcustomersbywayofqualitycontrolinspections,butabadfacialdeliveredbyrudebeauticianforwhichtheclientpaidbigdollarsfor,cannot.

o YouremployeesmustbethemostpassionatedisciplesofyourbrandwithfullbeliefandenthusiasmProcessProcessesincludedirectactivitiesandindirectactivities.Directactivitiesaddvalueatthecustomerinterfaceastheconsumerexperiencestheservice.Manyprocessesaresupportedbyindirectactivities,oftenknownasbackofficeactivities,whichsupporttheservicebefore,duringandafterithasbeenconsumed.Youroperationsmanagementisfusedintotheexperienceyourcustomerswillhaveofyourluxurybrand,inparticularinservicesettingswheretheclientbecomesaco-producerinthatservicedelivery(e.g.asingingteachercan’tdelivergoodcustomersatisfactionunlessthebuyer(thestudent)alsoputsineffortin‘producing’theserviceoutcomeoflearning).Processes(alongwithPeople)areakeydifferentiatorofluxurybrands.Serviceblueprintingisapractisewhereyouchartallthestepsofeveryprocessintheorganisationandassesswherechangescanbemade(i.e.eliminatesteps,addsteps)thatwillleadtoanimprovementincustomersatisfaction.Forexample,ifyouhavealuxuryhotel,yourclients’expectationswouldbetohaveanamazingstay.Overandabovetheluxurioussurrounds(i.e.physicalevidence),theyexpectfrictionlessservicedeliverywherealltheirneedsgettakencareofautomaticallyforthemandwherealltheycouldwantautomaticallyawaitsthem.(giveexamplesofneedsandwants)

Byperiodicallyredesigningyourretailworkflowandoperationsprocesses,youcangetcloserandbetteratsurpassingyourclient’sexpectations.Inretailingofluxuryproducts,havingthecorrectprocessesarefundamentalindeliveringincrediblecustomersatisfaction(beyondjustthequalityofthegood).Beginningwithpurchasing,maintaininginventorylevels,warehousing,internalshipping,scheduledcleaningofstores,accuratestocktaking,electronicpaymentoptions,waitingperiods,fillingoutforms,accountingsoftwarethatdisplayscorrectpriceforregion,effectivereorderpointtriggeringtopreventoutages,howyouhandlequeuing.Processesareincrediblyimportantintimesofcustomerreturns(availabletime&geography),runningcompetitions(howtakeentrycodes),providingupgradeoffers(e.g.MacOSSierra),andeliminatingtheneedforcustomertorememberthingsorfeelforgotten(e.g.ITserviceticketswithdetails,carrepairupdates,trackingofshippedgoodswithestimateddeliverytimesforthereceiverandsender).Wehavecoveredsomeoftheareasthatdecisionmakersinluxuryretailorganisationsmustmanage.Thereismuchmoreinformationthat…Wewillnowhearfromaworldleaderinhigh-endretailandsomeofhisexperiencesofthebusinesssideofinternationalluxurybrandretailing.PleasecomewithmenowtothePresidentialLounge.

SeeAdditionalResourcesEhrenbergBassInstitute:https://www.marketingscience.infoYourGameChangingSkill:www.gamechanging.com

Interview

In this episode, we have the privilege to hear from il Signore Davide Bonanni Cavaliere (English: Sir DavidBonanni).Heisahighlysoughtafterconsultanttoluxurybrands.Hehaslivedhislifeintheworldofupmarketretailinindustriessuchasfashion,hotels,foodproductionandfinedining.HeiscurrentlywiththeiconicfashionhouseGiorgioArmani and Iwas able to spend some timewith this gentlemanwhile inAustralia fromRome,beforeheheadedofftoSingapore.In this interview he shares some of his experiences in the management of luxury brands and his powerfulknowledgeofhowtocreateexquisitecustomerserviceinluxuryretailing.Thisinterviewblendsbeautifulwiththeinformationgivenbymyselfinmydiscussionprior.Ihopeyouenjoy.Davidcanbecontactedbyemail:david@luxuryretailconsulting.com

Audience Question

Today’squestioncomesfromJason.Heownsamilkroundandisconcernedaboutthedemiseofhomedeliverymilk.Heasksforanyhelpingrowinghisbusiness.

o Milkvendingisindecline,buthomedeliveryisingrowtho Get maximum ROI on the fixed cost by selling more refrigerated products such as fresh juice and

expensivecheeses,pate,caviar,smokedsalmon(andsomenon-refrigeratedsuchasnewspaperasan‘in’to sell higher value items such as glossymagazines and even expensive spices like vanilla, saffron orbalsamicvinegar.

o Choosesmall,butexpensiveproductstomaximisesalesinthelimitedspaceofamilkvan.o Canbedoneasyourownstockyou’veboughtorothers’onconsignmento Setuppartnershipswithsupplierssoyouusetheirstock(theirasset)andyousimplydeliver,butensure

thecustomerordersdirectlywithyou,sothesupplierscan’tcircumventyou(andyoubuildadatabase)o Considerelectronicorderingthatworksbehindthescenesforyou(i.e.others/suppliersdopickingand

packaging)soyouarefreetodelivero Considerdelivery through theday,particularly towhereoldpeople liveasyoucanbuild relationship

andcreatecrosssellopportunitieso Remindparentsofthe‘magic’theyhadwhenabottleofmilkwaswaitingoutsidethedoorforthemo Usegiveawaystopromotemilksalese.g.chocolatepowder,custardpowderetc.

ListentoEpisode102tohearallofSteven’sadvicetothisquestion.ItcanbefoundiniTunesunderBusiness.ThisisthefavouritepartoftheshowforhostStevenCavallobecausehegetstodirectlyhelprealpeoplewithanactual problem they are having in the areas of business development,marketing, sales or fundraising. Stevenfeaturesoneoftherecordedquestionssentinbylisteners,andplaysbackthatrecordingonair,alongwithhiscommentary.Tosubmitaquestion,pleaserecordyourquestionasanmp3(maximumfilesize10Mb)thatisnolongerthan60secondsandemailitto:answer@thebusinessfirm.com.auWhilewe canaddressyour issueandprovide somevaluable insight forquestions featured;of course,we canonlygointobriefdetailintheminutesavailableinthepodcast,soweencouragelistenerswhowantmoreformaladvice(regardlessofwhethertheirquestionisfeatured)tooutlinetheirspecificproblem/opportunityandemailitdirectlytoconsulting@thebusinessfirm.com.auandyouwillgetareplywithin24hours.

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