white paper Are your customers buying your shopping experience or someone else’s merchandise? SUMMARY • Retailers need to view their business in terms of customer needs
• Customer’s
choose a retailer because the retailer meets a need that transcends the merchandise
• Delivering
consistently excellent experiences is different from becoming an experiential brand
“Great retailers don’t deliver experiences in order to sell stuff. They sell stuff to amplify experiences!” Laurence Bernstein has been fine tuning the art of converting features, attributes and benefits into dynamic, experiential brands for 20 years. This White Paper looks at the retail purchase from the point of view of the customer, and asks the question, “what comes first, the merchandise or the merchant?”.
H
ave you ever wondered why
dise just to get customers to cross the
young Chinese men and
lease line?
women will spend several
months salary on a scarf or handbag from Gucci when they could buy an exact replica for a few dollars, just down the street (the replicas are uncanny and I defy anybody to tell the difference)? Have you ever wondered why otherwise perfectly sane people willingly line up for a Tim Horton’s1 cup of coffee, when there are three other alternatives within ten feet? And have you ever wondered why some stores have to discount their merchan-
The answer is that some brands are experiential brands and others remain retail brands. Many retail brands deliver experiences, or focus time and attention on delivering “consistent, excellent customer experiences.” However, they still see themselves primarily in the business of selling merchandise or serving meals or coffee – the experience is an added value or attractive come-on, designed to increase sales of merchandise, meals or coffee. Managers of Experiential brands, on the other hand, see themselves as selling
1
416.967.3337 www.proteanstrategies.com
Canadian based chain of quick-serve coffee/ donut restaurants
experiences, where the merchandise is seen as a way of delivering the experi-
“Success depends on being unique and different in ways that transcend the product or service you are selling.”
ence – in a way, the merchandise is an
in the pure prestige of the brand – if that
added value or come-on to increase
were the case they would buy the rep-
sales of experiences. Which makes im-
lica. Similarly, the $200 scarf does not
minent sense for two reasons: authentic
perform or function any better than an
experiences are unique, and the margins
$8 copy. What is in play here is the in-
on experiences are much higher than
trinsic experience of the purchase contin-
margins on merchandise.
uum: what it means to buy a scarf for a
Specifically, experiential brands are fo-
girlfriend at Gucci. There is a feeling of
cused on the way the brand makes the
hope, a feeling of wellbeing, experienced
customer feel, not just in the store, but
in anticipation of the purchase; there is
also throughout the process of thinking
the physical and emotional thrill of the
about, buying, using and remembering
actual visit to the store. There is the
the product. This is a deeper, more relevant experience than is generally dis-
feeling of satisfaction and pride when the girlfriend opens the bag and sees the
cussed when talking about “in-store ex-
scarf. And finally, there is the feeling
perience delivery,”
that recurs for years every time the scarf
In an era where there is pretty much
is worn..
nothing that cannot be replicated and
How does this relate to a cup of Tim Hor-
sold for less, or improved on and sold for
ton’s coffee? Again, it cannot be because
the same, success depends on being
of the convenience, and there is abso-
unique and different in ways that tran-
lutely no prestige; and, to be honest, the
scend the product or service you are
coffee doesn’t really taste any different
selling. As a retailer, competitors can
from any other quick-serve coffee. Peo-
replicate pretty much everything you do
ple would rather line up at Tim Horton’s
– the way the store looks, the merchan-
because of the way the entire experience
dise you sell, the words your sales asso-
makes them feel about themselves and
ciates use, even the way they look. The
their lives – the many things that that
only thing that cannot be replicated is
have nothing to do with the coffee, but
the way your customers feel when they
have everything to do with the overall
leave your store or relive the experience
experience of wellbeing, community and
when they us the merchandise they
fitting in.
bought from you. This is what we call
Stores that find themselves chasing their
the differentiated brand experience and
prices downward and discounting their
it is the essence of great retail and
merchandise are those that focus on sell-
transactional brands.
ing the merchandise, not the experience.
Getting back to the young people in
While it is true that many of these store
China. Clearly, the payoff for them is not
brands invest heavily in “delivering a Page 2
great customer experience, every time,”
the store, but to the brand and the ex-
these experiences are theatrical, tempo-
perience.
rary, and designed to provoke a specific
“Stores that find themselves chasing their prices downward
response such as “stay in the store longer and browse more,” or “be surprised and seduced to buy on impulse.” This form of experience delivery falls into the sphere of “Experiential Marketing,” which is a tactical approach to building sales and loyalty. “Experiential branding,” on the other hand, is the
and
strategic positioning of the brand in such
discounting
a way that it transcends the store or the
their
product or the service. Experiential branding suggests that the brand is de-
merchandise
fined by how the experience makes the
are those
customer feel, not by what the product
that focus on selling the merchandise, not the experience.”
or service does for them. It is inherently
Two great experiential store brands come to mind: Old Navy and Abercrombie & Fitch. Neither of these is particularly original in what they do or what they sell. They are also not particularly original in their sales and communication strategies: Old Navy sells an edited collection of great value clothing that fit a specific life style; Abercrombie and Fitch do the same thing, except the way they define their target lifestyle means that the value be found in the style of the clothes, rather than the price. This is very likely, give or take a word or two, the mission and value proposition of almost every branded retail chain .
more customer focused and is, to a much greater degree, about the consumer and not about the company.
Laurence Bernstein is the founder and managing
Stores that focus on delivering a great
partner of Protean Strate-
customer experience every time are not
gies/The Bay Charles
wrong – experiential marketing is the
Consulting Group Limited. He has been a leading
fastest growing sales and communica-
proponent of the “new order of differentiation”
tion field. The problem, very often, is
and has written and lec-
that these experiences generally do not
tured on the subject of
aggregate into a single meaningful, dif-
experiential branding and intrinsic/extrinsic
ferentiated experience that is insepara-
research methodologies in Canada, the US and
ble from the brand essence. If the experiences delivered in the store or around the product are each strategi-
China. In addition to a highly successful 20 year career in advertising and marketing he held senior positions at Westin Hotels and The Canadian Restau-
cally designed to support the brand’s
rant Association. Laurence attended the Univer-
fundamental position, then the customer
sity of the Witwatersrand in Johannesburg and
will feel the meaning of the brand. Providing the experience is relevant, he or she will be prepared to pay more for it and develop long term loyalty – not to
Cornell University in Ithaca , New York This white-paper is based on the original paper on the subject written by Laurence Bernstein and published in the Cornell Quarterly in April, 1999.
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The question becomes, why is it that no
perience, the essence of the brand, is
matter how hard these stores try to rep-
the same.
licate the experiences delivered at Old Navy or Abercrombie & Fitch, they just
“Experiential branding suggests that the brand is defined by how the experience makes the customers feel, not by what the product or service does for them.”
don’t achieve iconic status and they remain vulnerable to competitive discounting?
The Chinese kids buy scarves to complete an experience they crave, and Hermes and Gucci neatly wrap the experience in a scarf and sell it in a box. Men and women, old and young line up not to
The reason is that both Old Navy and
buy a cup of Tim Horton’s coffee, but to
Abercrombie & Fitch understand the ex-
buy an experience – and it’s great that
periential need of their customers at a
Tim Horton’s includes a cup of coffee at
deeper level, and are in business to de-
no extra charge.
liver this deeper experience, as opposed to sell clothes. This approach has resulted in both these stores being equally appealing to boys and girls because, while boys and girls need and want different clothing, these stores have understood that boys and girls are looking for
The difference between visionary retail brands and brands that have to fight for every dollar of margin lies in the fundamental understanding of the business they are in – great retailers don’t deliver experiences in order to sell stuff. They sell stuff to amplify experiences.
the same experience in the realm of dreaming about, buying and using clothes. What these kids are looking for is so far removed from the physicality of the clothes, or even the look of the clothes, that there is no reason to market boys clothing to boys and girls clothing to girls. They market the experience and, as we have seen, the experience is the same for boys and girls. In effect, Abercrombie and Fitch understand that the way being an Abercrombie and Fitch customer feels to boys is the same as it is for girls. The tactical support – the merchandise, the store design, the in-store experience, the pricing and so on – may, by necessity, be slightly different. But the end-game ex-
Protean Strategies is a Toronto based management consulting firm specializing in developing brand strategies and providing a full range of consumer research services. Since its inception in 1997, the firm has provided breakthrough strategies for leading Canadian and US brands, including General Motors, Fairmont Hotels, Canadian Tourism Commission, American Express, Dell Canada, Energizer Batteries, Unilever , Procter and Gamble, Allstate Insurance and advertising agency partners in Toronto, Calgary, New York City, Chicago , London, Amsterdam, Frankfurt and Shanghai. Www.proteanstrategies.com * 416.967.3337
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