3 Ways Luxury Manufacturers Drive Sales During a Recession

Dollar stores, discount big box retailers and fast food chains saw the silver lining that comes with every recession, but they were not alone. Companies that manufacture luxury products refused to accept a decrease in sales with a drop in consumer spending power. Below are three examples of how luxury companies weathered the storm:

1.  ”Used” is such an ugly word; BMW focuses on pre-owned

BMW, among the best examples of a luxury automotive manufacturer, saw a decrease in sales caused by the recession. Instead of strictly pushing new sales, they reinvented the idea behind owning a used car.

According to Bloomberg, “U.S. sales of so-called certified pre-owned luxury autos rose 4.7 percent this year through August, bucking a 31 percent drop for new luxury models, according to researcher Autodata Corp. BMW, Lexus and Mercedes certified sales jumped 14 percent.”

• Takeaway:  Companies can retain the value of their brand without dropping prices. Provide or emphasize options that already exist at lower price points.

2.  Apple drops prices while introducing features

Earlier in the month, Apple introduced a refreshed line of iPod nanos with perhaps the most significant technological improvement since its introduction:  the ability to shoot and record video. And they did it with a $20 reduction in price.

• Takeaway:  Reducing prices alone makes a company look desperate, and the practice harms their brand. Reducing prices while adding features strengthens their brand while remaining competitive.

3.  Louis Vuitton/Ralph Lauren looks to the East

Reuters and Bloomberg report that LVMH and Ralph Lauren are looking to expand and penetrate China and Lebanon in the next few years, and their expansion has already begun. Companies like these want to lay the foundation for years of growth by increasing the percent of revenues derived from emerging markets.

• Takeaway:  All markets are affected during a global recession, but not all markets are affected or respond equally. Modern-day executives should pay attention to opportunities abroad.

The One Question Google Asks All of its Products

Take a look at some of the web services Google has grown, bought or cultivated in its web arsenal.  We have their basic search, the AdWords network, YouTube, Maps and Streetview, Gmail, Documents and Calendar, just to name a few.  We also see some of those little products that don’t quite appear on the main page but they still support, like Google Earth, Chrome, Goog 411, Knol, Picassa and trends.

Some products are related directly to search and finding answers to information, but others (especially products like the now defunct Lively) entered into new worlds and industries.

How could Google possibly evaluate every product and whether or not to continue to support each initiative?  After all, many of Google’s products have yet to turn a profit.  Services like YouTube alone are run at a lost, and YouTube is probably a few years away from entering into the black.

In an article for the New York Times, senior vice president of engineering Jeff Huber says, 

“There’s no single equation that describes us, but we try to use data wherever possible [...] What products have found an audience? Which ones are growing?”

Ultimately, Huber says people at Google ask, “is there an interest in our products?”  If there is—like YouTube—it’s likely they’ll continue to support the initiative, even at a financial loss.  If there product hasn’t found a strong audience—like social mobile network Dodgeball—it’s unlikely they’ll continue with the service.

Secondary questions come in to play as well, such as “does this service solve a substantial problem?” or “did this product have trouble attracting Google employees for development?”

How anyone can use this question

Modern executives, bloggers and entrepreneurs can use the question of “is there an interest in my product?” for almost every new venture.  

• For online entrepreneurs:  Let’s say you took the initiative to launch your own social network  in your free time a few months back.  Take a look at the people using the network.  Are people relying on your service and using it regularly? Do you see consistently more account registrations than when you began?
• For modern executives:  Let’s say you developed a new process within your organization to reduce the amount of reports people are creating and, thus, reducing the amount of time people on your team spend crunching numbers.  Are people using your process?  Does your process actually address the problem you created it for, and does it do it well?
• For bloggers:  Let’s say you launched a new type of section on your blog, such as a fresh back of links every Friday.  Do you find your readers, through stat tracking software, reading those links?

Moving forward

Make a list of each initiative/project that you are supporting.  Is there interest?  If not, what steps can you take to get more people involved?  Are you willing to wait a few additional months to see if there will be any interest?

How To: Write a Pitch Letter

Bnet posted an article on how to persuade coworkers by drafting the perfect pitch letter. In addition to focusing on what to say, consider how to express your idea.

A few suggestions from the article:

• The introduction should establish a problem or void that your suggestion will solve
• Make the purpose clear and concise
• Avoid stating personal or political opinions that do not belong in business
• Validate your point by using research or surveys, and make sure the source is both relevant and available
• At the end of the letter, the person should simply only have to give his or her approval to begin the process
• In case the person does not agree, offer to set up a meeting

How To: Get the Most Out of Your Ad Agency

Watching TV shows like Thirty Something or Mad Men gives a glimpse into the lives of advertisers and their agencies. Building a strong relationship between the client and the agency is crucial for the success of the brand and prevents clients from looking elsewhere when the economy begins to shake or sales begin to slip.

In an article for BusinessWeek:

It’s far better to make the marriage work. And just like real marriage, it’s less important to find the right partner than it is to be the right partner.”

Focus on forming a strong relationship between the client/agency. Doing so will provide more security in the future when the future does not look as prosperous.