Thursday, December 18, 2008
Analogy #228: Fashionality
When I was a young teen, I really did not pay much attention to fashion. Clothing and style weren’t important to me. As one might expect, by not paying attention to fashion, I often ended up not being in fashion. As a result, other kids at school used to make fun of me and laugh at me behind my back.
Fortunately, I had some friends who would occasionally clue me in to my larger fashion faux pas. Without their help, I would have been a total social outcast.
Most teenagers are really into fashion. Status and acceptability with teens is closely linked to your fashion statement. Make the wrong fashion moves and you are ostracized.
Fashion-consciousness is not just important to teens. It is also important to business. Virtually all products have a fashion component to them, what I call their level of “fashionability.” If you ignore the fashionability of your products, you can become the social outcast of your customer group, leading to declines in market share and profitability.
The principle here is to pay heed to the “fashion triggers” of your industry. Now at this point, you may be thinking that this principle applies to clothing, perhaps, but not my business. Well, I believe that there is an element of fashionability to ALL products.
Fashionability includes those external factors which change the demand for your product (up or down), even though the performance of your product (relative to competition) remains unchanged.
For example, take a sack of potatoes. The quality, taste and nutrition value of potatoes remains relatively constant over time. Yet the demand for potatoes rise and fall over time due to external economic conditions. When the economy is bad and people feel poorer, potatoes are more “in fashion.” They are the fashionable way to “fill the tummy” when times are tight. When the economy is good and people feel wealthier, potatoes are less in fashion, with the fashion moving to better cuts of meat.
Within the potato business, organic is becoming more in fashion, so the growth segment within potatoes is in organic potatoes.
And how about those SUVs and pickup trucks made by US automakers? The quality and performance of the trucks did not suddenly plummet in 2008. In fact, the quality and performance might be even better. Yet sales of these SUVs and Pickups plummeted in 2008. Why? They became less fashionable. Higher fuel prices, the rising importance of the green movement, and a rise in “frugality chic” made these vehicles a less desirable fashion statement.
Most consumers never take their off-road SUVs off the road. The four-wheel drive feature is seldom ever used. They never need to put a ton or two of cargo into the back of a pickup. These rational quality and performance features were not the driving (pardon the pun) force behind these purchases. The SUVs and pickups were purchased as fashion statements. They made the owners feel “cool” and powerful—admired by their peer group.
Since the features did not drive the sales upward, it should not be surprising when the sales plummet even though the features actually got better. When owners of SUVs and Pickups became re-labeled as “wasteful harmers of the planet” (rather than cool and powerful), the fashion element went away (as did the sales).
Although the US automakers have done a lot of things wrong, I think one of the big mistakes has been their inability to become leaders in embracing the fashion whims of their industry. They’ve been late with small cars when small was in fashion, late with hybrid cars when that was in fashion, and so on.
If fashionability affects all products, then smart strategists should see at least a portion of their strategy as an attempt to manipulate that fashionability to their advantage. Below are some tips on how to do that:
1) Identify the fashion triggers for your product.
What factors cause your industry sales to rise and fall regardless of performance? What causes some firms in your industry to gain or lose market share regardless of relative performance? What makes some products or brands “cooler” than others? What factors make your customers look good or bad to their peers? If you can answer these questions, then you can identify the fashion triggers in your industry.
They may be economic triggers or they may be social triggers. They are whatever impacts the image of the person who purchases that product. If it is a social trigger, what puts a person on the top of their social ladder? Is it being the most innovative? the least risky? the most eco-friendly? the most caring?
You cannot manipulate what you do not understand. Get to know what the key triggers are.
2) Get In Front Emerging Fashion Trends
Fashion changes over time. What was “in” becomes “out” and vice versa. If you do not want to be a brand on the “out” you need to embrace the next new definition of what is “in.”
Being reactionary rarely works. By the time you identify the next version of “cool” already in effect in the marketplace, someone else has already captured that space. You will always be seen as a fashion laggard—a step behind and a bit out of date.
One needs to be pro-active—looking for the next big fashion trigger before the trigger is pulled. That will give you time to create the strategy which captures the moment when it arrives.
3) Manipulate Fashions to Your Advantage
Fashion triggers are not an exact science. You can influence them. Look at who you are and what you are good at. Then try to make that the right fashion statement. Heinz took a performance negative (hard to get its ketchup out of the bottle) and made it into a fashion statement (great ketchup is thick—having thick ketchup that is hard to get out of the bottle makes you look like an astute ketchup shopper).
4) Don’t Just Focus on Performance
If factors beyond performance impact sales and profitability, then don’t just look at performance. The time and effort spent to make small, incremental improvements to performance may have been better spent on improving one’s “fashion” statement.
The successful advertising campaign by Apple rarely talks about performance. Instead, it talks about why it is more fashionable to associate yourself with Apple. Yes, the ipod performs well. Microsoft’s Zune also performs well. But which makes the stronger fashion statement?
When times get tough, just improving performance may not suffice. You can make the performance of an obsolete product better, but it may still be obsolete. It may make more sense to reposition yourself on the fashion trigger.
5) Keep a Flexible Portfolio
If you put all your eggs in one basket (i.e., concentrate on only one product) then you may be screwed when that one basket goes out of favor and becomes unfashionable. Having a portfolio of products helps in many ways. First, what is in fashion with one segment may be different with other segments. Having more products allows you to better target the fashion trigger of each segment more precisely.
Second, having a portfolio increases the chance that when fashion changes, you have something else to offer which is in tune with what is “in.” Because the US automakers had pretty much abandoned small cars in their portfolio, they had little to offer when their big trucks and SUVs went out of fashion.
Third, even if you do not offer lots of options, one can benefit from having several ideas in developmental stage. That way, when the fashion changes, you can ramp up whatever developmental project is most appropriate, rather than losing the precious time from having to start from scratch.
6) Don’t Fear Cannibalization
Ford invented the minivan, but did not introduce them, because of fear that it would hurt their highly successful station wagon business. Well guess what? When Chrysler introduced the minivan, station wagons went out of fashion and Ford was hurt anyway. Ford would have been better off killing off its station wagons with its own minivan than to have another company do it to them.
Apple remains cool, in part, because it embraces cannibalization. It continually introduces new products to make the old obsolete. This helps Apple keep a strangle-hold on the cool factor and leaves no room for competitors to take it away.
All products have an element of fashionality in them. If you want a successful strategy, then you need to understand how to use that fashionality to your advantage.
When I was a teen, being a geek was considered a fashion no-no. Now, geekiness is considered cool by many. Had I only been born in a different generation, I could have been naturally in fashion.