The Hindu Business Line : Know the customer intimately

It may be no secret that Victoria’s Secret, known for lingerie and beauty products, earned an operating income of $1 billion in 2006, on sales that crossed $5 billion. Or that the sales of ‘this remarkably powerful brand’ is anticipated to double in five years, as Leslie H. Wexner, Chairman and CEO of Limited Brands, declared in the 2006 annual report.

But not so well known may be the fact that Wexner bought the first VS store for $1 million in 1982. The shop had been started in California five years earlier by “Stanford Graduate School of Business alumnus Roy Raymond, who felt embarrassed trying to purchase lingerie for his wife in very public and awkward department store environment,” as Wikipedia recounts.

“After seeing the store, Les got the idea to reinvent underwear as lingerie and make underwear emotional – have underwear make you feel good,” write Leonard M. Lodish, Howard L. Morgan and Shellye Archambeau in Marketing that Works ( www.pearsoned.co.in).

“Les was influenced by how he thought European women viewed underwear much differently than American women. A brilliant idea early on was to use supermodels.” The idea worked. By 1995, he had an $800-million business, and 300 retail stores.

“I began as a shopkeeper. I am still a shopkeeper. I see the world that way,” professes Wexner in his company’s annual report. “In one store. In four thousand. Doesn’t matter. It’s all about knowing the customer, not from data or research alone, but knowing her like a friend. Intimately.”

VS has succeeded the same way Starbucks has, say the authors. “Changing how people view a commodity – by changing VS into a relatively inexpensive way for women to feel good about themselves.” Having own stores has been a very important competitive advantage to Wexner. In contrast, his competition that sells through department stores has “a much riskier proposition trying to evaluate and roll out new product lines.”

Just one of the many secrets in the book!

Too big to feel good

Marketing that Works Leonard M. Lodish, Howard L. Morgan and Shellye Archambeau

Charles Fishman tells the story of “how an out-of-town superstore became a superpower” in The Wal-Mart Effect ’ ( www.crosswordbookstores.com). “Although Wal-Mart has stayed true to its original core value – always low prices – the company has now grown so large, and evolved in so many ways, that it no longer truly understands its own culture clearly or effectively – ; or understands how it is perceived by the rest of us,” frets Fishman. “One of the great ironies of Wal-Mart’s success is that the very things that allowed it to thrive so inexorably are now the source of so much criticism.”

The author finds that Wal-Mart’s isolation in Bentonville is a source of the company’s lack of perspective, “about itself, about its public perception…” There are also other troubling elements in the planet’s biggest company. Such as, “Low wages, unrelenting pressure on suppliers, products cheap in quality as well as price, offshoring of jobs…”

Coherent arguments.

D. Murali

http://BookPeek.blogspot.com