Alfred Dunhill Ltd: Reconciling Traditions and Innovation in Product and Brand Management - Case Study Example

Case Study: Alfred Dunhill Ltd: Reconciling traditions and innovation in product and brand management Branding for many years has been logos and advertisements but today, it is much more than a name or a logo. It is no longer an image projection but an association of the consumer’s mind and a long term relationship with the consumer on emotional feelings more than the economic transactions. Dunhill’s name has been synonymous to functional and essential luxuries that are ‘unmistakably male’ and also has a very distinct fashion style and caters to the high class, style conscious male population. For luxury brands such as Dunhill, the challenge will be to keep the aspirational aspects of the brand and products alive while allowing more accessibility to extend the brand, defining mature retailing concepts, focusing on service quality and most importantly taking into account customer satisfaction. According to Alicia Perry with David wisdom III, Communication of luxury products is the most important and difficult paradox to manage. Like other brands, they should also communicate that they exist and at the same time protect their selectivity. In their communication strategy, they need to combine selectivity, elitism and rarity. Brand Identity is broken into 4 categories- Positioning, verbal, visual and experimental. From an identity perceptive, positioning is the anchor and sets the right tone for the communication of that company, service or product. It provides the tactical blueprint that anchors the creative vision to then create an identity. For Dunhill, the components would include proposition pitch, price structure, target markets, audience messaging matrix, positioning statement, core essence, history and tradition of the company, identity objectives and technical parameters. Verbal identity on the other hand, could be a name, tagline, copy points of a brochure, descriptor. Promotional tag lines usually have a short life cycle; intended to promote the company, product or service descriptively, Visual identities are composed of several core elements such as logo mark, customer service (p, 7) According to Uche Okonkwo (2007), the rate of internet penetration in different countries is very high. The proportion of the population with internet access in the Unites States and in other developed countries is nearly 95% (Angy Geerts and Nathalie Veg, p3).Internet is a complementary tool in communication strategy and the critical objective is to inform, educate and persuade. It can establish long term relationships with customers and generate a better understanding of their needs through online chat services, knowledgeable personal shoppers, editorial style advice and product suggestions. Browsers and search engines provide more information on the internet of products and services. An irony of modern society is that consumers have very little time to spend in choosing and hence brands focus on online information /content. By integrating consumer data, it is possible to get more information on the specific target group and their requirements. The elements that could reconcile the aspects of online presence are visuals, sound, interactive, usability and customization. Visuals involve the use of the tools such as color schemes, music videos, slide shows, advertisements, three-dimensional view of the products, ability to zoom, style and size. The homepage is the first contact of the customer and therefore it is very vital that the page is carefully shaped to create an impact and drive the client into the world of luxury shopping. Interactivity and usability is also a very important factor that Dunhill needs to consider. The use of explanatory videos to support the know how of the brand and the ‘sound walk’ (audio guide application) to bring the cybernaut into the world of travel. The website must be user friendly and allow the users to navigate. Consumers would expect excellent service and interactivity adds more value to the online experience. The best way to make a brand impression is to be extremely creative in the chosen luxury segment. On the other end of the spectrum, Dunhill should also be intimate, and have direct relationship with customers so that they find value in being loyal to the Dunhill brand. They should also conduct regular focus groups and collect weekly regional customer questionnaires to stay plus with the market. Luxury is quickly becoming about relationship over product and brand awareness depends more on close customer relationship over flashy marketing stunts. Personalization and customization of the products and services is one of the aspirations to introduce in the luxury market and personal attention to every customer with the knowledgeable personal shoppers makes the customer feel more special and important. Dunhill needs to keep in mind that the internet should re enforce the brand core central values and utilize the internet tool as an interactive application. Real coherence between the values expressed by the brand’s traditional channels of communication and those in the internet. (Angy Geerts, Nathalie Veg) The relevance of maintaining consistency for brands in the current market is categorized by diverse cultures, increasingly empowered consumers ,ever changing trends and customer preferences are the one critical aspect of any company’s marketing strategy. Consistency is often mistaken by brands for complacency or static existence. Consistency refers to the ability to convey the brand identity, brand image and brand essence but this should not come at the cost of the brand refusing to constantly adapt to dynamic ever changing market structure. Carrying out both the contradictory things successfully is highly challenging for a company like Dunhill. The brand Dunhill is born from a philosophy which is to capture the spirit of the past and recreate it for the modern consumer. This brand comes with a history, they have been through financial recession, wars, other economic climates and the consistency with which they have managed themselves to this date would indicate ‘business as usual’. In order to stay alive and in competition in the business and to balance the longevity and heritage on the other hand, Dunhill needs to constantly keep upgrading and reinventing by keeping the traditions of the brand alive and also seek to incorporate and blend their history in the marketing communication. The origin of most of the luxury products are not in successful business plan but sustained business for centuries. Considering the centuries of change that Dunhill have witnessed, it stands out not only for the product quality but also the cultural heritage they carry for decades and the ability to drive demand continuously by innovating through legacy qualities – indulging customers, delight them, inspire and keep a state of sustained desire. A classic example of this is Alfred Dunhill developed a luxurious line of accessories ‘Dunhill’s Motorities’. His first collection included car horns, leather overcoats, picnic seats and goggles. This rich elegant illustrated history reflects the company’s pursuit for quality and excellence. Heritage branding is the new strategy to create a great impact in the market and Dunhill can use this and reinvent with the changing times to suit the customer needs. Dunhill is using talents to dig deep into rich heritage, re-interpret old designs and restore focus to the venerable and quirky luxury goods label and focus on core expertise. Significant part of Dunhill brand is its reputation for innovation and invention. Dunhill grew up to global prominence due to its ability to constantly create products even before other companies could conceptualize them but in order to be successful consistently throughout in the current completive globalized market environment, it has to make itself relevant to the current customer segments. When marketers identify a stage where it needs to keep up with the current market, Dunhill would need to inject a new life in the brand by adding new products lines and this activity is called product rejuvenation. The fundamental guidelines for opting this strategy are Regain focus- Effects of unrelated diversification lead to confusion in the minds of the consumer. Operating in number of diversified businesses in product lines and markets is justified but from the brand perceptive such diversification is sometimes more detrimental than useful. Dunhill transformed into global businesses with several categories such as timepieces, clothing, automobile and men’s accessories but despite a strong mix and rich heritage, this expansion in product lines and markets led to confusion and lacked identity. Dunhill redefined the strategy by focusing on expertise areas such as leather goods, menswear and watches. Marketing and customer service- Most companies need to accomplish 3 transformations to gain loyalty .1st factor is by changing the mass production to developing new individualized customer solutions through designing and R&D. 2nd factor is to design strategies for customer specific sales and services and 3rd factor is to have incentive scheme to reward creativity when dealing with the customers. An example for this is that Dunhill videotapes and analyses the interaction between the counter sales people and the customers to gauge customer service provided and provides huge incentives to their employees. Marketing can be in the form of extending product options, adding valuable customer service. Leadership-Many luxury brands and products have emerged that provide tough competition to Dunhill. In this scenario, Dunhill can regain its dominance only if it is guided by top notch brand oriented leadership. They should evaluate the identity of its brand to its customers in the changing times and take appropriate decisions. Innovation and design- Given the aggressive strategy by all the competitors along with the superior designs ,customer oriented features etc it becomes important for Dunhill to regain the market with reinvention and recreating the magic and spirit of Dunhill. Relevance to current customers and the ability to morph into a brand that can reflect customer needs prove very critical for the company to get back to the top slot in the current market. Entering new markets- Positioning decisions require a specification of the target market and the nature of competition to set the competitive frame of reference. The target market for a brand typically does not constitute all possible segments that make the entire market. However, these market segments represent potential growth for the new brand. Changing brand elements- Although visual brand elements such as logos, colors and packaging have a very deep impact in the minds of the consumers, often brand elements must be changed to convey new information or signal that the brand has taken new meaning. To increase a brand’s equity, one of the most common strategies in today’s world is to extend their brand. Brand extensions allow the companies to take low risks and reduce the risk of launching new products. They enhance, facilitate brand awareness and widen the brand’s attributes. Most brand extensions occur as line extensions, which use the existing names and products and extend into new sizes, shapes and flavors. Improving brand image and creating brand awareness- One powerful way to increase the brand equity is to increase the breadth of brand awareness by propagating the essence and the history of the company and the core competence. A new marketing program is also very essential to improve the strength, favorability, uniqueness and quirkiness. As part of repositioning to the existing positioning, any positive associations that have faded will be boistered and any negative associations that are created will be neutralized. Brands must make the product relevant and meaningful for target customers and also meet the current market. It must enhance the product over and above the basic generic level. Today’s world is characterized by major market and economic changes. Management is often confronted with the dilemma whether to invest in a new product development (NPD) given the technology uncertainties. The changing economic uncertainties with increased global competition, changing customer needs, rapid product obsolescence and emergence of new markets, require NPD to be deployed for all companies especially for luxury brands. There are different approaches in the market such as traditional and option to check if NPD process is apt for the company or not. By treating NPD as an incremental process, option approach gives explicit decision rules with regard to extension of stage wise NPD process, interface between R&D, marketing and finance. Dunhill would need to derive pre and post R&D options to compare the feasibility and this way justified assessment at all stages of the new product initiative can be derived. If the uncertainty in R&D stage is high, then probability of project value return will be low. Delaying market introductions and gathering more information is a better option if uncertainty is high. In this option approach, marketing and financial elements can be included in the initial stage of NPD process. This option approach should incorporate another guideline where commercialization aspects are integrated to improve the NPD process. This option approach is the best as it also takes financial elements into consideration to capture the NPD flexibility value and extend R&D marketing interface to other functions like finance, marketing and design. At each stage of new product development, a thorough in-depth analysis is done to ensure that there is no uncertainty involved and this serves as a base for investment purpose. With the option approach, the portfolio can be well balanced at each time new information arrives with substantial impact on the value of the investment proposal. Launching new products and expanding the range of products can be an attractive growth strategy ,with or without the risk taken and for luxury brands like Dunhill, the leverage of strong brand name can reduce the risk of introducing new products into the market by providing the consumers the familiarity and the knowledge on the brand. Some estimate that 30-35% of the new products launched fail (Montoya – Weiss & Calantone 1994; Booz et’ al 1982, cited in Hem et’ al, 2001). Due to factors such as high risks, advertising costs and increasing competition it has become very difficult to succeed. An increasingly popular approach with launching new products is to follow brand extension strategy. Many leading luxury companies have been applying extension strategies such as new product lines, product categories and brand names and extending a brand into a category especially where consumers are highly committed to existing brands is very challenging. According to Dr. Venkatesh Prabu’s research, the factors that need to be considered before Dunhill expands the range of products are Product similarity- Product similarity is the degree to which consumers perceive the extensions as similar to other products affiliated with the brand. The most frequently considered antecedent of brand extensions is the level of perceived similarity between the original and the new product and the study state that the consumers develop more favorable attitude towards extension and the original brand. An example of product similarity is diet coke introduced in the same product category of soft drinks. Brand extensions not on non luxury products – It is anticipated that the brand extensions will damage the brand image on luxury brands as these are widely available and accessible to huge section of the society and consumers usually purchase luxury brands for their symbolic attributes and their distinct values being unique, catered to the elite society and this will be damaged. The elitism segment will oppose brand extension as they feel luxury goods should be restricted for refined people who are educated and appreciate the value of luxury products and they are not be mass produced Innovativeness- This is a personal trait that Dunhill has always had where the company always tried new practices. For Dunhill innovativeness is the DNS of the brand. One also needs to look into the impact of the luxury brand extension and parent brand equity. Luxury brand extensions are undertaken to strengthen the core brand image of the parent brand. Dunhill should also measure the impact of luxury brand extensions on the parent brand image through brand confidence, brand prestige and desirability. The dependent variable predicted through conceptual fit, perceived quality of the original brand and transferability. Thus, only luxury brand extensions that relate to the original brand expertise and build brand confidence will have a positive impact on the parent brand. If extensions are inconsistent, brand confidence will decrease and will lead to brand image dilution. Only legitimate luxury brand extensions contribute to brand prestige assuming the brand has a reputation for quality and possesses the expertise to transfer the credentials. Conceptual fit and brand perceived quality are the main predictors of how good the product extension would work in the market. Hence the inclusion of new products for Dunhill will be to expand the range in the new existing product line or similar product segments as this would give the consumers a better connection to the new product. The new product should necessarily be catering to luxurious and elite crowd. There are 6 criterion for brand extensions for any company like Dunhill and they are brand equity, building on the original brand, leveraging the brand, protecting the brand and meeting profit forecasts, perception of fit and existing core brand of high quality In addition to this, Dunhill is also required to focus on marketing function of the new product and brands heritage and tradition is an important element for any product extension. Conclusion: Alfred Dunhill has always been synonymous to the finest things in life and has always reflected a marriage of craftsmanship and design innovation. It is important to bring synergy between the vision, mission statements integrated with the strategies, facts and product improvement and this can be done only with the successful management. The major challenge for Dunhill is to keep up with the new market trends and modern consumers but this can be well handled by good marketing strategies and product rejuvenations. Dunhill has a distinct advantage as its products are known for uniqueness, sophistication and quality. Dunhill has set the standard in their sector from day one with innovative products with the highest quality. That it a product and branding strategy that is still valid in today’s world and works for Dunhill Literary references Alycia Perry, David Wisnom III, (2003), creating the unique DNA of an enduring brand identity, United States of America, McGraw Hill Angy Geerts, Nathalie Veg, How to manage the consistency of luxury brands on the internet? University De Mons Business Week (Oct 3, 2005), Brand New, Business Week (Online) available from (accessed 14th December 2009) Nicole Stegemann, Business and economic research-Unique brand extension challenges for luxury brands, 4 (10) 57-65 Omno Lint, Enrico Pennings, The option approach to the new product development process, Philips corporate research, Erasmus University and Eindhoven University of technology, Rotterdam Venkatesh Babu, Issues in Brand Rejuvenation Strategies, PGDBA course in SDM- IMD, Mysore Read More