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  1. Ethan
    Jul 30 - 10:38 am

    Hi, thanks for the article. So I was wondering about your opinion on what Abercrombie & Fitch is currently doing. For some time now they refuse to lower prices to generate sales and monthly sales are tumbling by 20+% every month. Is this a viable strategy or what could they do to slow the bleed?

  2. Edward Boches
    Jul 30 - 1:19 pm

    Couldn’t agree more with much of what you say. The real problem is short term thinking. Where does that come from? Wall Street and the fact that all it cares about is next quarter’s profits. It wasn’t always this way. Up until the late 1970s there was value given to long term thinking. There was greater emphasis put on R and D that would contribute to the distant future. Now all anyone cares about is short term results. Exec compensation, stock price, definition of success seems to know nothing else.

  3. P.M.
    Jul 31 - 9:54 am

    Your story of Packard vs. Cadillac makes sense but trying to relate it to today’s automotive market doesn’t work. For example, take your quote from Mark McNabb:

    “I compete today in about 65% to 68% of the market. Obviously we would like to compete in a greater portion of the marketplace.”

    That says to me that they don’t have products in their lineup to compete with those of other car makers. For instance, someone shopping a BMW 3-series may never venture to a Cadillac dealer because there is no Caddy of comparable size. Lexus, Mercedes, Infinity all have these smaller cars. So, if Cadillac is developing a smaller car to compete in this class of car it seems to me they’re grabbing at the 35% of their perceived market where they have no product. It does not look to me as if they’re de-valuing themselves.

    With respect to a top brand losing its luster offering cheaper options, do you think BMW has done this by introducing its 1-series? I’m not so sure. However, I would say it almost never works the opposite way. Continuing with the automotive theme, Hyundai started selling inexpensive economy cars here and that seems to be the reputation they’ve gained. You’d be hard pressed to find a traditional BMW or Cadillac shopper to consider the new Genesis no matter how good it may be. Hyundai’s ads are constantly telling people to look at it differently as they try to turn their image around.

  4. DPaulson
    Jul 31 - 5:23 pm

    This is an excellent post. I site your Packard example in my blog where I note, Apparently, Packard executives forgot to “Ask the man who owns one.”

    link to beyondfocusgroups.blogspot.com

    As a solution, I suggest that pictographic research may be an excellent way to test brand extensions. Simply picture the purchasing situation, place the brand on the proposed extension, and listen to potential consumers. You won’t have to ask leading questions and you will get some very unexpected, but relevant, information.

    Thanks,

    Dale

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