Friday, 20 December 2013

b.Strategy - The Demise of Brands

The last part is here:   Strategy - 见人说鬼话, 见鬼说人话

Luxottica Group S.p.A. is the world's largest eyewear company, controlling over 80% of the world's major eyewear brands. Its best known brands are Ray-Ban and Persol. It also makes sunglasses and prescription frames for a multitude of designer brands such as Chanel and Prada, whose designs and trademarks are used under license. Luxottica also makes sunglasses branded Giorgio Armani, Burberry, Stella McCartney, Versace, Vogue, Miu Miu, Tory Burch, and Donna Karan. Its prime competitor is the Safilo Group S.p.A.  

Luxottica Group originated in 1961, when Leonardo Del Vecchio set up Luxottica di Del Vecchio e C. S.a.S., which subsequently became a joint-stock company under the name of Luxottica S.p.A. Having started out as a small workshop, the Company operated till the end of the ‘60s as a contract producer of dies, ferro-tagli, metal components and semi-finished goods for the optical industry. Leonardo Del Vecchio gradually widened the range of processes until he had an integrated manufacturing structure capable of producing a finished pair of glass. 1969 saw the crucial turning point, the launching of the first frames under the Luxottica brand: the contract producer became an independent manufacturer. 

Shortly afterwards, the presentation of its first collection, at Milan’s MIDO (an international optics trade fair), made the brand a definitive success.

I have mentioned this several times over various essays, if you have been in original product business, you would have noticed your retailers will always like to play your ass. The moment you are successful in your brands, they will play you by rising discount, so even if you make loads of sales, the deeper discount would have nullified your profits. You are just working for free for the retailers. If you continue to be successful, these retailers would try to create house brands using your products. If you want to continue to trade with your retailers, you have no choice but to agree. So now you have CUNT peanuts and Tong Garden peanuts at exactly the same shelves. CUNT peanuts is the same peanuts as your Tong Garden peanuts, selling at a dollar cheaper than the original. Even the quality of packaging is the same. Of course they would taste the same, because they were from the same fucking machinery.

I have mentioned before, don't fight the retailers. Agree with them, in fact, I would even withdraw Tong Garden peanuts from the shelves making CUNT peanuts the only selling peanut brands. So the sale for CUNT peanuts would be at all time high.

What's the ploy? No retailers no matter how smart and / or rich can ever produce the peanuts on their own. The resource and research&development needed are too great for each product. The most they can do is to switch the peanuts supplier to someone else. If you are not good enough, you are destined to die anyway. But, if you are worth your salt, these retailers would have no choice but to continue to buy peanuts from you and brand it under CUNT. You have now developed a symbiotic relationship with the retail chain (this is the smart case for all china products, the middle kingdom yellowskins are most cunning, those who stayed must be more yellowskin than those yellowskins who quit).

If you now move on to develop connectivity with other retail chains, you would be extremely successful, because the way you dealt with CUNT was a good philosophy. Other retail chains would like the style too. In less than 50 years, you are Luxottica supplying to all established retail chains-of-the-day in the world. You are most well-known no-name brand. Even more brand owners would hook up with you, allowing you to access their markets.

In life, it is easy to lose one's way if you are prideful and refuse to think for your enemies. The retailers are actually very insecure. They knew that they are mere traders, as compared to original product developers. As pure traders, they are as easy to replace as the wind changing direction. Fortunate for them, retailers are normally members of the ruling family. They would be able to stay for a while longer. Nonetheless, they are very insecure. Sad ...

This is one strategy you cannot ignore ... think deeper if you must ... savour its taste ...

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