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 ...

b.Strategy - Popularity is a Sacrilege

The last part is here:   Strategy - The Art of OEM (Branding)

I have written this once before, but now, I find it urgent enough to regurgitate.

Goods need to have a certain popularity to sell. That concept is called branding.

When a new good is pushed into the market, about 57% of the market will try it. It is like the opening of a new concept restaurant at the street's corner. Almost every other guy who passes by that restaurant will want to try it, provided it is not priced beyond common reach. After the first try, if the quality of the new good is perceived to be higher than its price, there is a fair chance for the customer to repeat his experience some time later when he has the urge, as the feeling was good during his first visit. The repetition is called the retention policy of the good.

As more and more customers try the good, more and more customers will repeat the purchase of the good. This is good for the good. By now, market talks of a new brand emerging. But, retention policy is useless when there is no good recruitment policy. After a while, the same customers will get bored and move on. No matter how good the good once was and still is, the customers are bastards and fickle-minded, they will move on to newer goods. The customers are the ones with the spending power, they will therefore decide the fate of the good. That is why, many pubs and drinking holes only have 3 years to make their monies, beyond that these drinking joints will go bankrupt.

Recruitment policy deals with getting new customers. Some new customers are gotten using word-of-mouth, others are gotten through using advertisements and awareness drives. However, recruitment policy is painfully expensive. Therefore, every producer of good clinked on to their good and customer-base jealously. There in lie the irony. When a good gets too popular, it will invite competition. Worst, the juvenile eastern fucken government-of-the-day will try to fuck you up by restricting your sale or curtailing your access to markets. She wants to send a message to any wannabes that she is god and no one should gain great wealth through the current system. You will be fucked.

Therefore, never try to be overwhelmingly popular. I know this is a deep deep irony of them all. But, if you want to survive well, be at all times, invisible. Use the money you just made from your new good to power-roll your next venture in another place. Your strength need not be shown-off. You only need to impress the sweet young things enough for that heavenly done deals.

I believe you do truly appreciate this concept and forgive me for trying to be invisible always.

b.Strategy - The Art of OEM (Branding)

The last parts are here:   Strategy - The Magic Flu   and   Branding Strategy

This is one of the most important essays. It enveloped many years of business operations, failures, successes and cunning. Following or contemplating it will save time.

The best way to understand this topic is by going into real examples.

Research & Development (R&D) is an expensive toy. Spend too much like Steve Jobs during his Lisa project, he got sacked by the very company he founded. Spend too little like Nokia cell-phones, it closed shop in 2013, after it became the world's largest vendor of mobile phones from 1998 to 2012 (Nokia Story is here).

In 1970s, Steve Jobs forced and conned his best friend, Steve Wozniak (Woz), to build a simple desktop computer from commercially available parts in a garage (Apple Story is here). Steve Jobs literally squeezed out all of his friend's technology know-how at one go, i.e., years of self-studying and researching up to University of California, Berkeley. Woz was a genius in his own right. This commercialization reduced cost tremendously, but, unfortunately allowed pirates from the east to duplicate it wholesale and with ease. By end 1970s, Apple became so popular that it single-handed created the desktop computer market. There was a saying that time, for every original apple computer sold, 99 clones were made. This provided a tremendous momentum and support for continuing purchase of Apple computers. Slowly but surely, it evolved towards business applications, which is the main force behind any historical success (recall Blackberry Story created for use in business emails).

Then, Steve Jobs made the first mistake in life. He made Apple III and launched in 1980 and made it totally non-copyable by any pirates. Apple sale went down like a rock. Unfortunate for Apple, during this time, IBM decided to enter this market segment with the original intention to provide a slightly more clever version of a dumb slave terminal to their main-frame computer. The IBM PC (personal computer) was meant to do a little printing, word-processing before communicating direct with their main-frame. [Rumour] Bill Gates of Microsoft was asked to write the Operating System (DOS) through his mum, a secretary to IBM vice-president. To IBM, the PC is just a toy. But, its launch timing was so immaculate that it went on to kill off Apple's home computer market in one quick stroke. By 1990s, Apple was more or less dead. The IBM PC was once again fully copied by the pirates of the east and became the new darling. Like before, there was a saying that time, for every original IBM PC sold, 999 clones were made. By this time, the desktop computer was the new found power given to ordinary home (and later, office) users to claim against main-frame dinosaurs.

Again IBM got greedy. IBM created a new pentium PC with a new operating system PS/2 and made the PC totally non-copyable. Sale of IBM went south, but, Microsoft not being a part of PS/2, then proceed to let IBM PC clones to install and run the clone computers as if nothing has happened. IBM was dropped from the market just like that. The power of masses cannot be under-estimated.

To date, Microsoft still allows full-copying of their softwares, hence, able to remain reasonably dominant in the desktop and laptop markets.

This above part is quite a well-known and documented history.

Up and about the same time, in 1950s, after the Kuomintang retreat to Taiwan, the Taiwanese society was relatively stable politically in the 1950s. However, it faced some obstacles economically as a result of the mass destruction during World War II and the Chinese hyperinflation in the 1940s. The sudden increase in population caused by the Kuomintang migration from mainland China also affected Taiwan's economy. During this time, only the US came to their aid. They were given food and resources. The bags that contained these food and resources were then taken apart and made into underwears for the kids. It was that tough during those times.

By end 1970s, the executive premier, Chiang Ching-kuo's Ten Major Construction Projects served as the basis for heavy industrial development and computers in Taiwan. Unlike that fucken little island, Taiwan provided a serious sum of US$1 billion for Taiwanese to develop clones for the Apple and IBM computers. Taiwan government believed in her people and allow the full development of OEM (original equipment manufacturer) high-technological products and the grants were given freely to citizens. To date, after that critical investment in her people, Taiwan remained the only dominant player in the electronics manufacturing. This was how brands like HTC and Asus started by being OEMs and slowly but surely, they each became original product and household name.

The same story goes to Samsung, after Apple asked Samsung to make components for their PCs and mobiles.

The Argument 

Every retail chain loves to build their own house brands. They know their venerability in sale. When the brand is well-known, the sale channels of the retail chains would have less bargaining power. Therefore, all the time, the retail chains seek to limit this branding growth. Given every possible chance, the retail chains will build their own house brands. But, as said before, R&D is very expensive. In the end, the retail chains only managed to change only the external packaging of the products, but not its content. The manufacturing process of the products is jealously guarded by the original producer. So you will find a fuck-price peanuts, selling alongside Tong Garden's peanuts (obviously, Tong Garden in order to gain access into the fuck-price retail chain agreed to repackage some of its peanuts with a fuck-price packaging and allow the fuck-price peanuts to be sold at a dollar cheaper) or fuck-price canola oil, selling alongside RBD's canola oil. 

If you were to buy petrol from the pump stations, noticed their refilling trucks are sometimes from very odd companies, i.e., every oil company do often cross-sell their oil products to each other. Hence, their advertisements about how good and efficient is their petrol are pure bullshit. There are all the same.

Back to the PC market, Microsoft used to and still is dominant in the pc market. At one time, rival, Linux, was developed and distributed free. But, it was deemed to be an inferior product from Microsoft's Windows. Since Windows was easily copied, Linux never take off even though it was free. Right now, Microsoft is no-where near the mobile units. Android, the operating system for mobiles, is given a free rein to develop its product. In time, Google, the owner of Android, would be far richer than Microsoft and Apple combined.

After the first read, the arguments above may appear disjointed and a little confusing initially. Read it a few more times, you will see the reason behind each story. It is important that you are able to deduce the relationship between R&D, product and survivability of self.

So it is obvious that you would start off with very little R&D resources. So be like Asus, HTC and Samsung, start to develop the product using your own bare hands. Employ little critters as your free workers. Don't be afraid to brand your product under someone else's house brands. Keep improving the quality of the product. This is one thing nobody can take away from you. But, do reduce the risk by allowing as many retail chains to brand it under their names. That way, the retail chains will feel less threatened by your rise. Given enough time, your own brand may or may not appear, but, you will be rich beyond measure.

b.Branding Strategy

The last parts are here:   Big Business starts Small (II)   &   Channels - Where Money Moves

Brand

(From wiki:) Branding is defined as "the process of creating a relationship or a connection between a company's product and emotional perception of the customer for the purpose of generating segregation among competition and building loyalty among customers." Or "a fulfillment in customer expectations and consistent customer satisfaction."

The origination of branding can be traced to ancient times, when specialists often put individual trademarks on hand-crafted goods. The branding of farm animals in Egypt in 2700 BC to avoid theft may be considered the earliest form of branding, as in its literal sense.

As somewhat more than half of companies older than 200 years old are in Japan, many Japanese businesses' "mon" or seal is an East Asian form of brand or trademark. In the West, Staffelter Hof dates to 862 or earlier and still produces wine under its name today. By 1266, English bakers were required by law to put a specific symbol on each product they sold. Branding became more widely used in the 19th century, through the industrial revolution and the development of new professional fields like marketing, manufacturing and business management. Branding is a way of differentiating product from mere commodities, and therefore usage of branding expanded with each advance in transportation, communication, and trade.

Any list of brands would be necessarily incomplete, but purely for example, Coca-cola, Apple, IBM, Google, Microsoft, GE, McDonald's, Intel, Samsung, and Toyota. The split between commodities/food services and technology is not a matter of chance: both industrial sectors rely heavily on sales to the individual consumer who must be able to rely on cleanliness/quality or reliability/value, respectively. For this reason, industries such as agriculture (which sells to other companies in the food sector), student loans (which have a relationship with universities/schools rather than the individual loan-taker), electricity (which is generally a controlled monopoly), and so on have less prominent and less valuable brands.

Among the most highly visible and recognizable brands is the red Coca-cola can. Despite numerous blind tests indicating that Coke's flavor is not preferred, Coca-Cola continues to enjoy a dominant share of the cola market. Coca-cola's history is so long that a folklore has sprung up around the brand, including the (refuted) myth that Coca-cola invented the red-dressed Santa-Claus which enjoys currency in less developed regions of the world such as the former Soviet Union and China, and such brand-management stories as "Coca-Cola's first entry into the Chinese market resulted in their brand being translated as 'bite the wax tadpole').

Brand is bull-shit

Over my entire life, I have no respect for brands. I have changed my brands several times. The reason for each change of brand is that I was bored with its symbol and I wanted something new. Each time, it costed me tons of money to change. After each change, the sale volume did not change a single significant bit. It was sale as usual as if nothing had happened. The new brand did not get affected at all by its newness and neither did any of my competition took advantage of my "newbie" brand and wacked me to hell's come. It was only then that I realised that there is no such thing as brands. Brands are mere figments of our imagination. See how fast Nokia was abandoned for Apple, and then from Apple to Samsung. But, every damn branding leeching guru swears by it as if the corporation depended on it for a chance to survive this "cruel" market-place. I must admit that when I see a huge range of my products being displayed on the shelves, there is a little feeling of pride. Of course, it was bloody hard work. But, pride itself can't sell me products. I can feel proud simply because I owned that business. But, consumers are not going to care about who's behind that name. They simply wanted the best bang for their money, be it, fashion, lifestyle, pride, show-off, utility, value-over-money, need, and etc.

Some brands are named after their dogs, cats, mothers, fathers, sisters, brothers, own name and what-have-you. In each and every instant, they always have a story to tell. Some of the brands are so ridiculous that I would never have named the brand that way. But, after 10 years, even the most ridiculous name becomes familiar and consumers start to identify with it.

If in the event overnight, Coca-cola were to change to blue colour and call itself "Cup-cake". The drinks will still sell. The value is not in the so-called brand. The key is in its distribution channels. For a newbie brand, its access to market is limited, hence, the poor results. But, I was no newbie supplier, although I have changed abruptly my brand name, but because of my existing access to market. I was not affected by any brand name change. The consumers just take the new brand name products due to need. There were no alternative. Since my old brand name disappeared overnight, the retailer just recommend the next best AVAILABLE thing on the shelves.

Therefore, after a considerable time on station, the product would have increased their market access points. The brand having more access points is now more famous and hence, now a branded entity. What a joke!

So don't be fooled by the word "Branding". Really, there is no such thing. Just put your nose on the grindstone and deliver that quality and price-value, you will be alright. Don't ever compromise on your product quality. Over time, the access points will increase and take care of its own distribution channels. You will then have become "branded". It is that simple.

Brand is local

Even with your best marketing plans with unlimited budget, you still can't beat their local brands. Local brands have been around for eons. They exist and then they die. Even after they die, another brand will take its place. One chick dies, one chick sings (一鸡死一鸡鳴). But, nonetheless, they will survive to eternity. They are like the trees growing in the local woods. Locally strong, locally hardy. No point trying to challenge them, they are here to stay.

So therefore work with these local brands, allow your products to be branded under their brands. Let them feel that they are holding your balls. But, since you own the Intellectual Property Rights of the product and manufacturing power. There is hardly anything they can do about it. So do a joint collaboration, there is simply no harm that can come your way. This way, it is a little symbiotic and it would be good for all participating parties.

Never try to brand the product international. It is useless. It will fail.