On the Master's Masterbrand

Scott Davis is a partner at Chicago-based consulting firm Kuczmarski & Associates, heading up its Brand Asset Management Practice; an adjunct professor at Northwestern's Kellogg Graduate School of Management; and author of Brand Asset Management, to be published by Jossey-Bass Publishers next winter.

I am sitting across from a picture of our 3-year-old sons, Ethan and Benjamin, in their red and blue Polo Sport sweatshirts. I see Emma, our 3-month-old daughter, playing in a Polo outfit she received as a gift. I am sitting in our living room (paint by Ralph Lauren) having just finished reading a review of Chicago's hottest restaurant, RL (Ralph Lauren), where my wife and I will have dinner tomorrow night. We're looking forward to shopping at the Polo Ralph Lauren flagship store right next door to buy our summer wardrobes.

And so, as I sit here in my Ralph Lauren slacks and Polo Big Shirt, I truly cannot think, both from a professional and personal perspective, of another brand that has so successfully transformed itself into a dynasty as has Ralph Lauren. Which is why the recent Business Week article about Ralph Lauren, while complimentary at times, basically missed the mark. The article states that "Polo Ralph Lauren remains perhaps the strongest combination of business and brand in all of fashion-dom." However, it also implies that Ralph Lauren's recent financial performance is the result of short term pressures from the Street, at the expense of the brand's long-term welfare. In this, Business Week is off base.

Despite pressure from the financial community, Ralph Lauren continues to invest in building the biggest and strongest powerhouse in retailing, the Ralph Lauren name. While Coke talks about 360-degree marketing, Ralph Lauren is living it.

How? How can Ralph Lauren possibly be in Nordstrom and Home Depot and retain its brand identity? He is wildly successful in both. What about all those outlet stores; isn't that degrading the brand? No, in fact, they are helping to fuel record sales. I hear he is going to offer even more expensive suits; how is that possible? He has established an upscale brand, the Purple Label Collection. Isn't licensing taking control of the brand out of Ralph Lauren's hands? Actually, the screens he uses for partnered products, such as Sherwin Williams for Ralph Lauren paint, are probably tougher than internal Ralph Lauren screens, and the level of quality these licensees have to deliver really is "best in class." What's next, furniture? Surprise, surprise! Ralph Lauren already offers furniture.

Why does this work for Ralph Lauren as well as it does? In classic advertising terms, Ralph Lauren has laddered up to the highest order of value in consumer's minds. While anyone can offer a wide variety of high-quality goods (lets call these attributes), not everyone can say their products last long, can satisfy a family's wide variety of needs and allow consumers the opportunity to be connected with one of the most respected brands around today (let's call these benefits). Wearing Ralph Lauren, Polo Sport, Polo Jeans, etc., is like driving a Lexus.

This leads us to the highest level a brand can reach. Individuals feel better about themselves because they are associated with this brand (let's call this brand value). This makes these individuals feel more confident, secure and, ultimately, happy with this aspect of their lives. While attributes and benefits can be replicated by a competitor, values are virtually untouchable.

Any brand that can reach this level, as Ralph Lauren has, and claim a value that strikes at the inner core of an individual has reached the pinnacle. Saturn is there. Nordstrom is there. American Express is there. Disney is there. Hallmark is there. Ben & Jerry's is there. Federal Express is there. Intel is there. Yahoo! is getting there. Southern Company is getting there.

These brands have all reached the highest level of personal value to their consumers and customers and, virtually, cannot be touched by competitors. This type of value leads to incredible loyalty and the abilities to charge price premiums and successfully offer "endorsed" new products and services. Also, word-of-mouth referrals become the norm (perhaps the ultimate sign of brand value). In the end, this all translates to bottom-line growth.

The theory is simple, and it's borne out every day in the real world. A brand is an asset. An asset needs to be managed and nurtured and invested in Like any other important asset (e.g., your people). Once this happens, your asset will increase in value and importance. Once this happens, your organization should realize incredible revenue and profit gains. A brand's value position and value as an asset is theirs to continue to leverage and grow, and also theirs to lose.

How do you lose it? Succumb to the urge or pressure to turn a quick buck by grabbing the first quick fix that comes along. That's the greatest threat, greater than any competitor, to a strong brand's unassailable position.

The Business Week article suggests that Ralph Lauren's recent acquisition of a Canadian retailer, Club Monaco, was "to appease the Street's insatiable demand for growth" and to boost top-line revenues. Wrong. This is a good acquisition because: Club Monaco does not have a significant U.S. presence; it allows Ralph Lauren to position itself within another well-regarded retailer; it helps Ralph Lauren reach the coveted teen/young adult market; and it further positions Ralph Lauren for continued brand asset and revenue growth.

Obviously, Ralph Lauren has to be careful and make sure it is consistently making the right fashion, channel and image choices. If Ralph Lauren loses sight of this (as would be the case with any strong brand), or is driven by the short-term quarterly P&L spasms of the investment community, the long-term damage done to one of the strongest brands in retailing, could be considerable.

My money, however, continues to be on Ralph Lauren. I'm betting that the savvy retailer will act in its long-term interest by continuing to invest in the brand.

For me, the only questions left for Ralph Lauren to address are: "When is Ralph Lauren going to come out with that luxury SUV?" and "Can 1 get mine in black?"

COPYRIGHT 1999 BPI Communications, Inc.
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