Why Luxury brands aim non-core sectors?

by Alvaro HIDALGO

If in previous entries this blog covered the question of what do brands bring to real estate developments (Do brands really add value to real estate developments? –see http://bit.ly/n8XRj2 and  http://bit.ly/pO0pIn ) this one will cover the other side of the coin: Why Luxury brands would be willing to extend and enter other non-core sectors.

Indeed, global Luxury goods sales (that is, not including hospitality services,  luxury toys -cars, boats and planes-  transportation or property) have continued 2010’s double-digit growth path and will see an increase of 10%, up to €191 billion in 2011.

With such figures and growth outlook, markets expanding rapidly in Asia, then why do they need to extend to other fields? 

Let us not forget that the luxury industry has acquired the status of a driving economic sector not more than 35 years ago. Before that date, they were just a collection of small firms and ateliers....and they had achieved these results by extending the brands.

Indeed, the economic growth resulting from the stable political and economic framework  ensuing  WWII, provided a scenario capable of generating an unprecedented increase in wealth, which started to materialize in the 1960s. The first luxury bubble was to some degree burst by the oil crisis and only the factors allowing the steady growth of this sector came into place in the late 1970s.

Luxury industry which until then was used to sell to a very reduced number of people saw how: (i) Economic growth and increasing wealth enlarged their market base (ii) Travel and Tourism extended the influence to other countries; and (iii) Change in social uses broadened the market potential allowing the introduction of lines of products, some of them accessible to further social strata.

Simultaneously, societies became less and less formal. This resulted in a significant shift in the dressing codes welcoming once common pieces of clothing, even typical of the working class, like jeans.

Nevertheless - or precisely due to this- the need to establish status was still there –as it will always be-, and the natural solution was to add a couple of Luxury complements and apparels to any basic clothing.  This is when the terms “Casual"  and "Chic” came into play together in full force.

All the above changed the landscape of the luxury industry, a whole new market with new rules was born, and the first problem to solve was how to communicate with it. 

Indeed,  the traditional communication method of “Bouche à Oreille” between the well to do was exclusive by nature, but it became rapidly obsolete to attract the rapidly growing affluent.

This change induced decision-makers to face for the first time the dilemma that now represents the cornerstone of the luxury industry:

If to expand clients' base one needs communication and advertising, how is exclusivity maintained when using mass communication channels?  (a question now more present than ever with Internet).

Aside from the careful choice of the communication channel(s), the first step taken was to strip the communication of Luxury of any link to the end product.  The adage in Luxury: “heighten anticipation and maximize desire” was subtly reinterpreted:

If Luxury can be afforded only by those with a certain Lifestyle, then by communicating Lifestyle – instead of focusing on the product- Luxury retains the exclusivity.

This scheme opened the door to mass communication and advertising of Luxury goods and succeeded in making them even more appealing.  Everyone could see then what Lifestlyle is, and could buy a piece of it.

As an example of this de-materialization, if Luxury is Lifestyle, then it is difficult to better showcase this concept  than with the combination of sports , culture, adventure and excellence chosen by Rolex, succeeding to represent each activity and expression by its embodiment through individuals, events and venues (see http://bit.ly/qCaaom). It clearly follows Mr. André Heiniger's, -the old Patron of Rolex- approach, who was once asked: “How’s the watch business?” to which he answered:  “I am not in the watch business, I am in the Luxury business”.

On a larger scale, Perfume makers and distributors understood the power of communication of the fashion industry. In fact, few haut couture houses –if any- can survive without economic support, so fashion became a lifestyle showcase through which the revenue generating activities -sales of perfumes, jewelry and fashion complements- were advertised.

Nevertheless, certain goods, assets -and to some extent, services - are Lifestyle and Luxury in themselves.  Indeed, luxury cars, boats, planes, jewelry, property and hospitality services do not need to evoke anything; they are just the epitome of luxury.....And since these goods or assets are exclusive by nature –and price-, then their communication should do little but show the product.

Is it so?...  maybe not any longer.

Luxury items are expected to provide a pleasure to our senses, are supposed to fulfill our aspirations and desires and must do so based on impeccable design and outstanding materials all wrapped up in superb craftsmanship.  When these elements are reunited, the end product becomes a luxury one, whether it is a watch, a certain wine, a car, a boat, a plane or a property.

Luxury brands know that their business consists in satisfying the most selective individuals in a very competitive sector requiring to maximize exposure.... and this maximization can seldom be achieved by reaching the customers with one field of expertise.

The answer is therefore to extend the brand capacity in as many fields as possible, to maximize the possibilities of satisfying clients’ needs and aspirations.  We already mentioned in previous blogs how this trend was initiated by the merger of LV -a leather atelier-, with MH -a champagne and cognac-, then taken over by Arnault, owner of Parfums Dior. http://bit.ly/pDkgoU .

In a different sector, and in a non conventional approach to brand extension, the traditional marriage between wineries & hospitality has been given a further twist with the “Marqués de Riscal” Spa, in which an excellent winery is married not only with a restaurant & hotel, but extends its scope to a wine focused spa (vinotherapie), all wrapped in stunning Frank Gerhy’s architecture and managed by Starwood Luxury collection…. And as well as being a good business in itself, it provides exposure and access to worldwide markets.

Hotel Marqués de Riscal

It is not by chance then why Luxury brands extend their brand to other fields. They understand the nature of the business, they bring the design and craftsmanship capabilities and they have spent thousands of person/hours not only developing their core-products, but also carrying holistic approach analyses on how to satisfy the most exclusive, selective individuals.

Regarding our specialty -real estate developments and residential tourism- we already covered what  do brands bring to real estate developments, which in a nutshell are the same elements that they bring to other products : Exclusivity, Uniqueness and all round Quality (see our blog entries http://bit.ly/n8XRj2 and  http://bit.ly/pO0pIn - ) and it is clear that brands, in their turn, expect to benefit from the further exposure that such projects provide.

But then, from all the brands available, many can bring Beauty, some will bring Character, but only one can bring  "Power, Beauty and Soul"

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com

If Small is Beautiful..... Exclusive beats it.

by Alvaro HIDALGO

New destinations mushroomed

If the origin of mass international tourism can be placed in the 60s, one can situate the explosion of new destinations in the 80s, a moment in which major changes in the airline industry enabled access to new international and transcontinental locations at reasonable prices.

New destinations subsequently mushroomed, and the main focus of Destination Manager Organizations (DMO) was to increase the number of visitors as a measure of success.

As a tool to analyze this growth, the well known Tourist Area Life Cycle (TALC) concept was developed by Butler in 1980. Since then, it has survived three decades of constant scrutiny and verification studies, and it is considered now as a cornerstone in the analysis of tourism destination development and a milestone in Tourism academic literature.

Having entered into the second decade of the XXI century, the reactions to the model nowadays are mostly in the line of : .... ok, fine, but what’s news.

Nevertheless, TALC’s chart retains its validity by carrying a good reminder of the existence of – using an aerodynamic term- a “point of separation” beyond which specific measures should be taken to avoid the flow of tourists to become turbulent, resulting in the destination entering in a stall and declining.

Closely linked to the above, the “Carrying Capacity of a Tourist Area" concept started to be shaped. Carrying Capacity is defined by the WTO as "the maximum number of people that may visit a tourist destination at the same time, without causing destruction of the physical, economic, socio-cultural environment and an unacceptable decrease in the quality of visitors' satisfaction".

Maximum carrying capacity overflow

The Carrying Capacity must not be considered as a number resulting from a formula, but as a constantly ongoing process which overviews the destination to ensure that its quality and its capacity to attract tourists is maintained.

Indeed, if the first consequence of success is that it makes obsolete the tools and processes followed to attain it, we then need to constantly re-assess –with a fresh view- the new reality that resulted from the previous plans & actions, and make further plans for this new environment.

The concept evolved into the much broader “Sustainable Tourism” term which is now centering efforts of the industry and governments.

Resulting from this, DMOs are shifting their emphasis from Destination Marketing -focused just in bringing in more tourism-, to a Destination Management perspective centered in enhancing and maintaining the characteristics and attractions that made the destination what it is.

Some destinations are born to be directed to the mass tourism only, but in many others, the geography and/or configuration enables that several poles of activity with very different characteristics cohabit in a broad Tourist Area. Majorca and Costa del Sol are good examples of zones hosting both cheap mass-tourism sites and highly exclusive secluded locations.

The dilemma that any destination faces in the “point of separation”  is therefore the dreaded question: ".....what do we do now?". Being clear nowadays that sustainability must rule and lead, then the farsighted Schumacher’s statement “Small is Beautiful” is the automatic answer.

....But as the title of this entry states, “...Exclusivity beats it”.

Indeed, exclusive destinations are sustainable by their own nature and origin, and cannot overgrow beyond a certain point. Apart from some exceptions –there are always exceptions-, most of the exclusive tourism destinations remain as such after 50 or even 100 years of operation.

The price entry barrier not only keeps out most of the problems brought by excessive growth, but it also generates the revenue that will attract the levels of investment needed (i) to keep facilities, attractions and environment in good shape and (ii) to be updated recurrently. If the destination characteristics, configuration and/or name enable it, a destination facing the point of separation should always consider the "road to exclusivity" as the first alternative to be analyzed.

Luxury Brands are not only natural a path to exclusivity, but most importantly, they will shorten the transition time to attain the objective.

Indeed, Luxury Brands bring (i) the desired level of exclusivity and therefore sustainability (ii) a major worldwide marketing impact and (iii) a defined solution and a defined project. (See our previous entry on how do brands shape a destination http://bit.ly/r4mICb and http://bit.ly/pDkgoU )

The importance of point (iii) is generally overlooked. Indeed, when a new branded luxury project is announced for a Destination, its effects are apparent immediately. It creates a focal point that will drive its future development changing the investment and economic landscape of the overall destination on the spot.

By concentrating the efforts and resources into one clearly defined direction with an established timeline, the branded development begins to shape the destination and its perception from the day of the signature.

And thanks to their versatility, branded projects  provide its benefits to most types of destinations, whether it be a new tropical beach & golf resort, a new Marina or an old ski resort seeking rejuvenation.

Luxury Brands are the most direct vehicle to attain exclusivity and as a result, they assure sustainability.

But if it is true that the incorporation of any established luxury brand may result in the above benefits, only one can bring Power, Beauty and Soul…. the three qualities that most destinations seek to offer their visitors.

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com
.

Aston Martin 2011/2012 Coolest brand : "This British icon is truly the coolest of the cool".

http://www.coolbrands.uk.com/aston-martin

Gaydon, Warwickshire, 28 September 2011.
Aston Martin has been awarded the prize of the UK’s coolest brand, winning this prestigious accolade for an unprecedented fifth time in six years.

Once again, Aston Martin has topped a poll which comprises an array of leading international contemporary design-driven brands, including Apple and Bang & Olufsen, as well as other leading automotive brands. Aston Martin was also voted the top automotive brand surpassing a host of other luxury and specialist manufacturers to complete a double success.

Stephen Cheliotis, Chief Executive, The Centre for Brand Analysis and Chairman of the CoolBrands Council commented: “Smooth, sexy and sophisticated; British built, high quality and hand finished, let’s be honest, young or old, male or female, opinion former or British public, who wouldn’t aspire to own what is truly the coolest car on the road. Number one in five of the last six years, this British icon is truly the coolest of the cool.”

Since it was established in 2001, the CoolBrands initiative has been canvassing the opinions of experts and consumers to identify the coolest brand in the UK, based on factors including style, innovation, authenticity, originality and desirability.

This year’s council of 36 influencers includes music artist Jessie J, DJ and Bestival founder Rob da Bank and actress and fashion designer, Sadie Frost. After 10,000 brands are initially identified, a shortlist of 1,500 brands is established and the panel and consumers then vote to produce a top 500 of the most highly rated brands.

The past decade has seen Aston Martin transformed from a small-scale manufacturer of specialist sports cars to one of the world’s best-known luxury brands, boasting its strongest ever line-up. From the breathtaking One-77 supercar and the elegant yet brutal V12 Zagato to the Tailor-Fit luxury city car, the Cygnet, from the powerful Vantage range and new Virage to the exquisite DB9, DBS and Rapide, every Aston Martin expresses the core values of Power, Beauty and Soul. The Aston Martin range was expanded further at this year’s Frankfurt Motor Show, where the company unveiled the striking new DBS Carbon Series.

Aston Martin is globally represented with a network of 136 dealers in 42 countries, most recently opening new dealerships in Istanbul, Turkey, Las Vegas, USA and Mumbai, India. The company also has ambitious growth plans for up to four new dealer sites in China over the next 12 months, doubling the existing network.

Aston Martin remains at the forefront of contemporary manufacturing, a cultural force that embodies design and engineering excellence, and a brand with a truly special heritage. Renowned around the world, Aston Martin enters the next decade with the promise of radical innovation and change, without losing the core qualities that make this strong, independent British brand so widely revered.

For further information, pictures and videos please visit www.astonmartin.com/coolbrands

For more information on Aston Martin Branded developments please contact FIRSTLOGIC Consulting
http://www.first-logic.com

.

7 words and a logo: Does a brand shape a destination?

by Alvaro HIDALGO

Our two last blog entries were centred on anticipating the consequences derived from the now rapidly escalating financial turmoil. By turning this entry to academic issues, we wish to provide some respite to the now omnipresent “crisis talk”. Hence, it focuses on the subject above and brings some comments on the “Advances in Hospitality and Tourism Marketing and Management” Conference held in Istanbul June 19-24, 2011: Destination Development, Marketing & Management.

Destinations are far more multidimensional than consumer goods and other types of services. To be effective, positioning theory suggests that reaching the minds of busy consumers requires a succinct message focussing on one or a few brand associations. Nowhere is this challenge better highlighted than in the development of a seven word slogan that encapsulates a destination’s diverse and often eclectic range of natural resources, built attractions, culture, activities, amenities and accommodation. (1)

As it is, there is an overwhelming amount of choices available to satisfy any consumer’s need or dream and, in such a competitive marketplace, the viability of destinations depends on the ability to develop effective marketing and management strategies (2), among which differentiation is one crucial element to attract clients to a destination.(3)

Setting and developing marketing strategies and conveying such differentiation becomes an overpowering challenge to Destination Management Organizations.

DMOs’ difficult task is to be in both sides of the table. On the one hand they must set rules for a policy and business strategies by involving institutions and individuals. On the other they must draw support from the different stakeholders so that the brand will be both accepted and communicated through both official and unofficial publicity and products, resulting in a unique and consistent destination brand positioning (4).

So…. How to transmit the qualities of a destination, to attract the types of clients appealed by the different facets of what the destination is, “targeting a multiplicity of geographic markets to attract a wide range of segments”(1) … and all in less than 7 words and a logo?

There are countless studies on destination branding, brand equity assessment models, precise definitions and discussions on the difference between destination image and brand personality. But such analyses are not confined to lecture halls. On the contrary, their assessment will have implications in advertising, promotion and positioning of a city or destination (5).

 
Consistent positioning is of the utmost importance since, unless a place can come to stand for something, it will have little chance of being remembered long enough to compete for any of this precious attention. Indeed, most people spend no more than a few seconds each year thinking about a destination, a city or a country on the other side of the world or about. So, unless that city or destination always seems exactly like itself every time it crops up, there is little chance that those few seconds of attention will ever add up to a preference for its products, a desire to go and visit the place, an interest in its culture. (6) (7)

In this sense, the use of Celebrities has been a traditional way of creating awareness.

Indeed, we already knew that they create destinations -Prince Rainiero & Grace Kelly made what Monaco is now- and their successors -HRH Prince Albert- contribute to create awareness in recently established ones  http://bit.ly/qyUI6N

Now, we have empirical models to analyze Celebrities’ impact (8).

But if attracting customers is already difficult, to grab the attention of the most sought after “creative class” (9) becomes of paramount importance. They, as a group, create trends, build and enhance the characteristics of a city or a destination, and their power of influence lasts much longer than any advertising campaign. Bringing them in and being capable to retain them is a nonstop challenge, even more fierce in these days in which companies and full organisations can and are run remotely.

To retain these customers, destinations need to constantly defeat concurrent alternatives, updating themselves and proving they are in the pinnacle of the pyramid by -among other things- bringing the firms that prove and show their status. Only certain destinations and locations can receive and sustain certain brands and, by fostering their establishment, the destination crosses a threshold that separates it from the rest.

Thus,

Academics say: In this 21st century, cities and destinations compete on their brand and will develop in line with it. They are competing on the value that they provide in terms of physical and service offer, their heritage, their ambitions and their character (6).

In essence, they compete to offer “Power, Beauty and Soul”…

                        …in a way, only 4 words and a brand suffice to shape a destination.

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com

References:

(1) TOURISM DESTINATION BRANDING COMPLEXITY
Dr Steven Pike. (2005). Tourism destination branding complexity. Journal of Product &Brand Management. 14(4): 258-9

(2) DESTINATION BRAND PERSONALITY AND BEHAVIORAL INTENTIONS: A COMPARISON OF FIRST-TIME AND REPEAT VISITORS
Ahmet Usakli , Nevsehir University , Turkey
Seyhmus Baloglu, University of Nevada, Las Vegas, USA

(3) LONG-TERM COMMUNICATION EFFECTS OF TOURISM MALAYSIA MARKETING COMMUNICATIONS ON THE AWARENESS AND PERCEIVED DESTINATION IMAGE DIMENSIONS AMONG POTENTIAL TOURISTS FROM THE GULF COUNTRIES (GC)
Ashraf Mohammad Teehi Alfandi and Azilah Kasim
Tourism and Hospitality , College of Arts and Sciences, Universiti Utara Malaysia Kedah, Malaysia

(4) DESTINATION GOVERNANCE AND INTERNAL BRANDING AS ANTECEDENTS OF DESTINATION BRAND DEVELOPMENT: AN EXPLORATORY STUDY ON EDINBURGH
Ilenia Bregoli, Università Cattolica del Sacro Cuore Milan, Italy
Giacomo Del Chiappa Università degli Studi di Sassari Sassari, Italy

(5) EXPLORING THE RELATIONSHIP BETWEEN DESTINATION IMAGE & BRAND PERSONALITY OF A TOURIST DESTINATION – AN APPLICATION OF PROJECTIVE TECHNIQUES
Girish Prayag Faculty of Law & Management, University of Mauritius

(6) CITY MARKETING AND PLACE BRANDING: THE CASE OF CAPPADOCIA
Elem Yalçın and Burçak Çebeci Perker
University Faculty of Economics and Administrative Sciences,Istanbul, Turkey

(7) PLACE BRANDING Some Important Distinctions in Place Branding. , Simon Anholt (2004)

(8) SELECTING THE ‘RIGHT’ CELEBRITY ENDORSER: LATENT MEAN STRUCTURE ANALYSIS
Robert van der Veen and Haiyan Song
The Hong Kong Polytechnic University,School of Hotel and Tourism Management,

(9) THE RISE OF THE CREATIVE CLASS. Richard Florida, 2002.

Money, Money, Money… Where is the Money? (II)

by Alvaro HIDALGO

As a follow up to our entry in late January 2011 http://bit.ly/dHQTrc and as usual in a market downturn, the first thing to notice is that the IMF forecasts mentioned  then have -again- proven wrong.

From a global markets’ perspective, August is proving to be an awful month, most markets losing an average 10%, even more in the banking & finance sector. And under this doom & gloom few are ready to think about new operations or investments.

Again, it’s not that there are not funds available…it is the aversion to risk!

With regards of Real Estate and/or Residential & Tourism developments, most funders/ bankers/ investors have been fighting & suffering to reduce their exposure to real estate over the last two years. And those coming out of such ordeal, will now smile -or blatantly laugh- if you meet them and ask for funds for a new project.

So?

Probably the biggest change that happened in the last 8 months is that investors, once achieved the stabilization of their portfolio after 2 years of asset & debt consolidation, are now becoming aware that liquidity needs to be allocated. Indeed, Banks and professional investors see that operational margins have been healthy and –in many cases- sufficient to compensate for all the bad debt losses....up to now. But to continue obtaining those margins they need to invest & fund or finance new operations.

This need to allocate funds applies to individual investors too. In spite of the destruction of wealth that this market crash represents, there is liquidity desperately looking for alternative investments that minimize risk:

ICI estimates $40Bn withdrawn from funds in the last month

Stock markets are not even being considered, Funds & fund managers are not trusted (see chart) any kind of debt /sovereign debt is frowned upon, general commodities are on average suffering from the foreseen economic downturn, main currencies are becoming more volatile...… only the safe havens are sought after. Therefore Gold is skyrocketing and Swiss Franc is steadily gaining strength.

Moreover, individuals have even further concerns and start doubting Banks and Financial Institutions' solvency and wondering whether their deposits are safe.

Thus, under this market environment one should go back to basics: Fixed assets and Real Estate have traditionally been a safe haven to preserve wealth through uncertain economic times.

This may sound almost like a joke after all we have suffered, but we all know now that the 2007-2010 Real Estate crisis was generated by excess of liquidity and indiscriminate access to debt enhanced by mortgage loan packaging and its effects in housing prices. When the scheme ran out of fuel, the whole system collapsed.

Housing prices back to rational levels

In any case, all that is old stuff.

Nowadays, a severe correction (30% - 50%) in Real Estate prices has already been incorporated & absorbed by the market in most countries & regions.

Whether there is room for a further correction or not is arguable, but it is likely that  we are now close to the levels where housing prices should rationally be.

Therefore, it is now time for added value projects, clearly differentiating themselves by targeting specific market niches.

And to assure lenders & investors that sales and revenue will be there and they will get repaid, and simultaneously assure buyers that they will maintain value,
one must go –once more- back to basics and trust in three major truths:

•   Location, Location, Location
•   The power of the brand
•   Productivity and return

…which get us back to Branded Residences.

Indeed, they do attract customers with powerful brands and they run with operational agreements/ condo-hotels that provide a source of revenue. Additionally, the nature of the business requires them to be in the right location.

From a funder point of view, Branded Residences provide a higher level of liquidity (being secured by the brand and the market niche) when compared to standard assets. But, most importantly, they grant additional levels of security by (i) allowing pre-sales and (ii) bringing a built-in source of revenue….even if sales were sluggish in the initial stages, the operation will provide the revenue required to cover payment of at least the interests from day one.   Hence, for Buyers and Investors, the Branded Residences concept provides overall solidity to the project. And, in the same way that the brand serves the final client and the operator, it does also attract the banker/funder as it buffers many of the risk factors.

Does this mean we can find money now?  It is not a risky bet to say that after this month of August -and what still may come-, bankers will put on hold any new operation for a while.

Solidity & Credentials

Nevertheless, we need to go to see our bankers now, being sure not to ask them for money but on the contrary to acknowledge their current predicament, keep them updated of the status of our project, and focus in its solidity and in the duration of the production cycle.

Indeed, projects starting now could be ready to be completed by 2013 -a moment in which the market should be in full recovery.

What’s the objective? The purpose is to be sure that your banker will have your project in mind when his P&L shows him that they may have done too good a job in the management of risk, but that there is no revenue. At that moment, your project must immediately hit his mind for it is solid, profitable, has all the credentials and is ready to go.

And a top brand project, per definition, has the solidity and the credentials.

So, how to attract the money? In the end, if one can bring power, beauty and soul to a branded destination, money will come too.

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com

Do brands really add value to real estate developments and travel destinations? ( and III)

by Alvaro HIDALGO

Following our last blog http://bit.ly/n8XRj2 we stirred up quite interesting conversation threads in different LinkedIn forums, and we believe it may be worthy to close the series gathering some of the points raised.  (Quotes are numbered and authors are referred below)

The most expected question “Isn’t it there something to be said about overextending a brand's horizontal expansion? While ultra luxury brands understand quality and value, I hesitate to agree it translates to the hospitality sector” (1) was very clearly answered within the discussions: “if the ‘brand promises’ of the development and the luxury brand complement each other it works….. In the luxury sphere clients are used to getting the best and thus having a famous luxury brand involved in a project is a natural extension of the developments' positioning in the market” (2).

A brand can be regarded  as “a comprehensive set of values that enable the asset to articulate its benefits concisely to its target market”(3) but, instead of being understood as a  whole ,  this very precise definition gets frequently  distorted and is applied only to the short term capacity to attract its target market and make the sale.

Indeed, this short term approach is followed by “many property firms for which branding is little more than project marketing using individual, short-lived marketing and PR measures. But because property branding must be seen in the long term,” “targeted brand positioning, differentiation, authentication, and cultivation should create a lasting genius for your project”(4).

Thus, branding must not be applied to “just a surface-level activity, but the architecture and master-planning should be an integrated part of the brand and the delivery of the community & the facilities management to ensure that the brand promise is delivered on a day-to-day basis to end users.” (5)

It is clear that real estate product identification should always be understood in the long term.

A good example of the importance of the name can be seen in the gated communities & condominiums. Their name becomes an established brand in time and this is only achieved by proving to be capable of maintaining certain standards during a number of years. “Brands may 'tag' products but ultimately it is the individual experience with an induced value that creates that brand” (6).

Branded developments fill this short term - long term gap. By showcasing the brand from the very early stages of development, established brands commit not only to bring in their set of values, but also to maintain them for the long term.

Indeed, top brands' reputation is based in their capacity to produce top-of- the-range products and services and to make them evolve to adapt to -and in many cases to shape- new trends and ways of life.

Bringing these levels of design, quality and service to a final product is something that many try to achieve and very few succeed in the long term –some have been succeeding for almost a century…..    Here lies the brands’ strength and power.

Finally, applying brand standards to the very immaterial sales process does also make the difference.

“If you want to reach the buyers who buy ultra-luxury branded real estate, you need to reach the same kind of buyers who buy the ultra-luxury brands” “It requires an understanding of how to market branded luxury to the elite, creating an exclusive invitation only type offering and keeping the brand integrity of the project sound to maintain value for the project and for the buyers.  It requires managing the inventory so the initial buyers enjoy greater benefits then the buyers who come in last and the exclusivity of the offering builds a backlog of those that wish they could have bought. With the development phase really hitting the market at just the right time in Asia, understanding how to pre-sell your ultra-luxury branded residences & hotel residences into these markets can really minimize the risk and increase the ROI to the developers and the ownership to the buyers” (7).

So, bringing in luxury brands avoids the pitfalls in this final leg and their expertise adds value by setting standards and requiring that the process is handled by professionals.  They do know how to successfully manage the distribution and the retail chain to enhance both the product and the brand itself…. few sectors can surpass established luxury brands in the mastering of this process.

Hence, by incorporating their expertise to the branded destination concept, brands do play in their home court. They are just extending their capacity to provide lifestyle to other niches and by this they create value and maintain it in the long term.  And the implications of this provide a major benefit to all parties involved: brand, developer, funders, lenders &  investors, sales force and clients/owners.

Branding complements and fulfils all parties’ aims and needs…... they come at a price but they generate the returns.

Of course, under the brand umbrella there are many different standards.....And none can compare with the reputed “Coolest brand”: http://bit.ly/mdMAmz

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com

Quoted Contributors:

(1)    Kyle Thieme, Social Media Coord at Madplum Creative 

         http://madplumcreative.com/

(2)    Jp Fourie, CEO  Admakers

         http://www.admakers.com
(3)    Jason Barret,Commercial Property Manager with a twist
         Jason Barret's LinkedIn profile
(4)    Lee Valentine, Brand Strategist at Team scope design
         http://www.teamscope.com.au
(5)    Lisa Knight, Founder & Creative Director at The Brand Foundation
         http://www.thebrandfoundation.net
(6)    Jessica Osborne, Project Consultant
        Jessica Osborne LinkedIn profile
(7)    Robert Rann, President & CEO Refined Resort Residences
         http://www.refinedresortresidences.com/
         http://blog.refinedresortresidences.com/

Many thanks to all LinkedIn discussion contributors for all your valuable entries, quoted or not.

Interior garden picture courtesy of  John Glover, leading specialist garden photographer http://www.johnglover.co.uk

Do brands really add value to real estate developments? (II)

by Alvaro HIDALGO

After our first blog entry on this last February (http://bit.ly/qQujFJ), the topic has become hotter and hotter.

More brands are entering into this, some of them with mixed results. The more negative of which is  – as in most cases – not due to the concept itself, but to its faulty application. 

Is it the right brand in the right market?

Introducing a successful brand in a country/region in which it is not known is risky business in itself.

And it is so, even if the objectives are limited to the core brand products, not to mention trying to export a brand and simultaneously enter a non-core sector. 

The second common mistake is branding just an average real estate project in which the brand brings only a stamp. Why should someone pay something for nothing?

  

So, when do brands add value?

Quite simply, when the resulting product becomes a better one by incorporating the qualities and know-how that the brand represents.it is just getting back to basics, and  High-end and Ultra Luxury brands are proving their ability to do this in earnest.

Back to basics

By successfully translating their respective expertise into the real estate and hospitality sectors, quality brands bring to the table what is expected from them, i.e., creating and maintaining value (the latter is proving to be a capital point under this market). 

An excellent cross-comparison on this was published by Sally Howard in Forbes http://onforb.es/lMJGey.

But then, there is the other side of it.  Real Estate is probably the most important statement and expression of lifestyle.

Brands bring similar people together

It is true that in some cities the location of the property provides by itself this flare, but in many other places the results of the location-identification equation are not clear. 

Thus, the incorporation of a well established brand that impersonates the essence of lifestyle to a property investment is the natural step to follow.

Moreover, people identify themselves with a certain image, and since most of us want to live in places surrounded by people with similar interests and values, branded property ensures, in a way, that the owners/users will be in contact and in the vicinity of like-minded people. Brands, In the end, bring similar people together.

This natural market segmentation reduces the buyer’s decision time; besides, there are not so many properties available under a specific brand. Thus, reduced decision time translates into quicker sales and easier cash-flow management, which benefits the developer.

Brands are powerful tools and, as any other tool, when handled with care provide the desired results. 

By creating a valuable product that will keep its value in time, branding properties provides benefits for all parties involved.

Of course, under the brand umbrella there are many different standards.....And none can compare with the reputed “Coolest brand”: http://bit.ly/mdMAmz

For more information please contact  FIRSTLOGIC Consulting www.first-logic.com

 Pictures courtesy of wozcup2011.com ; events.piaget.com ; thedailytruffle.com

.

Apple innovates the architectural industry...

Example of Apple architecture, Apple Store, NY

Last week Steve Jobs, CEO of Apple, proposed the landing of a spaceship in Cupertino, USA. Cupertino is, and has always been, the home of Apple Mac’s offices. And so, now that Apple appears to be approaching world domination in terms of the latest (indeed the coolest) I.T. and mobile technology, it seems only apt that its HQ should mirror this brand prowess.

The said “spaceship” is actually one office building that will hold 12,000 employees. No expense has been spared with the curved construction. The existing 150 acres (previously owned by HP) currently features a standard office building, a huge amount of parking and 20% landscaping. This will be transformed into an architectural landmark with 80% of the land dedicated to around 4500 indigenous trees (inc. apricot orchards). Jobs says that they’d like “a shot at building the best office building in the world.” But why would a computer company assume a position of expertise when it comes to architecture?

This architectural egotism does seem to be a phenomenon that is affecting many of our top brand names. But is it justified? Any über successful brand does require an understanding of design versus practicality and ergonomics if they are to succeed – even more so in such economically challenging times. (There is no point in creating a computer that does a million fancy things, for example, if it looks plain ugly or just huge when sat on your desk). And form v function is an ethos well known to any architect.

So, perhaps, when a brand is top of their trade, it is quite a natural progression, after all…

Apple’s iPhone is number 2 on the “UK’s Coolest Brands” list and the iPod is number 3. Therefore, it should be of no surprise that the Number 1 Coolest Brand in the UK is also extending their inherent ability for producing the exquisite for the property industry. 

Aston Martin is the UK’s largest manufacturer of luxury sports cars. Their automobile designs, inspired by a combination of power, beauty and soul, are revered worldwide. The recent announcement of exclusive international destinations states a desire to create resorts with an emphasis on sporting facilities that is not currently available in the property/tourism market. Each resort will maintain the core elements of the Aston Martin brand whilst captivating the influences of the specific locations – a design concept that is similarly seen in the Apple stores that are each unique but consistently use a combination of light, glass and metal to achieve a trademark ambience. 

As Architect, Philip Johnson, states “All architecture is shelter, all great architecture is the design of space that contains, cuddles, exalts, or stimulates the persons in that space.”

Aston Martin developments concept image

In conclusion, whilst construction must, of course, be technically sound, it may also be magical – and in that, the brand genius of our generation may well be able to assist.

For more information on the Aston Martin Branded Developments please contact  FIRSTLOGIC Consulting www.first-logic.com

.

A new era for the World's coolest brand

– Aston Martin Branded Developments

Alvaro Hidalgo of First Logic discusses the company’s role in taking one of the World’s coolest brands into the exciting world of property development.

How will First Logic manage the development process for Aston Martin?

First Logic's role with regards to Aston Martin branded developments is to identify projects suitable for the prestigious brand and initiate all of the driving factors (concept, architecture, funding & financing, marketing & sales and subsequent management of the operations) that are required to make the project become a reality.

Where in the world will the Aston Martin developments be located and what are the deciding factors?

We are evaluating and actively seeking proposals of development projects which unite the high calibre characteristics represented by the Aston Martin brand. This includes the location, project configuration and a unique appeal.

Aston Martin will grant licenses to only a limited number of developments, worldwide.

What environmental factors are you seeking for the location of these resorts?

Beautiful environments are being sought (mountain, forest, snow, lake, etc) that can also provide first-class sport and leisure activities such as ski, polo, golf or marina. Each development will be considered on an individual basis with a construction and sales approach that is both effective and in harmony with the Aston Martin brand.

For more information on 

Aston Martin Branded Developments

please visit:
FIRSTLOGIC Consulting

www.first-logic.com

.

Aston Martin extends brand prowess to international property developments

Renowned manufacturer of luxury British sports cars, Aston Martin, has extended its brand license agreement to include international property developments. Enthusiasts are attracted to the distinctive Aston Martin style that has become iconic to the world of automotive design – the key elements of which will now be applied to the new property concepts.

Power, beauty and soul are the 3 core elements that lie at the heart of the Aston Martin brand, and these same elements will be significant in placing Aston Martin branded developments at the height of the luxury property industry. “Aston Martin has an inherent beauty that stems from a basic requirement to be streamlined and aerodynamic. It is this design expertise, and an understanding of aesthetics combined with functionality, that will differentiate Aston Martin developments”, says Alvaro Hidalgo of First Logic.

Each Aston Martin property development will be unique, tailored to suit a selection of first class leisure destinations such as Marina, Beach, Ski, Golf and Polo resorts. Key principles will remain present throughout all developments, as will a striking selection of build materials. The classical strength and elegance of the Aston Martin brand will dictate the property framework, which will be united with contemporary innovations to complete truly unique developments. The worldwide portfolio of Aston Martin’s luxury properties will include villas, apartments, residences, hotels, sports clubs and accompanying exclusive leisure facilities.

Those investing in an Aston Martin property development will be proud to be part of a new brand concept that assures absolute quality, care and craftsmanship. And the long term rewards of investments in a top luxury brand include the benefit of faster sales, reduced risk and additional security. 

For more information on Aston Martin branded property developments, 

please contact FIRSTLOGIC Consulting

http://www.first-logic.com

About First Logic:

First Logic is an international property development consultancy that integrates focus and expertise to create one seamlessly driven project. http://www.first-logic.com

*Aston Martin and the Aston Martin logo are trademarks owned and licensed by Aston Martin Lagonda Limited. All rights reserved. Other product and company names mentioned herein may be trademarks or registered trademarks of their respective owners

Do brands really add property value? (I)

Brands are not created overnight. It is with forethought, planning and customer loyalty that a brand becomes popular. Obviously, all of this groundwork leads to a consumer bond that is not easy to attain and difficult to compete with. And that bond can be transferred to related products as the brand cannot risk its reputation by producing or endorsing any product that is sub-standard. 

In challenging times every industry faces a mounting pressure for fresh ideas, and one of the solutions to the 2008 crisis brought up by the property market was “property branding”.
As in any other field, the execution of the idea or guideline is as important of the idea itself. And it seems as if some believed that by simply bellowing “branded property” via any medium that would have them, would easily salvage a sorely damaged bank account. Of course, the truth is that it would be difficult to resurrect a failing resort that was constructed with peak costs and copy-cat planning by just adding a brand name above the door.
It should be remembered that it is not the logo of the brand that adds the value, but the strategy that the brand will bring (with equal emphasis on an accurate selection).

The undeniable fact is that branded hotels are more profitable in all economic conditions – most especially during the downturn as customers are more risk adverse and therefore need to be reassured by the familiarity of a known name. A recent example of a brand that has pushed its boundaries is the fashion-house Missoni. The initial Hotel Missoni in Edinburgh proved to be so superbly popular that the bold, dynamic designs have now also been applied in Kuwait with establishments also planned for Oman and Brazil. 

 

This is a clear example of how branding works. It is the brand that links the facts with the emotion. Knowing that a second-home development in an emerging district will have on-site facilities such as a swimming pool and a sauna is one thing. Knowing that it will be inspired, designed and run by a luxury name such as Versace is quite another. http://www.palazzoversace.com/

Branded properties provide added security as the management companies place importance on consistent management and worldwide marketing. This in turn results in higher returns over a longer period of time.

And, of course, we are all human. It would take a quite a stern investor who did not crack a small smile at the mention of his exclusive retreat on the delectable shores of some-such coast… oh, yes, and it just happens to be managed by the World’s Number One Coolest brand…

FIRSTLOGIC Consulting can identify and implement the management agreement of top brands to transform your property development. For more information www.first-logic.com