As product managers we all dream of the day that our customers become truly excited about our product and its product development definition. We’d love it if our product’s logo was highly coveted by our customers and was almost seen as a sort of status symbol. The more customers who felt this way, the bigger our product’s bottom line would be, right? Well over at the luxury goods merchant Michael Kors they are dealing with a slightly different issue: is it possible that they have become just a bit too popular?
Just Exactly Who Is Michael Kors?
So you say that you’ve never heard of Michael Kors? Well, where have you been hiding then? Mr. Kors was just another fashion designer until he got his big break and appeared as a celebrity judge on the hit TV show “Project: Runway” back in 2004. Mr. Kors has partnered with the investment team that transformed the fashion brand Tommy Hillfinger.
Kors offers US$400 handbags, US$300 watches, and US$200 dresses. Although these prices may strike you as being a bit high, you need to understand that a fashion house’s runway collection will feature bags that sell for US$2,000 or more and dresses that go for US$4,000. The key idea behind Kors is that luxury products don’t have to be unaffordable for the middle-class consumers. Now that’s something to put on your product manager resume!
The product managers at Kors sure seem to know their stuff. The retail market in the past few years has been, to put it nicely, difficult. However, Kors has done very well. The company has grown by more than 20% each quarter. Their profits have grown from $13M a year ago to $662M this past year. The company is currently valued at $16.7B. What this means is that the company is worth more than both Ralph Lauren or Tiffany & Co.
Lessons From Coach
The world of luxury products poses a unique set of challenges for a product manager. Yes, you want your products to be successful. However, you don’t want to be too successful. The cardinal sin of luxury comes down to one word “overexposure”.
A great example of the challenges that Kors is facing is offered by the luxury brand Coach. Over the past year or so, Coach’s share of the North American premium handbag and accessory market has fallen from 35% to 24% while Kors has grown from 3% to 18%.
So what’s gone wrong over at Coach. People who watch the luxury market believe that Coach expanded too quickly. Coach expanded into outlet stores which ended up tarnishing the brand’s high-end reputation. Back in 2013, outlet stores were generating 70% of Coach’s retail sales. As you can well imagine, Coach sees things a bit differently. They think that their decline in sales comes from a lack of investment in full-priced stores and running too many promotions.
One other difference between Coach and Kors is how they interact with department stores. Coach has more stores and outlets than Kors does simply because they have been around longer. However, Kors has better representation in department stores. This is a mixed blessing: department stores tend to be more aggressive in their discounting which can end up hurting a brand’s image. Coach sells its products in 1,000 North American locations. Kors on the other hand sells their products in 2,500 North American locations.
What All Of This Means For You
We would all like our products to be seen by our potential customers as being a high-end luxury item (even if what we are selling is industrial drilling bits). Almost seems like that should be a part of our product manager job description. However, it turns out that even if we were able to get our products to be viewed this way, it might not solve all of our problems.
Kors is a very successful high-end luxury brand that sells handbags, dresses, and watches. They have been growing rapidly over the past few years and now people are starting to ask if they are growing too fast. One of their rivals, Coach, appears to have grown too fast and their brand became cheapened. Will the same thing happen to the Kors brand?
The good news is that high-end brands in all markets can grow without oversaturating their markets. A key factor that we all need to keep in mind is that so much of what makes our brand a desirable brand is when we keep it up-to-date. Our customers will always want what is new and what is desirable. No matter how many places they can get our product from, if we are the only place in town that offers them what they are really looking for, then they will keep buying it from us!
Question For You: If your brand did become overexposed, what steps could you take to fix this problem?
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
Please buy my product. No, I really mean it – go out now and buy my product! Sadly, this technique of simply asking your customers to buy your product generally doesn’t work for most product managers. Instead, we have to be waiting in the wings until our customers decide that they need a product like ours. When they do, they more often than not release what is called a “Request For Proposal” (RFP). We are expected to create a response to this document that talks about our product development definition and if the customers likes our response the best, then they’ll buy our product. What can we do to make the customer fall in love with our RFP response?