First Product Value Declines Then Stock Price Drops

By May 26, 2015 Blog

Overheard in Brooklyn: “Yeah, I saw that Michael Kors thing in Saks but I’m so over him. Like I even care about his brand anymore.” This is exactly what happens to brands that don’t have their product managers engaging with marketing and pricing experts. In Michael Kors’ case, the problem was ubiquity– overexposure of the brand makes it less exclusive and less desirable. Once the company fractured the brand into three price points and moved the brand from exclusive to downmarket his client base which included Sofia Coppola swiftly exited stage and Michael Kors was left with selling into an unproven marketplace for his brand. He lost his market. This is so apparent given that Business Insider has taken his downward slide into lower end sales and highlighted it as a case study of a business in decline. Watch here to see what Business Insider is saying about Michael Kors …. Michael Kors is so over .

I don’t like watching businesses get into trouble, I’ve got no schadenfreude involved here. Why I highlight such a high profile story is that the learning for this brand is no different than any other brand no matter the size of the business. Ready, I’m going to topnote the educational takeaways for your business.

1. Spending your time building business value and building business relationships translates into brand positioning. The higher up the food chain, the more desireable your product or item becomes.
2. Brands move from upmarket to downmarket–never to return upmarket. Once something goes on sale, it erodes the product value which ultimately recalibrate customer expectations.
3. Recalibrating customer expectations means you will reduce their confidence in the product and thereby having their focus move from beauty, quality, exclusivity, along with other traits around customer desire and replace them a focus on price.
4. Price customers aren’t loyal customers. They’re not doing business with you, they’re doing business with the low cost that they’re engaging with.

So Michael Kors wanted to occupy a few too many brand positions and didn’t take the time to align brand, customer, pricing and product and the market showed him how they felt with a 37% decline in stock value. Ouch. You don’t have to make the same mistake. Learn from Michael Kors.

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