Tag Archives | brand loyalty

We Irish are suckers for brands and labels, and it’s costing us dear

Paul Cullen wrote this story back in September, Stepping out in the €27.99 suit, when it was one of their websites top stories early in the morning. It even made the rounds of Twitter for a while as well.

The cheap Lidl suit story has been around for a while – I think it first came out back in October 2008.

What struck me more about this story was the reference to the Canali jacket being sold by Louis Copeland for 38 times the cost of the Lidl suit. That’s a jacket – not a full suit – for over €1,000.

Fair enough the jacket is made of wool and not polyester, and that it has a “breastpiece made from the hair of a female horse’s tail” (top of my shopping list when I look for a jacket, I have to admit!), and that “some” of the sewing is hand done,. My question is though, is there really any justification for spending that amount on an item of clothes – do those differences really amount to an extra €970 worth of jacket?

Or is the extra €970 really just for the people with loads of cash who listen to bull from Louis Copeland when he flatters them about how the jacket fits, and gives them the line that it’s the personal favourite jacket of Barak Obama – all from the article. How much of the extra €970 is really just paying for the most important piece of material on the jacket – no, not the horses ass hair – the Canali label?

Having grown up in the clothing industry, I can tell you numerous stories about how much a label is worth to the price of an item.

Best example I can remember in the recent past about the cache of a label was when Old Navy opened (briefly) in Arnotts in Dublin. In the grand scheme of things in the US, Old Navy is below Gap which in turn is below Banana Republic when it comes to both cost and cache.

Yet if you really study their clothes, while the styles and colours may be slightly different, they are effectively all the same items, but just with different labels on them.

Yet when Old Navy came to Ireland, it was perversely more expensive than the Gap outlet just beside it in Arnotts. Anyone familiar with shopping in the US was laughing out loud at the fact that Irish shoppers were buying Old Navy items that were more expensive than Gap, but however the perception was created in the minds of shoppers, it happened.

In the early 1990’s, you could have manufactured a garment for, say, €27. If you put your own Irish branded label on the item and sold it to an Irish retailer, it would sell for maybe €62 to the general public.

Say you made the same item for a big name international designer – exactly the same item. Firstly, just because they were the big name international designer, they’d say that they couldn’t possibly buy the item from you for €27. They’d give you €19 – and because you were making in bulk for a bigger order, and were keen for the business in the hope of repeat orders, you took the money.

Now, your €19 item gets the fancy label from the big name international designer added to it, and then gets sold by a chain of international chain stores or their own designer stores only in New York, London, Paris and Milan. Suddenly you see the €19 item being sold for €229.

People – it’s the same item. Made by the same people. Using the same materials. But with a different label on it. But being sold for nearly 4 times the price. And it sells more than the Irish retailer sells at €62.

Another great example was something I noticed in Tesco when I lived in London. There, if an ordinary grocery item became popular, they’d very soon put a “Tesco Finest” label on it and charge more – for exactly the same product inside.

Obviously, people can spend their money on whatever they want. And perceptions are hugely important when it comes to how money is spent – and labels feed into those perceptions enormously.

But think about it! We Irish are famous for our love of branded, labelled items. But how much extra money are we spending unnecessarily in order to fund that love.

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It’s not fair – I’m hooked on brand name items, costing me a fortune

I’ve always been of the opinion that Irish people are hooked on buying brand name items and therefore exposing themselves to higher purchase costs rather than buying own label or white label (yellow pack) items when out shopping.

We end up paying more – but we’re getting what we want. It’s a choice we’re making.

This part of an article from LifeHack addresses that issue:

Brand loyalty is one of the major factors influencing people’s buying decisions. Part of this is “following the leader” – if I know the brand, it must be because people are talking about it, thus it must be good.” Part of it is packaging design. And part of it is comfort in previous knowledge – the brand you know and kind of like is a better bet than the one off-brand you don’t know and might love or hate.

What to do about it:

Commit yourself to trying something new every so often – maybe every month, replace a favorite brand with a brand you don’t know and see how you like it. You pay a huge premium for branding, often at the expense of quality, so it’s worth it to shed a brand here and there. For durable purchases (as opposed to consumables like food), develop a systematic way of comparing your brand against the competitors – Apple (or Microsoft), Ford (or Chevy), Nike (or Adidas) might not always be the best way for you to go, even if you’ve had good experiences with them in the past.

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Customer retention, again

A while ago, I commented about why I found it so hard to understand why Irish businesses seem to be not too bothered about trying to keep customers.

I’m in the middle of such an experience myself again – with another telco coincidentally. I’ve been with Vodafone for the past year. I’ve just become eligible for an upgrade, and decided to check out the Nokia N95.

The Vodafone upgrade price is €439. And on the O2 website, I can move my account to a similar tariff and get the same phone for €269. So, for the same outlay every month (and a few extra free texts with O2 than I’d get with Vodafone) I can save myself €170.

I’ve had no complaints with Vodafone over the past year or so, but there’s been nothing in that year to build any brand loyalty. So, for the better offer, I’m off to O2. Lets see what they’re like for a year anyway, and I’ll follow the deal next time around as well.

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