ETD: 893 Doing Business Online; Wal-Mart Seeks Luxury Market;
What Makes Luxury Luxurious?
E-Tailer's Digest
etd_post at gapent.com
Tue Jun 7 11:46:09 GMT 2005
E-Tailer's Digest --- Everything for the Retailer
Issue #0893 June 7, 2005
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Doing Business Online
[3] Wal-Mart Seeks Luxury Market
[4] What Makes Luxury Luxurious?
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[1] Greetings.
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Hi All:
Today we have somewhat of an oxymoron - Wal-Mart wants to enter the luxury
market! The first thing you think of when you hear Wal-Mart, is cheap
prices geared towards the masses. Now they want to enter a here-to-fore
untapped market (for them). Will they make it?
List member and luxury market guru Pam Danziger has defined the luxury
market. Do you believe Wal-Mart can perform? Do you have what it takes to
sell in that market?
How are you accepting online payments? What issues are you encountering,
especially with all the identity theft that is happening? We have been
experiencing challenges with customers in Germany and Japan, and I'm sure
will have the same issues in other countries.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] Doing Business Online
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For those of us who do business online, especially selling products to
consumers, are faced with many challenges. While we have always had the
issue of security, it has gotten worse lately with identify theft. And it
doesn't help when companies like Citigroup admit they lost a box containing
computer tapes with personal information on 3.9 million customers of its
CitiFinancial consumer-finance unit. (actually it was UPS that lost the box).
So what do we do? How do we accept payment from customers and be
guaranteed we will collect? Recently we started doing business in Germany
and Japan
(http://youngbloodusa.com/Merchant2/merchant.mvc?Screen=SFNT&Store_Code=SM).
One customer in Germany requested COD delivery, which is not available
outside the U.S. She had identity theft issues, and won't pay online.
As stated in issue 889, Japanese consumers prefer to make online payments
using a method called konbini. Consumers pick out items online, but don't
pay with a credit card. Instead, they go to a local convenience store and
give cash to a clerk, who transfers the money into the online vendor's
account. Not only is this system alien to most U.S. businesspeople -- but
foreign companies aren't allowed to participate in it.
Germans -- who have a great trust in their banking system and a strong
cultural bias against debt -- much prefer to make online purchases with
wire transfers from their bank accounts. In fact our German customer
requested that. Of course, this runs into another issue - the ability for
somebody to withdraw funds.
Obviously there are other payment methods - like PayPal, and the payment
service from list member Jules Kaplan (inovium.com) We also have EFT, ACH
(at least in the U.S.), Western Union and other local methods. But no
global method that is easy and safe. The venture we were involved with in
Tortola would have been the closest thing to a global currency - a safe
way to transfer funds, and be assured that the funds were backed by gold.
So, what do you think? What are you doing for payments globally?
George
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[3] Wal-Mart Seeks Luxury Market
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Wal-Mart Stores Inc.'s top executive said sales recently have languished
partly because the company isn't selling enough merchandise to
higher-income customers.
The world's largest retailer is doing a strong job catering to its core
customers -- those with lower incomes who shop at Wal-Mart because they
"have to save money," said President and Chief Executive Lee Scott.
Nevertheless, Wal-Mart's sales at stores open at least a year -- or
same-store sales, a widely followed measure of a retailer's performance --
rose 2.5% in May, at the low end of the company's forecast of a 2% to 4%
increase.
Wal-Mart's focus will always be on less-affluent shoppers, but "we need to
widen our appeal to a broader range of customer," Mr. Scott said. That
means improving the quality of the company's household goods and apparel,
and improving its consumable offerings with "organic and natural food," he
said.
To achieve that goal, the company's global merchandise-buying operations
and the company's product-development teams are "getting closer together,"
Mr. Scott said, and are developing merchandise that is more attractive to
upper-income customers.
URL for this article:
http://online.wsj.com/article/0,,SB111801187381451266,00.html
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[4] What Makes Luxury Luxurious?
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In order for a product to be called 'luxury' there are three primary
product attributes that must be apparent to the consumer, according to a
new survey among 700 luxury consumers (average income $133,000) conducted
by Unity Marketing. When asked to rank nine different attributes of
luxury, consumers say first and foremost a luxury product must exhibit
superior quality. Then the luxury good must deliver distinctive style and
design and it must have the right price/value relationship.
Superior quality is of primary importance to luxury consumers With the
recent emphasis in the luxury market towards experience, we sometimes lose
sight of the fact that product quality does count. Luxury consumers are
primarily drawn to trade up to luxury because they expect better quality,
finer details, superior workmanship and materials. Nearly 90 percent of
luxury consumers agreed with the statement, 'When you buy a luxury item,
you expect it to be a cut above the average.'
Luxury consumers also expect style and design. But luxury marketers must
go beyond offering the 'best of the best' quality and also deliver
intangibles like outstanding style and design that luxury consumers rate
almost as highly as quality. In addition to their expectation of superior
quality, luxury consumers are highly attuned to style and design that are
more a reflection of personal taste and experience. For the uninitiated it
may be easier to distinguish product quality than to recognize outstanding
style and design. Luxury consumers have discerning tastes and an
appreciation for superior style.
Luxury consumers want a favorable price/value relationship. It's these
expectations of higher quality and superior style and design that makes
luxury consumers willing to dig a little deeper into their pocketbooks or
wallets to buy the more luxurious item. But while luxury consumers
appreciate superior luxury quality and design, they also get an
experiential thrill of paying less for the best. Over 80 percent of luxury
consumers agreed with the statement, "I enjoy the feeling of buying
luxuries on sale and usually search out the lowest price or the best value."
Thus luxury consumers carefully evaluate the value of the luxury attributes
offered against the asking price. For luxury goods that come up short in
the value proposition, shoppers are less likely to pay the full asking price.
Luxflation means continually inflating the luxury value delivered to the
consumer. What is luxury today becomes the norm tomorrow. Luxury is
constantly devolving as luxury is translated from the 'classes' down to the
'masses.' What once was extraordinary ultimately becomes ordinary.
Therefore luxury goods marketers must fight against the inevitable downward
gravitational pull toward the common and everyday by continually inflating
the luxury value of their product offerings. This strategy for marketers to
pump up the luxury value of their products is called luxflation.
"Luxury marketers must begin by offering the 'best of the best' quality,
superior style and design and the right value/price equation, but they also
must go beyond to deliver not just a great thing, but a wonderful
experience to the customer. Thus the bar is raised and luxury marketers
must work harder to enhance the luxury value of their goods in order to
maintain their luxury products' allure and appeal."
Pam Danziger
President
Unity Marketing
Get a free 2,000 word white paper describing the "Eight Things Every
Marketer Needs to Know about the New Luxury Market."
http://www.unitymarketingonline.com/downloadPDF.php
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