Blog: Ubiquitous premium brands and the 'Burberry effect'
Dave Leggett | 1 May 2008
Just how far can premium or prestige brands go down the volume road? It was a question that had me thinking after meeting with Jonathan Nash, who's in charge of Saab and Cadillac sales in the UK. He turns low volume on its head and maintains that it can be an advantage in terms of delivering a more personalised customer experience. There might be a few people out there who snigger at that one, given the way Cadillac has undershot on volume, but I think he has a point.
Does the brand image start to suffer if the brand's cars are everywhere you look? How far can you take it? I guess if the tide is rising and people have more money to spend, the fact that millions of people can buy formerly exclusive designer clothes and upmarket car brands is a good thing - a simple consequence of rising affluence. BMW 3 Series outsells Ford Mondeo in UK these days; so what? And when these things do become ubiquitous, then the people who formerly wanted exclusivity can move on to something else. In Europe, a Caddy is a pretty exclusive thing, not exactly a cool thing (let's leave gold wheel Escalades to one side, that's a hip-hop micro-niche) but maybe that will come?
In Motor Industry Magazine, Martin Derrick asks whether BMW can avert the “Burberry risk”.
“Remember Pierre Cardin? Or Ben Sherman? Or Burberry and Stella Artois?
“What they all have in common is that they were premium brands which lost some of their sparkle as a direct result of boosting sales volumes too aggressively. Worse, they started being associated with – how shall I put this? – less than premium customers.”
As sales volume grows, is there a worry that BMW’s nice cars will fall into the wrong hands? Derrick said that growth will continue: “because people are getting more affluent and are living longer so there’s no question of demand for premium cars falling in the short term”.
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