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The Unbalanced Branding Relationship Between Retail Jewelers and Jewelry Designers

The Unbalanced Branding Relationship Between Retail Jewelers and Jewelry Designers daily-golden-nugget-1457-37
I have this love/hate relationship with the words "branding" and "brand." When I became an entrepreneur and started studying different marketing approaches, I still remember my initial confusion of seeing those words used in connection with advertising. Up until then, I only knew of branding as a method of marking livestock, such as cows. The origin of the word brand, in fact, has Germanic origins relating to burning an identification mark into livestock. Years later, Roman pottery makers who manufactured in mass started pressing their mark into their clay pots so they could be identified in different areas of ancient Europe.

In modern times, big companies are still using the same method of attaching their name, insignia, or logo on a product to create name recognition of their quality product or service nationally or internationally. Naturally, simply having a quality product or services doesn't create brand awareness, or build brand recognition the likes of Xerox, Q-Tip, or Coca-Cola; indeed for that you, need to spend a lot of money exposing everyone to your marketing message.

The Internet Has Changed Branding

Until the internet came around, only companies with large advertising budgets could afford to become a household name by placing ads across every traditional marketing channel. There are a far greater number of less expensive marketing channels available now than the previously limited TV, radio, newspaper, and radio. Many marketing online channels have an entry level cost of only pennies per day for local advertising, a few dollars per day for regional advertising, and reasonable but higher costs for nationwide advertising.

In other words, the internet has made it very easy for any small business to develop a nationally recognized brand, and potentially become a household name.

Branding and Teamwork

In 2005, my agency was hired to help implement a branding campaign for a jewelry organization that wanted to build awareness of the quality of their members, so that their group would stand out as an elite set of jewelers. The branding campaign had two different components, the first was to advertise a unique high quality line of jewelry, and the second was to explain that that line of jewelry was only available at one of those elite jewelry stores.

Another agency created all the marketing assets (photography, color pallet, ads, etc.) while our job was to implement all the websites that supported the campaign and track results. A lot of effort went into creating the marketing assets and laying out an easy to follow plan for using those assets. Each individual store was asked to use the pre-made ads in their local market, and with 700 local markets covered across the U.S., it seems like an easy task to quickly build nationwide brand recognition of this elite group of jewelers.

Even though the jewelry organization itself supported the campaign with full page ads in nationwide magazines, the local campaigns fell flat because that chosen high quality line of jewelry didn't match the other merchandising in many stores, and therefore they simply wouldn't support it.

After four years of trying, that branding campaign idea was eventually abandoned. I can't help but imagine the success that could have been had if a more generic product line had been selected to drive foot traffic to those 700 retail stores. Surely, a local retail jeweler would gladly use a pre-made ad and spend their money for local advertising if that advertising is helping to drive foot traffic to their store.

This is a new type of branding strategy available in the jewelry industry. Instead of one company paying for everything, retail jewelers can choose designer product lines that fit with the rest of their merchandising, and the designers provide the ads for retailers to use in their local marketing. This strategy works perfectly when the designers and the retail jewelers are willing to work together in a team, and realize that their mutual success is based on a mutual agreement of marketing and sales. Pandora is the perfect example of this teamwork.

Pandora's Branding

The other day, I published my analysis of Pandora's Q4 2015 report. I emphasized that the report clearly states their plans for expansion of company owned retail locations in the U.S., but no mention of further new Gold or Shop-in-shop level independent retail stores. Many retail jewelers have complained about the restrictions Pandora placed upon them when they carried the line in their stores, but when you sit down and really scrutinize it, you'll realize that Pandora was simply building their brand name so everyone involved could benefit.

Pandora set out to create a unified brand image which it could only do through a controlled contract with its retailers. Their marketing program is very convenient for retailers because they do all the work by providing all the marketing materials. Instead of wasting time creating ads, a store simply inserts their logo on the pre-made Pandora marketing and it's ready to go. The time savings is very attractive, and it is the type of support the retail jewelers need.

Pandora doesn't allow most of its retailers to show product on their websites, and retailers are not allowed to carry similar jewelry lines in their store. Pandora retailers also have required purchases in order to maintain their status as a Pandora store. Retailers I know who follow Pandora's guidelines and use the supplied ads, are reporting that they do get a lot of foot traffic looking for Pandora, so the joint branding program does appear to have a big benefit.

Designer Branding of the Future

Many of the new jewelry designers I've met over the last few years have already started to build their brand through social media before getting placed in their first stores. Designers who put a little effort into Instagram and Pinterest are finding it easy to build a nationwide following online of people who like their single product line. They know who their target customers are and they can use internet marketing and social media to directly engage with them. Knowing their target customer should also make it easier, but not necessarily less expensive, for designers to create the right marketing materials.

Independent retail jewelers often struggle to manage their time between running a store, managing finances, and thinking about future marketing which promotes the store. Jewelers have to figure out how to advertise everything they sell in their store, and they aren't specifically focused on building a single nationwide brand name.

In several of my previous writings, I've said that retail jewelers should ask designers if they have ready-to-use marketing materials, which would save time and money. Retailers and designer should then work together for their mutual benefit. Retailers should be using the provided ads, and designers should be funneling sales leads to the retailers using those ads.

A nationwide brand awareness of that jewelry designer begins to emerge when you add up all the marketing efforts from the jewelry designer and the local efforts of the retailers carrying the line. Just like the Pandora strategy, this joint program would yield benefits for the retailer and the designer if the business relationship is fair.

The Unbalanced Relationship

Branding teamwork between retail jewelers and designers seems like a really good business relationship to be in, except that most of what I see, is an unbalanced relationship favoring the retail jewelers.

Years ago, it was the retailer's responsibility to create their own advertising. The cost to create ads can be measured in time, creative work, or the hiring of a marketing agency. However you measure it, that cost has shifted from the jewelry store to the jewelry designer. The designers are spending the money on researching demographics and creating marketing, which is a savings of time and money for the retailer. Designers who promote themselves on social media are gaining national recognition and creating purchasing interest on a local level.

We all know that retail jewelers are always cautious when deciding to bring new jewelry lines into their store. Unestablished designers are often asked to place product on memo for 45 to 60 days while also providing all the marketing material to support their product.

In this scenario, the retailer is getting all the benefit without any risk. Meanwhile, the designer has invested money out of pocket to promote themselves and manufacture products. The retailer's responsibility seems to end when the ads are placed and the product is put in the showcase. The retailer has no financial loss with items on memo and therefore doesn't feel the urgency to sell them.

Under these conditions, it makes better business sense for a jewelry designer to promote themselves and sell direct through ecommerce. If they are the ones fronting the full financial risk of their product, then they should be the ones to reap the profits from a retail sale direct to consumers.

This is the conundrum I see facing the jewelry industry right now. Once upon a time, the retail jeweler was the only channel through which someone could acquire fine jewelry, but that's not true at all anymore. Jewelry designers can sell direct through ecommerce or they can open their own flagship retail store. Selling direct means more profits for them, and certainly seems fair since they are doing all the marketing work, developing a following, and take the full brunt of the manufacturing financial risk.

From my point of view, the above mentioned branding teamwork strategy would work a lot better if the retailers honored new designers and paid for products rather than asking for memo terms. Many jewelry designers do not want to deal with consumer sales, and are perfectly happy to skip the ecommerce route, while others view ecommerce as their future.

The jewelry industry is going through a metamorphosis right now. Retail jewelers and designers need to better understand their role in supporting one another and using this new joint branding strategy for their mutual benefit.

AT: 02/23/2016 02:12:48 PM   LINK TO THIS GOLD NUGGET
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