Why are group affiliated brands more successful than stand alone brands?
In an article by HBR, (https://hbr.org/2015/06/luxurys-talent-factories/) group fashion brands were three times as creative as collections made by independent competitors. (See the exhibit below)
The real source of the groups’ value says Andrew Shipilov, associate professor of strategy and an Akzo Nobel Fellow at INSEAD is the way they exploit their diverse business portfolios to offer rich learning opportunities to both managers and creative talent. This is why their brands excel at design and business innovation.
Within the group, there is a vibrant circulation of talent that allows them to spread knowledge and best practices, despite the sometimes intense rivalry between their brands.
Cross fertilisation of ideas is key :-
An example of LVMH – a brand house – To boost sales growth, the groups’ watchmaking companies started hiring marketing managers from their groups’ cosmetics and fashion companies.
These people were adept at developing stories that explain why a company created a particular model of watch and what the aspirations of its creators were. The ability to draw on deep brand-building and advertising expertise from other companies within their groups gives affiliated watch brands an advantage over independent watch companies, which have to hire it externally, often at a hefty price.
One executive reflected, “I’m responsible for a luxury watch brand in Asia. My team never had a CRM function, so I recruited an executive who had experience in CRM in fashion and cosmetics firms in our group. She brought the tools and the processes, as well as the knowledge about performance benchmarks. She helped our people change their mindset from being focused on the product to being more customer-oriented.” The new CRM systems improved the brand’s customer understanding and reduced its risks of stock buildup, since they provided quick feedback on market reactions to products. And the relationship-based approach the former fashion executive introduced has played an important part in making this brand one of the most-sought-after luxury lines in China.
10X provides this opportunity to SME’s and gives them the edge to compete, says Terry Kew, CEO of 10X. By forming mastermind groups (coaching clubs) which meet regularly and facilitated by an experienced chair (coach), SME’s can now exploit their diverse business’s to offer rich learning opportunities to both managers and creative talent.
Andrew Shipilov is an associate professor of strategy and an Akzo Nobel Fellow at INSEAD. He is the coauthor, with Frédéric Godart, of the June 2015 HBR article “Luxury’s Talent Factories”https://hbr.org/2015/06/luxurys-talent-factories as well as a coauthor of Network Advantage: How to Unlock Value From Your Alliances and Partnerships http://www.amazon.com/Network-Advantage-Unlock-Alliances-Partnerships/dp/1118561457/.