Monday, January 09, 2006

Target > Walmart, Some Differentiation

Lately, I've been thinking about the importance of branding and consumer perception to a business's success -- from the company name and logo to the quality of the service rendered. Robyn Waters, former vice-president of trend, design and product development at Target was interviewed by businessweek here back in Oct. 2005. A few snippets,

You worked at Target during its crucial transformation into a design powerhouse. How was the decision made to adopt design?
Our ads were always hip. When I came in to Target, 12 years ago, the merchandise was half as cool as the ads. We needed to differentiate ourselves from Wal-Mart, which was becoming very big. We didn't want to compete on price -- it wouldn't work. Target was at a crossroads, deciding whether it would be a regional discounter or if it would go national.
Top management decided on a strategy of growth based on a three-legged stool -- to be trend-right, to be completely customer-focused, and finally to be design-driven. Everybody was on board -- the chairman, the president.
We soon developed a healthy respect for what design could do for the bottom line. We had started to see what the iMac computer did to Apple's stock or the [impact of] Volkswagen's redesign of the Beetle. Everyone at Target heartily and unanimously accepted that design can drive business growth.

What other brands have captured the concept of design for business?
P&G, Apple. Coach is one of my favorite examples of a great brand. The name always stood for quality. But now it's a design powerhouse, leveraging design in a forward-thinking and innovative way that's reflected by its phenomenal sales every quarter.

Any businesses that haven't figured it out?
Sony has stumbled and struggled.

What are the trends today?
Finding luxury in everyday basic goods is a big trend. To do that, companies are leveraging design to turn everyday products into unique and special experiences. Whirlpool's latest washers and dryers are a good example. Combining beauty and functionality, they sold at three times the price of the ones in the market.

So, what are tomorrow trends?
Mass customization is the next big wave. The Coldstone Creamery ice cream chain is a great example. You can make your own flavor of ice cream by choosing candy or other topping that the server will mix in right there on a cold marble slab. Or the Mini Cooper, which offers customization online.

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