Essential Reading for Marketing & Business Professionals
Thursday March 6th 2008

Insights in this issue:
* Luxury isn't Luxury any more
* TV isn't dying - Official!
* How do you get a salesforce to cross-sell?

Two weeks ago we suggested that Web 2.0
was struggling. Now we have the latest
figures on TV viewing make which
interesting reading. Four quarters of growth
suggest TV is fighting back against the lure
of Web 2.0 after all! We take a brief look at the
luxury market and ask - is luxury still
luxury? And finally, McKinsey answer one of
the most challenging questions of all - how
to get a salesforce to cross-sell

James Pearson - Editor

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Luxury isn't Luxury any more

A new book - How Luxury lost its Lustre
suggests that luxury brands aren't really
luxuries any
more. It is estimated that "luxury goods" are
now a $157Bn a year industry. Approximately
60% of the business is concentrated in 35
brands. The largest of these -- Louis
Vuitton, Gucci, Prada, Giorgio Armani, Hermes
and Chanel -- are corporate behemoths in
their own right. Louis Vuitton brings in
nearly $4 billion in sales annually, while
the others rake in more than $1 billion each.
But the behemoth of the sector is LVMH (Loius
Vuitton Moet Hennesey) . In 2005, LVMH did
$18.1 billion in sales and made $3.5 billion
in profits. During the first half of 2007,
LVMH reported a 16% increase in profits over
2006.

The question is, will luxury hit the buffers
in 2008? Consumers are certainly being more
cautious and other considerations are coming
to the fore. Many luxury brands "outsource"
production - increasingly to China and this
has an impact on the perceived quality of
brands. What if Chanel No 5, instead of being
based on the centrifolia rose petals from a
family concern in Provence, was being
produced from the same roses grown in vast
greenhouses is Guanzouh?

The question, therefore, is this: Can luxury
transcend market trends and can luxury be
luxury when everyone has it? The neat
marketing trick of encouraging "exclusivity
for everyone" is in danger of being found
out. And those brands, Burbury, for example,
that have epitomized this in recent times
look in severe danger of being found out.
Meanwhile, true luxury and exclusivity goes
from strength to strength - Tiffanys, for
example, announced a 17% rise in profits in
2007 and has just opened a new store on Wall
Street. And Rolls Royce will make over 1000
cars this years, a record.

If you want to find out more then we
recommend you read Deluxe: How Luxury Lost
Its Luster, by Dana Thomas

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
TV isn't dying - Official!

The Institute of Practitioners in Advertising
(IPA) has released its latest quarterly
report on TV viewing, Trends in Television.
This shows that viewing levels have increased
yet again - taking the average daily viewing
hours in 2007 to 3.63 hours, compared to 3.60
hours in 2006.

BBC1 remains ahead of ITV1 and both did
relatively well over Christmas. Individual
channel performances have remained relatively
the same - with digital channels doing better
among younger audiences. This is no surprise
given the success of Sky in homes with
children. Those children are only now
becoming adults so it is unlikely that this
pattern will remain for very much longer.
Terrestrial channels now account for 63.5%
(up from 61.9% in Q3) with Satellite
accounting for 36.5%.

Over 80% of the population now have digital
television in some form with Digital
terrestrial growing very fast and now
accounting for 47% of TV households.
The most recent figures from Sky suggest that
the love affair with Television is far from
over and these figures from the IPA only
re-inforce this. What has changed, probably
forever, is television's hitherto unique
ability to deliver vast homogenous audiences
all watching the same programme at the same
time. Only the BBC still reaches more than
1/3rd of the population, ITV 23.9%, Sky's
branded channels, by comparison, manage a
share barely larger than that of Five (6.5%
vs 5.8%).

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
How do you get a salesforce to cross-sell?

Persuading salespeople to cross-sell their
company's products is seen as one of the Holy
Grails of sales and marketing management.
History is littered with failed attempts,
wrecked on the rocks sales resistance and
management mistrust. But a new study by
McKinsey suggests there may be a relatively
simple solution. They identify a number of
key issues that have to be addressed.

First and foremost, remuneration of both
sales people and business unit management has
to focus on co-operation - encouraging people
to work together. This was achieved by having
10% of bonuses based on how the other
divisions felt each individual was
co-operating.
Second the distrust of other
products, services or divisions to deliver on
time and to the right quality has to be
addressed. Salespeople are understandably
reticent about sharing information that might
result in their customer relationships being
damaged. This is the main reason why most
Salesforce automation and CRM systems fail,
by the way.

The solution was to work with the biases of
the salespeople and show them that provable
cross-selling success would make them far
more employable, while for senior managers it
would accelerate promotion and pay. This was
achieved primarily through workshops.

So what was achieved? A 25% increase in
overall revenues, solely through
cross-selling. Once that sank in, behaviours
that encourage co-operation became
increasingly the norm because
non-co-operation could compromise reaching
target!

The final conclusion - make simple changes,
bring people along by working to their
agendas, then once cross-sales increase,
impose cross-selling targets because you have
proof it can be done!