July 27, 2007
The Power of Limited Editions
You launch a new product and it takes off. What do you do next? You expand production, right? No, if you’re marketing in Japan, you take your limited edition dollars to the bank and discontinue the product.
That’s
what Pepsi did with its Ice Cucumber soda as did Nestlé with its one-off Cantaloupe
Melon and Koshian Maccha (green tea with red-bean filling) KitKat bars.
The Japanese, according to the Aug. 6 BusinessWeek, have a thing for limited editions (known there as gentei) and go to great lengths to snap up items they know will only be on the market for a short period of time.
Pepsi’s Ice Cucumber beverage, for example, sold out of its 4.8 million bottle supply in just a few weeks. Keiko Ishihara, who oversees PepsiCo sales for Japanese distributor Suntory, told the magazine there was never any thought of expanding production of the drink.
“We didn’t want it on the market past the summer,” she said. “The value of Ice Cucumber is that it’s gone already.”
Consumers in Japan are so into limited editions that companies cannot avoid going this route. There is, however, a concern that brand equity can get lost in the process of introducing and then discontinuing products so quickly.
Ms. Ishihara said, even with its success, Pepsi looks to limit its limited editions to three or four a year to avoid consumers getting “tired of it.”
David Teasdale, president of Mars Japan, told BusinessWeek, “If you do it too much, [consumers will] forget why they are purchasing the brand. Mars Japan has gone the gentei route with M&Ms tied to Hollywood movie releases.
Discussion Questions: Does the gentei experience in Japan have applications here in the U.S.? What about concerns that use of limited editions can lead to a deterioration of brand equity?
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To me, the concept of limited editions is a key enabler of experience retailing. It’s not the only way to build it, and like anything, its effectiveness can be reduced through over-use. But built well, a limited edition product can become wrapped up in an event of some significance to the shopper: an experience.
Pier 1, a long time ago, built its whole retailing strategy around this concept–you felt like you were walking into a bazaar filled with the tastes and textures of exotic places (and cheap!), but you knew if you didn’t buy it then, you’d probably never see it again.
But it also can be used seasonally–like the Ice Cucumber drink. If Pepsi rolls it out again next summer, it could easily become “the summer drink” that everyone anticipates.
The key is to balance satisfying enough demand without being too widely available–otherwise you undercut the sense of urgency. But if you habitually make your limited editions too hard to get, people will stop looking.
I was struck by first Kent’s and then Bill’s observations about the relative risks and rewards of the LE strategy.
Given the time and relatively small inventories involved, I’d tend to see it Kent’s way, as a fairly low-risk thing to try.
In fact, Bill, I could see the first few forays as tests in themselves, where an organization could learn from each round and establish seasonal–and other–trends over time, year to year.
For instance, midsummer seems to bring out the turquoise in all of us, across fashion and bed & bath. Are there other sensory trends we aren’t picking up on because we’re not tracking them empirically? Would they come to light in a limited-edition test?
There’s a wealth of customer insight we could collect along with the incremental sales.
Today’s discussion and articles made me think of a recent example of a type of limited edition marketing here in the states.
A couple years ago dark chocolate M&M’s were introduced in the US as part of a “dark side” Star Wars movie release and promotion. There was tremendous word of mouth buzz and nearly everyone who tried them loved them. Then they were gone. Dark chocolate-loving parents hid the remaining candy they still had away from their children. People drove for miles to try to locate any bags that might still remain on store shelves in obscure locations. Some tried to find the product on eBay and were willing to pay highly inflated prices until there was not a dark chocolate M$M left in the land.
Then, more than a year later in July 2006 the dark chocolate M&M’s were released nationally as a permanent part of the line. I am not privy to insider information, so I don’t know if the promotional release was a controlled test run for the product, was a limited edition that ended up being just too lucrative to stop or, if, from the get-go it was a brilliant marketing move designed to create panic and demand in the chocolate buying community!
Asian consumers have long had an interest in new products. Even if the company didn’t take the new product off the market, sales of that product would decline as another new product comes out. This phenomenon is evident in the drink category and consumer electronics category. Zara uses the same limited edition style as a strategy for the company.
Developing brand equity is a challenge and needs to be carefully managed. Either the new products are brand extensions and use the the name of the brand or the equity is to the company and the company’s name is prominent on the new products.
Whether this strategy works everywhere, whether manufacturers want to train consumers to constantly be moving to new things, or whether there is a segment of consumers that is constantly looking for new things are questions that need to be answered before companies use this strategy in all areas of the world.
This type of “in and out” merchandising is also apparent at Costco, particularly in categories like seasonal, books, and clothing. That’s what makes each trip unique–you never know what you might come out with. And there’s always the fear that if you don’t buy now, it won’t be available again.
In North America, the idea of making the shopping experience fun and unique has been lost in most retailers, particularly in the traditional shopping channels. This gentei approach sounds like it might spark some in-store excitement with unique products. I agree with Kent that brand equity would grow, as long as manufacturers consistently deliver on quality “in and out” products. And in the appropriate categories.
The culture and history of the Japanese consumer is different than for Americans. Two concepts seem to be merging here. Limited Additions have a place in the market. They should be for special events, times or related fact. Remembering the small size of most Japanese stores, the idea of seasons or ever-changing product flavors creates some retail excitement. There is greater opportunity in America to roll flavors in and out in select categories. Execution seems to be the problem here.
The limited edition would seem to be at the base of high-end consumerism. What greater incentive to want than being told you can’t have? The Japanese would seem to have compressed “upward mobility” into single products. By placing the “limited edition” tag on a product, consumers want it based upon exclusivity. Hasn’t Nike done the same thing by pricing sneakers just out of the price range for their target market?
Consumers are sold exclusivity by access whether it be due to cost or inventory. Demand is created as a response to A CONSUMER linking his or her comfort (status, ego) to possession of a particular item. Nike maximizes sneaker sales by stressing the economic well being of many of it’s “customers”–the Japanese by stressing their consumers’ ingenuity. I prefer the Japanese model!
Retailers in the US need to test this limited edition concept. Using your Business Intelligence software, merchants should examine the sell through rate for potential limited edition items. Does the sell through accelerate as inventory diminishes relative to other items in the classification? If so, it is very likely that the limited edition strategy will work on a broader scale.
Most retailers do an inadequate job testing. Too bad, because good testing is clearly a key to success in this competitive market. Innovation without good testing is reckless and irresponsible management.
Limited Edition marketing turbocharges brand energy, especially for high-turn items like candy, soda and snacks. But it also has snob-appeal in the world of fashion. Think Louis Vuitton Multi-Colore line or Target’s 90-Day Fast Fashion. LTD ED also surfaces in home goods with celebrity designers–Jeff Koons numbered, signed mugs for Ily Coffee. Even 7-Eleven’s Kwik E Mart is a kind of limited edition retail.
We are going to see a whole lot more of this kind of marketing here in the States, because it makes good business sense. It creates brand excitement, appealing to potentially different segments, which also allows for retailer exclusivity and higher margins too. Good Gosh, Why Not?
Having worked with Japanese suppliers and retailers for many years, the gentei concept places an additional limitation on customer preferences, thereby heightening the “get it while you can” interest of a new product roll-out.
Additionally, they also classify “seasonal” products as gentei (winter gentei, summer gentei), and then pull the product out when the “season” is over. This applies even to products that are not necessarily seasonal. It heightens customer interest, generates trial, and leaves the customer wanting more. The fact that they have to wait for the next “season” isn’t difficult, because the next season is always right around the corner.
The brand equity grows because the customer begins to depend on the manufacturer for what’s next, and looks to them to provide them with new (and renewal) products to keep their interest and curiosity.
The Japanese beer companies all have their summer “new” brews and their “winter story” products each and every year. The customer keeps picking them up, and then going back to their regular favorites when the season is over.
Americans are ripe for this, and it is a big opportunity for domestic providers to get into this lower-risk/higher upside adventure.
Limited editions have worked for decades in the cold cereal business, with the labels and premiums changing all the time. And Entenmann’s doesn’t bake the same items every week. They rotate certain items from time to time, and test new ones, too. It keeps the customers from getting bored and it helps create a sense of urgency (buy it now because it might not be there next time.) The designer jeans business has largely become a limited edition business, too, since the most highly valued items are only available for a few months, at best.
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To me, the concept of limited editions is a key enabler of experience retailing. It’s not the only way to build it, and like anything, its effectiveness can be reduced through over-use. But built well, a limited edition product can become wrapped up in an event of some significance to the shopper: an experience.
Pier 1, a long time ago, built its whole retailing strategy around this concept–you felt like you were walking into a bazaar filled with the tastes and textures of exotic places (and cheap!), but you knew if you didn’t buy it then, you’d probably never see it again.
But it also can be used seasonally–like the Ice Cucumber drink. If Pepsi rolls it out again next summer, it could easily become “the summer drink” that everyone anticipates.
The key is to balance satisfying enough demand without being too widely available–otherwise you undercut the sense of urgency. But if you habitually make your limited editions too hard to get, people will stop looking.
I was struck by first Kent’s and then Bill’s observations about the relative risks and rewards of the LE strategy.
Given the time and relatively small inventories involved, I’d tend to see it Kent’s way, as a fairly low-risk thing to try.
In fact, Bill, I could see the first few forays as tests in themselves, where an organization could learn from each round and establish seasonal–and other–trends over time, year to year.
For instance, midsummer seems to bring out the turquoise in all of us, across fashion and bed & bath. Are there other sensory trends we aren’t picking up on because we’re not tracking them empirically? Would they come to light in a limited-edition test?
There’s a wealth of customer insight we could collect along with the incremental sales.
Today’s discussion and articles made me think of a recent example of a type of limited edition marketing here in the states.
A couple years ago dark chocolate M&M’s were introduced in the US as part of a “dark side” Star Wars movie release and promotion. There was tremendous word of mouth buzz and nearly everyone who tried them loved them. Then they were gone. Dark chocolate-loving parents hid the remaining candy they still had away from their children. People drove for miles to try to locate any bags that might still remain on store shelves in obscure locations. Some tried to find the product on eBay and were willing to pay highly inflated prices until there was not a dark chocolate M$M left in the land.
Then, more than a year later in July 2006 the dark chocolate M&M’s were released nationally as a permanent part of the line. I am not privy to insider information, so I don’t know if the promotional release was a controlled test run for the product, was a limited edition that ended up being just too lucrative to stop or, if, from the get-go it was a brilliant marketing move designed to create panic and demand in the chocolate buying community!
Asian consumers have long had an interest in new products. Even if the company didn’t take the new product off the market, sales of that product would decline as another new product comes out. This phenomenon is evident in the drink category and consumer electronics category. Zara uses the same limited edition style as a strategy for the company.
Developing brand equity is a challenge and needs to be carefully managed. Either the new products are brand extensions and use the the name of the brand or the equity is to the company and the company’s name is prominent on the new products.
Whether this strategy works everywhere, whether manufacturers want to train consumers to constantly be moving to new things, or whether there is a segment of consumers that is constantly looking for new things are questions that need to be answered before companies use this strategy in all areas of the world.
This type of “in and out” merchandising is also apparent at Costco, particularly in categories like seasonal, books, and clothing. That’s what makes each trip unique–you never know what you might come out with. And there’s always the fear that if you don’t buy now, it won’t be available again.
In North America, the idea of making the shopping experience fun and unique has been lost in most retailers, particularly in the traditional shopping channels. This gentei approach sounds like it might spark some in-store excitement with unique products. I agree with Kent that brand equity would grow, as long as manufacturers consistently deliver on quality “in and out” products. And in the appropriate categories.
The culture and history of the Japanese consumer is different than for Americans. Two concepts seem to be merging here. Limited Additions have a place in the market. They should be for special events, times or related fact. Remembering the small size of most Japanese stores, the idea of seasons or ever-changing product flavors creates some retail excitement. There is greater opportunity in America to roll flavors in and out in select categories. Execution seems to be the problem here.
The limited edition would seem to be at the base of high-end consumerism. What greater incentive to want than being told you can’t have? The Japanese would seem to have compressed “upward mobility” into single products. By placing the “limited edition” tag on a product, consumers want it based upon exclusivity. Hasn’t Nike done the same thing by pricing sneakers just out of the price range for their target market?
Consumers are sold exclusivity by access whether it be due to cost or inventory. Demand is created as a response to A CONSUMER linking his or her comfort (status, ego) to possession of a particular item. Nike maximizes sneaker sales by stressing the economic well being of many of it’s “customers”–the Japanese by stressing their consumers’ ingenuity. I prefer the Japanese model!
Retailers in the US need to test this limited edition concept. Using your Business Intelligence software, merchants should examine the sell through rate for potential limited edition items. Does the sell through accelerate as inventory diminishes relative to other items in the classification? If so, it is very likely that the limited edition strategy will work on a broader scale.
Most retailers do an inadequate job testing. Too bad, because good testing is clearly a key to success in this competitive market. Innovation without good testing is reckless and irresponsible management.
Limited Edition marketing turbocharges brand energy, especially for high-turn items like candy, soda and snacks. But it also has snob-appeal in the world of fashion. Think Louis Vuitton Multi-Colore line or Target’s 90-Day Fast Fashion. LTD ED also surfaces in home goods with celebrity designers–Jeff Koons numbered, signed mugs for Ily Coffee. Even 7-Eleven’s Kwik E Mart is a kind of limited edition retail.
We are going to see a whole lot more of this kind of marketing here in the States, because it makes good business sense. It creates brand excitement, appealing to potentially different segments, which also allows for retailer exclusivity and higher margins too. Good Gosh, Why Not?
Having worked with Japanese suppliers and retailers for many years, the gentei concept places an additional limitation on customer preferences, thereby heightening the “get it while you can” interest of a new product roll-out.
Additionally, they also classify “seasonal” products as gentei (winter gentei, summer gentei), and then pull the product out when the “season” is over. This applies even to products that are not necessarily seasonal. It heightens customer interest, generates trial, and leaves the customer wanting more. The fact that they have to wait for the next “season” isn’t difficult, because the next season is always right around the corner.
The brand equity grows because the customer begins to depend on the manufacturer for what’s next, and looks to them to provide them with new (and renewal) products to keep their interest and curiosity.
The Japanese beer companies all have their summer “new” brews and their “winter story” products each and every year. The customer keeps picking them up, and then going back to their regular favorites when the season is over.
Americans are ripe for this, and it is a big opportunity for domestic providers to get into this lower-risk/higher upside adventure.
Limited editions have worked for decades in the cold cereal business, with the labels and premiums changing all the time. And Entenmann’s doesn’t bake the same items every week. They rotate certain items from time to time, and test new ones, too. It keeps the customers from getting bored and it helps create a sense of urgency (buy it now because it might not be there next time.) The designer jeans business has largely become a limited edition business, too, since the most highly valued items are only available for a few months, at best.