Professor Elam

Thursday November 3, 2011

You can read the details about Burberry's 

CAshmere and Wool Trench Coat at this link. The price is $5,995. 

As the article on page D1 of today's WSJ says

'Luxury isn't luxury if everyone has it' says Marshal Cohen  chief industry analyst at market research firm NPD Group. The WSJ article details that one can bump the base price of a $1995 coat to $3343 by choosing mink or fox collars and yes,  Burberry branded horn buttons. Indeed the catalog allows for a potential 12 possible trench coat combinations. 

My wife says one does not want to invest in Burberry as there are no products for Mr or Ms Average person looking for a stylish turn in their lives. And so her focus is on Ralph Lauren. 

But, the point here is that like Apple, Burberry and RL have gone for profit margin rather than market share. Elsewhere Sony reports a $1 B annual loss. They have lost money on flat screen tvs for the last seven years. Yes I would agree with Sony that is a grave matter. The problem as Sony observes, all the screens (check out Best Buy or Costco) look the same. And so brands become commodities. Notice that is not happening with Burberry or RL or Apple. 

At right is a screen shot of the Ralph Lauren web page.Note that you instantly understand what the world of RL is all about – luxury, prestige, yep, this ain't Occupy Wall Street. Those ear rings look the size of a broach to me. 

We will move to studying cost managerial accounting in ACCT 3301. I want to emphasize in the time we have left to emphasize how one's strategy can enhance or destroy shareholder returns. Students are aware that I have been using a Design Emphasis. Clearly RL, Burberry, Coach, Apple, Porsche al have it, and are wildly successful as a result. Today Lexus acknowledged that BMW has puled ahead of them. Part of that is the post tsunami problems in Japan. But I think the real problem is that Lexus became the Japanese Buick, a softly sprung luxury commodity;  one looks like another. The big seller is the RX 350-370  cute SUV built on after all a Toyota Camry platfrom. 

BMW however is the Ultimate Driving Machine, and never lets one forget that.