Quality, Niche Brands Thrive In Down Economy

Published on August 10, 2009

Marketing Experts Offer Advice, Anecdotes in Classroom Discussion

Executive Professor Steven Koch and Janet Gurwitch, former CEO and founder of Laura Mercier Cosmetics and Skincare, fielded questions about the importance of technology to marketing, how to extend brand loyalty across generations and how to repair a damaged brand.

Executive Professor Steven Koch and Janet Gurwitch, former CEO and founder of Laura Mercier Cosmetics and Skincare, fielded questions about the importance of technology to marketing, how to extend brand loyalty across generations and how to repair a damaged brand.

The key to launching a brand in a lagging economy is to find a product or service that caters to a niche market of loyal customers, marketing experts said in a lively panel discussion that drew a large crowd to the C. T. Bauer College of Business at the University of Houston.

The event, “Marketing and Brand Management in a Down Economy,” was organized by the Bauer EMBA program as part of its biannual series of panel discussions for students and alumni.

Speakers included Steven Koch, an executive professor at UH Bauer with more than two decades experience in senior management marketing positions at firms such as Pennzoil-Quaker State, Sega and Coca-Cola Foods, and Janet Gurwitch, former CEO and founder of Laura Mercier Cosmetics and Skincare.

While a lot of companies may be reigning in their marketing budgets, that void presents an opportunity, Koch said.

“When times are good, the tide is rising and it floats all boats, everybody’s spending. But in an atmosphere where people are pulling back and saying let’s pare back a little, ad budgets tend to be disposable. But think about it, if everybody’s doing that it kind of creates a vacuum. Now is the opportunity to get a higher return on your investment.”

Gurwitch, a longtime senior executive with Neiman-Marcus before she founded the luxury skin care line named for a well-known makeup artist, told the crowd, “I think it’s never easy to start a brand. I was in a mature industry and times were good… The timing is always key. You can’t get any capital right now so you have to be more clever. It takes a whole tool kit, no matter when you start your brand.”

Gurwitch said having a quality product with a point of difference, aimed at a niche consumer group who tend to be extremely loyal, was the most important facet of building her very successful brand.

“You have to look at what’s happening at the time and ask, what is the need?” Gurwitch said. Finding a celebrity makeup artist to build credibility around the brand was also important, she said.

The engaging discussion was organized by the EMBA program at UH Bauer, which holds events twice a year to bring together alumni from the program.

The engaging discussion was organized by the EMBA program at UH Bauer, which holds events twice a year to bring together alumni from the program.

Because Mercier had worked with Madonna, Sarah Jessica Parker and numerous Vogue cover girls over the years, a product with her name attached held instant cache. Gurwitch hired public relations experts to help create a buzz, which resulted in the product being mentioned on Oprah. She then assembled a top sales team, and ultimately the company took off: from 0 to $10 million in earnings in 10 years.

In Gurwitch’s case, using star power to help build the brand worked, but Koch noted that, “I think you have to be careful not to rely too heavily on that celebrity because then they own the business and not you.”

At the same time, it is often well worth it to enlist targeted supporters in order to build the kind of relationships that in turn build brand equity, Koch said.

Both Koch and Gurwitch lauded the benefits of new technology on marketing and building brands.

“It’s the one healthy part of the media right now,” Koch said. “Web tools are very important to marketers now because they’re easily tracked and wonderfully quantifiable. Especially in an environment like this, faith marketing doesn’t work. You need to see numbers.”

Despite the challenges, and the fall of once mighty brands like A.I.G., success stories are sure to surface from the current economic downturn, both speakers agreed.

Gurwitch referenced Gilt.com, an internet company that sells designer clothes at a discount, creating a sense of exclusivity (invitation-only) and urgency (limited sales).

And several brands, still doing well today, were successfully launched during the Great Depression, Koch said. Among them: Kraft’s Miracle Whip, Motorola, Fortune magazine and Revlon.

By Julie Bonnin

Posted Under: Alumni

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