The 5 Cs
Lazard’s Solomon offers up just the tonic to improve your margins: The 5 Cs.
COMMUNITY: “People are looking for their corner store again,” he says. “In this fragmented, mass culture, people want to reconnect with like-minded people — even though they might be 5,000 miles away.”
CONTENT: Retailers used to provide information and expertise, but no longer, Solomon points out. Products now sell themselves at Wal-Mart and online. But consumers still want expertise and advice. “The best retailers provide great, unbiased information,” he points out. This is precisely the strategy employed by entrepreneur Alex Tabibi and Pets United, the multichannel marketer that built its $80-million empire of common pet URLs and common community where pet owners can talk to each other.
COMMUNICATION: “The best online retailers engage in two-way communication with their customers,” Solomon notes. Blogs, e-mails and bulletin boards/chats allow two-way conversations. Some craft sites demonstrate how customers use their products. Others post customer product reviews.
CREATIVITY: ”Product innovation is the heart and soul of merchandising in a differentiated [noncommodity] strategy,” he says. “Develop innovative, proprietary products so you don’t have to compete on price. Build your merchandise mix around a clear lifestyle.”
CREDIBILITY: Consumers want to know they are buying the right products that’ll deliver the proper functionality, and that’ve been accepted by others, Solomon points out. So the marketers must have credibility with consumers.
Hit products have delivered functionality and developed this social acceptance to become brands over time. So a retailer can sell existing brands, such as Zappos’ products, or develop its own brand. Zappos, for example, has become a credible brand that delivers on its promise.
It’s more powerful to develop your own brand over time, Solomon says, by delivering on its promise and gaining credibility with consumers. Credibility with many consumers will generate word-of-mouth referrals and ultimately build the brand.
