The Brand Builder's Playbook // Turning Brand Perception into Pricing Power with Sandeep Seth (Tapestry)

25:33But then again, as I would say, pricing is an outcome of desirability. You know, how desirable is your brand? I mean, I faced the same challenge of my mother's brand or grandmother's brand, I would say, three times around now, first with Olay, then with SK2, and then with Coach. It didn't matter what price I put out there, no one was willing to buy Coach, right, at one point. I mean, Coach has been through many cycles, but in the most recent cycle, it was rejected by many millennials. That's not a brand for me, and Gen Z's were not even considering it. So we had to really go back and really say that, look, let's not start with the price.

26:06Let's start with the consumer. Let's start with the insight that we are building in. And the three things that are working for us today, I would say, is our innovation. You know, the products that we are putting out there, whether it's the Tabby or the Brooklyn Bank, are truly resonating with this generation. Our emotional connection, which we've kind of driven through brand purpose, and I can talk about that. And eventually the value that we offer to this customer. I think three of that coming together is really what's allowing us to create the right pricing. So, again, as I said, there is a lot of science here, but there's also a lot of, you know, we call it magic and logic at Tapestry.

26:43So it's kind of both coming. We are running elasticity studies at every stage of, you know, the choices we're making. So it's not random that we wake up in the morning. But the one last point I want to make, and then I'll pause and you can tell me where to go with it, is this whole deselection barrier. One of the things we saw with the outlet businesses, the way they were growing, discounting and through performance marketing, that was becoming the way brands were driving. And I think that was the downfall of many brands in the category. And we realized that the more discounting we are putting at, we're actually creating a perception of low brand value overall on that.

27:19Not even the price point, just the messaging of discounting. So how do we get out of that? And a big part of what we had to do was really start with creating desirability versus creating, you know, a discount perception of the brand. We're going to talk about Coach in a minute. And Ryan and his team have some interesting data that we want to talk about with you, which I'm sure you're familiar with. But before we do that, I'd like you to speak a little bit about P &G and Tapestry. What could each of those organizations learn from each other regarding brand perception and pricing power? That's an interesting question.

27:54Never thought of it like that. But look, I mean, I bring in with me a lot of how we've gone about pricing at P &G, which is putting the consumer at the center of it. So, you know, not starting with just the P &L, but starting with the consumer and saying, what is the value of what I'm offering to this consumer? and what is that. I mean, the whole concept of point-of-market entry, I think, is something I've learned from our days at P &G. So a lot of that we brought here. But on the other side, the models that a retail company like Tapestry runs with its first-party data are quite amazing. Now, sometimes we don't have the luxury of that at P &G since a lot of that is going through groceries or third-party wholesale on that.

28:36But that rigor allows us to create a precision in how pricing and pricing elasticity can be modeled into what is there, both from a evergreen collection that we have or the newness that we are launching. And what is the power of that data if you could, in the P &G context, work with the retailers who have that data to drive that? Because that gives you a real sense of what is the brand value in the minds of the consumer and how far you could go or not versus just being driven by the financials of it. Sandeep has brought up this point of market entry concept a couple of times. I'm very familiar with it.

29:16Some of our listeners may not be. It's a very powerful principle. And you're kind of that's inculcated at P &G. Sandeep, could you talk about that principle of point of market entry? Why it's so important? What you've learned about it? Absolutely. Look, I mean, in the most basic sense, it's the point where the consumer first time enters the market or starts making their own decision to buy the product and i think that's where the habits are formed on what it is and as a leading brand if your intent is to grow the market it's really about growing point of market entry and disproportionately gaining share now there are there could be many other entry points into the category through the life stages that that we can tap one and we can talk hours about that but i think point of market entry that that that first point and i you know at coach we talk about that's the first date you know when you start falling in love you know how do you create magic of the first date and and bring the consumer in and that increases uh not just you know um your penetration but also helps with lifetime value because you have the highest lifetime value starting with the consumer at the point of marketing that's an interesting principle i'm curious when things like a recession or bad times or tariffs, which may not affect you guys, is there a point of re-entry and the balance between innovation, emotion, and value?

30:36You're saying, does that equation change? The macro always plays a role here. But interestingly, as I kind of briefly mentioned earlier, I mean, where we play with our brands, it's a very emotional category right on that and and you know we've seen that in in the past recessions also 2008 or or earlier to us as i look back into our data is um the category is quite recession proof in that sense because people are making an emotional purchase i always share this data you know within our target audience for coach there are 25 million women who are going to turn 18 next year and every year for the next 10 years we've done the math globally in the markets we play and when you're 18, you're going from high school to college, doesn't matter the session or not, you're going to buy a handbag.

31:21The point of market entry becomes even more important for this group. But you're right. I mean, look, there are a lot of people who are going to defer their investment choices or they're going to make different choices on that. So how do we really focus on different life stages and what do we mean and how do we bring the brand emotionally closer at those choices? I've talked about one important one is high school to college, which is like going from backpacks to handbags, but, you know, starting a new job, right? And all of these are those points where you're making a decision to, you know, change your wardrobe, buy a new handbag and what happens.

31:58So I think in situations like this, it gets even more important to focus on that versus going with more broad generic messages and how do we connect with the consumers at the right point. Yeah. So it's interesting to hear the theories and strategies you guys put in place of what we're seeing in the data. So the coach brand in the US, and we look at a panel of 1.6 million Americans, is a loved brand. And the uniqueness and meaningfulness we see compared to peers is off the charts. However, the awareness of the brand is lower than its uniqueness and meaningfulness. And to a lot of folks, that means, oh, no, is that a bad thing?

32:34No, it's a fantastic things. It means what they know of the brand today is incredibly unique and meaningfulness. And the innovation piece you've been saying is showing is they're constantly right when they think they know you well, there's still more to be constantly learned. And we're seeing that in the data. And you may have heard in the beginning when we're talking about the constructs of what drives uniqueness and meaningfulness, purpose, emotional, functional, experiential. Your emotional connection is superior to your functional, even though your functional is off the charts as well. So it's really interesting to hear the strategies that built that over time.

33:09Look, firstly, you know, the data point that awareness is low really encourages me because that shows the headroom I have to grow from where I am. So we know we have a meaningful proposition to the consumers we are reaching out to, but there's so much potential on where we go. I think one of the things we called out, I would say, four years back, we had an investor day, September of 2022, is the evolved positioning of what coach is. Like if I were to just kind of go a little back in the history of Coach, I mean, Coach has in some way been integral part of driving American fashion in a way back in 1941 with men's leather wallets inspired by a baseball glove to, you know, the 60s when Bonnie Cashin was the first female creative director in this industry, kind of bringing in the codes of Coach, which still are the codes of, you know, how we brand it.

34:02And then, you know, around 90s and 2000, when the so-called accessible luxury came to life, where, you know, the trade-off at that time was, you know, to have a luxury experience, you had to pay a very high price. And Coach brought that experience at a price that was inclusive. And then many other brands came into that. And I think that also led to a bit of a downfall because it became a pricing game at one point, right? Everyone trying to lower their price, discount more. And I think that's where, you know, under Stuart Weavers, who's the current creative director who joined us in 2014, we started to re-invision what this would look like.

34:36And we came up with this evolved positioning of expressive luxury. And I'm going to talk about this because this is where the whole emotion starts. As we started talking to the younger generation, I would say specifically Gen Zs, one of the biggest things that comes out is the role of luxury has evolved from just being status and symbol to self-expression on that. Now, while self-expression in itself is not a new concept, every generation wanted to have that self-expression for this generation is very different to previous, driven by the single difference of social media. Everything in their life is recorded and every mistake is up there.

35:14and the tension. And I have, as I said, two Gen Zs at home. My daughter's 14, my son's 19. The challenges of self-expression for this generation are creating such tension and such, you know, so many different mental issues that we kind of see that has become a big challenge for our industry because fashion and beauty are at the forefront of what self-expression really means for this consumer. So as we started going deeper on one side, you know, they're looking for multiple personas. Who I am on Instagram is different to what my TikTok persona is, to what my real life personality is. And how do I express myself in each one of them?

35:57But at the same time, there's a big self-doubt, which is, will I be accepted? Right. That's the that's the biggest thing I want to express myself. But I also don't want to be canceled. I want to be accepted. Like, how do you bring this two together? And this is at the extreme of its, you know, for any generation, I would say. No other generation has been recorded to the extent this generation is on everything we do. And that's where, you know, we felt that as one of the leading luxury brands, we need to help our community overcome this pressure. And that's why we started defining what our brand purpose would be.

36:34And it was really about inspiring confidence in the community to find the courage to express your true self with a tight line of courage to be real. So that's where we kind of narrowed down. And we said, instead of really talking about our products, yes, our products are featured in everything we do. We're going to talk about this. And our mission is to really be that conduit that provides you that confidence and that courage to be real. And that's what we've been working on. Now, how do we do that? It comes to life through the products we want to put out there. It comes to life through our communication, but also through our experiences that we are creating in online and offline environment.

37:11So we have dramatically changed because there's a pressure on walking into a luxury store and talking to a store associate. How do you overcome that? How do you remove that at every stage and then allow that self-expression? So that's been our journey, I would say. That's that's helping us connect emotionally first. And you mentioned, you know, from a functional superiority point, if your coach has always stood for the highest quality of craftsmanship and the leather that we use. In fact, you know, vintage coach bags sells at a much higher price point sometimes than even the new ones because of the quality of the leather that's out there.

37:47Sandeep, we haven't talked too much about Kate Spade or Stuart Weitzman. Are you going through sort of the same thought process with those brands in terms of obviously your purpose is different and the customers are different, consumers are different, but the same thought process? Absolutely. Look, you know, Kate Spade's been through its own journey and, you know, Kate Spade is an iconic brand of the 90s and one of, again, very loved brand in the US and parts of the world. But it needs its own rejuvenation where it is at its stage. So we are now codifying the brand growth principles as a company and how we bring that to life.

38:24You're right. I mean, the Kate Spade consumer is very different to the coach consumer who's much more timeless versus, you know, coach Kate Spade consumer is looking for different attributes and different emotions on that. So it's not so much about confidence and courage. It's about, you know, more about joy and connecting right in that front. So how do we take the core principles of brand building and reapply is the work that's happening across our other brands. And on Stuart Weitzman, just one line, we are in the process of divesting that brand, which we had announced last year. So, yes, the broad principles remain the same, but our focus is how do we continue the momentum that we're seeing on Coach?

39:06How do we turn around Kate Spade and how do we really turn tapestry truly into a brand building organization? We're going to let you go in a minute, Sandy. But we end the show with Ryan and myself and our other host. In this case, it's Kate talking about one takeaway for our listeners from everything we've just experienced on the show. You've been a part of the show, a big part of the show. If you'd like to leave our listeners with one takeaway, one piece of advice, one piece of wisdom from your experience on brand positioning and pricing power, what would that be? I think really understand where you fit in the lives of the consumer and what's that value that you can offer because that goes beyond any other competitive advantage you look for.

39:48So that obsession of understanding their lives and then seeing how you fit in uniquely, I think that's what we're trying to do with each of the brand. And that gets immense value and pricing power or anything else we can talk about. Ryan, does your data support all that? Absolutely does. Sandeep, thank you. This is a real gift. And it's good to see you again. And you sound like you're having fun. Absolutely. Thank you, Jim. Thank you, Ryan. It was a pleasure talking to you guys. Thanks for being on. We appreciate it. Thank you. Welcome back, Kate. You've had a coffee break and you've had some popcorn, I see.

40:23I did. So what were you settling in like the movies and watching? It was just as good. Probably better. This is good. Okay. I'm a marketing nerd, so, you know. No murder. The better you get. No murder. There was zero murder in that story. Well, Sandy was remarkable, you know, so sitting back, listening to it, the conversation, you know, what did you take from that? What things would you highlight? I mean, one thing I want to do is take the whole thing and make my students listen to it because there were so many points in there that were like, yeah, that stuff we tell you, it's real. It's really real.

40:54And it turns out it's really hard. Sounds so easy when you say it. But then, you know, to his point, he's got a brand that they revitalized. He's got a brand that they need to turn around and they've got a brand they're going to decide to let go. And the pathway to each of those decisions is really different. And you have to get them right. There's a lot at stake. Like, you know, what really resonated too was the story about his wife's bag. So we'll start there. When the Coach brand comes up, she remembers something that was associated with a specific moment in their lives. And I thought that's exactly how Coach is.

41:27It's one of, as he brought up a number of times, it's a life moment kind of product. It's the kind of thing you buy for someone when they finish their PhD or you buy for somebody when they, you know, get their first real grown-up job and they can't carry that thing they've been carrying for 10 years anymore. And I think that we do really well to tap into the power of those moments because as different as people are, in those moments, we're all kind of looking for the same thing. But it raises one interesting question. Do we as a brand say, you know what, there are millions and millions of people turning 25 every year and that's a huge market in and of itself.

42:02If we get that whole market, we are golden. So let's do that. or do we try to create a ladder within the brand so that we can keep people over their lifespan, which is much harder? Or do we kind of acknowledge, look, yeah, we're where they start, we're their point of entry, but for the consumer, what the entry isn't the entry to our brand, it's entry to premium and luxury. And so for them in their experience, yes, this is my first luxury product, but they see others as being more appropriate later. So I think there's an interesting call to be made there about what a brand tries to do and how the consumer sees the category as a whole.

42:42But I think in the end, the part that kind of stuck with me is two things he said. One, the consumer sets the price, right? And also, when you talk about these life stage products, he sort of starts getting to what the business is that they're really in. They're not in the handbag business, they're in the belonging business. And so the true competitors for them are other products that provide that sense of acceptance and belonging and affirmation. And so if I were going to answer that first question about how far they want to stretch, I would ask that question, you know, where else do we have the same, can we provide the same sense of social acceptance and belonging, not where are we the best handbag?

43:25Kind of back to Brian's earlier points about functionality not being the thing. It's really about the business they're in is satisfying that deeper need. Did anything surprise you from what you heard? One thing that I think is the tension is this question of innovation, right? So these older brands will often talk about how they're innovating. And I know that objectively coaches, they've got these new product lines that you use non-conventional materials. they're using more sustainable inputs into their goods. I'm not always sure that term innovation is easily understood in some contexts. I think it's hard to understand exactly what that is.

44:06So what was interesting to me was to hear how that's part of the initial discussion. But as we go on, again, it's not the innovation that matters. It's the extent to which that innovation is responsive to some need the consumer really has. You can have the newest, coolest fabric, but if that doesn't translate into this makes me feel socially accepted and affirmed, the innovation itself is really, it's really not relevant at all. So I guess I wouldn't say I was surprised, but I think I found it interesting to hear both this story about, you know, deep and emotional resonance and this idea of technical innovation.

44:41I think sometimes we get lost in one or the other and we aren't able to make the connection between the two. I think the surprise I saw, delightful surprise, is piggybacking on self-expression and maybe it's innovation in channel is the multiple personas that an individual can have depending on their channel. That makes this exponentially more complex. What is my persona on TikTok versus LinkedIn versus Facebook or something else. And so the purpose and the positioning being a connective tissue and agile enough to tweak for those, I thought that as a delightful surprise. I was just on a call before this with a person who does experimental philosophy and they were just looking at how people interpret others based on the channel they see them.

45:28So it's very relevant. And what they have found is that people think the authentic self is the in real life self. So, you know, given that kind of insight, We might expect people experiment more with other kinds of riskier brands in their online persona. But in real life, they still want the coach bag. They want the universal donor. And so I think you're right. That's a super interesting insight. And I think there's actually some research being done that can inform the decisions that that would affect. Absolutely. I loved how he beamed, Ryan, when you said your uniqueness and your meaningfulness is strong.

46:04I think I remember that correctly. but your awareness is low. And he just beamed. He said, that's the potential of this brand. Headroom. Which affects everything, right? How you think about your spending, your strategies, your communication, your target audience, I suspect. Absolutely. Yeah. So I was thinking about that combination and that seemed like a positive to him. Do you guys interpret that as being that the segment that is aware of them absolutely adores them, totally gets them. And then the other segment is really a blank slate. Is it, is it two different segments in there? Or is that the same person that doesn't really know, but vaguely thinks they like it?

46:44It's stronger than vague. It's what they think they're familiar with the brand. They hold an incredibly high uniqueness and meaningfulness, the two building blocks for the demand curve. However, imagine a brand that you thought, you know, everything about this brand and then innovation comes out and new things come out. You're like, wow, it's not, I don't think I I fully understand. I'm loving what I'm seeing, but I don't know everything about it. If you see maximum familiarity and UNM, it actually doesn't leave a lot of headroom. So it's a good thing. I mean, a lot of folks misperceive that awareness is the star of the show and uniqueness and meaningfulness is you could build that later.

47:20And it's the opposite. Okay. We end the show with a piece of advice, a takeaway, what you want our listeners to think about applying all this great discussion we've had about brand perception and pricing power. So if you boil this down into one piece of advice, if you're in a room of CMOs, which this is, as our listeners, there's many more than CMOs, but what would your piece of advice be? This is such a hard question. You know this is hard. I know it is. That's why I'm going last. I mean, I think I'm going to steal Sandeep's line. I'm going to steal the consumer sets the price. Yeah, I love it.

47:55they determine how much pricing power you have. If you can really get inside and understand what business you're in for them and why you do that for them better than everybody else, then you know how much price and how you have. If you keep backing out and saying, well, our technical category is X or Y, and we have this objective benefit that we provide, and it costs us$40 million to make that objective benefit, really I don't think that needs to go into your pricing considerations nearly as much as what the consumer is going to bring to the table and what they're going to compare you to as a potential substitute.

48:30Kate, a follow-up question to that, because you work a lot of companies. How would you recommend they do that? I'm an experimentalist myself, right? And so if it's me, I don't run the experiment in the field because it's going to make people mad. However, there are really classic marketing research tools that you can use that can help you figure this out. And, you know, I don't think it's just, you know, age and inertia talking. I think that a well-designed marketing research study that presents products at different prices and gives people an incentive compatible decision is a good place to start.

49:04And then when you do that, you also from the same people measure the benefits that that product is providing to them. And then you do the analytics necessary to make the connection, right? So it's a combination of using what we've always done and tapping into better analytics that can help us make sense out of it from the consumer's psychological perspective. I think the lesson comes from everyone who spoke today. I think it's that the pricing power doesn't come from the CFO. Brand builders played enormous role, starts with measuring your pricing power and connecting it to the financials in terms of willingness to pay a premium.

49:41So I really think it's everyone's responsibility. All brand builders play a role in reducing price sensitivity. I think this episode was a great chapter in pricing power and brand perception. I mean, I think there were so many ideas, so many fundamentals, so many lessons in the conversation we've had and what Sandeep talked about. So I think it meets the playbook metaphor really well. And I think there's a lot of ideas and thoughtfulness in the discussion we've had here. I'll have one out of left field in terms of my takeaway. I guess it's not terribly related to our topic this week, but hey, this guy was 23 years at P &G with children in formidable years, living in Singapore, I assume that's P &G's Asia headquarters, South Asia headquarters.

50:29And he jumps to New York City with his kids because he had a discussion with that management team and he liked the chemistry. He liked what he heard. He thought they need someone who's a great brand builder. I have some credibility in that. I have some credentials in that. I have some experience in that. This sounds like it could be a really, really great fit. That took a lot of courage. And so I think there's a great lesson there about courage, about moving when something excites you, when you sense an organization that needs what you have, you know, it can lead to great things. And we didn't talk a lot about his family and all that, but my guess is everyone's having a great time.

51:05So I think there's a lot of lessons there about career pathing and decisions we make in our lives and our careers. Very nice. And also that he started as an engineer, right? Yes. And how many people do find their way to marketing ultimately? And I think that superpower of having the combination of a really rational analytical mind and the interest in humans, it's pretty remarkable. It goes to say that if you master the foundation, the fundamentals of any playbook of brand building, it opens a lot of doors for you, transcends industries and sectors. Okay, you guys, thank you. That was wonderful.

51:40So thanks for this wonderful session. And that's it for this week of the third episode of the Brand Builders Playbook. We'll see you for episode four next week. Take care, everyone. Thanks for listening to the Brand Builders Playbook, where we explore the real strategies behind resilient revenue driving brands. If today's conversation sparked new ideas or helped you see things differently, do us a favor. Follow the show on your favorite podcast app, leave a review and give us a like or rating. It really helps others find the show and keeps our conversation going. And if you know a brand leader or marketer who needs to hear this, share this episode with them.

52:16And don't forget to check out the worksheets in the show notes. We'll be back next week with more insights, more playmakers, and more of what it takes to build brands that last. Thank you.