Welcome to the official SMS Blog! This blog hopes to keep students up-to-date with the latest news and events in the marketing world, give you the tools to take this knowledge and what you learn at the business school, through different marketing subjects and impress when networking, applying and interviewing.

Luxury Branding with a Cultish Devotion - Ferrari

Jess Sutherland

‘The Ferrari is a dream – people dream of owning this special vehicle, and for most people, it will remain a dream.’
Enzo Ferrari, 
Founder, Ferrari

There are very few brands that are on par with Ferrari; not just for their product, but also for their brand experience and the level of exclusivity that is tantamount to their image. There is luxury, and there is luxury; and Ferrari is in a league of its own. If Alleres’ theory was used to describe the luxury phenomenon, where there are 3 levels of luxury: accessible, intermediate and inaccessible, Ferrari would be in the latter category. Luxury brands satisfy functional and psychological needs, particularly social recognition and self-esteem. Typically, perceived characteristics of such brands include quality, aesthetics, scarcity and elitism, characteristics that Ferrari richly possesses.

Source- http://www.technologicvehicles.com/en/green-transportation-news/2155/video-specifications-of-the-new-ferrari-enzo-hybrid-v12-and-1270kg-f150-price-update
While there is a sleuth of luxury brands in the fashion industry – Hermes, Louis Vuitton and Rolex etc. – none inspire the same cultish, fervent devotion that Ferrari does. While many women may aspire to own a Prada bag or a Chanel suit, the thousands of people that spectate at Formula One races wearing Rossa Corsa and waiving Ferrari flags will, as Enzo Ferrari said himself, never own a Ferrari. But they represent an emotional connection to the brand that is unparalleled worldwide. Much of this can be put down to scarcity. The capping of production ensures that there is a waiting list to merely purchase a Ferrari, and a 6-18 month waiting period for the customized vehicle to be delivered is standard. Similarly, Ferrari’s will never be on sale or visibly advertised. A recent move to further cap the production of some models, and focus on delivering an even more personalised service to consumers of the exotic supercars – such as cashmere seats and steering wheel details –highlights the scarcity approach in action.

Tailoring a strategy whereby the product must be accompanied by a rarity value is very common in luxury brands. However, none pursue it quite as exceptionally as Ferrari. For example, despite their luxury status, Moet & Chandon and Louis Vuitton almost give the impression they are mass-produced. These brands tread the fine line of brand extension coming at the expense of reduced perceived quality. But the difference between these brands and Ferrari is that while they are marketed to be beautiful, they are also attainable. Ferrari’s strategy is one of natural paucity whereas most other luxury brands in the fashion, automobile and wine industry adopt a tactical-driven paucity approach.

The challenges for luxury brands are immense; they must be fast growing, timeless, modern and highly profitable, all at once. A luxury brand has to become an institution but also remain current. A rich heritage is therefore commonly drawn on in luxury brands and integral to their success. Burberry harks back to its military heritage and Louis Vuitton to its luggage craftsmanship of the 19th Century. Ferrari’s history of racing and strong associations with the Formula One industry has become so iconic and renowned, it is almost synonymous with Italian pride itself. This has ensured that their passion for quality engines and beautiful vehicles is the dominant emotional connection with consumers.  Trust and scarcity go hand in hand. If consumers feel that the product hasn’t delivered to meet their expectations, they are unlikely to trust the brand. Luckily for Ferrari, an exceptional pedigree and wealth of experience in the industry ensures the brand is reputable and trustworthy, even to non-discerning consumer. 

Some luxury brand commentators point to potential opportunities for Ferrari, such as expanding their product base into high performance SUV’s – an avenue where rival Porsche has already had success with it’s ‘Cayenne’ model. Some also suggest that enlargement of their customer base through initiatives such as adding roominess or extra luggage space to their vehicles. But Ferrari hasn’t implemented any of these strategies, and it is unlikely that they will. While their scarcity strategy places a ceiling effect on their potential for revenue generation, the core values that uphold the essence of their brand has been a consistent pillar of their success. Moreover, they have proven that there are ample opportunities for generating revenue through other means, such as their licensing and retail division, which is worth upwards of US$1.5 billion. To make their brand appear more accessible or generic would be to undermine the very tenet of luxury itself.

Ferrari’s attainment of the coveted title of ‘World’s most Powerful Brand’ has seen Ferrari outperform its competitors in a range of criteria, including ‘sentiment index’ and the emotional component of the brand. The title does have its risks and implications. The most powerful brand does not equate to the most valuable brand. But realistically, title or no title, Ferrari’s dominance is unlikely to dissipate any time soon.

Jess Sutherland is currently studying a Commerce/Liberal Studies degree with the Univeristy of Sydney, majoring in Marketing, International Business and Psychology. This blog was originally submitted as assessment material for MKTG3120- Building and Managing Brands.  

A Reflection on the SMS Mentoring Program

Lily Cheng

Looking back in hindsight, I was glad that I applied for the 2013 SMS Mentoring Program.

Although my background was in Finance and Law, the former President James Fan referred it to me, as every student in commerce should find a mentor. A mentor is more than just a mentor. My mentor is the current General Manager for e-commerce and marketing of Veda, Victor Leung. He is now a dear friend of mine and I am hopeful that our friendship will continue into the near future.

What started off as an odd pairing (as I made it clear that I studied law and finance and he was the head of marketing), we now see each other roughly once a month for dinner on a Friday. He was forgiving and understanding and for that I am grateful. I asked him how he felt about being paired with me, he laughed and told me that when he read my application, he knew straight away that it was meant to be. He said that my application stood out as interesting and he felt the tone of my personality and he wanted to know more about my diverse life. When we first met, it was awkward needless to say but after a few hot chocolates and coffee, we were talking as though we had been friends for years.

I told him that I was glad to be paired up with Veda as I had heard of the company in my former days working in retail credit in a small Australian Finance company and it was somewhat relevant to my degree. Veda is a credit reporting agency. It acts as a database for financial companies (particularly those that deal in retail finance) to look up their client’s credit histories and scores. I started to learn more about Veda, the importance of marketing in the commercial world and about my mentor over time. I learned how marketing is the core reason why businesses failed or succeeded. Marketing is embedded in every transaction and interestingly a part of everyday life.

I was honest with him. When he asked me about what I wanted out of the mentoring program, I told him I wasn’t sure. I told him what I knew, which wasn’t much but he seemed okay with it. I was grateful to have a mentor that was understanding and eager to see me develop as a person. He has taken me into his office to roam around and take photos. He gladly showed me how marketing was moving to an online platform and he was educating me about something that I would not have considered. We also sometimes try out new places to eat from time to time because I am a “foodie”.

Victor has given me a refreshed and mature outlook on life. Having a mentor is like having a coach. He was someone that I reported to when I had reached another achievement or milestone in my life. He kept me on the ball by constantly asking me what I was doing, how it was relevant to my career goals and why. He is sometimes very critical of what I do and while at the time, I do get admittedly defensive, there is always truth in his thoughts. He is one of my biggest supporters.

When I talk to Victor, he makes me reflect on my decisions. I don’t want to disappoint him. I wanted to make him proud to have me as a mentee. He would remind me at times about deadlines and tell me to hone in on being more of a “professional” for I was a very casual person by nature. He did mention that he enjoyed my easy going nature as it was different but stressed that I should be more professional in the corporate world. Most of all, he gave me words of wisdom that can only be acquired through experience. I continue to take on his thoughts, insights and advice eagerly.

He has been there for me in person and via email. I am always surprised that he sticks to his schedule with me for he is a very busy person, sometimes starting work at 7AM, which I anecdotally ask, “Is the sun even up at 7AM in winter?” He generally looks at me with a blank face which is then followed by a moment of silence and laughter.

People might think I am not making the most of my mentoring experience, as I have not gained work experience or scored an internship. That wasn’t my key objective however when I applied in 2013, although it isn’t impossible. I am content with the friendship that has developed over time with Victor. I wouldn’t push him to give me an internship instead I leave the ball in his court. Who knows, maybe in the near future, he might or someone in his network might need an extra pair of hands? Every mentoring experience is different, and mine has been incredible.

Victor was a former student of the University of Sydney and a former tutor in the marketing discipline. He is the General Manager for e-commerce and marketing for Veda.

Lily Cheng is a current student at the University of Sydney studying LLB/Commerce (Finance).

Mad Men: Advertising Agencies since Draper’s Day

James Fan

To understand where advertising agencies fit within the broader marketing agency landscape, a short history lesson is in order:

Back in the 1950s, most clients relied on a ‘full service’ agency that met all of their advertising service needs including creative development, media planning and buying and market research.

Source- http://divvyhq.com/category/organizational-change/

In 1960 McCann Erickson established Interpublic, the first major agency holding company. This sparked off a frenzied period of consolidation between agencies. More recently, major holding agencies Publicis Groupe and Omnicom group in 2013 looked set to merge, however in May this year it was announced this deal had fallen through. Now the advertising industry is made up of 4 large conglomerates or holding agencies; Publicis Groupe, WPP plc, Omnicom group and the Interpublic Group of Companies (IPG).

Consolidation allowed agency groups to place conflicting clients e.g. Pepsi and Coke under separate agencies, enjoy volume discounts when buying media and achieve a faster rate of revenue growth. Agency holding groups also diversified into other marketing fields, acquiring specialist branding, digital, experiential, market research, media planning and buying and public relations agencies.

Yet as the agency holding companies grew, the services offered by the advertising agencies themselves began to shrink. In the 1990s, media and creative were often unbundled in the interests of economies of scale in media buying, leaving creative agencies that focused on the creation of advertisements and branding. Subsequently clients would rely on multiple specialist agencies, as opposed to a single full service agency. However, given the increased cost and complexity of unbundled services, the industry is debating over the merits of a return to a full service model.

What do you think? Is a full service agency the way forward? Or should the marketing industry continue to offer numerous smaller agencies with specific services on offer?

Want to read more or see what others think-

30+ Must Know Marketing Industry Acronyms

Samantha Roberts

This list of acronyms once explained will help you keep up when reading about the industry or networking with industry professionals. 

Source- http://blog.locappy.com/digital-marketing/locappys-cheat-sheet-to-digital-marketing-acronyms 

B B2B- Business to Business
B2C- Business to Consumer

C CBBE- Customer Based Brand Equity
CMM- Chief Marketing Manager
CMO- Chief Marketing Officer
COB- Close of Business
Comms- Communications
CPC- Cost Per Click
CPV- Cost Per View
CR- Conversion Rate/ Ratio
CRM- Customer Relationship Management
CTR- Click Through Rate
CVP- Customer value Proposition

E eDM- Electronic Direct Mail (aka an email newsletter)

F FMCG- Fast Moving Consumer Goods
FOC- Front of Counter

I IDI- In depth Interview
IP- Intellectual Property

K KPI- Key Performance Indicators

L LPO- Landing Page Optimization

O OOO- Out of Office

P PoP- Point of Purchase
POS- Point of Sale
PR- Public Relations

R R&D- Research & Development
ROI- Return on Investment
RTB- Real Time Bidding

S SEM- Search Engine Marketing
SEO- Search Engine Optimisation
SFA- Sales Force Atomisation
SME- Small to Medium Enterprise
SMM- Social Media Marketing
SWOT- Strengths, Weaknesses, Opportunities & Threats

U USP- Unique Sales Proposition

W WOMM- Word of Mouth Marketing

Have you come across any more through work experience or in your studies that you think everyone should know?

A Look at the SMS Mentoring Launch Event 2014

Salil Kumar

Two weeks ago, I had the opportunity to visit the University of Sydney Business School CBD Campus for the launch event of the Sydney Marketing Society’s 2014 Winter Mentoring Program.

The Sydney Marketing Society (SMS) based at the University of Sydney looks to connect talented young marketers with leading employers in the marketing sector. The Mentoring Program is a recently launched initiative by the society, currently in its second year, which matches student mentees with mentors from the industry. The aim of the program is to provide students with an opportunity to gain an insight into the real working environments of their mentors, as well as build strong professional networks during their studies.

Find more photos from the evening at the SMS Facebook page
As a Master of Marketing student with a background in accounting, my exposure to the marketing industry has been very minimal to date. I was therefore very eager to participate in SMS’s mentoring program, as it was the perfect opportunity to learn more about the industry, and seek guidance from someone who has been working in a field of Marketing (digital) that is of great interest to me. 

Since having met my mentor, I am greatly looking forward to the next 8 weeks of the program, within which I will be visiting his place of work, possibly shadowing someone from his company for a day, and learning as much as I can within this time frame!

Keep an eye out for more stories of participants experiences throughout the Mentoring Program to come.

Salil Kumar currently writes for the Marketing Matters student blog, where this blog post was originally posted. See other posts by Salil and his fellow University of Sydney Masters of Marketing students- http://mktg-matters.blogspot.com.au/ 

Is Dove’s Real Beauty Campaign Inspirational or Offensive?

Tracy Trieu

‘You are more beautiful than you think.’

As part of the Dove Campaign for Real Beauty, the powerful and thought provoking short film Dove Real Beauty Sketches has caused controversial conversations. Women were asked to describe themselves to an artist who sketches them based on their descriptions. A second sketch is then done based on descriptions by other people. The heavy contrast between the participants’ self-criticism and the compliments from other people creates a somewhat poignant realisation.

It is the realisation that we can sometimes be our own obstacle. Why do we focus on our negative features whilst seeing the positives in others when, essentially, there is no reason to? Dove tastefully executes a timeless message, undoubtedly relevant to some women, that people need to be comfortable in their own skin. A piece of wisdom is that we should not be self-conscious because other people are also too concerned with their own appearance to notice ours.

However, despite the emotionally charged film, further thought has led to the rise of several stimulating questions: to what extent is this campaign patronising women? Is it a generalisation based on out-dated female stereotypes? It is only focusing on a small group of people? Not all females lack confidence and have low esteem. To some it may be insulting as women are seemingly being portrayed as weak.  To others it may be a much needed beautiful message.

Watch Dove Real Beauty Sketches as studied in the University of Sydney Marketing Unit MKTG3120- Building and Managing Brands and let us know what you think:

Source link: https://www.youtube.com/watch?v=litXW91UauE 

Sponsor’s power amidst FIFA corruption allegations

Tom Cleary

Allegations of corruption following FIFA’s decision to award the 2022 World Cup to Qatar raise important questions about the power of sponsors in the world game, and the extent to which they can force institutional change within the governing body FIFA.

Image Source: http://gulfnews.com/pictures/sport/qatar-s-promised-fifa-world-cup-stadiums-1.732053

A significant number of high profile sponsors, including Coca Cola, Adidas, Sony and Visa have publicly expressed their concerns over FIFA’s handling of the corruption allegations, with fears that it could have negative implications for their brand. Over $2.3 billion will be spent on World Cup TV advertising alone, with many brands attempting to forge an inextricable connection with the world game to leverage its ‘halo’ effect. Moreover, it is estimated that FIFA will generate $1.4 billion from sponsorship revenue following the 2014 World Cup. 

With this in mind, shouldn’t sponsors be able to exert more influence over FIFA? Regardless of whether sponsors still see a financial benefit in supporting the controversial organisation, they should issue an ultimatum for a revote, or withdraw funding on the grounds that it adversely impacts fans and inevitably their customers.

It is also interesting to note that little media coverage has addressed the implications of such allegations on Qatar. Importantly, the World Cup was a chance for the Arab emirate to showcase itself to a global audience. Regardless of whether the allegations are true, they have resulted in a PR disaster, in turn causing irreversible damage to the emirate's image. Suggestions of corruption are compounded by concerns over player and fan safety in extreme weather conditions and inadequate labour conditions.

It will be interesting to see what the next step is for FIFA. However it is clear that fundamental institutional changes are required to restore faith in their governance of the world game.