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- [00:04]
A
Do you pay attention to politics? It's something that's stressing me out.
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B
I know. I came to Miami on Wednesday to vote because we are registered here.
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A
Oh, you are. We need more transplants like you, Anna, from New York to Miami.
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B
I don't think at least it's two votes. We're going at least two votes. I know, but like we're stealing two votes from, you know.
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A
Yeah, yeah, yeah.
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B
Foreign.
- [00:37]
A
So today we are talking about how to build a product universe tactics of product led branding. So Anna, I'm going to hand over to you because this is one of the topics that you've been writing about, you've been thinking about quite a bit. So tell me about what you mean by product universe and where your mind is.
- [00:56]
B
So this is how it actually started. It's based on my work at Banana Republic and aspirations. Free. When you start thinking that like hey, you can, you can build brand through cultural products, which is merchandising, collaborations, events, creative partnerships, content, brand codes and so on. But what actually really needs to happen is for marketing and merchandising to work really, really close together and to actually have such a definition of products. Product ranges, collections, hero products, foundations, but then also classics, capsules, limited editions, collaborations, that, that becomes part of a brand's business plan and it becomes part of a brand strategy. And what I mean by that, it literally you can say hey, if a retirement output, product output and most retailers add, add, add, add solution to more consumption is more products, you know, so you end up with skus, which is, which are product numbers that are really long tail and you sometimes don't even know what is going on. And merchandisers look at their Excel spreadsheets, they look mostly at the pro product performance. Did it sell? Did it not sell? So this is building upon that but then also looking at what are the hero products. What is the purest distillation, this distillation of the brand? Can we use that as a father for collaborations? Can we use special materials? Can we have that? It's something that we do year over year over year, but reissue in different colors, different materials with different creative partners as part of different chemicals. What is our collection? What is that interpretation for seasonal of seasonal trends through our filter? And what are those foundational products that are. That go never out of stock? They're always there. And then what is the cultural impact of all of those? How do you build merch around it? How do you build collaborations around it? How do you build content around it? How do you create so sort of structure that says, hey, if you're going to use all those different products to start a conversation with different members of the creative class with their key Personas, they're going to buy most of this. And all of what I just explained is relevant because it really helps you fine tune your financial plan. It really helps you fine tune how much money do you want to make each month, each quarter, each year. And to go from that objective backwards and say, we need X amount of Hero products, we need X amount of collections, X amount of foundations. And this is how our promotional plan looks like. Heroes never go on sale. For example, foundation goes on sale after three months. Collections go after one month, never more than 30%. So let's unpack this further. But I first want to hear your experience.
- [04:04]
A
I have a. I have a question, a couple of questions. And just so for some people who might not be in the fashion industry, and I understood when you use word like, you know, foundation, collection, and hero product. So give me a tangible example of what you mean by hero product. And you said that, you know, hero product may not go on sale, Right? So, yeah, give me, give me an example of what a hero product is, what a foundation is, and what a collection is.
- [04:30]
B
Absolutely. So at Banana Republic, for example, when we said, hey, if we kind of combine the safari origins of Banana Republic, which even in Safari, they were upcycled military garments. So there was a lot of pants that had multiple pockets and straps. There were shorts. There were those vests with multiple pockets. There were coats that were oversized. And again, very functional. So take one, say, do a vest. Do a photojournalist vest, which is a vest with a lot of pockets. If you do a hero version of that, that means it comes in suede, in leather, in fur. But because it's a photojournalist vest is the purest distillation of what the brand is about. If it comes in a foundation, then it's made out of canvas, for example, or denim. If it's done as a collection, that means, oh, what are the seasonal colors? What is on trend?
- [05:29]
A
Okay, okay, okay.
- [05:30]
B
On trend. And we are going to do that best in maybe cinched waist, or maybe it's going to be tailored or maybe it's going to be longer, depending what the trend is.
- [05:41]
A
So is it. Am I correct in understanding that this is a bit of a pyramid?
- [05:45]
B
Yes, it's a pyramid. Because Hero products are your margin drivers, foundation is your volume driver, and collection is your volume driver. Margin driver means that that's how you make really money and you're not going to create a lot. Not everyone is going to want to buy a fur vest.
- [06:03]
A
Yeah.
- [06:03]
B
Those who do are those from the creative class, who are influenced, more influential, who are going to wear that and say, oh, this is Banana Republic. I love this vest. And it's going to be priced higher, but the quantities are going to be limited and it's going to be available only maybe in flagship stores.
- [06:22]
A
You know, one thing that was from the previous conversation that we had and because you and I come from slightly different career perspectives and backgrounds and in the past decade or so you've spent quite a bit of time in the fashion, luxury retail world. And my background, part of it is that. But I don't necessarily exclusively focus in that industry just because, you know, we work with multiple clients. So we may have a fashion client, we may have a space.
- [06:53]
B
This is applicable beyond, it's applicable beyond peril, it's applicable to all sorts. So I'll let you get.
- [07:00]
A
Yeah. So I want to set the expectation.
- [07:02]
B
To the audience that actually it can be, it can be applied to CPG as well.
- [07:08]
A
Yeah. So like the last time, I want to unpack it from a non sexy, non fashion perspective a little bit. Yeah. Give me, give me another example where this triangle or the pyramid of Hero foundation collection and I want to again, unpack it to apply to non fashion, non retail, no apparel industry to see how we can sort of replicate that, that dynamic outside of the.
- [07:38]
B
The style example.
- [07:41]
A
Okay. Okay. Yeah.
- [07:43]
B
And then I also want to get into maybe capsules, limited editions, classics for, because for Banana we hit classics like, oh, white button down over or, or that photojournalist vest or a cashmere sweater. You know, like when you have those and when someone, you. Basically all you want to do is build a brand around those products and by setting people's expectations and you are allowed to set people's expectations because you can build a story around what the classics are and they never, they can always expect to see it in July, in all in, in, in October, in April. They're going to be there. They may be seasonal variants, but that's something that are classic to the brand. They're the core. They're different from heroes in a sense. They don't need to be the most expensive thing and they don't need to be in special material and they're different from. They usually belong to that foundation, but foundation is much more broader. Classics are the substack of that. But if you say, for example, chocolate Hero item would be, oh, we partnered with this famous French Chocolater, like your milk chocolate, and you partner with some artisanal chef for the 500 editions that are going to be available only in R. In Paris in October and November to celebrate expense. That's your. And then it become available maybe next year on the site or in selected stores. And so foundation for milk or chocolate is the pure, basic milk. It's like no additions. There is just like 80% milk, 20% or whatever. I don't know what the percentages are, but it's like milk chocolate that. And then you have maybe a darker one. And then you have this one that's your base. And then when you have that collections, then you say, let's do it with coconut. Let's do it. Strawberries, let's see. Oh, people are really like freaking out over umami. Let's do. Let's do umami. Let's do, you know, miso flavor. That's where it comes. That seasonal flavor. So I. It's applicable, I think, to CPGs as well also, like for chips, for example, and different flavors and so on.
- [09:54]
A
You know, before this conversation, I was, as. I was thinking about a product universe and a recent. This is a very popular, widely shared case study of the past couple of years, which is Stanley The. The markup.
- [10:10]
B
Oh, my God.
- [10:11]
A
Yeah, yeah. Because I think that's one brand in the past few years that's reinvented the brand without a massive rebrand or campaign effort. Right.
- [10:28]
B
So it's existed 120 years, that company. And you know how many things they sell, sell. They have everything from like outdoor stoves to like, tents, to like, oh, you have a Stanley Cup. So.
- [10:41]
A
But not, by the way, this is not a stunning cup.
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B
It's not. It's a not. You know, you have a hero product when, when. When people knock it off and yeah, you know how it happened? It's like, that's why Stanley cup is Stanley's hero product.
- [10:57]
A
Right, right.
- [10:58]
B
And sometimes, you know, it just takes history. Like Burberry Trench. That would be a hero product. Yeah, you know.
- [11:05]
A
Yeah.
- [11:06]
B
Or hero product for Apple would be iPhone now. But maybe it was Mac before. Maybe something. But anyway, I love that you brought up Stanley because, you know, shout out that Stanley cup actually explode. The car burned down. But Stanley cup did not.
- [11:20]
A
Yes, yes. Yeah, yeah, yeah, yeah.
- [11:22]
B
But I don't think that would have been enough if Stanley cup was already not popular among many different teenage and kids groups through wide distribution through Starbucks. It just achieved that cult status.
- [11:40]
A
Yeah, yeah. Because I think that the car burning down, I think it happened, if I remember correctly, in the fall of 2023.
- [11:48]
B
Correct.
- [11:48]
A
It's pretty recent.
- [11:49]
B
Around this time. I think it was maybe December, but anyway.
- [11:52]
A
Yeah. Yes. But Stanley really started gaining momentum several years before that. And that just the, the car incident happened to be one incident that elevated even further.
- [12:07]
B
You know, I think it's, it's through their distribution because I think they started distribution in Starbucks.
- [12:13]
A
Yeah.
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B
And kids go to Starbucks. They want Frappuccino. They won't. I don't know what not. And I think like, I know that 10 year olds love Stella cup, you know, so I think it was like, you see, that's like, it was not even a brand strategy, it was a product distribution.
- [12:32]
A
But, you know, so I, I actually have a completely different example that I wanted to.
- [12:37]
B
Sure.
- [12:38]
A
Share. It's totally random. All right, let's.
- [12:42]
B
Again, Japanese.
- [12:45]
A
No, no, that was. Well, so this is very esoteric, but. Yeah, but I kind of wanted to connect the dots because it was something that's very unusual and esoteric because like Stanley is a good story, but it's a bit of a fairy tale, you know. Right. It's diff. It's not easy to replicate that kind of success for everybody.
- [13:08]
B
And I don't think that even if they planned it, that it would be so successful so that I think that's the entire point of having such a wide distribution that at some point something is going to happen.
- [13:20]
A
Yeah. So let me, let me share this example. It's a Japanese shrine. And Japanese shrine, or Shinto shrine in Japan is like Starbucks in that the number of shrines in Japan is like every other corner. And the way they make money, I mean, it's a shrine, it's a nonprofit organization, but they have to somehow make money in order to survive. Right. So the way they make money is actually within the first three days of the year. So there's a custom in Japan where in the first three days people flock these shrines and they just give change into a wishbox. Like, you know, a $2, maybe even $10, but like little change. And a lot of shrines make 95% of the revenue from that. Just people flocking to the shrine.
- [14:20]
B
The first three days like this is like tax accountants.
- [14:24]
A
Yes, exactly.
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B
When they do 15 and they're like, they cover for the next whatever, 11 months.
- [14:30]
A
But like the rest of the year they don't have much to do. And it's a family business. Usually, you know, your dad is a priest, your grandfather is a priest, and I read this case, a fascinating case study of a Guy who inherited from his father like 10, 15 years ago when he was 25. And this is a shrine that's in the countryside of Japan. And he was making $35,000 a year. And his father couldn't make a living just purely being a priest. So he had a site. Well, he had a gig the rest of the year to make ends meet. And then he just happened to have this shrine that he was managing. So when this son took over, he was like, oh, what, what should I do? Should I just do the same thing? Like collect change in the first three, three, three days and then do something else? But he decided not to do that. And he thought about, okay, how can I grow this Shinto practice? So between 2009 and 2023, over the course of 10, 13 years, he went from $35,000 a year to now over a million dollars a year. Yeah, it took time. It took like 12 years, but he grew the business 30 times. And he did this by building a product universe, basically. Not necessarily in a sort of, you know, it wasn't like a cultural hit that they introduced, but he created a universe of different products and services over time. And then he made it into a company. So basically, you know, this was the, the location, this was the shrine that he had. And then back then like 12 years ago, what he was selling was these little lucky charms, right? These are off the shelf, a dollar, you know, lucky charm that these visitors would buy for good luck. But what he then did was, you know what? Instead of create offering these cheap charms that he was selling, he actually developed his own set of products. More high end, more unique, more original, more elevated.
- [16:51]
B
Let's use this pyramid, like right there, see?
- [16:54]
A
Yeah, exactly, exactly.
- [16:56]
B
I love this. This looks so beautiful. I think you're like, right, that you say is esoteric, but it's also not because you know how like spas do the same thing and even hotels do the same thing. Now how you can go to Oman and there is an online shop and you can get like all the products that you would get without even going there. They found a way how to kind of extend because you know, when you go to like, let's stay in Japan, so Japanese ryokans, for example, you're there three days, no longer, or maybe something like that. But the way to really extend it is through the exactly what this guy has done, which is build that product universe, which is a mixture of actual products and services, services, and then cultural products for like, you can buy like the same shampoo that is available there. But you can also buy a book or you can buy an instructional how to make a hot pot at home or something.
- [17:55]
A
Yeah, yeah. So what he did was, you know, what, what used to be just people flocking to the shrine the first three days and like literally throwing change and then maybe selling these chut keys, you know, for a dollar a piece to creating original product, like narrowing down to fewer products. He also, what he also did was creating services, like super high end services. What he ended up doing was expanding the business from like three days a year to 365 days a year in terms of these items that he was selling to off the shelf cheap stuff to fewer but more premium, like original items. Moving the services from outdoors to indoors and then increasing the revenue from 35,000 to $1 million a year by quote unquote, expanding the product universe. So as I was thinking about this topic prior to this conversation, I was like, wow, this is a fascinating one because it's a family business that's been around for like literally for centuries and not making any money to. Yeah, it took about a decade or so, but transforming completely by creating a product universe.
- [19:09]
B
So I have a question for you, Dan. Love this example. So let's, let's, let's stretch it further. What if other shrines start offering the exact same thing?
- [19:20]
A
How is. No, so what he, you know, what he's doing now is that two years ago he started a consulting service to other shrines.
- [19:31]
B
Okay.
- [19:32]
A
So he's, yeah, he's productized his method and he's offering that to other shrines and then they can also use the same service package but in other locations. So you know, these shrines are independent family owned businesses. But he's franchised it so that other shrines can now license his service and offer it.
- [20:00]
B
I love that. Like, this is so good. And also because he's the first mover, he probably has more information than anyone.
- [20:08]
A
Exactly, exactly.
- [20:10]
B
On how to take it further. So he can all like, because he is again, a first mover than copycats and he's actually charging copycats. I mean, some of them, some others are going to do it by themselves.
- [20:20]
A
Right.
- [20:20]
B
But I think he's always going to be a step ahead.
- [20:23]
A
Exactly, exactly.
- [20:25]
B
Like you should do like, I don't know, hotel or something.
- [20:28]
A
Possibly, possibly nearby, you know, and you know, speaking of nearby, it's in a, in a coastal town, so it's got a beautiful ocean view. And over the course of 10, 12 years or so, like he's made enough money to expand the facility from like one little shrine to Multiple facilities within the compound. Yeah.
- [20:49]
B
So tell a spa, like, you know, there you go.
- [20:54]
A
Yeah, yeah.
- [20:55]
B
But you know what that reminded me of? I would just add McDonald's. Because McDonald's, okay, maybe 10 years ago or something, it kept so many undifferentiated products. It hit salads. It had like, no one associated McDonald's with salad. So they were like, oh, let's offer more things in order to saturate the market, in order to basically be there for every occasion people don't meet or blah, blah. And that didn't work. I mean, I know that now they. They have a little quarter Pounder crisis. But when the new CEO came, he was like, you know what? Let's just reset this. Let's just say we're not in a hamburger business. We are in the show business. And that, you know, that was really well before that, like, brand started talking about entertainment and so on. What he meant by that is that basically that he's going to create experience and he's going to sit down, he's going to narrow down his products pyramid. He was like, no, the basics, the burger, the rice, the apple pie, and then you can have like three burgers. Fries never change, and so on. Ice cream literally spared that menu down. So when people go to McDonald's, they go for a specific taste for specific product. That's classics. And then maybe seasonally he adds some stuff and so on. That would be his collection. But what was really relevant, it started collaborating with Travis Scott on a Happy Meal. It turned Happy Meal into a cultural product because it tapped in all the celebrities, what you, like, co created with them. You know, you can say, well, that's nothing new. Well, it's not. But like, use Happy Meal as, again, as that cultural vehicle. A cultural product is going to mean a lot of different things to a lot of different people and be an entry point into a brand. Those little toys that you get that you start then collecting, that was that dialogue that they use for, you know, speaking of MC and so on, like all the later collaboration.
- [23:00]
A
I think speaking of McDonald's, which is not a fashion brand, it's not a luxury brand, it's quite the opposite. Right. But as it relates to culture, one of the smart things that they did, I think earlier this year called Wackdonald's. Do you know about that? So it's kind of reverse engineering what was happening in culture and bringing it to business. So you know how the McDonald's logo is the golden arch, the W. Right, Correct. So in the anime culture, in the Anime world. There are wakdanos. So if you flip the M. Yeah, yeah.
- [23:40]
B
So is that like in Japan or was it here as well?
- [23:43]
A
No, no, it was. It wasn't in Japan. Well it's, it's Japanese influenced but it's. I think it happened only in the US so.
- [23:52]
B
Ah, okay. Never seen this before.
- [23:57]
A
Is a fiction, a fictional fast food company in the. In anime. Right. And I don't know if they got like license or permission from McDonald's to do it, but it's sort of been. And it's been existing for quite, quite some time. So what McDonald's did earlier this year was what if we take this and for a limited amount of time for like four weeks, I think it was in March this year, create a real McDonald's. So I think one or a couple locations in, in. In California earlier this year for a few weeks McDonald's became WacDonald's and then offered items popular. Jean.
- [24:43]
B
Okay, got it. But you see even here, and I love that you brought this up even here they have this special chili sauce. You know, they use that to tie it back to their actual product as a collection. That middle of the pyramid. Something that's going to excite the culture at that moment and they're probably going to move away from it. It's never going to become like part of the menu but it gives a. Give them a. Like a refrain in culture.
- [25:12]
A
Yeah. And this is, this is in your pyramid, the product universe pyramid. I would say it's not a foundational collection. It's not a mass thing, but it's a hero. A limited amount of time in limited locations.
- [25:26]
B
And it says like you see, I'm at USA Today because it says they actually use that to introduce a new sauce.
- [25:33]
A
Right, right, right.
- [25:34]
B
You know, so that is show business again. I, I think it's a good example how they created this entire setting or universe if you will, or a world for that one. But you see, I think you know what's really relevant, Ray, and I'm really glad that you brought it. They collaborated with anime biggest names, you know what I mean? So they kind of like really went all in.
- [25:57]
A
Yeah, they did.
- [25:58]
B
I, I think inspired packaging. I love that.
- [26:01]
A
Yeah, I thought this was an interesting example for sure. I mean I was thinking about that before recording but as you were talking about this came to mind because they were very smart in what was happening in culture and then bring it into real world and then creating. Leveraging it, you know, for the.
- [26:22]
B
Pulled it back into the. They. They pulled Culture into the product universe. So it goes both ways, really.
- [26:28]
A
Yeah.
- [26:28]
B
And it worked because it was very organically part of the culture. If you have the real. What I was saying before, it was like, oh, they have anime masks, actors already. They have already embedded fan group. They co created with fans and they did those things that they knew that anime fans are going to respond well to. If they marketed this to me, it wouldn't work.
- [26:49]
A
Yeah. So they. It originates from 1983 episode of Cat's Eye, which is a Japanese manga.
- [26:56]
B
You know what it did when they did with Palace? They did T shirts. But the only way to access those T shirts, if you. You had to be in the know because it was actually packaging. It was not advertised anywhere else. It was packaging as advertising. And then from there you have like a special destination, a microsite that you can shop. You can't shop it on Palace. You can't shop in McDonald's site. So that's also adding that drop element of streetwear culture. It's not unique anymore. Everyone is doing it. But I do think it's relevant that they talked about that the mechanics of discovery are very unique to. Who is that targeted towards street anime fans? So on. Okay, key takeaways.
- [27:41]
A
Yeah. Just to wrap up well, how would you summarize this? What's one takeaway from this?
- [27:45]
B
My. One takeaway is that actually brand strategy includes marketing, product design, and merchandising all together. The product should never be like the. Basically, product strategy is also your brand strategy.
- [28:00]
A
Yeah, yeah, I would say my. My takeaway and using that Shrine example is subtract and elevate. That's what they did. Basically. They had, you know, so many little, like, Chach keys. Right. And what they did was they minimized it to just a few items and then made them premium, super expensive. And then, then they expanded their product universe. So subtract and elevate.
- [28:26]
B
Yeah, well, for me, I mean, that's like basically the same thing. It's kind of like product strategy is brand strategy. That means what's your point of view? What's your filter? Why are you doing this? What's your promise? And how to use products, not just communication or content, to deliver it.
- [28:42]
A
Yeah. All right. Do you want to do the. The. The final hit list? What's. What's occupying you?
- [28:47]
B
Oh, my God. I have to vote today, guys. What about you?
- [28:53]
A
Also speaking of which, the thing that I'm trying to get off my mind is this website called polymarket. Do you guys know about this?
- [29:02]
B
Polymarket? No.
- [29:04]
A
Polymarket It's a prediction market. So basically you just infinitely stressed me out. Yeah. So basically it's random people betting who's going to win.
- [29:19]
B
Can I say it again? You just infinitely stressed me.
- [29:22]
A
I know, I know. So I've been looking at it and try not to look at it, but this is all the. The point that you have to go vote.
- [29:31]
B
That's true. Other thing that's like, let's have one more because. Yeah. So my thing is that I've been thinking about the luxury industry a lot and how like, you know, the results every quarter this year are coming in and they're like, no, no. Luxury is like imploding. Carrying is going down in double digits. Lvmh, single digit. Hermes is doing well, Prada is doing well. So I started thinking like, it's not an macroeconomic problem. It's not geopolitical problem. It's not growth strategy problem. It's actually the soft power of luxury problem.
- [30:06]
A
Okay.
- [30:07]
B
It's cultural problem because luxury lost its soft power. So now I'm analyzing that and I want to publish it on Monday. But I've been thinking a lot because like about 10 years ago I was exploring luxuries, new growth models, and that was even before the current fast growth. So I'm just trying to create a narrative that's basically saying luxury has always been about aspiration once. And it's not original thought, it's just more than that market is a lagging indicator of lost, of that soft power. Cultural power.
- [30:43]
A
Yeah, yeah. So I had a few things in mind. But in response to the point that you just made the luxury market, I was talking to a friend of mine recently who went to some fancy dinner and it was, you know, rich people, important people, all of that. And my friend was sitting at a table of maybe eight people and he said that somebody at that table, somebody who's in, I don't know how old, you know, 50s, 60s, whatever, obviously quite rich, said, oh, all I need in my wardrobe is Hermes and Uniqlo. Yeah. And I thought it was kind of an interesting insight in that I think the market is going in two completely different directions. One is extremely high end, one is extremely affordable. But I think affordable, like in the case of Uniqlo vs H&M or even Shein, there has to be quality. Like Uniqlo has quality. Yeah. But it's very affordable, right?
- [31:44]
B
Yes. And I think that already happened, like let's say five years ago, seven years ago, something like that. It bifurcation. But you know what I think, and let's leave that for maybe. Maybe that's a hook for the next time. I think Midle is coming back, but not like Gap Middle, J. Crew Middle. Big, but as a lot of smaller brands.
- [32:05]
A
Yes, yes.
- [32:07]
B
Price point maybe above Zara and Uniqlo. And I know Uniqlo has good quality, so I'm not.
- [32:12]
A
Yeah.
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B
Equating them.
- [32:13]
A
Yeah.
- [32:14]
B
Is increasing there. So let's say one above $50, maybe $20 more. There is so many of them. So I wonder what kind of market organization is going to be there when. When you have so many options that are, you know, in between.
- [32:30]
A
Return of the middle. Maybe that's a topic for Turn of the Middle.
- [32:33]
B
Stay tuned.
- [32:35]
A
Good conversation. All right. See you in two weeks.
- [32:37]
B
See you in two weeks.