New York -- The names are, or were, familiar. In cars, Packard and Cadillac; in retailing, Tiffany's and Bendel's; in fashion, Halston and Gucci; in copiers, Xerox; in motorcycles, Vincent. The list goes on and on, encompassing every field.
They are all examples of companies or brands that have at times dominated the upper crust of their respective markets only to lose the leading position. Merely retaining a position at the very top can be daunting. Recapturing it, as Black & Decker is attempting to do with its new line of professional power tools, may be even harder. It requires not only producing the best product but also revising entrenched perception.
Until people began to realize the extraordinary difficulty of creating and maintaining an upscale brand name, many companies willingly cheapened top-flight products to be affordable to the mass market, said John O'Shaugnessy, a Columbia Business School professor.
"It's nice to be Rolls-Royce, but companies can't resist producing something below that because they can't resist the bigger sales; they want to grow," Mr. O'Shaugnessy said.
At times, the very top of the market is too slim to support any company. Judging by used motorcycle prices, the most revered machines are by British manufacturer Vincent. On a bleak day in 1956 still recalled with sorrow by trade publications, Philip Vincent was said to have stood before a loyal group of dealers and customers to say a sufficient market did not exist to support a truly extraordinary (and expensive) handmade bike.
Shortly thereafter, similar sentiments were heard at the demise of the independent Daimler auto company, noted at the time as producing the car of choice for the English royalty.
Cosmetics companies have become adept at maintaining an exclusive feel, even as they become less exclusive. Revlon and Max Factor initially had a small group of upscale customers. But the reality of truly upscale cosmetics is they tend to have microscopic sales. Thus many of the largest companies establish a brand and then begin broadening the base, transforming class-market goods to mass-market goods.
Retailers are almost forced to try a similar strategy. During the 1970s and 1980s, several prominent carriage-trade department stores reduced the cost of their goods to draw in younger customers while at the same time attempting to avoid any loss of cachet. Saks Fifth Avenue is cited by some as an example where this has worked. In other cases, the stores lost their prestige and their market. Witness the recent death of Bonwit Teller and the current struggles of both Bendel's and Gucci's to restore past glory. Halston, once among the most famed names in fashion, ended up a meaningless signature on off-price clothes that have nothing to do with the designer himself.
Tiffany's and Cartier, perhaps the most famous jewelry stores in the nation, have drawn widespread scrutiny for their contrasting marketing strategies. To offer less expensive goods and still maintain the glamour of the flagship, Cartier began a second line, Le Must de Cartier. Despite some second-guessing, the privately held company is believed to have succeeded in maintaining its franchise and expanding its customer range.
In 1979, Tiffany, once synonymous with high-class goods, was purchased by Avon, and an effort was made to market the exclusive jeweler to everyone. Out went many of the most spectacular jewels; in went trinkets; elsewhere went big spenders. Profits disappeared. That prompted a management buyout in 1984 and a radical reversal in strategy that appears to have succeeded.
With the 1990s seeming to be a more austere time, Giorgio
Armani, designer and purveyor of some of the most expensive clothing, has opted to create a new division with less expensive items. Charivari, an expensive New York retailer, has disparaged this trend. In a new advertising campaign, it cites the profusion of basic T-shirts and jeans dominating the fashion scene and concludes, "Wake us when it's over."
For decades, the textbook example of the risks and difficulties of allowing prestige to wither was the Packard, said Professor Louis Stern of the Kellogg School of Business at Northwestern University. Before World War II it was the class act of autos, but its quality suffered after because of wartime materials shortages. Packard's reputation never recovered. Cadillac, at the time considered a brilliant marketer, kept its reputation unsullied by putting out a vehicle with a different name while shortages persisted; it dropped the vehicle when conditions improved.
Contrast Cadillac's ability to maintain a reputation then with its trials today. Years of lackluster models left its association with top quality mainly in the minds of older drivers. Beginning in the late 1970s, a renewed focus on manufacturing and service restored the competitive position of a number of U.S. manufacturers, most notably Xerox. At Cadillac, a profound restructuring in the mid-1980s improved operations and helped the company snag the Baldrige Award for quality.
Still, despite some improved models, gaps remain in Cadillac's lineup, and market share continues to stagnate, said David Garrity, a securities analyst with McDonald & Co. The Cadillac name has yet to reclaim its lofty position.
The major Japanese manufacturers appear highly conscious of how hard it could be to raise the prestige of even a good name. In Japan, Toyota, Nissan and Honda market even the most expensive cars under their own banners. But in the United States they believe the tight connection between their offers and the middle to lower end of the market (in terms of price) made the creation of a new marque essential. The companies have all launched an assault on Cadillac's turf with new lines of luxury cars. The results, said Mr. Garrity, have been encouraging for them.
Mazda, smaller than those three, has attempted to extend a good reputation for sports and economy cars into the prestige class with the offering of a model costing more than $30,000. It is an experiment that will be closely watched. But by 1994 it will join the other Japanese manufacturers with a new division, named Amati, similar to Honda's Acura division and Toyota's Lexus.
"We could not stretch the Mazda brand to be perceived as a competitor of BMW, Mercedes and Jaguar," said Christopher Mather, a senior vice president at Interbrand, an international consulting firm that has worked on the launch.
Another approach is being tried by Ford Motor Co. In the 1980s as part of a massive corporate overhaul, it was successful in improving the quality and the perception of Lincoln, traditionally its top-tier offering. But to go after the very top of the worldwide mass market, it bought Jaguar in 1990, paying approximately $2.3 billion for a company whose physical assets were worth only a few hundred million.
"The rest of the money was for the strength of the brand, the legend that is Jaguar," Mr. Mather said.