"NO ONE NEEDS AN iPAD, BUT EVERYONE WANTS ONE."
Interview with Stéphane Garelli (PDF)
Professor Garelli, what differentiates "new" markets – Russia, China, India, etc. – from established markets?
We're seeing two different worlds for consumers. A world of "I need it" – you find this in emerging markets like China, Brazil, Russia or India – where basically, when you purchase a product, it will be introduced into your household for the first time. And then you have an economy of "I want it" – a model you'll find in the US, Europe, etc., where a product is purchased to replace an existing one. This distinction has a profound effect on the way we deal with our customers. Because in times of crisis, the economy of replacement ("I want it") is an economy where people can stop buying products for one full year without experiencing a drop in their standard of living. In the economy of "I need it", if I receive money, I spend it.
How does the industry deal with the "I Want it" model? How do you market products that no one is really in need of?
Let’s take the iPad. No one needs an iPad, but everyone wants one. You don’t want it because you need it, you want it because it gives you something more than just the product. I believe the new branding is much more about what's around the product than about the product itself. You don’t buy a watch in order to know the time. You can check the time on your cell phone. You buy the watch because of something else. Most people have almost everything. If you want to sell something, you're confronted with the problem of replacement: you have to market your product in such a way that your customer will drop one product in order to buy your product. If you want to launch a new magazine, you have to convince the customer to drop the paper he has been subscribing to in order for you to have a chance in the market.
What do you no longer believe that you used to believe ten years ago?
I no longer believe that the world economy is in synchrony. Ten years ago globalization meant that more and more economies would grow at the same pace. Today we see many different growth models. Every market seems to be following its own path.
What idea could change everything in the economy?
I think the most challenging idea is the belief that you can have everything for free. The younger generation in particular has got used to consuming information, music, etc., for free. They actually feel entitled to have it for free. And this is a very powerful challenge because we all know there is no such thing as a free lunch. It's a question of generation. The younger generation wants certain things to be free, they want more transparency, they want a high level of ethics, they want a high level of accountability, they want to know exactly who is responsible for what. And they want to consume and do good at the same time. Buying is more than just acquiring a product, buying is doing something good for society. When I was younger, I bought a product just because I wanted it. Then I bought a product because of its image. Now when we buy a product, we consider what its impact will be on society.
Name three brands that you love?
As a Swiss citizen I have to say: Nestlé. I would also include one of the pharmaceutical companies because they do good. But I don’t love blindly…I'm sorry, I can't really answer this question.
The 61st International Retail Summit on "Re-generation – Resurrecting Retailers and Brands" will take place at the Gottlieb Duttweiler Institute (GDI) in Rüschlikon/Zurich on 8 and 9 September 2011.