Former Hermes CEO: 10 Principles Of Brand Management For Hermes'S Success

Despite taking risks in business,

Financially, it has always been known for its steady image.

They have been insisting on self financing.

In order to avoid dependence on banks, Hermes usually reinvested 15% of its profits into business activities as a capital for launching new projects.

Recently, CEO Patrick Thomas of former Hermes international group and "up and down".

Jiang Qionger, chief executive, is visiting the EMBA SH155 class forum in Central Europe to talk about the "artisan spirit" they understand.

Patrick is the first non family member of CEO in Hermes history.

He said that since the birth of Hermes, there has been no change in the whole strategy.

The idea is composed of three elements: choosing the best materials, no matter how expensive, creativity, creating a lifestyle and lifestyle.

In the eyes of Patrick, the current luxury market is divided into two parts: one is the real high-end luxury goods, the other is for the masses to buy luxury goods.

He sees that in the Chinese market, those brands that are most particular about reputation and quality are going up and down, because "there are always some people who don't care about anything but the best quality."

The lower end of the so-called luxury brand is selling products with its own logo and brand.

Patrick said that the concept of real luxury should rely on quality products to nurture brand, that is, to increase value rather than reduce costs.

Here are the 10 luxury brand management principles summarized by Patrick Thomas on Hermes's success.

Patrick Thomas

Former CEO of Hermes International Group

1. rooted in the original intention

To make products, everything must be rooted in the original intention.

You have to think clearly about where you come from and what kind of things you want to bring to your customers, just like Hermes has been making harnesses.

The saddle on the left is in the 2004 year, and on the right is in the 2003 year. The saddle on the right is characterized by a complete leather and no stitches on it.

2. persistence in quality

The picture shows a French, meaning that Hermes is always responsible for the quality of the product and responsible for the quality of the material.

There is a story of my own experience: when I first started CEO, a lady found me with a saddle. She said there were some repeated stitches in her saddle, which was a decline in the level of technology.

Then I took her to look for this saddle in our production notebook, but we didn't find it.

I realized that the saddle was produced in 1937, which was bought by the lady's grandmother, and it had been repaired for a while, so there was a repeated suture.

The young lady thought that the product of Hermes would not have any quality problems even after 80 years, and asked for a stitch.

After the repair, we wrote a letter to the master who made saddle.

The letter said, madam, I am very sorry for the inconvenience caused by you. After this maintenance, we can ensure that this saddle can be passed on to your offspring without damage.

From this little incident we can see our persistent pursuit of product quality.

3. is outstanding in style

As a luxury brand, it is in its own style.

The picture shows a few scarves we produced in different years. The left is produced in 1985; the middle is 2010, some development, and the scarf on the right of the 2011 year.

It can be seen that these scarves were best viewed at that time, but more importantly, they maintained the style of Hermes.

We have always insisted on inventing our own style on the basis of our own style. This is very important. If the company changes to an art director, the design is beautiful, but it is not Hermes style. We will only collect such products in the sample room, and will not be introduced to the market.

So remember, from the very beginning, keep your style.

4. create the desire to buy.

When making luxury goods, there is no concept of marketing. We are not doing marketing, but just providing products for customers.

The essence of marketing is that you have to cater to the tastes of customers and meet the needs of customers.

If you are a fast selling product, do homogeneity products, such as toothpaste, you may interview 1000 consumers, ask them what color, capacity and other toothpaste they want, and the final product is made according to the needs of consumers.

And what we do is the other way round. We only do what we most specialize in, instead of first investigating the tastes of customers and then cater to their tastes.

There are few companies that really can't do marketing without satisfying the tastes of consumers.

What we create is actually a desire to buy.

{page_break}

5. refuse to be ugly.

Hermes products will never be ugly.

Although the reality is, in the luxury industry, you make things, even if it is ugly, someone will buy them.

But at least we will not do such a thing.

We only make good products.

6. connotation is more than logo.

Don't get too wrapped up in LOGO, use products to enhance your LOGO, instead of using LOGO to upgrade your product.

If a company relies on LOGO only to rely on labels to sell things, then sooner or later the company will become increasingly scarce.

If you don't rely on your LOGO very much, you can sell things, indicating that your company has a very rich connotation, because customers will ultimately see your connotation, not your logo.

7. refuse to milking

In the market, the general company has milking process, meaning that when making a product, after investing, it should constantly milking from its body, and constantly gain benefits.

You can take such a milking way in the mass goods industry, but you can't do this in the luxury industry.

If we have a product that is very successful or more successful, we will halt the product at a time, because if a product has been very successful, it will destroy our luxury brand, and the brand is everything to us.

8. more than the outside world

Do not pay attention to competition. If you compete, you will soon become the same as your competitors. Do not look at the outside world, just look at yourself, what is your core competency; do not stare at competitors. When you compete with others, you will gradually lose yourself.

9. profit is not a goal.

The principle is that profit is only a comparative benchmark, but a good reward. It is definitely not a strategic goal.

10. the most important asset is human beings.

For a luxury company, the most important asset is people. Investing in people is always worthwhile. We will think of ways to make our employees happy and let them develop in their careers.

Personal life is a private matter for employees, but employees are unhappy in their work and directly affect their personal lives.

The smile of employees is the best reward for me as CEO.

The inheritance of the Hermes family

Hermes was founded in 1837 by ThierryHerm s, the founder of the family, Thierry s.

The Hermes family began training their successors in their childhood.

As a systematic project, successor training and power pmission begin at the age of 6: first, delay their sense of satisfaction and foster a strong sense of responsibility; at the age of 10~14, they can begin to assess their personalities and interest in making money, so that they can understand the real responsibilities; 21~ should give them space to explore the world when they are 30 years old, and guide them from the first generation of their development goals, and work out a mutually satisfactory plan.

Compared with family businesses in China, there are many enterprises in Europe for hundreds of years. Health inheritance is more dependent on a scientific and systematic system of governance structure. The typical problem of Chinese family businesses is that the old generation succeeds. After 20~30 years, the new generation is still unable to simplify Dan Chuancheng.

How has the development course of Hermes been handed down from generation to generation in the hands of the founder of Thierry Herm s, and eventually developed into the world's top brand? How does the Hermes family inspire the sense of mission and identity of the family members through strong culture and values? How did the 70 generation of family members maintain their strong cohesion since the six generation of the 170 generation?

First, successfully inherit the five generation of family businesses.

Hermes's trademark -- carriage -- originated from Hermes's original saddle industry.

The Hermes group was founded in 1837 by tyre and Hermes, and was originally a manufacturer of special coach accessories for European aristocracy.

Their craftsmen added leather elements to the saddle to show the excellent quality and simplicity of the Hermes brand.

From nineteenth Century to twentieth Century, Hermes has been extending the saddle product, and the time it takes to make each saddle is about 20 to 40 hours.

In 1870s, Amir Charles s inherited his father's career and moved the Hermes store to Paris's famed Boulevard, which became one of the most expensive sections of Paris.

After several years in charge of Hermes, Amir sold his Hermes shares to his son Amir Maurice Hermes in 1922.

With the rise of the automobile industry, the carriage industry has gradually declined. Amir Maurice Hermes began to implement diversification strategy and produce leather goods related to travel and sports.

But he never gave up Hermes' traditional industries, but gave way to saddle bags, suitcases, wallets and handbags.

For example, the Kylie bag introduced in 1950s was named after Princess Grace of Monaco.

She was photographed by a photographer and photographed in her magazine with a photo of a herriman purse covering her baby's stomach. This handbag has also created a fashion craze, which has set the image of royal and celebrity Royal products firmly established.

In 1920s, Amir Maurice bought a patent from the Canadian zipper inventor and introduced it to France.

Since then, zippers and hermes handbags, knights wear and leather products are so closely linked that the French affectionately refer to this invention as "Hermes' defender".

In 1920s, Hermes introduced new products such as ready-made garments, strap watches and leather gloves.

In 1930s, Emil Morris passed Hermes to his son-in-law, Robert Dumas, which means that in the fourth generation of the family, CEO's surname is no longer Hermes, but Dumas.

In 1937, under the guidance of Robert, Hermes's first scarf came out.

Since then, scarves have become Hermes's biography of Jiabao, melting into a part of European culture.

Although the scarf production has slowed down in the mid twentieth Century, as of the mid 1980s, Hermes has put more than 10 new scarves into the market every year.

In 1978, Jean Luis Dumas took over the business after his father died.

Before returning to family business in 1964, he served as a buyer for Hermes' competitors.

The external experience of the fifth generation of successors laid the foreshadowing of the full prosperity of Hermes in 1980s.

{page_break}

Two, create a solid financial structure (listing).

The family agreed that Hermes was listed in 1993, but more than 80% of the shares were in the hands of 56 family members, including 6 family members holding 5%~10% shares.

The price of the 425 thousand shares issued fluctuated at about $55 a share, 34 times over subscribed.

The Hermes group has about 4 000 external shareholders.

The advantage of listing is to allow family members to buy and sell stocks, thereby avoiding disputes between family members due to equity value.

Stock liquidity can bring floating value, consensus price and liquidity.

Therefore, if the share holders want to buy real estate or cars, they can sell shares without affecting the market.

In the view of the Hermes family, issuing shares to the public can not only enhance the stability of the family, but also maintain the influence of the family.

Family members believe that Hermes is a listed company, but it has a family culture that is unbreakable as a castle.

Three. Develop strong family / business relationships.

According to the Hermes family, family businesses pursue the principle of democratic centralism.

This means that the owner should satisfy:

1, CEO should have excellent leadership and close ties with the family (there are more than forty family members in the sixth generation).

2, the members of the three branches of the family (Dumas, Pies and Grande) are allocated reasonably at different levels of work.

3, build a governance structure and set up a strategic committee composed of family members to ensure the family's influence and share responsibility.

4. The board of directors of a company is mainly composed of family members.

5, after the listing of Hermes, through the formulation of the articles of association, the rules of buying and selling shares of family members are clearly defined, and restrictive family voting rights are implemented.

6, in order to avoid dilution of voting rights, non family shareholders and divorced family members may hold shares but have no voting rights.

7, when CEO and company's major decisions are made and changed, they can be implemented only when the pass rate of 75% is triggered, so as to ensure the family's influence.

8, the family's next generation should receive traditional education as soon as possible, organize the next generation of visiting subsidiaries and suppliers regularly to cultivate their interest and sense of products and design.

Four, develop strong values.

The family wants Hermes to maintain the family business model.

They thought that CEO had better be a family member, but it did not insist on that.

But they insist that the CEO should be decided by family shareholders.

Family members must have absolute control in all daily and important decisions.

If the family loses control, even if CEO is appointed by the family, the company will lose its family character and tradition.

They believe that the whole family has little rights and responsibilities to Hermes group.

These responsibilities are part of family moral culture.

In these values, Hermes insisted:

1, respect for human and nature.

For nature, the Hermes family is far from being loved but grateful.

How can we achieve Hermes today without silkworms and silkworms?

2, respect for innovation.

At all levels of the group, Hermes always adhered to innovation and pursued perfection.

Five, stimulate corporate culture

All employees of Hermes have a strong sense of identity and pride.

For example, a doctor found that when asked about a patient's occupation, other patients would say they were secretaries, engineers, etc. but the employees of Hermes only said, "I am an Hermes."

All employees of Hermes are very united. Their focus on quality and creativity are all part of the spirit of the Hermes family.

Six. Financial autonomy.

Despite his adventurous business, Hermes has always been financially sound.

They have been insisting on self financing.

In order to avoid dependence on banks, Hermes usually reinvested 15% of its profits into business activities as a capital for launching new projects.

Seven, inspire family pride.

Jean Luis Dumas has a proverb:

The secret of our success is to do every job well - everyone should be proud of his best efforts.

This pride is not arrogance, but humility and enthusiasm.

You will be more proud when you think of your children's work.

The only criterion of satisfaction is that if one day a miracle happens, Grandpa returns to the world. He can pat on the back of his grandchildren and tell them, "well done."

Yesterday's ship has become a thing of the past. Even if we do not build it ourselves, we must do our duty.

Today, every member of the family is the helmsman of this ship and is responsible for its future.