Learning Dance Steps on Your Competitors' Graves

I was recently asked for advice from a friend of mine, who is a fashion designer. He was interested in becoming a master licensee for a famous European women's design name in the United States and targeting men. The potential gains seemed like a no-brainer: a well-known name entering a new market. He was all ready to go, but I asked him first if he had thought about other design houses that had done the same thing. What about Donna Karan? Liz Clairborne? Even a retailer like Talbot's? Were they successful? Yes, at first, but then the sales evaporated. I asked him if he knew why. He said no but that he was going to find out.

Then there were the goods. He was going to do belts, ties, watches and shoes, licensing the name out to sub-licensees. I asked him where he was going to focus. Which item was going to be the lead focus that would carry the entire line? What was the one item he would advertise? How much was the sub-licensee going to invest in this lead item? That licensee and their ability to deliver could determine the entire success of his line.

The biggest mistakes I see my friends making are in not analyzing and understanding their competitors and in not focusing their product lines. Competitive analysis helps you understand the landscape where you will be fighting. Focusing your line gives you the sharpest sword. Everyone learned this in business school. The challenge is truly spending the time and the effort to understand your market and then to understand which of your products will give you a competitive advantage in that market.