Too Much Good Press?
Skip to content
Innovation Marketing Operations Sep 2, 2014

Too Much Good Press?

A Sau­di home­ware company’s great rep­u­ta­tion might just be ham­per­ing its growth.

Photo by a photographer

Based on the research of

Edward (Ned) Smith

In Sau­di retail start­up aura liv­ing, Ned Smith, an asso­ciate pro­fes­sor of man­age­ment and orga­ni­za­tions at the Kel­logg School, found a per­fect case study in growth strat­e­gy imple­men­ta­tion. Soon after aura opened its first store in Sau­di Ara­bia in 2011, the mid-mar­ket fur­ni­ture and home-acces­sories com­pa­ny had a prob­lem on its hands: one of its ear­ly sales strate­gies helped turn it into a pres­tige media darling.

It’s a good prob­lem to have,” Smith says.

But it is a prob­lem nonethe­less. Though aura founder and CEO Noura Abdul­lah had estab­lished the com­pa­ny to serve as an afford­able and taste­ful alter­na­tive to lux­u­ry Mid­dle East­ern brands or the West­ern beige” style of fur­ni­ture sold by Ikea and Pot­tery Barn out­lets in Sau­di Ara­bia, one ear­ly win threat­ened to under­mine the company’s ini­tial mar­ket strategy.

We had busi­ness-to-busi­ness rela­tion­ships with the five main wed­ding plan­ners for lav­ish Mid­dle East­ern wed­dings — these are the kinds of events with 2500 – 3000 guests,” Abdul­lah says. Because of our suc­cess fur­nish­ing these wed­dings and the attrac­tive look and feel of our prod­ucts, we got cov­er­age in a string of pub­li­ca­tions like Harper’s Bazaar and Martha Stew­art Wed­dings.”

Estab­lish­ing Brand Identity

How has that affect­ed the company’s efforts to attract mid-mar­ket cus­tomers to its show­rooms in Riyadh and Dhahran? You can argue both ways,” Abdul­lah says. You can say these pub­li­ca­tions can­ni­bal­ized us reach­ing our tar­get audi­ence, mak­ing it dif­fi­cult for cus­tomers to look at us as attain­able. On the oth­er hand, you can look at the pub­lic­i­ty as sup­port­ing our brand image and giv­ing mid-mar­ket cus­tomers an oppor­tu­ni­ty to be proud of that image.

aura did little initial marketing in paid media outlets, choosing instead to make sure its products were beautifully photographed for social media.

We did very lit­tle mar­ket­ing in the begin­ning, pri­mar­i­ly because it is very expen­sive to put ads in news­pa­pers and mag­a­zines,” Abdul­lah con­tin­ues. Instead, we put time and ener­gy, rather than mon­ey, into approach­ing media out­lets. We also made sure our prod­ucts were beau­ti­ful­ly photographed.”

Smith sees great oppor­tu­ni­ty in aura’s ini­tial burst of good press, iden­ti­fy­ing sta­tus and brand iden­ti­ty as com­pet­i­tive assets the com­pa­ny can use to its advan­tage. Being affil­i­at­ed with high-sta­tus oth­ers can low­er your costs and increase your per­ceived qual­i­ty,” Smith says.

We did very lit­tle mar­ket­ing in the begin­ning, pri­mar­i­ly because it is very expen­sive to put ads in news­pa­pers and mag­a­zines,” Abdul­lah con­tin­ues. Instead, we put time and ener­gy, rather than mon­ey, into approach­ing media out­lets. We also made sure our prod­ucts were beau­ti­ful­ly photographed.”

Smith sees great oppor­tu­ni­ty in aura’s ini­tial burst of good press, iden­ti­fy­ing sta­tus and brand iden­ti­ty as com­pet­i­tive assets the com­pa­ny can use to its advan­tage. Being affil­i­at­ed with high-sta­tus oth­ers can low­er your costs and increase your per­ceived qual­i­ty,” Smith says.

Add Insight
to your inbox.

We’ll send you one email a week with content you actually want to read, curated by the Insight team.

But while aura’s mar­ket­ing growth strat­e­gy may have allowed aura greater flex­i­bil­i­ty in estab­lish­ing a brand iden­ti­ty, Smith thinks aura’s viral mar­ket­ing cam­paign might have been more tar­get­ed. aura should have spent some time under­stand­ing social-media use in their core mar­ket,” he says. More impor­tant­ly, aura should have tracked its recep­tion in the social-media-osphere from the get-go. They may have real­ized soon­er rather than lat­er that their recep­tion was clus­ter­ing at an end of the mar­ket that they did not intend to tar­get and pro­ceed­ed to pur­pose­ful­ly and strate­gi­cal­ly seed’ oth­er neigh­bor­hoods’ in the social-media network.”

Increas­ing Mid-Mar­ket Footfall

So far, it does not appear that mid-mar­ket cus­tomers are flock­ing to aura.

Rich peo­ple are walk­ing through the door and buy­ing, because it is fash­ion­able and not expen­sive,” Smith says. But that’s hurt­ing aura’s growth, because they know that if they could get the right peo­ple in the door, those peo­ple would buy aura’s prod­ucts. They’re just not com­ing through.”

As a retail­er, there are three main fac­tors that aura is track­ing: foot­fall, or how many peo­ple walk in the door; con­ver­sion rate, or how many of those peo­ple make a pur­chase; and tick­et price, or how much each of them spends. The company’s con­ver­sion rate is very high — espe­cial­ly for a fur­ni­ture retail­er — and its tick­et price is much high­er than antic­i­pat­ed, but its foot­fall is lag­ging behind expectations.

What this tells you is that peo­ple are afraid to walk into the store because they feel that it’s high-end,” Abdul­lah says. Once they walk in and they see our price point, they are pleas­ant­ly sur­prised and they almost always make a purchase.”

Rather than abandon its initial target customers now that it has established itself as a status brand, aura has a window of opportunity to broaden its customer base.

How has the com­pa­ny respond­ed? First, aura is empha­siz­ing pric­ing by intro­duc­ing in-store over­head sig­nage that fits with the brand image with­out cheap­en­ing it, while tar­get­ing price-con­scious con­sumers. Sec­ond, press releas­es for its pri­ma­ry prod­ucts are pro­mot­ing the company’s acces­si­ble with­in reach” pric­ing. Third, aura is pay­ing spe­cial atten­tion to its pric­ing strat­e­gy to ensure that it attracts and main­tains its tar­get audi­ence. Because much of the Mid­dle East­ern design and fash­ion con­ver­sa­tion hap­pens on Insta­gram, aura is now mon­i­tor­ing social media close­ly to keep tabs on cus­tomer reac­tion to its cur­rent price points.

Attract­ing Two Mar­ket Segments

Rather than aban­don its ini­tial tar­get cus­tomers now that it has estab­lished itself as a sta­tus brand, aura sees a win­dow of oppor­tu­ni­ty to broad­en its cus­tomer base. We feel we can attract both high-end and mid­dle mar­kets,” Abdul­lah says.

Smith agrees. In the­o­ry this is great. They stum­bled upon a set of con­sumers they had devot­ed lit­tle to no resources to tar­get,” he says.

aura living set out to establish itself as an affordable and tasteful alternative to luxury Middle Eastern brands and the “beige” style of furniture sold at Ikea and Pottery Barn.

But he sees risks at play in the strat­e­gy of tar­get­ing two mar­ket seg­ments. One is about resources,” says Smith. Like any diver­si­fi­ca­tion strat­e­gy, engag­ing two mar­kets requires more resources and dif­fuse atten­tion than engag­ing in one. This is par­tic­u­lar­ly rel­e­vant for small com­pa­nies, which may not have the resources nec­es­sary to pur­sue mul­ti­ple mar­ket seg­ments successfully.”

Abdul­lah is aware of that resource-inten­sive deci­sion. For the future, we need scale: to cov­er head office costs, to get the ben­e­fits of dis­counts, logis­tics, and sup­ply chain,” she notes.

The com­pa­ny is try­ing to scale up with­out going mind­less­ly into new mar­kets. Its ini­tial plan was to open five stores in Sau­di Ara­bia. When sales and deliv­ery data showed that the mar­ket would be sat­u­rat­ed at three stores, aura shift­ed course — putting more resources into adver­tis­ing and mar­ket­ing, as well as per­fect­ing its e-com­merce busi­ness — as ways to increase sales before expand­ing to the greater Mid­dle East region. 

The sec­ond risk,” Smith notes, is about iden­ti­ty and con­sumer per­cep­tion. Engag­ing in mul­ti­ple mar­kets can cre­ate ambi­gu­i­ty in the minds of con­sumers, which can lead to devaluation.”

The com­pa­ny is tack­ling the risk of brand con­fu­sion in sub­tle ways. For the open­ing of its store in Jed­dah this year, aura is main­tain­ing their cool fac­tor” by spon­sor­ing a din­ner event host­ed by local fash­ion and design blog­gers. The Jed­dah store is also small­er and locat­ed in a less pre­mi­um area in the mall to test whether loca­tion and store design can increase foot­fall. The shop is sim­pler while still embody­ing the brand, and it has been designed to attract Jeddah’s tra­di­tion­al­ly more cost-con­scious customers.

We’re try­ing to avoid the mis­takes we made in Riyadh,” Abdul­lah says. We want to con­vey that we’re attainable.”

Featured Faculty

Edward (Ned) Smith

Associate Professor of Management & Organizations, Associate Professor of Sociology (Weinberg College, courtesy)

About the Writer

Fred Schmalz is a writer and editor for Kellogg Insight.

Suggested For You

Most Popular

Organizations

How Are Black – White Bira­cial Peo­ple Per­ceived in Terms of Race?

Under­stand­ing the answer — and why black and white Amer­i­cans’ respons­es may dif­fer — is increas­ing­ly impor­tant in a mul­tira­cial society.

Leadership

Why Warmth Is the Under­ap­pre­ci­at­ed Skill Lead­ers Need

The case for demon­strat­ing more than just competence.

Most Popular Podcasts

Careers

Pod­cast: Our Most Pop­u­lar Advice on Improv­ing Rela­tion­ships with Colleagues

Cowork­ers can make us crazy. Here’s how to han­dle tough situations.

Social Impact

Pod­cast: How You and Your Com­pa­ny Can Lend Exper­tise to a Non­prof­it in Need

Plus: Four ques­tions to con­sid­er before becom­ing a social-impact entrepreneur.

Careers

Pod­cast: Attract Rock­star Employ­ees — or Devel­op Your Own

Find­ing and nur­tur­ing high per­form­ers isn’t easy, but it pays off.

Marketing

Pod­cast: How Music Can Change Our Mood

A Broad­way song­writer and a mar­ket­ing pro­fes­sor dis­cuss the con­nec­tion between our favorite tunes and how they make us feel.