Learning The Super Moves From The Business Coach

The Business Coach Talks About The Super Moves

SUPER MOVE #26 from the business coach – Set a good example for your team by not buying crap that you don’t need

In the world of business, I have noticed as a business coach that everyone judges you based upon what you do and not based upon what you say. So when you, as a leader, sit down on your golden throne and sip the most expensive alcohol you can find from your golden chalice, it becomes very hard for people to take you or your cost-cutting initiatives seriously. By flying coach when possible and taking your staff out to eat on business trips at Outback and not a super-high-end steakhouse, you will set a powerful example for your team.

“You can’t build a reputation on what you are going to do.”
-Henry Ford
(The famous entrepreneur who revolutionized the automobile industry with the creation of Ford Motor Company and the mass use of the assembly line concept of production)

SUPER MOVE #27 – You must become obsessed with incrementally improving your margins as you grow your brand

Over time, you will find that customers will become increasingly loyal to your brand and when they do, you want to reap the harvest from the sweat equity you’ve put in over the years by incrementally raising your margins. I, as a business coach, am going to drop three knowledge bombs on you that will blow your mind when you realize the power of a well-maintained brand backed by incremental pricing increases. Get ready to see what I, the business coach, have to say.

The Value – The $60 bottle of Antique Gold champagne that was discontinued by Cattier was repackaged under the name of Armand de Brignac and sells for over $300 per bottle.

The Story – It all started back in 2006 when the manager of the company that produces Cristal champagne was asked by a reporter from the Economist why rappers love his champagne so much. His response was, “We can’t forbid people from buying it.”

This comment infuriated Jay-Z and he began looking for a new champagne to rap about (and a company that he could own behind the scenes). Later that year, he featured a bottle of a new type of champagne that no one had ever heard about in one of his trend setting rap videos, “Show Me What You Got.” Over time, this new brand of champagne called Armand de Brignac, nicknamed Ace of Spades because of the large and very prominent logo on each bottle, was introduced into the marketplace. The people at Cattier, the company that produces the champagne, said of the new brand, “(Armand de Brignac) making its North American debut this year, after enjoying success as a premium, high-end brand in France.” Although the brand was later discovered to just be a rebranded version of the $60 per bottle Antique Gold that Cattier had discontinued in 2006, it is still flying off the shelves – at $300 a bottle.

Once this revered rapper who is worth approximately $550 million (according to Forbes) told the world they should be drinking a $350 bottle of champagne, the world began to buy the champagne and actually felt good about it. This, my friend, is proof positive of the value of incrementally raising the margins of something based upon the perceived value of the brand.

The Value – The $300 Beats headphones are consistently rated below the $140 ATM-50s, but the headphones continue to sell because Dr. Dre and other celebrities have discovered that they can increase their margins to over 300% and consumers will still pay for the headphones because they are worn by celebrities.

The Story – Born in 1965, Andre Romelle Young is now better known as Dr. Dre. Growing up in the projects of Compton, California, Andre was constantly around gang violence and turned to music as his passion. In 1984, Dre became inspired by the DJ Grandmaster Flash song, “The Adventures of Grandmaster Flash on the Wheels of Steel” and began going to clubs to watch local DJs perform. He started out DJing under the name of Dr. J, after his favorite basketball player, but later changed his stage name to Dr. Dre.

In 1986, Dre met O’shea Jackson whom most people know as Ice Cube and began collaborating with him on songs for Easy E’s record label, Ruthless Records. Soon they formed an iconic gangster rap group called N.W.A., which that lasted until 1991 when Dr. Dre decided to leave the group at the peak of its popularity. After he left, he founded Death Row records with his bodyguard at the time, Suge Knight. Death Row records produced hit after hit for Snoop Dogg, 2Pac, Dr. Dre himself, and countless other artists.

After leaving Death Row, Dre started his own label called Aftermath Entertainment. He signed Eminem to a recording contract in 1998 and 50 Cent to a contract in 2002. As a Grammy-winning recording artist who has stayed relevant for nearly three decades and as someone who is known for having a great ear for music, I believe that Dre is justified in pricing his headphones for $300 per pair if people are willing to buy his brand. In fact, so many people bought his $300 headphones that Apple ended up buying up Beats Audio for $3 billion dollars, keeping Dr. Dre on staff in a senior leadership position.

The Value – The cost of the Nike and Jordan brand shoes will continue to be high because as Forbes reports, the price of the shoe has nothing to do with the cost of producing it and everything to do with the value of the brand. “Nike holds as much as 60% of the U.S. market share for athletic footwear. The company’s Jordan brand of basketball shoes alone contributes around 60% of the revenues to the entire U.S. basketball footwear category… Customers have regularly shown a willingness to fork out high amounts of cash to get their hands on shoes modeled around iconic names such as Michael Jordan, Kobe Bryant, and Lebron James.”

The Story – When Michael Jordan was picked by the Chicago Bulls as the third overall pick in the first round of the 1984 NBA draft, he was very good and many general managers knew he was very good. However, the Houston Rockets felt that Hakeem Olajuwon was a better fit for their organization so they drafted him with the first overall pick and the Portland Trail Blazers thought that Sam Bowie was a better fit for their organization so they drafted him with the number two overall pick. But Michael Jordan would prove to be perhaps the most competitive and hard-working athlete of all time as he demonstrated time and time again by doing things just like these:
• Named the Rookie of the Year
• Won 6 NBA Championships
• Won 4 NBA Most Valuable Player Awards
• Punched teammate Steve Kerr in the face during practice for not hustling enough.
• Shaquille O’Neil explained on the Dan Patrick Show that Jordan actually told a defender during a game what he was going to do to him and then he actually did it: “‘I’m coming down. I’m going to dribble it between my legs twice. I’m going to pump fake and then I’m going to shoot a jumper. And then I’m going to look at you.’ And that’s exactly what he did.”
• To combat his opponent Dikembe Mutumbo’s trash talking during a game, Jordan actually looked over at him and said, “Hey, Mutumbo. This one’s for you” before shooting and making a free throw with his eyes closed.
• He trashed all his doubters in his Hall of Fame induction speech, saying of Bulls GM Jerry Krause, “I don’t know who invited him … I didn’t.”

Now despite having been retired for nearly 15 years, Jordan still earns over $100 million per year largely from endorsement income, like the income he derives from the Jump Man image that he co-owns with Nike. He and Nike have incrementally focused on raising margins as they have grown the brand’s perceived value.

Fun Fact:
“Nike and Reebok produce most of their shoes in South Korea, Taiwan, China, and Indonesia. With their minimal production costs, basketball shoes are quite profitable. The wholesale cost of the $130 Air Jordan is $68.75, said John Ruppe, Nike’s manager for basketball-shoe marketing. The cost of making them is about $30.”
As a business coach, I don’t care whether you are an artist, a bakery, a dentist, or a plumber. You must become obsessed with incrementally improving your margins as you grow your brand.

December 11th, 2017


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