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CAS:

Can HeUo Kitty continue to rule the world?


She's the cat who appears on everything from diamond jewellery to pencil cases, virith her own theme park and even a branded hospital. Melinda Vaxley asks if she can stay cieam of the crop in a recession

Hello Kitty cot blankets and cushions (facing page), clothes and cute, and cuddly toys are the more obvious brand products of the ubiquitous cat 32

here is a recently opened hospital in Taiwan that aims to relieve the stress of childhirth for women. While this noble aim might not surprise the visitor, the decor is a little more shocking. The four storey building is decked out in pink, with childish cartoons of a white cat looming out from every possible surface. This is Hello Kitty healthcare. Hello Kitty, a cartoon cat. has appeared on branded merchandise since 1974. But how has the brand's owner. Sanrio, created a $lhn (E722m) marque with a personality so appealing that it has been ahle to cross cultures, product sectors and move into experiences as diverse as theme parks and hospitals? Roberto Lanzi. president of Sanrio (EMEA), admits that the success of Hello Kitty and its many manifestations might look a little odd to anyone not familiar with the business. He explains: "One of the key points of Hello Kitty is transgression. It is the oialy brand in the world where you could buy a lollipop or a bottle of red wine. It's also one of the only licensing companies in the world that does more than 12m (11.2m) a year in pure diamonds." For most licensed brands, there is a moment when success turns into over exposure. One example is designer label Pierre Cardin, which lost its cachet when, at one point, the

brand had more than 900 licences, appearing on everything from socks to mattresses. It may make money in the short term, but it has lost long-term luxury appeal. This does not seem to have been an issue for Hello Kitty, however. Starting out 34 years ago as a cartoon cat on a purse, it has appeared on everything from mainstream school notebooks to edgy, pricey Fender Stratocaster guitars. When McDonald's created Hello Kitty happy meals in Tokyo, people queued up outside in a way usually reserved for rock concerts. Sanrio's Lanzi explains that the ingredient tying together every licence is that using the cartoon cat should bring a little bit of 'joy' to any product or service. Tsai Tsung-chi, director of Hau-Sheng Hospital with Hello Kitty branding, agrees, saying that the hospital brings a smile to mothers at a very difficult and frightening time. Lanzi adds: "Hello Kitty was created with the focus of being a small gift, whatever the product. The proposition has always been 'small gift, big smile'." Martin Roll, business and brand strategist at Venture Re public, and author of Asian Brand Strategy, says that there are many reasons for Hello Kitty's popularity. "Unlike many of the Disney characters and other popular cartoons that emote and develop a distinct
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CASE STUDY HELLO KITTY

personality. Hello Kitty is a rather boring cartoon figure," he claims. "It does not even have a mouth to talk. Hello Kitty's Zen-like calmness and faceless expression are the main reasons tor its appeal across age groups and markets." There are 500 new Hello Kitty products launched around the world each month and 500 lines are discontinued. The idea is, according to Sanrio, to change the range to match different and emerging marketing, business and cultural trends across the world. Apart from the hospital, Sanrio recently signed a licensing deal with mobile handset manufacturer Sony Ericsson, which has launched a range of Hello Kitty branded phones. Lanzi says: "Mobile phones are a very natural product for the Hello Kitty brand. Children are now using mobiles just as much as teenagers and adults. They are objects that everybody has in their pocket and it is always seen. It is great for exposure." While Sony Ericsson may advertise its Hello Kitty branded phones, Sanrio relies purely on its partners and word-of-mouth. It doesn't have a 'normal licensing strategy', according to Lanzi. "The big difference between the Hello Kitty and our competition is that Sanrio never advertises any aspect of

the brand," he claims. "We don't rely on animations, films, TV shows or anything like that. We are probably one of the only brands in the world that relies on our partners, merchandising and word-of-mouth to keep us out there." Anna Cole-Morgan, business development director at Comment Retail Services (CRS), the company that sets up licensing deals between brands and retailers, says that Sanrio is unique in its approach. "Normally, licensing is done as a technical or commercial deal," she says. "Sanrio. however, is very

involved in the creative side, and its decisions to work with partners are more about their ability to create Hello Kitty products which appeal to the loyal consumer and protect what the brand stands for." Tara Gregory, executive marketing manager for Los Angeles streetwear brand Ed Hardy, says that approaching licensing by understanding the brand and its relevance in society is a good strategy She says too many companies are constrained hy sticking to a particular sector or consumer, when it is the brand's personality that can best dictate its usage. "There are technicalities to every deal. However, the creativity and attention paid to popular culture is really what makes a licensing strategy successful," she argues. Aside from its unusual approach to licensing. Hello Kitty is also unconventional in that it is a pure branded creation. Most cartoon licences are the result of a popular comicbook character or TV cartoon turned into saleable products after finding an audience through media. VentureRepublic's Roll explains: "One of the important factors that differentiates Hello Kitty in the world of cartoons and characters is that it is
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CASE STUDY
HELLO KITTY

OVERVIEW GLOBAL FOOTPRINT


THE WEIRDEST HELLO KITTY PRODUCTS TOP-THREE SELLING HELLO KITTY ITEMS ON EBAY

Airbus A330-200 Hello Kitty laptop aeroplane for Eva Air bag-12.99 Tarot cards Girls Hip f l o p s Satellite dish 1.99 Diet pills Condoms Marriage certificates Lawn mower Maxi pads Pagers Toilet paper Armbands for Thai police (who must wear them for committing minor transgressions such as lateness) Hello Kitty wallet375

not alive with stories, gimmicks and pre-determined personality before it reaches people. "By being a simple cartoon with very minimal characteristics, the brand actually acts as a canvas upon which pei)p!e can decorate with their own embellishments, thereby personalising the cartoon, giving it a special personality and internalising the cartoon into their lives. "This simple yet powerful differentiator sets the Hello Kitty brand apart from competitors." For Hello Kitty, its personality has been created purely through its merchandise appearances. Starting out as a symbol on a purse and then stationery, it has inverted the usual model, appearing in stage shows and TV cartoons as a result of selling so well on accessories. While the cat made some guest appearances in other Sanrio cartoons, its first series was an AmericanJapanese animation called Hello Kitty's Furry Tale Theatre in the mid-1980s. Since then. Hello Kitty has gone on to star in the Japanese cartoons Hello Kitty and Friends and Hello Kitty's Paradise. She has been 'clay animated' in Hello Kitty's Stump Village and the three-dimensional Adventures of Hello Kitty & Friends. Yet most people have come across Hello Kitty through its vast array of branded products, rather than the

character's limited media profile. It is because of this, suggests Cole-Morgan, that the figure appeals to more than just the children you might expect to follow a cartoon figure. She says: "From the very young to the very fashionable. Hello Kitty has an incredible appeal." But as consumers tighten belts and cut down on more frivolous purchases in a recession, surely Sanrio's Lanzi must he worried for Hello Kitty? In 2008, Sanrio made good profits - up 57% to 3.07bn yen - but profits in the company's native Japan, which slumped into a recession last year, fell 26%. With less disposable cash to spend. consumers are likely to think twice about paying a premium for a notepad emblazoned with a white cat. Roll says the Sanrio brand will start to struggle as consumer preferences, especially in the fickle Japanese market, hegin to shift. He says: "As with many iconic brands that have had long-term success only to fade away gradually. Hello Kitty too has shown some brand fatigue in its native Japan. "With the emergence of electronic gadgets, games and the internet, children and teens are more lured hy the visuals and sounds of these new channels than the simplicity and purity of a mouthless cat. It would he a great challenge for Saniro to maintain the brand popularity of Hello Kitty"
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CASE STUDY HELLO KITTY

Hello Kitty isn't just for the k i d s - s h e has her own wine label and is evenabit of arockchick with her own branded Fender Stratocaster guitar (opposite page)

Sales in Japan also fell in 2008, down 28.3% to 25.5bn yen. However, in Europe sales rose 62.2% to 4.5bn yen as Hello Kitty's popularity in Italy, Spain, France and Germany gained momentum. Lanzi admits that economic conditions are challenging; "The market at the moment is very tough. It's easy to go with McDonald's and do a happy meal - but we can't stop there. It's our duty to always be thinking of something new. What I am not happy about in the past three years is that for one property working, we have 200 that aren't." He is convinced, however, that Hello Kitty is still relevant for its domestic market, where in May last year the character was named a tourism ambassador for Japan, representing the country in China and Hong Kong. "It's very tough for other brands to make it in Japan so I think we have a safe bet there for the future. Japan is a traditional market with traditional values, and that won't change any time soon." argues Lanzi. "Hello Kitty is universal. The purity makes her a great vehicle for understanding the truth in our lives." Matt Haig, author of business book Brand Royalty, agrees that tough times need not spell the end for the
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figure's world domination. Writing about the brand in his book. he argues that Hello Kitty owes its success to the 'cute factor'. He says: "In a world of incredibly harsh and ugly realities such as wars, terrorism and a recession, cuteness is becoming a powerful brand attribute." Yet Hello Kitty is not all about cuteness. In line with its mantra of appealing to more than just children, it appears on a number of more adult properties - such as the Fender guitars - as part of a desire, particularly in Asian countries, to position the kitsch Hello Kitty as 'cool'. The Ed Hardy brand is following Hello Kitty's lead in this area, Don Ed Hardy started life as a tattoo artist, influenced by Japanese culture and aesthetics, and developed artwork on this theme. In 2002, clothing brand Ku USA moved his distinctive designs into fashion by producing a range of products based on his work. The clothing range began to be stocked in high-end American stores. such as Saks. In 2004, fashion designer Christian Audigier licensed the rights to produce the high-end Ed Hardy clothing line, which is based on imagery from the artist.

The brand now has a range of products including energy drinks, air freshener, scarves, fragrances, bottled water, intimate clothing, men's denim, belts and watches. Ed Hardy's Gregory adds: "It is a brand that represents Los Angeles culture and crosses all demographics it's a lifestyle brand. The uniqueness of us versus other licensing brands is that people want to wear Ed Hardy to be a part of the lifestyle." Sanrio's Lanzi claims that of all the licensed brands across the globe, including Marvel comics, Disney's High School Musical and Hannah Montana, Ed Hardy is his biggest rival. He says: "We tend not to worry about competition. People have been attracted to the Hello Kitty brand for more than 30 years - but if anyone is out there doing a good job in the licensing space and is making us worry, it's Ed Hardy" Gregory admits: "I get proposals everyday with a new product idea for the Ed Hardy brand. We have licences from couture swimwear to Smart cars and vodka - we identify a need and a space and fulfil it with a licence. Abnormality is creativity" One of the reasons for Ed Hardy's success, however, may have less to do with its creativity and more to do with good old-fashioned celebrity pulling power It is rumoured that US president Barack Obama, heiress
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CASE STUDY HELLO KITTY

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Paris Hilton, singer Britney Spears and supermodel Heidi Klum are among the brand's fans. Lanzi says that Hello Kitty attracts its own celebrity customers but he is not keen on official endorsement strategies: "We are very lucky that many VIPs across the world have adopted the Hello Kitty brand. This is free advertising for us: we don't ask for it, people just love Hello Kitty that much." One of the brand's biggest celebrity promoters is singer Mariah Carey. Tbe diva has been associated with the marque for a decade, when she started using Hello Kitty as a fashion statement. She opened concerts holding a Kitty doll and last year told Glamour magazine that fans send her the merchandise, which she keeps in her house's very own Hello Kitty crib. Lanzi enthuses: "We have a very wide appeal across all age groups." However, the Sanrio president concedes that Hello Kitty's unusual levels of appeal to so many people can be a disadvantage strategically, and this is something the business needs to keep a careful eye on during an international recession. "At the end of the day we are overexposed," he says. "This could be a problem for us over the next couple of years as we don't have a distinct category We aren't just toys, and people can be confused by that." CRS's Cole-Morgan adds that while Hello Kitty has built its status as a cult icon, it needs to make sure it keeps up its pace of developing new products and ditching underperforming ones if it is to bold international consumers' attention in future. "There is always the risk that the public will become bored if innova-

tion isn't key and tbe brand is overexposed," she says. "Consumers can lose interest and move on to something else very easily when something has been around for a long time. Hello Kitty is at risk of that in a few countries." However. Ed Hardy's Gregory, with a plethora of her own licensed products to market, argues that if the individual products are promoted well, over-exposure won't deter consumers. With more than eight million Hello Kitty blogs on the internet, it does not appear that over-exposure has barmed the brand so far. But its future will require Lanzi to overcome the issues of an overly complex portfolio of products, a global recession and the changing nature of consumers. It is no surprise that Hello Kitty, already in possession of a physical theme park, is now moving into massively multiplayer online roleplaying games with its own virtual world, currently in beta testing. While the brand's jet aeroplane may be less popular in these days of sustainable travel. Kitty's debit card, teaching young people money management skills, seems more appropriate than ever. Lanzi says he's confident that the phenomenon is not yet over. "Many people adopt Hello Kitty, and all these people interpret the brand differently, hut somehow it seems to work,'" he says. Roll adds: "Only time will tell whether tbe meow of this speechless but iconic Japanese cat will be heard in the coming decades. However, the current brand equity of Hello Kitty serves as a solid business platform for the future."

Hello Kitty cuts across all demographic groups and cultures, with interactive PC games for children (above), car stickers and designer bags (right). Paris Hilton and Mariah Carey are celebrity fans

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