Friday, October 21, 2016

Ivanka Trump’s brand: associated from luxury to racism, misogyny, and white-supremacist swamps

There was a certain pathos to Ivanka Trump's appearance at Fortune Magazine's "Most Powerful Women" summit this week. She waxed defensive, then dismayed, at her father's crude talk about groping women. She lamented that the "vicious" media, which for decades served her father so well, somehow just doesn't get the real him. She insisted she doesn't weigh in on strategy or policy, except for that maternity plan she pitched then made a commercial about. She brooded that somehow, people have gotten the crazy idea that she is a campaign surrogate (a Wednesday text message to Trump supporters begins, "Hi, it's Ivanka…"). And she raised the curtain on what's sure to be a concern at the next Trump family gathering: the runaway dumpster fire that's burning the Trump brand to cinders.

"I saw on the front cover of The New York Times a story talking about how the Trump brand was being decimated due to the campaign," she said at the Fortune forum. "Our team had provided statistics as it relates to our hotel company, for example, showing traffic patterns and actual analytics and data. They insisted on using quotes from random people. I have no idea where they called."

They could have called FortuneMagazine itself. Or Bloomberg, which are among the financial media companies whose analyses suggest the Trump brand is in trouble, if not in ruins. From what we know of his finances, after going belly-up in the mid-1990s, Trump shifted from real estate development as a core business, to marketing. The product he decided to sell? Donald Trump. And he set about affixing his surname to everything from hotels to golf courses to board games.

Trump markets Trump-themed products to three kinds of people: the affluent who can afford to purchase condos or stay in luxury hotels with his name on them; businesses and organizations who rent out his golf courses, hotel venues, or Mar-a-Lago for events; and aspirational everymen who want to feel richer by swigging some Trump water or wearing a Mexican-made Trump suit.

The first group, according to the polls, can't stand Trump, whose run for president has rebranded him from reality-show bon vivant to racist, woman-groping business failure and tax cheat.

The second group risks boycotts and protests if they associate with him.

The third can't generally afford the inflated room rates at properties that are typically located in blue states with few Trump voters. And the broader marketing audience for Trump products includes the people he has turned off with his abominable campaign: women, Hispanics, African Americans, Muslims, and college-educated white suburbanites.

A peek at a 2008 contract proposal from the Trump Organization, obtained from a source close to the enterprise, reveals how the Trump family trades on the perceived value of the name.

The proposal from Eric Trump to an overseas luxury-property developer, stipulates that Trump Organization licensing deals contained three basic elements. The first is the initial fee, in the millions of dollars, upon execution of the contract. The second is a percentage "of the gross sales price for each saleable real-estate unit sold (including all parking spaces, commercial units, and other features of the building that will be sold)." The third is an additional "incentive fee" that amounts to a premium paid to the Trump Organization for every dollar above the base sales price that the housing units sell for, in increments of $1,000. The higher the premium the developer charges over the basic price due to the Trump name, the higher the percentage "incentive fee" that's attached.

"[T]he Trump name is critical to obtaining a premium over market prices," Eric Trump tells the prospective partner, noting that the premiums due to the Trump Organization "vary as prices escalate—for instance, a 20 percent fee from $1,000-$1,100 per square foot will escalate to a 30 percent payment from $1,100-$1,200 per square foot, etc.); once again, the exact % is subject to negotiation."

It's tough to see what kind of premium the Trump Organization could charge today, or even whether developers will seek deals to slap the Trump name on the side of their buildings.

For Ivanka, the damage could be twofold: both reducing her income from the Trump Organization, where she is an executive, and spreading the damage to her own brand.

The former model and father's favorite—sometimes in the creepiest possible way—has spent years building her side business based on an appeal to young working women.

Ivanka's website dispenses tips on work-life balance. Her clothing, shoes, and handbags, manufactured in China and Vietnam, are available for sale on her site, as well as at Nordstrom, Amazon, and other online retailers. The line reportedly did $100 million in business last year.

But that business, like her father's, is based on Ivanka's last name. She hasn't developed a first-name-only brand, like Madonna or Beyoncé. Her surname is how she makes a living, and how her brothers and their father do, too. So the iceberg sinking the Trump campaign stands to cost her and her family money.

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