A Luxury brand has always had some sort of appeal to me. Whether it was the image of an Audi A4 zooming smoothly on a shiny paved road or someone wearing a Versace suit strolling through a well-lit lobby, these extraordinarily expensive objects of aspiration have always interested me. I had just finished reading The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands by Jean-Noel Kapferer and Vincent Bastien and was quite impressed by the growth of luxury brands. I decided to understand luxury brands further.
To understand the meaning on luxury brand marketing, one has to understand the meaning of the term luxury.
Luxury :
Luxury is about social status or wealth. It’s part technological superiority, part superior craftsmanship and satisfies a certain role-playing notion that the buyer has. Additionally, it satisfies an emotional desire with intangible benefits.
Luxury Brand Marketing :
Marketing in this business can be vexing since it means creating a desire for something that no one really needs and charging a lot of money for that thing. Economically, a luxury product is one that sells at a premium than products with comparable functions and similar quality. From a marketing standpoint, a luxury product delivers primarily on emotional value.
Growth is always a challenge in the luxury market and brands are always pondering about how to do this without diluting their exclusive status. According to the New York Times, “The market dynamics have changed. It used to be defined by how much you could afford. Before, if you belonged to a certain group, you shopped at WalMart and bought the cheapest coffee and sneakers. Today, you may still buy the cheapest brand of consumer goods but still want to have your coffee from Starbucks or own an iPod”. Very true. I’ve know of college kids who are struggling to make ends meet and yet, they still possess an iPod or a MacBook.
This is clearly interesting as it indicates that there’s a shift in consumer behavior towards luxury goods. This is of interest because in today’s world, from a product and services angle, individualism and creativity have been replaced by efficiency and cost-controlled generic output. The McDonalds and WalMart principle is a constant in our daily lives – most of the things we consume are mass manufactured and at a fast pace. So, this half-and-half shift is a paradox. What’s causing it?
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People care more about being thought to have taste than about being thought either good, clever or amiable.
Samuel Butler
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Possible reasons for the shift in consumer attitudes :
1. Psychological : One of the reasons could be psychological. The news on TV is increasing depressing everyday. We’re under a tremendous amount of stress in our work and daily lives. Also, most folks ( in a developing economy) are plagued with a weariness and emptiness resulting in a void which typically a luxury good consumption resolves temporarily.
2. Liquidity : There’s an increased amount of liquidity in luxury goods. Distribution of these goods has greatly expanded. Redistribution is another channel. Think TJ Maxx or Marshalls.
3. Changing attitudes among the wealthy :Wealthy customers are foregoing ownership of luxury assets while still wanting to use them on a membership basis. For e.g. Leasing a Lexus as opposed to buying one.
4. Back to creativity : Developed economies are going through a dematerialization shift in some areas where design, creativity, symbolism and entertainment are more important that manufacturing. e.g. the U2 iPod
5. Affordability : This is not a factor in 2009 but a few years ago, the excessive liquidity in the lending market made it easy to engage in the purchase of luxury goods.
Back in the day, the limited production capacity of the economy reduced aspirations to basic material comfort. Today, as a result of a the surplus manufacturing economy, folks with modest meands can aspire to greater material satisfaction. Hence today’s consumer culture where marketers conduct segmentation by consumption with brands and products positioned to be bought and not made.
With today’s mass-market shift towards luxury goods, the typical brand and product responses do not matter. Instead, as indicated in the graph here, the response is extensions into variants of the luxury brand catering to more niches. The flip side is possible brand erosion because of the move outside the traditional niche or expanding the niche. But, as product differentiation continues to blur, smarter luxury brands will realize (like Apple and Armani) that the customer experience is the most important part of the luxury business model.
Predictions are everywhere about how China and Japan will dominate more than half of the luxury fashion market in 10 years time thus overtaking the US and Europe. The writing is thus, on the wall. We, as marketers, need to be prepared for it.
Sources :
1. The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands by Jean-Noel Kapferer and Vincent Bastien
2. The New York Times.
3. Idris Mootee Presentation from Brand Masterclass
