2. LUXURY MARKETING
Luxury items have been defined as anything people buy that they don’t need. Need is not a precursor to purchase
in the luxury market. Luxury consumers buy based upon desire—they aren’t buying a “thing” they are buying to
,
achieve a feeling, to enhance an experience or to get an emotional lift.
Luxury is about achieving a comfortable lifestyle in the material realm—having those things that make life easier,
ThE LUXURY
more pleasant and more satisfying. Having a luxury lifestyle is not about money; it is about the experiences and
MARKET DEfINED
feelings that having enough money can bring. People want to surround themselves with things that reflect their
personality and things that they enjoy.
In the United States, luxury observers note that there are 4 million households that have an income of more than
$1 million (ultra high-end luxury sector), and an estimated 48 million households earning between $50,000-
$150,000 (driving force behind democratization of luxury).
MovING fRoM ThE MAssEs To ThE CLAssEs In the Pressure from the most affluent consumers stimulates and
past, when luxury was first introduced to the classes it, slowly accelerates innovation at the high end, which cascades
moved to the masses. Nowadays, this happens right away. The downward to lower-priced products—making innovation more
notion of luxury has entered people’s vocabulary in large part affordable and available to more people.
because of the media. The increased availability of celebrity
A LUCRATIvE oppoRTUNITY The luxury market space is a
magazines and TV, as well as additional coverage in more
lucrative category because many manufacturers and
traditional consumer publications means that more people
marketers do not understand how to reach this market, or they
know what is available. Because of this increased awareness,
do it inadequately. Additionally, luxury purchases transcend
luxury consumers now have the desire to be a part of something
the volatility of the market.
more glamorous—not to distinguish themselves from others,
but to feel part of the group. According to The Boston Consulting Group, the global
market for new luxury goods is currently estimated to be $500
“Consumers are bombarded with stimuli encouraging them
million and will reach $1 trillion by 2010.
(to buy luxury items)—stores are dream palaces; websites are
windows; advertisements have perfected the vision and
language of dreaming; and dreaming is the source of innovation.
The constant bombardment leads to people being able to visualize
themselves as better for purchasing a particular luxury good.”
2
3. LUXURY MARKETING
In the past, the theory of “cocooning” has dominated the way of thinking about luxury consumers. A large portion of old luxury
purchasers were empty nesters who put a premium on time and on their home. Traditionally, the luxury consumer profile was:
traditional, old, rich, white, male, and inherited wealth.
Old luxury was about having and owning—it was a very materialistic view. Luxury equaled exclusivity, which is no longer valid
with today’s democratically minded luxury consumer. It was defined by attributes, qualities and product features, and much of the
LUXURY
appeal was derived by status and prestige. It focused on the “thing” being bought.
CoNsUMER TYpEs
The old view of luxury is dying out.
NEW vIEW of LUXURY New luxury is completely defined boomers age 38-57 entering the empty-nesting stage, which
from the point of view of the consumer. It is no longer about corresponds with increased luxury spending.
the “thing” people are buying; it is about the experience and
Some other types of new luxury consumers are: Silicon
feeling the luxury product delivers. How the product delivers or
Valley, entertainers, professional athletes, entrepreneurs, trust
performs experientially is key with today’s luxury consumers.
fund babies, aspirational buyers, even generation X and Y who are
The new luxury consumer is better educated and more willing to save in order to buy the best. America’s middle market
sophisticated in taste. The Internet, home shows, and is also part of this group as they are trading up to luxury items.
affordable travel have exposed more people to other global
DE MoC R A T I C A L L Y MI N D E D, N oT I N T o EX C L Us Iv I T Y
lifestyles that are not as fast-paced.
New luxury consumers are not into the idea of exclusivity; they
New luxury consumers: are more democratically minded these days. They are only into
| Want it all but are exhausted trying to get it. exclusivity coming from their ability to express a personal point
of view, an attitude or their own uniqueness.
| Are influenced by friends and cultural figures but have strong
tastes of their own. New luxury avoids class distinctions; it appeals more to a value
system (i.e. buying new luxury fixtures in the bath doesn’t say
| Don’t believe in debt, but don’t let money stand in the way of
“I make big bucks;” it communicates “I am intelligent and
buying what they want.
discerning.”)
| Need a lot of understanding. When they get it, they are not
only appreciative they are also likely to open up their pocket Today’s luxury consumers believe everyone is entitled to
books and spend money. luxury (democratic approach); they believe “luxury is for
everyone and different for everyone.”
A large portion of the new luxury generation is baby boomers
that are known for challenging authority, rejecting the status According to a recent survey of luxury consumers, 90% of
quo, and making their own paths. There are 76 million baby these consumers agree that “luxury doesn’t have to be the most
expensive thing or be the most exclusive brand.
”
3
4. LUXURY MARKETING
New luxury consumers believe that “if you don’t understand | They have the highest average income of any of the types
it, or can’t say why it is worth it, you don’t want to own it, or (excluding X-fluents), and they live in the most expensive homes.
experience it, even if you can afford it.” Marketers must give | One-third of their luxury spending is on home-related
people a reason to believe why it is worth it to them. luxuries.
BREAKoUT of ThE LUXURY New luxury consumers want products that deliver real | They spend the most buying luxuries, about $14K on
MARKET BY TYpE technical, functional and emotional benefits. According to average per year.
recent research on luxury consumers (based on a two-year
| They have a deep desire to find new meaning and establish
longitudinal study on luxury consumers with incomes of
new equilibrium in their lives.
$75,000 and above), there are four groups that make up this
market space. They are: | They feel conflicted between roles they play in their inner
and external worlds.
“ X - f L U E N T s ” = E X T R E M E L Y A f f L U E N T This group
spends the most on luxury and are the most highly invested in | They feel blessed they have so much success and have a need
luxury living. “The super rich have always distanced themselves to give back to society, e.g. Bill Gates, Ted Turner.
from others, but the distance has shrunk. They want to continue | They are not motivated by status or exclusivity when they buy
to distance themselves.” The way to reach this group is through luxury goods.
continual innovation. | They are democratic in their view of luxury.
“CoCooNERs” = oLD LUXURY Forty percent of luxury | They seek connections in all areas of life: political, social, etc.
consumers are “Cocooners” who are inwardly directed and focus
| They spend the most on personal services that free them from
their time and attention on making their homes more luxurious.
the drudgery of day-to-day life, so they can spend time out
They are disconnected from others and the outside world. More
connecting.
than 50% of their luxury spending is on home-related luxuries.
They only spend about 65% of what “Butterflies” do. Eventually they will evolve into “Cocooners.”
“BUTTERfLIEs” = NEW LUXURY Twenty-five percent of LUXURY “AspIRERs” Thirty percent of luxury consumers are
luxury consumers are “Butterflies”. They are called butterflies “Aspirers. This group is highly attuned to brands and believes
”
because they are coming out of their homes and starting to luxury is best expressed in what they buy and what they own.
reconnect with the outside world. They define their
| They are driven to buy and display, but are not at the level that
personal identity by connecting with the outside world.
they’d like to be.
| They spend nearly as much on luxury items as X-fluents. | They are driven by the need to have and to own.
| They are less materialistic than Cocooners or Aspirers, and | Aspirers spend less than half of what Butterflies do.
they understand that things don’t bring happiness.
4
5. LUXURY MARKETING
Today’s luxury marketing and behaviors are driven by a strong sense of “me” It is all about the feeling consumers get from
.
purchasing, owning and enjoying a product. Luxury consumers want more “specialness” in their experience of luxury. They focus on
the experience of luxury embodied in the good or service they buy, not in the ownership or possession itself.
Luxury is tied up with creature comforts and feelings of comfort. Consumers will pay a premium to recreate a wonderful
emotional experience. All luxury consumers, up and down the income scale, gain their greatest luxury thrills from experiences.
UNDERsTANDING
LUXURY BUYING When a consumer purchases a luxury item, there is an expectation of better quality, fine details, and better material. This makes the
BEhAvIoR luxury consumer willing to dig deeper into their pocketbooks to buy that extra feeling of confidence.
Luxury consumers don’t buy luxury for status or social advancement and won’t buy things they clearly can’t afford. The differences
within the luxury market are more behavioral than motivational.
According to current luxury marketing theory and surveys, affordable travel, consumers are connecting to different global
emotions are behind 100% of consumer spending on luxury styles, which affect their desires, and ultimately the luxury
items. There are four emotional spaces that influence the goods they pursue.
buying habits of new luxury consumers:
QUEsTING Questing is defined as “finding fulfillment through
ThE RELATIoNshIp
1. Take Care of Me: well-being, relaxation knowledge. Today’s luxury consumers research products
”
BETWEEN EMoTIoNs AND
LUXURY pURChAsEs 2. Connecting: membership, attractiveness thoroughly before buying. Again, they are exposed to so much
3. Questing: adventure, learning through play more knowledge in today’s world and are going out more and
4. Individual Style: status, uniqueness seeing what other people have. New luxury consumers are
drawn to new products and quest for new experiences.
T A K E C A R E o f M E A new trend in the luxury market is
“self-actualization”—buying enhanced life experiences. The INDIvIDUAL sTYLE Consumers seek products that
way marketers tap into this is by focusing on selling a feeling or express their individuality (i.e. finishes, designs, etc.).
an experience. Cultural icons like Oprah Winfrey encourage American luxury consumers value exclusivity that comes from
this by telling viewers to “take care of themselves.” their ability to express a personal point of view, an attitude and
their own uniqueness. Exclusivity for the sake of exclusivity
CoNNECTING Marketing to luxury consumers is all about
is a European luxury ideal, not an American ideal.
connecting with the consumer—knowing them, understanding
them and getting inside their heads and hearts. Here is an example of how the emotional drivers come
together…A woman soaking in a tub is taking care of herself,
Consumers are reconnecting with the outside world and
while also preparing for a moment of connecting, wanting to
reaching out to establish true connections with others.
feel, look and smell good before her dinner date.
Because of easy accessibility to the Internet, tv shows and
5
6. LUXURY MARKETING
LUXURY CoNsUMERs LIKE ThE Luxury consumers appreciate superior quality, but they get feeling of buying luxuries on sale and usually search out the
IDEA of pAYING LEss a thrill out of paying less for the best. According to a recent lowest price or best value. They are savvy shoppers that know
survey: 80% of luxury consumers agree that they enjoy the how to find a bargain.
TRADING-Up ThEoRY Based on consumer research from The Boston Consulting Consumers continually seek to achieve greater levels of
Group, a major shift has occurred in the retail market. luxury. Once they have reached a level, it becomes ordinary
America’s middle market is “trading up” to new luxury and they seek out new luxury fulfillment (questing). Once
products (products that possess higher levels of quality, they have experienced luxury they can’t go back.
taste and aspiration). “There are 48 million households in
America with incomes more than $50K that have the means
and desire to trade up to new luxury products.” People are
willing to spend a large amount of their income for products
that have greater technical and emotional benefits.
6
7. LUXURY MARKETING
Luxury is not defined by brand; if the product carries a luxury label it doesn’t mean it is part of the new luxury market. It is only
part of the new luxury market if consumers desire it, but don’t need it, and want a personal or experiential connection to it.
The brand of the luxury item is not the primary reason luxury consumers buy it; it only justifies the purchase. So, branding
still plays a critical role in luxury purchases. The more extravagant the purchase, the more justifiers needed (good name, in
fashion, last longer, etc.).
LUXURY pRoDUCTs
AND BRANDING
It is important that the quality in luxury brands must be very | When asked what encouraged people to buy their last
good. However, the level of service, the experience and the luxury item:
customer interaction differ greatly between products. This 82% said company brand and rep
provides a great opportunity for insightful marketers to 78% said store or dealer brand and rep
position their brand. 60% said word-of-mouth
sTATIsTICs A survey of 866 affluent customers done in | In luxury marketing these three things working together
conjunction with Home & Garden Magazine showed: most strongly influence the consumer to buy:
1. Product brand
| While brand doesn’t define luxury, it is the #1 most 2. Dealer/store brand/reputation
powerful influencer on the luxury consumer when they buy. 3. Price/value relationship
The brand and/or representative of the store where the
luxury product is sold comes in at #2.
BRAND AND ThE Consumers connect with brands on an emotional level. LUXURY BRAND LoYALTY Brands that create the
EMoTIoNAL CoNNECTIoN Luxury consumers buy luxury brands because they want to, strongest connection with the luxury consumer have a higher
and because they desire it emotionally (right-brain controlled). brand loyalty. Brand loyalty is about how effectively and
The consumer’s passion, loyalty, dreams and desires are all completely the company’s brand satisfies the consumer’s
tied up with the brand. Connecting to the consumer on an needs, desires and dreams.
emotional level is the key to a brand’s success.
“Marketers make mistakes in assuming that brand loyalty is
Marketers need to understand their consumers. They should something a consumer does for them, when in reality, brand
be asking themselves: What are our consumers drives and loyalty is something the company and the brand do for the
desires? How does our brand fulfill their fantasies? consumer (the consumer knows what to expect from the
purchase).” The brand is the “contract” between the
Luxury product performance is now defined as the quality,
company and the consumer written in emotions.
design and uniqueness, as well as how it makes the consumer
“feel,” and how they experience luxury.
7
8. LUXURY MARKETING
Many manufacturers are having trouble successfully reaching the new luxury market because they fail to understand the infor-
mation listed below. For those marketers who “get it,” there is a ton of untapped potential in the luxury market. It is essential for
manufacturers, retailers and marketers to find ways to connect with consumers.
sUGGEsTIoNs oN hoW To CoNNECT | Must connect why the consumer buys with how to reach them
hoW To MARKET
| Create two-way dialogues with consumers, potential and where to reach them.
LUXURY pRoDUCTs
consumers and future ones.
“It’s about connecting with the consumer and the things they
| Build consumer feedback into marketing plans (e.g., cable care about. Connecting means talking less and listening more,
companies talk with viewers, viewers participate in polls, etc.). giving more value rather than increasing price, it’s about being
| Must have two-way interconnectedness at every point of involved and passionate about the consumer, rather than
contact for the consumer. Company websites, retail stores, waiting for the consumer to come to you.”
and the brands the stores carry are all connected in the A great example of “connecting” is Progressive Insurance.
consumer’s mind, so make sure the marketing strategy They offer consumers the ability to get quotes online. If a
encompasses all these areas. consumer is having trouble filling out the required information,
| Manufacturers must upgrade the caliber and quality of any they can click on a button that enables them to talk to a
and all people who represent the company and interact with Progressive representative. Once they click on the button, a
customers, especially when picking retailers. representative calls them within moments.
| Implement strategies that will predispose customers to talk
and share positive things about the brand (i.e. word-of-
mouth campaigns).
Marketing a luxury good is not about selling a thing; it is consumer’s psyche to understand their emotional dreams and
about selling an experience, and ultimately enhancing the desires. Then they need to deliver that to the consumer with
ThE EMoTIoNAL CoNNECTIoN,
MAKING ThE CoNsUMER consumer’s pleasure and enjoyment. Marketers must deliver their product.
fEEL spECIAL greater exclusivity by making luxury consumers feel special and
Manufacturers must look at the world and their products
unique, but not to the point of class snobbishness or arrogance.
totally from the consumer’s point of view. They need to ask
The consumer’s “passion” for the product is connected to their themselves:
experience using the product, so marketers need to connect | How does this product help the consumer?
with the consumer’s passion by digging deep into the | How does the product create, support or enhance an
experience?
8
9. LUXURY MARKETING
| Into what feelings, emotion or enjoyment does it translate? purchases and won’t buy it if they don’t understand it.
| How does it make the person feel to use the product? Marketers need to focus on demonstrating the emotional
benefits as well as giving consumers a reason to believe why
| Look at product features—what experience do they bring it is worth it to purchase the luxury good/service. Again,
to individuals? consumers buy things to achieve a feeling, enhance an
The founder of Revlon once said, “In the factory we make experience, get an emotional lift, and fulfill a fantasy.
cosmetics, in the stores we sell hope.”
Lure customers with emotion, and then “close the deal” by
There needs to be a balance between emotional and rational creating a rationale for the purchase.
selling. Because new luxury consumers justify their
Luxury marketers must continually extend the bar of luxury Some of the key elements to tapping into new luxury are:
KEEpING ThE pRoDUCTs fREsh higher and higher to bring freshness, newness and something high quality, attainable price point, sought-after design and
AND BRINGING MoRE vALUE
extraordinary to the ever-aspiring luxury consumer. To advanced technology.
maintain the luxury allure, they must pump up the luxury
value of their brand.
Luxury marketing is based on building a brand, communicating | A Luxury Brand must tell the story behind a product to
KEY ELEMENTs To BUILDING its value, and using the brand as a conduit to connect to make the emotional connection (use rich and graphic
A LUXURY BRAND the consumer. Brands succeed when they tap into what consumer targeting).
consumers want as much as what they need. Marketers must | A Luxury Brand must be relevant to consumer’s needs—
understand why people buy their brand so they can connect meet passions and desires emotionally and physically.
with their consumers emotionally. The brand conveys a
promise to the consumer that the product will satisfy their | A Luxury Brand must align with consumer’s values— today’s
emotional desire. consumers want their consumerism to provide a greater
meaning and they look to “do good” when they shop.
KEYs To BUILDING A LUXURY BRAND
| A Luxury Brand must perform for the consumer—it is
| A Luxury Brand must be expansive—big ideas give luxury if it makes the consumer feel special and unique, as
marketers places to venture/opportunities to meet in well as performing its material purpose.
consumers’ personal lives.
9
10. LUXURY MARKETING
ADvERTIsING To ThE LUXURY MARKET (BAsED to their luxury customers. Connecting to the customer
oN A sTUDY of AffLUENT LUXURY CoNsUMERs) encourages repeat purchases/upgrades, and encourages
word-of-mouth. Those customers will tell their friends and
| Brand ads should tell a story that will be so involving that
create a desire for their friends to get the same treatment.
the consumer becomes part of the brand story.
TIps oN ADvERTIsING | Brand ads should be relevant (deliver meaning to hIGh-END foCUs GRoUps Conducting tactical
To ThE LUXURY MARKET
consumers’ lives today) to passions, desires and fantasies research is a great way to better understand consumers’
of the consumer. passions and desires. It is important to be creative and to
think outside the box. First get a sense of the decisions your
| The story must continually be reused, refined, reinvented
target market is making across categories and segments, and
as values of the consumer change.
then design the high-end focus group accordingly.
| The message must relate to many people’s lives and be
Some examples of high-end focus groups are:
expansive enough that it can change with the times.
| Invite affluent consumers in for a private showing and
Traditional advertising and marketing does not always work
cocktail reception of an exciting new line at a favorite
for new luxury products. Marketers need to pay attention
boutique/specialty store. Get feedback by showing
to cultural icons like Oprah, who say “take care of yourself,
products with different technical features, different
spend money on yourself,” when creating messages for
finishes, etc.—think outside the box.
consumers.
| Give away a complimentary gift with an unrelated purchase.
KEYs To CREATING EffECTIvE
For example, a store like Coach, who wants to decide what
WoRD-of-MoUTh ADvERTIsING
new color to start making accessories, can give away a leather
| Have a new, innovative concept—what’s hot. keychain in the various the colors they are considering. Let
the consumers pick which color they want. Leverage retail
| Make it a simple concept—dumb it down so ordinary
relationships to conduct qualitative research—make sure to
people can understand the concept immediately.
reward retailer partners for their help.
| Identify and develop dialogue with the most likely
| Survey customers at retail locations (i.e. decorative
prospects to be your brand ambassadors (those that are
plumbing/hardware) to determine their satisfaction
most passionate about your product).
levels. Assess degrees of customer satisfaction, causes of
Manufacturers need to find creative ways to meet the needs customer pain, and reasons for dynamic retail experiences.
of their best customers and make them feel special. One idea
for connecting to plumbing customers is to send a gift at 1
mo., 3 mo., 6 mo., and a year—towel, massage brush, etc.—
10
11. LUXURY MARKETING
fINDING AffLUENTs There tend to be more liberals MIsCELLANEoUs MARKETING TIps
under 40 and more conservatives over 40, so focus on foR ThE LUXURY MARKET
subscriber lists of conservative publications to reach
| Showrooms/Displays: Showroom/displays need to be visually
Affluents.
stunning. Sixty percent of consumer decisions to purchase
To reach Affluents consider Architectural Digest and were influenced by the retail environment and displays.
Bon Appetit. To reach Mass-Affluents consider these
| Internet Sales: Internet sales do not play a significant role
publications:
in the new luxury home market. Today’s consumers are
| Condè Nast Traveler smarter and more prepared. They often use the Internet
| Gourmet to do research, but less than 15% of new luxury products
purchased for the home are sold online. Online retailing
| Vanity Fair
as yet does not deliver the emotional gratification that new
| Food & Wine luxury consumers demand.
| Martha Stewart Living | Promotions: Consumers like to get luxury items on sale;
| Martha Stewart Living Children luxury consumers want to feel like they’ve won or achieved
special status by saving money. Think of creative ways to
| Kids: Fun Stuff to Do Together
inspire shoppers (e.g., giving shoppers a special goodie bag
gives an emotional lift).
| Satisfaction: Total customer satisfaction is another key to
winning in the new luxury market.
11
12. LUXURY MARKETING
| “Luxury k&b Collection Show: Branding Luxury: Tips on Drive Business Value” by Ray George
Marketing Brands Affluent” – www.kitchenbathpros.com
| “Business Spotlight: Why Do People Buy What They Don’t
| “Metrics for Marketing to Luxury Buyers” Need” by Michael Rubinkam
by Andrew Grossman
| “20 Ways to Enhance Your Bathroom” –
REsoURCEs | “Know-How Exchange—Customer Behavior” – www. House Beautiful Magazine
marketingprofs.com
| “Splash Out Your Bathroom” – The Journal
| “Luxury Buyer Is Still Hot Prospect in Volatile Times”
| “Danbury Business Changes American Design” –
by Alf Nucifora
Fairfield County Business Journal
| “Luxury for the Masses—Trends in Luxury Item Spending,
| “Bathrooms Make a Splash…These Days Anything Goes”
Marketing” by Bob Francis
–
| “Luxury’s Long Tail” by Tim Manners The Independent
| “Paradise by the Bathroom Light” – | “High-Tech Bathrooms: Electronic’s Final Frontier” –
www.kitchenbathdesign.com Electronic Design
| “The Good Brand” by Linda Tischler | “America’s Take on ‘New’ Luxury” –
International Herald Tribune
| “The Comfort Zone” – www.kitchenbathdesign.com
| “A Stimulating Experience: Today’s Whirlpools,
| “Bathrooms to Feed the Soul” – www.moen.com
Air Baths…Without Ever Leaving Home” –
| “Opportunity Knocks as Consumers Embrace ‘Trading Kitchen & Bath Design News
Up’” – www.kitchenbathdesign.com
| “Escape to the Bathroom for a Shower of Amenities” –
| “Special Bathroom Suite Series Part II—Impulse Buying” Denver Rocky Mountain News
– www.pmmag.com
| “American Standard Study Reveals What Americans
| “Fall Bath Remodeling Report” – www.kitchenbathdesign. Love and Hate About Their Bathrooms” – PR Newswire
com
| “Research and Markets: Future Trends in Luxury Market
| “Marketing to the Mass -Affluent” by Dan Kennedy Analyzed” – M2 Presswire
| “Intelligent Bathroom” by Philips Research
| “Understanding Your Brand – Aligning Brand Equity to
12
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