Luxury brands report


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The new world of luxury brands that commands affluent consumers respect and loyalty

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Luxury brands report

  1. 1. spotlight on… luxury The power and promise of luxury brands and the global consumer M&M GLOBAL Q1 2012 51
  2. 2. IT’S OUR MOMENTUM IT’S YOUR BLOOMBERG // Bloomberg Businessweek New European and Asian editions // The New Relaunched March 2012 // New channels: Personal Finance, Sustainability, Technology // Bloomberg Markets Introducing Bloomberg Pursuits, a new, global luxury lifestyle magazine // Bloomberg Television The smartest view on daytime TV // Bloomberg Mobile Leading apps: Bloomberg Businessweek+, Bloomberg Radio+, Bloomberg TV+ Seize the opportunity > > > ©2012 Bloomberg L.P. All rights reserved.
  3. 3. spotlight on luxury gilt-edged business There are very few sectors that garner the same sense of emotion as luxury. Consumers desire to own a piece of it and marketers aim to mimic the refined, polished and aspirational tones of its brand messaging. When Credit Suisse looked to overhaul its marketing efforts away from images of bankers and people purchasing houses, the luxury sector was its first point of call for inspiration. Out went the men in shiny suits, in came dramatic backlighting and striking images. M&M Global is kicking off its series of sector-specific Special Reports with the topic of luxury for several reasons, the first being the power that it holds within international media and how that is evolving. While it has been a mainstay of the media plans of international media owners for years, as you will read on pages 61-62, local media owners are getting in on the luxury trade and catering to these advertisers in ways that they have never before and as a result attracting more luxury ad dollars. The health of the luxury market is mirroring the new world order that we are seeing in both the global financial and advertising markets. The robust opportunities are coming from the Far East and as a result this is where more luxury brands are focusing their attention both when it comes to launching new endeavours, such as Hermès and its sari collection in India, or reaching new consumers, like Estée Lauder using out-of-home sites with Mandarin messaging to reach travellers at London’s Heathrow Airport (p58). The attraction of luxury marketing lies in the mystery in which it operates so successfully and getting any glimpse behind the wizard’s curtain is sought-after. The brands within the luxury space are notoriously quiet while at the same time revolutionary. All brands from FMCG to B2B can and should learn from their successes, if only on a slightly lesser budget. Martina Lacey, deputy editor Contents 56. Fast Facts Read the facts on global luxury brands and the luxury consumer 57. campaign showcase Jean Paul Gaultier: French Kiss 58. feature The new world order of luxury 61. feature Regional versus local media M&M GLOBAL Q1 2012 53
  5. 5. spotlight on luxury fast facts M&M Global gives you the facts you need to understand global luxury consumers and the brands they covet tOp GLOBAL Luxury BrAnds in 2011 Brand 1. Louis Vuitton 2. Hermès 3. Gucci 4. Chanel 5. Cartier 6. Rolex 7. Hennessy 8. Moët & Chandon 9. Fendi 10. Burberry Brand value ($bn) 24.31 11.91 7.45 6.82 5.32 5.27 4.99 4.57 3.42 3.38 Brand value change (%) 23 41 -2 23 34 11 -7 7 7 N/A Source: Millward Brown Optimor, 2011 where dO yOu purchAse yOur Luxury items? Consumer annual gross income €100,000+ Department stores 23% Outlet stores 22% Speciality boutiques 18% Brand boutiques 15% Brand and shopping websites 11% Duty free 11% BrAnd interActiOn priOr tO Luxury purchAse How wealthy shoppers carry out their research 1. Visited company website 2. Visited retail location 3. Read online reviews 4. Via mobile phone 5. Used social media websites 6. Called contact centre Male 69.2% 66.6% 50.7% 15.5% 12.6% 12.3% Female 65.6% 66.9% 39.2% 12.4% 12.6% 12.2% Total 67.6% 66.7% 45.1% 14.0% 12.5% 12.3% Source: Empathica Consumer Insights Panel, Wave 2 2011 Source: European Luxury Survey 2011, McKinsey & Company 2012 purchAse drivers fOr chinese cOnsumers 44% In-store 7% Direct marketing I saw an ad about this brand on a website 11% I checked reviews online (eg BBS/forum) I saw this brand’s website I received recommendations from friends/family I saw others using it in person 9% 2% I read an article on this brand in the newspaper 14% Word of mouth I evaluated the product when I was in the store I spoke to the in-store salesperson 9% I saw the product displayed in the store/ store window 5% I read an article about this brand in the magazine I saw a TV commercial 7% Traditional media 21% Internet 13% 12% 2% 1% $2,545 Average ticket price of a luxury purchase 58% 53% Are women 11% 11% I read the catalogue in the store BrAziLiAn Luxury cOnsumers The top spenders by numbers 8% Live in São Paulo 47% 33% Have postgraduate degrees Are aged 26-35 Source: McKinsey & Company 2012 Source: McKinsey Insights China, 2011 M&M GLOBAL Q1 2012 56
  6. 6. spotlight on luxury Jean Paul Gaultier: ‘L’Art du French Kiss’ K isses have been part of Jean Paul Gaultier’s (JPG) DNA for a long time. This year, the French luxury brand has decided to teach its fans a lesson in what it knows best: the art of French kissing. JPG’s latest marketing effort aims to promote its range of ‘his and hers’ perfumes, blurring the lines between masculine and feminine. Exclusively online, ‘L’art du French kiss’ invites users to select the type of kiss they find most inviting, choose who they would like to share that kiss with, generate a customised video using data gathered from Facebook, and share the link with friends via Facebook, email or Twitter. “The French kiss reflects sensuality, boldness and transgression of some taboos, just like the JPG perfumes brand,” says Denis Quimbrot, vice-president, international communications, Beauté Prestige International (BPI), the company behind the marketing, production and distribution of JPG perfumes. “The animation highlights the codes of the JPG brand: boldness, freedom, humour, creativity and erotic tension,” adds Quimbrot. “JPG is an accessible and unconventional luxury/fashion brand. Some people are big fans, some are curious about the designer, and others appreciate his perfumes. We want to reach both the fans and the people curious about the brand.” Created by Isobar, the ad was written by Pierre Duquesnoy and art directed by Laurent Nuyen and Kevin Vevé. The campaign kicked off just in time for Valentine’s Day and will continue to run throughout 2012. ○ “The French kiss reflects sensuality, boldness and transgression of taboos, like the JPG perfumes brand” 2-ongoing e DATE: February 201 rfume REGION: Europ CATEGORY: Luxury/pe ultier BRAND: Jean Paul Ga DIA CHANNEL: Online AGENCY: Isobar ME M&M GLOBAL Q1 2012 57
  7. 7. spotlight on luxury Industry view the new world order of luxury Seraphine  Money UK managing director, Inflight Media Marketing (IMM) The Chinese traveller,   a passenger of choice for  luxury brands  Chinese carriers are expected to transport 320 million passengers in 2012 – registering a doubledigit growth rate this year (+10%), according to figures from the Civil Aviation Administration of China. Beijing is predicted to become the number one airport worldwide, eclipsing Atlanta, the leader for many years. As Europe’s economies continue to struggle, luxury brands are directing their marketing efforts on new consumer groups in emerging economies. Amanda Saint finds out more about these premium customers D espite the endless economic doom and gloom stories that dominate the media, the market for luxury goods continues to grow. Consumer groups in the West may no longer have quite as much disposable income, so premium brands are targeting the new luxury consumers in the emerging BRIC economies: Brazil, Russia, India and China. The new cashrich consumers that these fast-developing economies have created not only spend online but are prepared to travel the globe to source authentic luxury goods. As a result, brands are adapting their marketing strategies to capture their attention as they travel. The rise of The airporT consumer JCDecaux Airport manages all the advertising “There’s no   space at London Heathrow, and marketing one-size-fitsdirector Steve Cox has certainly seen an all strategy, so  increase in adspend as well as renewed adapting the media  interest in airport retail opportunities. “The fastest-growing category for us in 2011 was environment in   luxury brands, and we forecast that it will be each market   the same again for 2012,” he says. is key” Luxury brands that increased their airport adspend in 2011 include Mulberry, Dior, Gucci, Chanel and Burberry. But it’s not just the amount of advertising these brands are placing that’s increasing: a growing focus on Asian, particularly Chinese, consumers is becoming an integral part of their strategy too. Estée Lauder ran a campaign at Heathrow in 2011 that appeared in English and Mandarin concurrently, while a Harrods spokesperson confirms that: “The Chinese customer has become increasingly important for Harrods. The trend is for the highly brand-conscious Chinese shopper to seek 58  M&M GLOBAL Q1 2012 t M&M Viewpoin out the very latest, limited edition and exclusive products. Fine jewellery, fashion and accessories from well-known luxury brands, including Chanel, Burberry, Cartier and Louis Vuitton, are among the preferences.” However, it’s not just the Chinese who have money to splash on luxury brands. Cox confirms that the Russians run a close second and that shoppers from Japan, North America, Indonesia and Brazil are also becoming key players in the luxury retail market. Big brands are increasingly recognising the unique opportunities they have when these consumers are in transit. Research has revealed that people are in a different frame of mind once they reach the airport and that they feel they can shop differently compared to when they are at home. Focus groups show that people see spending on luxury items as being a key part of the experience, and that the holiday mood and tax-free status makes them feel as if they can spend more. GeT The messaGe As the opportunities to reach luxury consumers at airports grow, demand for ad space is high, but Cox believes that the way brands interact with these consumers will change completely in the next two to three years. He says: “We will see brands moving to a dialogue rather than a monologue. Asian consumers have the most advanced personal technology of any consumer group, so advertising will move towards more interaction between posters and handhelds.” Managing director of Blowfish Digital, Farhad Koodoruth, is already aware of a rise in interactive advertising, with digital billboards and QR codes being increasingly used in South Korea and Japan. “There’s no one-size-fits-all strategy, so adapting the media environment in each market is key,” he states. The brand message needs to fit just as well as the media via which it is delivered. For instance, the World Duty Free outlets at Heathrow have been running Chinese language ads in the digital billboards in their shop windows. These are timed to tie in with arrivals and departures to destinations in China and have proved very successful in luring Chinese visitors into spending in these stores while passing through. With the number of passengers travelling through Heathrow reaching an all-time high of 69.4 million in 2011, the London 2012 Olympic Games will give luxury brands at airports even more opportunities to reach global consumers. As the hunt for exclusivity becomes almost as prized as the brand name for many shoppers, the opportunities are especially great for the new brands that are social media and digital-savvy, and can engage with this new audience in innovative ways to give their messages a local touch, no matter where they deliver it. local focus As luxury brands fight for the attention of these new consumers and try to grow their market share in the emerging economies, Koodoruth believes that they face a real challenge to maintain and develop the brand image they have created while increasingly fitting it to the local environment. If they can meet this challenge, then the 2012 predicted growth of 16% in China’s luxury market could feasibly be even bigger than that. Despite Estée Lauder’s recent Heathrow ads, and Harrods’ introduction of Mandarin-speaking staff and store guides, Koodoruth feels that the big luxury brands are very reliant on the reputation they have already developed, with a little localisation thrown in for good measure. Many believe that the real opportunities with these new consumers lie more with the smaller, niche players, rather than the wellestablished luxury brands. “Niche players have an opportunity to develop a market presence and brand reputation among the luxury consumer demographic,” says Koodoruth. He adds: “Innovative use of social media to localise their messages will be key to them gaining a foothold.” ○ Quick Insight 11% How much the Savigny Luxury Index gained in January 2012, outperforming the benchmark MSCI World Index by 6% 40% The increase in adspend at In 2011, 60 million Chinese tourists travelled abroad, spending more than $50bn. According to the World Tourism Organisation, there will be 100 million outbound travellers from China by 2020. The Chinese are consumers to cherish, as 80% of their travel budget is dedicated to luxury shopping and buying presents and souvenirs. Research gives us an insight into their demographic and behavioural profile. Of the travellers originating from China, 51% are financially independent females, while 40% are between 25 and 34 years old. Their top destination in Europe is France. They also like to visit the UK, where buying jewellery, leather goods, perfumes and ready-to-wear from luxury and department stores is a must. By 2015, Switzerland is forecast to be the second shopping destination for the Chinese tourist, especially for luxury watches. The Chinese are the biggest consumers of Swiss watches. London Heathrow in 2011 $4.8bn The 2011 net profit for French luxury goods giant LVMH, which owns brands such as Louis Vuitton and Givenchy To reach this amazing fast-moving audience, think inflight media. Find out more by visiting us at $7.2bn The amount Chinese consumers celebrating New Year overseas spent on luxury goods in 2012 M&M GLOBAL Q1 2012 59
  8. 8. THE LUXURY MEDIA BRAND 2 035 000 PREMIUM INDIVIDUALS reached every week Source : Audipresse Premium 2011 – brand audience over 8 days Contact FigaroMedias : Flore PILZER +33 (0)1 56 52 23 31
  9. 9. spotlight on luxury zooming in and out The playground for luxury advertisers has just got a whole lot bigger as brands tap both local and regional media and spark publishing initiatives in their quest to reach new communities with high-end products and propositions, reports Jenni Baker w hile global food prices rose, banks crumbled and governments around the world instilled austerity measures, sales of global luxury goods expanded by 10% to $257bn in 2011, according to Bain & Co’s tenth Luxury Goods Worldwide Market Study. Despite the recent instability of the global economy, the luxury market has not been affected. Top-end brands have remained on track, becoming savvier in their marketing efforts and working harder than ever to win over cashstrapped consumers. Luxury advertisers have a wealth of choice when it comes to choosing the right media, and media owners across the globe are on alert to be that medium of choice. Panregional media has historically been hailed as the exclusive playground for luxury advertisers, but now local media owners are keen to grab their own slice of luxury ad revenue. Nicola Chatterton, international client services director for Initiative, manages the account for Swiss luxury watch advertiser Patek Philippe, a brand that uses both local and regional media in its advertising strategy. “Patek is positioned and perceived in the same way from one country to another, so we will use the same ads,” says Chatterton. But for other luxury advertisers, ads may need to be adapted. “What local brings you is the local language,” she says. “There are very affluent people in this world who speak English, but there are also a large number who don’t.” “When people discuss luxury, they talk about the brand and its value, but ultimately advertisers want to sell products” Local expertise When people discuss luxury, they talk about the brand and its value, but ultimately advertisers want to sell products. And that’s where local media presents its case. It can target audiences geographically, while advertisers can include local retailers and concrete sales information. So what are local media owners doing to attract luxury dollars? In the Netherlands, publisher NRC Media has created an ‘intelligent luxury’ platform by launching a magazine called DeLuxe. It is distributed six times a year as a supplement to the daily newspaper NRC Handelsblad. “We needed to have a surrounding of luxury,” says Dylan Schuitemaker, NRC Media’s international sales manager and manager of the luxury and lifestyle sales department. DeLuxe attracts advertisers such as Chanel, Hermès and Louis Vuitton. It has also worked with brands for specific M&M GLOBAL Q1 2012  61
  10. 10. spotlight on luxury their local counterparts, what pan-regionals offer is an umbrella presence. “With pan-regional publications, you get a homogenous approach,” says Chatterton. “With Patek, we’ve built up a portfolio of eight outside back covers in The Economist. The fact its readers trust it creates a positive association.” campaigns, such as Marni’s collection for H&M, to attract a specific type of audience. But Schuitemaker says luxury advertisers are now seeking more than just a print ad. “The major fashion brands are forming shopping areas on their websites, and you see that in their advertising,” he says. Local media offers access to a vital market. “It helps an advertiser to understand how the locals are consuming and what they are looking for.” With competition heating up from local rivals, panregional media owners are striving to protect the luxury ad revenue on which they are dependent. This year, Bloomberg launched a luxury magazine, Bloomberg Pursuits, as an offshoot of Bloomberg Markets. By attracting advertisers such as Hermès, Chanel, Cartier, Porsche and Ermenegildo Zegna, it hopes to connect these brands with new audiences. Bloomberg “Local media Markets director for EMEA, Laurie Benson, says helps an advertiser local media owners are not considered a rival to pan-regional giants but an opportunity. “Most to understand luxury advertisers will use pan-regional media how the locals are to do branding to the highest level and local consuming and media to heavy-up or do store promotion.” As a premium local media brand in France, what they are Groupe Figaro is also catering to its luxury looking for” clients. In 2011, it unveiled channels focusing on affluent points of interest such as golf, boating, auctions, wines and spirits. “Local media understands local tastes and brands’ popularity, and it can dose its editorial content and portfolios accordingly,” says Groupe Figaro vicepresident of international, Eileen Le Muet. With Chinese visitors to Paris regarded as important buyers of luxury goods, Groupe Figaro has developed two initiatives targeting this audience: a Chinese edition of Madame Figaro in China and a high-end Paris city guide in Chinese that circulates in France and China. While they may not have as high a circulation in certain markets as 62  M&M GLOBAL Q1 2012  The right mix BBC Global News commissioned research through Toluna in May 2011 that confirms television has a strong affiliation with luxury goods advertising. When asked: “Which media gives you ideas for luxury products or services?” 35% of women agreed magazines gave them ideas for luxury purchases, while 40% agreed online media was the most effective, with 54% saying TV was the most influential platform. “The biggest difference between a mass local and a mass pan-regional strategy is the association of brand and quality the advertisers are looking for,” says BBC Advertising senior vice-president for EMEA and the US, Carolyn Gibson. Over its 18-year history, The Financial Times’ core luxury proposition, How To Spend It, has branched out beyond core watches and jewellery, accessories, handbags and leather goods. “Luxury now touches so many areas of people’s lives, and we have adapted How To Spend It to feed into those levels,” says FT commercial director Dominic Good. As well as developing its print product, the FT has also tapped into the digital space, beginning with a flash-based desktop website and expanding it to the How To Spend It iPad app. key role for digital Print has established itself as the medium of choice for luxury brands. But local and pan-regional media owners are also selling mobile and iPad apps and websites, which means a rise in ad revenue. Groupe Figaro’s Le Muet says digital should play a key part in sales, and local media owners need to keep up with multi-platform communications. The luxury sector is becoming the fastest-growing area in international media. With the range of platforms available, advertisers have more choice than ever to reach their audience. The affluent will continue to spend on luxury goods and services this year, so luxury brands need to ensure that they are connecting and interacting with these consumers across all platforms. ○ t M&M Viewpoin Local media is truly establishing itself on the luxury scene and has some advantages over pan-regionals to really tap into the immediate market. But rather than battle it out, both platforms have a different part to play in the mix. Branding and perceptions may seem more effective via a pan-regional approach, but when it comes to consumers making a luxury purchase, local media offers a personal connection between advertiser and consumer.