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The Luxury Market & Consumer<br />08th June 2010<br />
Introduction<br /><ul><li>What is Luxury and how do Luxury brands work?
Case study: Prada
Key trends in the Luxury marketplace
Know vs. Show – the Luxury consumer defined
Audience understanding
The Recession and the Luxury consumer </li></li></ul><li>What is Luxury? Logic & Magic <br /><ul><li>Two core tactics must...
Logic - what makes the business ‘work’
Magic - what makes the brand ‘special’
Logic has to play a part to justify spending a large amount of money:
Must be technically superior
Uniquely made; scarce; bespoke etc.
For a brand to attain Luxury status there needs to be an air of magic about it:
Must represent a superior level of wealth and social status and this comes from the way a brand behaves or conducts itself
Must promote self expression – make the consumer emotionally linked to the brand values</li></ul>IntangibleEmotive<br />Pr...
Case Study – Prada – Expanding a Luxury brand<br />‘Massclusive’<br />Exclusive<br /><ul><li>Retained brand magic & defend...
Spawned the ‘utility chic’ trend
Validated by technical integrity
True to core brand attributes, e.g. Sailing heritage
Logic also becomes important when unlocking new markets, sectors or consumers</li></li></ul><li>Broadening (diffusing) the...
Appealing to a younger and (somewhat) more price-sensitive customer</li></ul>Diffusion lines<br />
Using Art and Architecture to build Brand Experience<br /><ul><li>Prada applies their design principles to everything they...
Dominating the visual and conceptual landscape…not just the strict domain of fashion
Innovative, original and ingenious form of PR vehicle</li></li></ul><li>Digitally Brave<br /><ul><li>In-touch with how peo...
Sample sale via Ebay-style auction
Way of artificially driving up price and collectability of Prada ‘artefacts’</li></li></ul><li>Current Brand Trends<br /><...
Partnerships with other luxury brands. </li></ul>	Trading brand values, e.g. Jimmy Choo (a Show brand) and Hunter (a Know ...
Experiences and stories over just “things”
Simplification of life as time is increasingly precious –online shopping for luxury products is welcomed
Recession has had some impact.  Consumers are still spending but need recommendations or justification e.g. ‘investment bu...
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The Luxury Brand Market &amp; Consumer

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What is Luxury and how do Luxury brands work?

Key trends in the Luxury marketplace

Know vs. Show – the Luxury consumer

The Recession and the Luxury consumer

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  • Product integrity is important (e.g Burberry actually didn’t suffer) -Burberry NEVER suffered from the chav thing (balance sheet) BECAUSE they maintained product integrity via Chris Bailey’s designs
  • Logic – business has got to be the best in market – distribution needs to be best in market, have the best quality suppliers, point of sale standards extremely high, technical superiority – etc.Magic – harder to define how this is attained, can come largely from product and brand stories, the company it keeps etc.0
  • Logic point at end: e.g. Sailing / skiing gear worn by world’s best sailors and skiiers / Quality is paramountMove from a niche offering to a broader one without losing product/brand integrity
  • New store openings using cutting edge architects to create a store ‘experience’ that is vastly different from the traditional maroquinerie stores in ItalyReflects brand values of contemporary design
  • Trends presentationStores are offering this bespoke, indulgent shopping experience to consumers because they are shopping for luxury online and therefore the maison is a go-to destination not just a store to browse as they can browse items online.
  • Consumer feels like they’re buying into a rare product – emotional connection by enhancing the magicSmythson,
  • Use an axis and state – terminology from their research
  • The Know group is more valuable to BB&amp;R than the Show group – advocacy, long term use vs. fashion
  • Need to take an increasingly international Business Perspective on Business 276 Want to get to the very top of my career 255I often notice adverts on taxis 222I follow the stock market 219I use my credit cards mostly for business 203I read the financial pages of my newspaper 194I never have enough time for my family 181First amongst friends to know what’s going on 175I like taking risks 174Economy is more important than the Environment 173I tend to spend money without thinking 172Prepared to spend more for good quality of wine 169Like to stand out from the crowd 150When it comes to wine, I consider myself a bit of a connoisseur 143Prepared to pay more for luxury cosmetics and toiletries 168Some luxuries I can’t do without 117Advertising should be entertaining 121Imp to look attractive to the opp sex 141Designer labels improve a person’s image 150Imp to look well dressed 139Refer to the internet before making a purchase 121
  • Need to take an increasingly international Business Perspective on Business 276 Want to get to the very top of my career 255I often notice adverts on taxis 222I follow the stock market 219I use my credit cards mostly for business 203I read the financial pages of my newspaper 194I never have enough time for my family 181First amongst friends to know what’s going on 175I like taking risks 174Economy is more important than the Environment 173I tend to spend money without thinking 172Prepared to spend more for good quality of wine 169Like to stand out from the crowd 150When it comes to wine, I consider myself a bit of a connoisseur 143Prepared to pay more for luxury cosmetics and toiletries 168Some luxuries I can’t do without 117Advertising should be entertaining 121Imp to look attractive to the opp sex 141Designer labels improve a person’s image 150Imp to look well dressed 139Refer to the internet before making a purchase 121
  • Need to take an increasingly international Business Perspective on Business 276 Want to get to the very top of my career 255I often notice adverts on taxis 222I follow the stock market 219I use my credit cards mostly for business 203I read the financial pages of my newspaper 194I never have enough time for my family 181First amongst friends to know what’s going on 175I like taking risks 174Economy is more important than the Environment 173I tend to spend money without thinking 172Prepared to spend more for good quality of wine 169Like to stand out from the crowd 150When it comes to wine, I consider myself a bit of a connoisseur 143Prepared to pay more for luxury cosmetics and toiletries 168Some luxuries I can’t do without 117Advertising should be entertaining 121Imp to look attractive to the opp sex 141Designer labels improve a person’s image 150Imp to look well dressed 139Refer to the internet before making a purchase 121
  • Bvlgari 1873Breitling 1022Swatch 401Tag Heuer 330Rolex 274Rotary 264Lorus 225Omega 225
  • Gin Brands: Tanqueray, Bombay Sapphire, Beefeater, Hendricks, Gordon’sChampagne: Taittinger, Heidsieck Co &amp; Monopole, Laurent Perrier, Pommerey, Nicolas FeuillatteLiqueur Brands: Chartreuse, Benedictine, Amarula Cream, Disaronno, Bailey’s, CointreauVodka: Flavoured Smirnoff, Finlandia Vodka, Smirnoff black label, StolichnayaScotch Whiskey: Bailie Nicol Jarvie, Teacher’s, JW Red Label, JW Black LabelMalt whiskey: Oban, Lagavulin, Laphroaig, Cardhu, Glen Moray, The BalvenieBrandy/Cognac/Armagnac: Hine, Martell, Remy Martin
  • They use the internet for shopping, information &amp; to make life easier as they are quite time-poorFT Online 591 The Sun 390 The Independent Online 345 Economist Online 330 Visiting Sites on Share Prices or Dealings/Investments/ 324 Visiting Sites on Business Info 319 Telegraph.co.uk 294 Times Online 291 Buying Gardening Eqip 246 Visiting Sites on Magazines 242 Sites Visited: Reuters 227 Sites Visited: Apple 207 Buying Flowers 206 Expedia 168Regularly Visiting Amazon 136Buying Books 123Buying Music 173Buying beer/Spirits/Wine 185Reg visiting sports sites 176Visiting Travel Websites 127regularly visit news websites (exc newspapers) – [154]
  • They are light TV and Radio consumers.The radio they listen to is mainly the BBC.They are not very likely to notice adverts in pubs/clubs/bar, washrooms, on buses.
  • Transcript of "The Luxury Brand Market &amp; Consumer"

    1. 1. The Luxury Market & Consumer<br />08th June 2010<br />
    2. 2. Introduction<br /><ul><li>What is Luxury and how do Luxury brands work?
    3. 3. Case study: Prada
    4. 4. Key trends in the Luxury marketplace
    5. 5. Know vs. Show – the Luxury consumer defined
    6. 6. Audience understanding
    7. 7. The Recession and the Luxury consumer </li></li></ul><li>What is Luxury? Logic & Magic <br /><ul><li>Two core tactics must be deployed to achieve success in Luxury marketing:
    8. 8. Logic - what makes the business ‘work’
    9. 9. Magic - what makes the brand ‘special’
    10. 10. Logic has to play a part to justify spending a large amount of money:
    11. 11. Must be technically superior
    12. 12. Uniquely made; scarce; bespoke etc.
    13. 13. For a brand to attain Luxury status there needs to be an air of magic about it:
    14. 14. Must represent a superior level of wealth and social status and this comes from the way a brand behaves or conducts itself
    15. 15. Must promote self expression – make the consumer emotionally linked to the brand values</li></ul>IntangibleEmotive<br />Practical<br />Concrete<br />
    16. 16. Case Study – Prada – Expanding a Luxury brand<br />‘Massclusive’<br />Exclusive<br /><ul><li>Retained brand magic & defended brand provenance by establishing Prada Sport
    17. 17. Spawned the ‘utility chic’ trend
    18. 18. Validated by technical integrity
    19. 19. True to core brand attributes, e.g. Sailing heritage
    20. 20. Logic also becomes important when unlocking new markets, sectors or consumers</li></li></ul><li>Broadening (diffusing) the brand without dilution<br /><ul><li>Allowing more rule-breaking and creative freedom
    21. 21. Appealing to a younger and (somewhat) more price-sensitive customer</li></ul>Diffusion lines<br />
    22. 22. Using Art and Architecture to build Brand Experience<br /><ul><li>Prada applies their design principles to everything they do – the wow factor features in everything, including their stores
    23. 23. Dominating the visual and conceptual landscape…not just the strict domain of fashion
    24. 24. Innovative, original and ingenious form of PR vehicle</li></li></ul><li>Digitally Brave<br /><ul><li>In-touch with how people live
    25. 25. Sample sale via Ebay-style auction
    26. 26. Way of artificially driving up price and collectability of Prada ‘artefacts’</li></li></ul><li>Current Brand Trends<br /><ul><li>Partnerships with more mass-market outlets whilst retaining exclusivity. Positioning collection as limited edition, limited places and creating a thrill of the hunt
    27. 27. Partnerships with other luxury brands. </li></ul> Trading brand values, e.g. Jimmy Choo (a Show brand) and Hunter (a Know brand)<br /> Sharing consumer fan-bases e.g. Diptique & Jo Malone<br /><ul><li>“Luxyoury*” – placing the consumer experience at the heart of the brand. Offering a more bespoke, unique, personalised experience, e.g. new Louis Vuitton destination store in New Bond St - a “Maison” rather than a “shop”</li></li></ul><li>Current Consumer Themes<br /><ul><li>Self expression through personalising
    28. 28. Experiences and stories over just “things”
    29. 29. Simplification of life as time is increasingly precious –online shopping for luxury products is welcomed
    30. 30. Recession has had some impact. Consumers are still spending but need recommendations or justification e.g. ‘investment buys’ </li></li></ul><li>Who are we Targeting?<br /><ul><li>We have analysed the Luxury audience using the Premier version of the Target Group Index survey
    31. 31. The UK’s biggest lifestyle research study
    32. 32. This premier version of the study only focuses on the top 10% of the population, allowing for a greater understanding of the target market</li></ul>The audience we’re focussing on for Luxury brands is:<br /><ul><li>Social class A, 20+, personal income of £100,000+</li></li></ul><li>The Luxury Audience in Detail<br /><ul><li>There are 101,000 people in this target group
    33. 33. Most of them are aged between 35 and 54 (76%)
    34. 34. 78% of them are men
    35. 35. Most likely to live in the South East (36%) or Greater London (35%)
    36. 36. 33% of them work in the business services sector, 20% work in banking and 11% in the medical profession</li></li></ul><li>Luxury Consumers: 2 Cohorts<br />Knowers<br />Zac Goldsmith<br />Jeremy Clarkson<br />Nigella Lawson<br />Fiona Bruce<br />A.A Gill<br /><ul><li>Sophisticated. Money has helped these people gain knowledge, including a repertoire of good quality products and taste for the finer things in life. </li></ul>Show-ers<br />Sean Coombs<br />Paris Hilton<br />Jennifer Lopez<br />Cheryl Cole &Victoria Beckham<br />Christiano Ronaldo<br /><ul><li>Over the top show of wealth, ostentatious. Money has brought these people “stuff” and the more expensive, the better. More motivated by fashion than by quality. </li></li></ul><li>‘Knowers’ – A More Valuable Target <br /><ul><li>This audience considers themselves quite the connoisseurs of food and drink and places to consume them
    37. 37. 65% of them claim to have a large/moderate amount of knowledge of food and wine
    38. 38. 70% of them say they have a large/moderate amount of knowledge of restaurants
    39. 39. They are also over 4 times more likely than the average AB Adult to say they have a large amount of knowledge of stocks and shares</li></li></ul><li>More valuable because they advocate e.g. food and drink<br /><ul><li>They are a valuable audience as over half of them (51%) are very/quite likely to convince others about food and wine
    40. 40. They are 27% more likely to do this compared to all AB Adults</li></li></ul><li>Work-Orientated and Time-Poor <br />Compared to all AB adults, they are very focussed on their career and the world of business. Having an international business perspective is important to them and they aim to get to the very top of their career. They are more likely to use smart phones such as iPhone and Blackberry.<br />They like to follow the stock market and tend to read the financial pages of their newspaper and think the economy is more important than the environment<br />They tend to use their credit cards mainly for business. They say they don’t have enough time for their family. <br />
    41. 41. Quality and the Finer Things<br />They consider themselves in-the-know and say they are the first amongst their friends to know what’s going on. They like taking risks and spend money without thinking.<br />They are prepared to pay more for quality wine as well as luxury cosmetics and toiletries. They say they consider themselves connoisseurs of wine. <br />There are some luxuries that they just cannot do without. Needless to say, they like to stand out from the crowd!<br />
    42. 42. Image Conscious<br />They think it’s important to look attractive to the opposite sex and like to be well dressed. Designer labels are considered to improve a person’s image.<br />When it comes to advertising, they like it to be entertaining and 60% of them say they refer to the internet before making a purchase.<br />
    43. 43. Brands Consumed<br />Watches:<br />Cars:<br />Jeans:<br />Handbags:<br />Shoes:<br />
    44. 44. Alcohol Brands Consumed<br />Gin Brands<br />Champagne<br />Liqueur<br />260<br />160<br />187<br />201<br />224<br />321<br />121<br />122<br />126<br />170<br />483<br />416<br />409<br />387<br />348<br />172<br />Brandy/Cognac/Armagnac<br />Vodka<br />Scotch Whiskey<br />Malt Whiskey<br />168<br />156<br />146<br />292<br />290<br />289<br />225<br />535<br />216<br />199<br />146<br />124<br />600+<br />175<br />173<br />164<br />
    45. 45. Gender Split: Top Brands by Category<br />Gin, Vodka, Champagne and Liqueurs are fairly evenly split but the Whiskeys, and Brandies are very male<br />Source: TGI Premier 2009, All data on this chart only, based on all AB Adults 20+<br />
    46. 46. Online Behaviour<br />For Information/Business Affairs<br /><ul><li>Share Prices/dealings websites
    47. 47. Business information sites
    48. 48. 45% of them regularly visit news websites (excluding newspapers)
    49. 49. Reuters Online
    50. 50. Personal Banking (55%)</li></ul>Shopping<br /><ul><li>Buying flowers
    51. 51. Expedia
    52. 52. 37% regularly visit Amazon
    53. 53. 23% buy books
    54. 54. A quarter of them buy music
    55. 55. 18% buy their groceries
    56. 56. Buying beer, wine and spirits
    57. 57. Buying gardening equipment</li></li></ul><li>The Recession’s (limited) Impact<br /><ul><li>Brand relationship is more powerful than price or discount, despite the recession
    58. 58. Half of all men spent less in 2009 than in 2008. But within this:
    59. 59. Confident – 16% (your target)
    60. 60. Considered – 55%, Challenged – 29%
    61. 61. The majority of the ‘Confident’ group actually spent more last year vs. 80% of the ‘Challenged’ group forced to cut back
    62. 62. The Confident feel untouched by the recession.
    63. 63. A third of them feel they are ‘thriving’
    64. 64. Only 12% ‘feel uncomfortable spending money in this recession’
    65. 65. BUT 49% are ‘more likely to evaluate the quality of brands before buying’
    66. 66. And 68% ‘shop around for the best prices now’</li></ul>I guess I’m one of the lucky ones because, economically, it has pretty much passed my by. I haven’t had to change my lifestyle at all.<br />Ian, 38 - Confident<br />
    67. 67. Summary & Implications<br /><ul><li>Success in Luxury
    68. 68. Power brands push the boundaries in both Logic & Magic
    69. 69. Status Redefined
    70. 70. No longer about being just bigger, better, most expensive
    71. 71. People want experiences and stories
    72. 72. They are looking for the new, the next and also the classic
    73. 73. Brands creating partnerships to reach high value consumers & deliver an experience
    74. 74. Knowledge is Currency
    75. 75. Valuable consumers consider themselves ‘in the know’ and gravitate to brands that support & enhance this
    76. 76. They are advocates (of food & drink)
    77. 77. They won’t or can’t do without Luxuries
    78. 78. Career focused, frequent travellers, commuters – time is precious; they ‘live’ online
    79. 79. Recession for them is all in the mind. So far, at least..
    80. 80. For top-end Luxury consumers, shifts have occurred in attitudes more than in behaviour
    81. 81. Still spending, just thinking twice about it first – and then buying it anyway
    82. 82. Those who were buying beyond their means have moved away from the sector</li></li></ul><li>Appendix<br />
    83. 83. Appendix Contents<br />Media Consumption - Outdoor<br />Media Consumption - Newspapers<br />Media Consumption - Magazines<br />Online Purchasing - Clothing and Accessories<br />
    84. 84. Media Consumption: They tend to be commuters and the media they heavily consume reflects that<br /><ul><li>They are more likely to see outdoor advertising and are heavy users of the London Underground.
    85. 85. They are much more likely than All AB Adults to notice adverts inside and on Taxis, at Airports, on the Underground and at railway stations.</li></li></ul><li>Newspapers and Topics of Interest<br />Favourite topics of interest:<br />Business/Company News<br />Personal Finance/Investment<br />Property<br />Foreign News<br />Editorial<br />European News<br />Sport<br />Cars/Motoring<br />Media/Marketing/Advertising<br />
    86. 86. Magazines<br />
    87. 87. Online shopping for Clothing and Accessories<br /><ul><li>73% have bought clothing online
    88. 88. Among those who buy designer clothing, 39% have ever bought it online
    89. 89. Among those who buy high street clothing, 70% have ever bought it online
    90. 90. 57% have bought shoes online
    91. 91. 30% have bought luxury accessories online</li></li></ul><li>Contact details...<br /><ul><li>Kiran Kaur: kirank@polestarcommunications.com
    92. 92. Megan Butler: megan@polestarcommunications.com
    93. 93. Simon Mathews: simonm@polestarcommunications.com</li>
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