New Luxury

Slide 1: New Luxury Design Analysis, Spring 2005 Chun-Juei Chou Yong Gyun Ghim Andrew Kim Pam Nyberg Jason Ring

Slide 2: Overview Objectives How can we better understand the emotional aspects of the New Luxury market? Which product and service categories appeal to North American New Luxury buyers? • How did the New Luxury market come to be? 4 Era Analysis • How do people’s feelings and desires relate to New Luxury brands and each other? 5 ER Analysis • How do the activities of New Luxury consumers relate to one another? 10 Activity Analysis • How are consumer activities supported by the innovation timeline for a specific New Luxury company? 13 Flow Analysis • In which emotional spaces do New Luxury brands/ industries participate? 14 Positioning map • Greater financial performance has come to those supporting what types of consumer activities? 16 Qual / Quant Analysis • How does the personality / experience of a New Luxury brand compare with its competitors? 17 Semantic Profile & Experience Evaluation New Luxury | Design Analysis | 2 Chun-Juei Chou | Yong Gyun Ghim | Andrew Kim | Pam Nyberg | Jason Ring

Slide 3: Definitions New Luxury Consumer Changes in economic and social factors have resulted in a new middle market consumer who selectively trades up to new and better products and services, trades down in others to pay for his or her premium purchases, and in the process, drives innovation and growth in previously stagnant markets. New Luxury Market New Luxury offerings are unique in that they deliver accessible emotional experiences to the middle class. Discount and middle-market products and services are affordable, but they generally compete on price and offer very little in terms of emotional engagement. And, while traditional Old Luxury goods deliver an emotional experience, they are too expensive for the vast majority of middle class consumers. According to the July 2004 Harvard Business Review article “Selling to the Moneyed Masses,” this trend reflects: “…The emergence of a new consumer market, which, by virtue of being “mass” and also affluent, constitutes the biggest growth opportunity out there for many companies….” Neil Fiske and Michael J. Silverstein, Trading Up: The New American Luxury 1 New Luxury | Design Analysis | 3 Chun-Juei Chou | Yong Gyun Ghim | Andrew Kim | Pam Nyberg | Jason Ring

Slide 4: Era Analysis Evolution of Middle Class Retailing How did the New Luxury market come to be? 1) US has experienced 3 middle class Mass Market Discount Merchandising Mass Luxury retailing eras Golden Years Emergence Beginnings Period 1950's-1980's 1980's-2000's 2000's - 2) Middle class retailing has evolved Environment rising middle class globalization women in the workforce; tremendously in the last fifty years increased levels of education, taste and experience 3) Discount retailers will benefit from Aspirations American dream Getting the Best Value A Better Life the trading up activity of the New Luxury consumers Activitiy shopping as leisure bargain hunting trading up 4) Retailers require different skills to Power manufacturers retailers consumer adjust to the changing environment Strategy standard quality and price good value at low prices flawless experience; emotional engagement 5) Experience and emotional Skills mass production efficient distribution; category expertise engagement play a bigger role in operational excellence the consumer’s mind Leadership centralized management visionaries \"outsiders\" who live the consumers' experience Retailers Sears, Macy's, McDonald's Wal-Mart, Southwest, Dell Target, Panera, Starbucks Forbes.com Schor, Juliet B., The Overspent American: Upscaling, Downshifting, And The New Consumer Sears.com Silverstein, Michael and Neil Fiske,Trading Up, New Luxury | Design Analysis | 4 Chun-Juei Chou | Yong Gyun Ghim | Andrew Kim | Pam Nyberg | Jason Ring

Slide 5: Lists of New Luxury Brands and Reasons to Buy New Luxury Brands Reasons to Buy Whole Foods Desire for safety / security Ethics / morality Exotic Car Service Desire for community / to reduce loneliness Product performance / improved performance Calloway Aspiration Desire for popularity Victoria’s Secret Elitism / desire for exclusivity Customer service Samuel Adams To improve social status Desire to be comforted BMW 3 Series To create a “wealthy” image Convenience / logistics management Panera Bread To increase pride Lust for the object Starbucks Better features / benefits Concerned about health of self / family Target Sense of adventure “I’m worth it” / sense of self worth Fresh Direct / Pea Pod Sense of identity Power Kendell Jackson wines Sense of well-being Desire for organization / self control Subzero Desire to learn Nostalgia Williams Sonoma Desire to emulate celebrities Restoration Hardware Desire to be attractive Crest whitestrips Desire to have a sophisticated image Swiffer Self expression, be unique AmEx centurion card Desire to escape Whirlpool Duet Relaxation / stress relief DiGiorno’s Enjoyment / fun Chico’s Desire to personalize Sephora Reward Godiva Indulgence / binge / passion Bath and Body Works Desire to spend quality time with friends and Gilette Mach 3 family New Luxury | Design Analysis | 5 Chun-Juei Chou | Yong Gyun Ghim | Andrew Kim | Pam Nyberg | Jason Ring

Slide 6: ER Analysis Desire to spend quality time with friends and family Product performance / improved performance Asymmetric Matrix Desire for community / to reduce loneliness Concerned about health of self / family How do people’s feelings and desires Desire to have a sophisticated image Desire for organization / self control “I’m worth it” / sense of self worth relate to New Luxury brands? Elitism / desire for exclusivity Desire to emulate celebrities Desire for safety / security Self expression, be unique Better features / benefits Relaxation / stress relief To improve social status Desire to be comforted Desire to be attractive Desire to personalize Desire for popularity Sense of well-being Sense of adventure Lust for the object Indulgence/Binge To increase pride Sense of identity Desire to escape Ethics / morality Enjoyment / fun Desire to learn Save time Aspiration Nostalgia Reward Power BMW 3 Series 2 2 3 3 2 2 2 1 1 2 1 1 1 1 1 1 2 1 3 3 2 2 3 3 3 3 3 3 3 3 3 3 3 Exotic Car Service 2 1 3 3 3 2 2 1 1 1 1 1 1 1 1 1 2 3 3 3 2 3 3 3 3 3 3 3 3 3 3 3 3 Callaway 3 1 1 3 1 1 1 1 1 1 1 1 1 1 1 2 3 3 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 Williams Sonoma 2 1 2 2 1 2 1 1 1 1 1 1 1 1 1 3 1 1 2 2 3 2 3 3 3 2 3 3 3 3 3 3 3 Restoration Hardware 2 2 2 2 2 2 1 1 1 1 1 1 3 1 1 2 1 1 2 2 2 3 2 2 2 2 2 2 2 2 3 3 3 Sephora 3 3 3 3 2 2 2 2 1 1 1 1 1 1 2 1 1 1 3 2 2 3 3 3 3 3 2 2 2 3 3 3 3 Victoria’s Secret 2 3 2 3 3 3 2 1 1 1 1 1 1 1 1 1 1 1 3 2 1 2 3 3 3 2 2 2 2 2 3 3 3 Godiva 3 2 2 3 3 3 2 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 3 3 3 2 3 2 1 2 3 3 3 Bath and Body Works 3 2 2 2 3 3 2 2 1 1 1 1 1 1 1 1 1 1 2 1 1 2 3 3 3 1 1 1 1 1 2 2 2 Panera Bread 2 2 1 2 1 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 2 1 2 1 1 1 1 3 3 Starbucks 3 3 1 2 2 2 2 1 2 1 3 3 1 1 2 2 1 1 1 2 2 1 3 3 3 2 2 2 1 2 2 3 3 Whirlpool Duet 3 1 1 2 1 2 2 1 1 1 1 1 1 2 3 2 1 1 1 1 1 2 3 3 2 3 3 3 3 3 3 3 3 Subzero 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 AmEx centurion card 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 3 3 3 2 3 1 1 1 3 3 3 3 3 3 3 3 Crest whitestrips 1 1 1 1 1 2 3 1 1 1 1 1 1 1 2 1 1 2 3 3 1 1 1 1 1 1 1 3 2 3 1 3 3 Whole Foods 1 1 2 2 1 2 3 3 3 3 2 2 1 1 1 3 1 1 2 2 2 2 1 1 2 3 2 2 1 1 2 3 3 Kendell Jackson wines 2 1 1 2 2 1 2 1 1 1 2 1 1 1 1 2 1 1 1 2 3 2 2 2 2 2 2 2 2 2 2 3 3 Samuel Adams 2 1 1 2 1 1 1 1 1 1 1 1 2 1 1 2 1 1 1 2 2 2 2 2 2 2 2 2 2 1 1 3 3 Target 1 1 1 2 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 1 2 2 Chico’s 1 1 1 1 1 2 2 1 1 1 1 1 1 1 1 1 1 1 2 1 2 2 2 2 2 2 1 1 1 1 2 2 3 Gilette Mach 3 1 1 1 1 1 1 2 1 1 2 1 1 1 1 1 1 3 1 2 1 1 1 1 1 1 2 2 1 1 2 2 3 3 Fresh Direct / Pea Pod 3 2 1 1 1 1 2 2 1 1 1 1 1 3 3 1 1 1 1 1 1 1 1 1 1 1 1 2 1 2 1 3 3 Swiffer 2 1 1 2 1 1 2 1 1 1 1 1 1 2 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 3 3 DiGiorno’s 2 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 3 Key 1 2 3 New Luxury | Design Analysis | 6 Chun-Juei Chou | Yong Gyun Ghim | Andrew Kim | Pam Nyberg | Jason Ring

Slide 7: ER Analysis Desire to spend quality time with friends and family Product performance / improved performance Asymmetric Matrix Desire for community / to reduce loneliness Concerned about health of self / family How do people’s feelings and desires Desire to have a sophisticated image Desire for organization / self control “I’m worth it” / sense of self worth relate to New Luxury brands? Elitism / desire for exclusivity Desire to emulate celebrities • Adventure Desire for safety / security Self expression, be unique Better features / benefits Relaxation / stress relief To improve social status Desire to be comforted Desire to be attractive • Relaxation Desire to personalize Desire for popularity Sense of well-being Sense of adventure Lust for the object Indulgence/Binge To increase pride Sense of identity Desire to escape Ethics / morality Enjoyment / fun • Self empowerment Desire to learn • Self gifting Save time Aspiration Nostalgia Reward Power BMW 3 Series 2 2 3 3 2 2 2 1 1 2 1 1 1 1 1 1 2 1 3 3 2 2 3 3 3 3 3 3 3 3 3 3 3 Exotic Car Service 2 1 3 3 3 2 Adventure 2 1 1 1 1 1 1 1 1 1 2 3 3 3 2 3 3 3 3 3 3 3 3 3 3 3 3 Callaway 3 1 1 3 1 1 1 1 1 1 1 1 1 1 1 2 3 3 2 2 2 2 empowerment Self 3 3 3 3 3 3 3 3 3 3 3 Williams Sonoma 2 1 2 2 1 2