STARBRANDS // BUILT TO SHINE: Luxury marketing


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Nasz pogląd czyli The Brand Marriage Company na marketing marek i produktów luksusowych a w szczególności ich strategię i budowę pod kątem segmentacji konsumentów dóbr luksusowych.
Our (The Brand Marriage Company) view on luxury marketing.especially luxury brand strategy and brand building in regards to luxury consumers segmentation.

STARBRANDS // BUILT TO SHINE: Luxury marketing

  1. 1. Luxury Brand Marketing
  2. 2. What is luxury?
  3. 3. Origins of Luxury Traditional luxury is a strictly European concept – French, British and Italian. It is associated with certain specific categories: —Apparel & Watches —Jewellery —Fashion —Beauty (fragrance & cosmetics) —Automobile These categories have two things in common: —Their products are hard goods —They concern the dressing and decoration of the person They are the goods that give you the feeling of being on top of things.
  4. 4. Definitions Conception of Luxury: Luxury Products are Branded Luxury Products are Expensive Luxury Products are for Luxury Consumers
  5. 5. Definitions If everyone owns particular brand…it is by definition not luxury. Luxury is about the quantity or a vast array of expensive goods partly derived from technical superiority …and unique craftsmanship TO PROJECT CERTAIN SOCIAL STATUS OR WEALTH SATISFY CERTAIN ROLE PLAYING ASPECTS SATISFY EMOTIONAL DESIRE WITH INTANGIBLE, BENEFITS SUBJECTIVE
  6. 6. Definitions According to a dictionary: Luxury is „the state of great comfort and extravagant living” or „an inessential, desirable good that is expensive or difficult to obtain”. However, most interesting is the antonym of luxury, which is necessity. From this perspective luxury is something that appeals to and feeds our lust.
  7. 7. Definitions According to Serge Dive (CEO of Beyond Luxury): Luxury is an urge, an absolute desire to sin with the view to break our daily routine and give us the illusion of happiness at least for an instant.
  8. 8. What is luxury brand marketing?
  9. 9. What is luxury brand marketing? Does it simply mean creating desire for things that no one really needs? And charging a lot of money for them?
  10. 10. Definitions In economic terms, luxury products are those who can consistently command and justify higher price than products with comparable functions and similar quality. In marketing terms, luxury products are those who can deliver emotional benefits hard to match by comparable products.
  11. 11. What is luxury brand marketing? Luxury doesn't have to be the most expensive or exclusive brand. Luxury is not how much something cost but how much it means to me or you.
  12. 12. What is luxury brand marketing? Ultimately luxury marketing is about transformation of people's experience, self perception and feeling - from ordinary into extraordinary!
  13. 13. Luxury Consumers
  14. 14. Luxury consumers Luxury consumers are everywhere and are very diverse. Source: Ad Week Sept`04
  15. 15. Consumer Segmentation Source: Marketing Luxury to the Masses, Pamela N. Danzinger
  16. 16. Consumer Segmentation Butterflies and X-Fluents seem to be 2 most promising targets (penetration+spending). Source: Marketing Luxury to the Masses, Pamela N. Danzinger
  17. 17. Luxury Cocooners Want involving stories behind brands, like eco stories, like vintage style, go for authenticity and ethics, what they buy is a part of their self-identity, they buy luxury products to fill up their emotional emptiness Source: Marketing Luxury to the Masses, Pamela N. Danzinger
  18. 18. Butterflies Respect icons of luxury, seek contemporary themes, value unique craftsmanship here is where couture thrives, status symbols are meaningless, feel responsible for sharing their wealth with others, not motivated by status or exclusivity Source: Marketing Luxury to the Masses, Pamela N. Danzinger
  19. 19. Luxury Aspires Materialistic, luxury perceived as products they buy not as a feeling or experience, look for goods endorsed by artists, designers or celebrities, value elegance and uniqueness Source: Marketing Luxury to the Masses, Pamela N. Danzinger
  20. 20. X-Fluents The last bastion of conspicuous consumption, buy chic, super premium brands, what they buy and have is what they are – status and recognition is what drives them Source: Marketing Luxury to the Masses, Pamela N. Danzinger
  21. 21. Luxury Consumers: summary They are rooted in values rather than badges. They are more enlightened, less materialistic luxury consumers. Source: Ad Week Sept`04
  22. 22. Luxury Consumers: summary Purchases reflect their personal style Source: Ad Week Sept`04
  23. 23. Luxury Consumers: summary For many, luxury conjures up images of just the type of behavior they want to avoid: Elitism Stuffiness Snobbery Instead they feel money affords: Independence Security Comfort Source: San Diego Union-Tribune, Nov`03
  24. 24. Luxury Consumers: summary They look for: —Superior quality, craftsmanship and customer service are the top, general needs. —Yet, more than over 30% of consumers say luxury brands are worse than in the recent years —Over 60% of consumers believe luxury goods prices are too high relative to the value they deliver —Over 60% of wealthy consumers say that the current state of the economy has changed their view of the luxury industry and they cut down on buying luxury products. Luxury Brands Are Failing to Deliver on Luxury Fundamentals! Source: The State of the Luxury Industry Study, Luxury Institute, 2008
  25. 25. What is causing the shift in consumer behavior towards luxury brands?
  26. 26. Development of New Luxury Luxury is about satisfying consumers pleasures. What are today's indulgences? They are associated with: —Time —Space —Home —Modernity What gives you a feeling of being on top of things? —Service —Being Different / Self Identification in the mass, plastic, digital world New luxury builds upon modern, extended view of the person and helps to highlight its individuality.
  27. 27. Development of New Luxury So,… luxury is no longer about rampant materialism or getting a new gadget. ___ instead it is the enjoyment and experience that money can buy. ___ Luxury = Freedom Freedom = Comfort + Confidence Source: Chain Store Age, Feb`04
  28. 28. Drivers of change It is driven by a need for diversity & individualism. Current call for individuality comes out as a result of globalization processes, often symbolized by McDonalization and Wal-Martization, as well as collapse of political systems that highly valued conformism and uniformity at the cost of the individualism i.e. communism in EE countries. People are fed up with the sameness, efficiency and social control.
  29. 29. Drivers of change It is driven by a hedonism and need for showing one`s status. There is a growing consumer perception that massmarket food, drinks and personal care products are bland and lacking hedonic benefits. Premiumness and luxury are now about personal enjoyment and tasting. Sensual moments of pleasure are worth paying more: well-being, health, youth, indulgement.
  30. 30. Drivers of change It is driven by a need for security, real values, authenticity. The need for everyday performance in professional and personal lives, financial crisis, wars, erosion of family values, climate changes they all bring lot of stress and make people feel less secure. Luxury products bring authenticity into the `plastic world` of today. They stand for quality and real values.
  31. 31. Drivers of change It is driven by a need for simplicity and convenience. Middle-aged yuppies living a hectic life and bombarded by too much information, increased time pressure hamper for making a life simpler and more convenient..
  32. 32. Drivers of change It is driven by a need for a democratized luxury. All people think they have the right to the best and the most beautiful. Consumers increasingly feel they should have access to the same quality as the social elite or celebrities. Affected by recession and financial crisis, people now search a rationale to buy, mix low with high, reject the ordinary and expensive e.g. Massimo Dutti, Habitat
  33. 33. IMPACT: Massification of luxury brands vs luxurification of mass brands
  34. 34. Massclusivity We have a surplus of similar companies, employing similar people, with similar educational backgrounds, working in similar jobs, coming up with similar ideas, producing similar things, with similar prices and similar quality. - Kjell Nordstrom and Jonas Ridderstale „Funky Business”
  35. 35. Massclusivity We also have a surplus of similar brands, with similar brand attributes, similar marketing messages, making similar bran claims, with similar quality, selling at similar prices. Welcome to the Surplus Economy!
  36. 36. Examples of mass luxury brands
  37. 37. Luxury ladder Super Luxury CHIC LUXURY (classical luxury) Luxury Near Luxury UBER PREMIUM Affordable Luxury LUXURY (masstige and premium brands aspiring to luxury) Super Premium Premium ENLARGED LUXURY (value & mass brands aspiring to premium) Upmarket
  38. 38. Massification of luxury CHIC LUXURY (classical luxury) UBER PREMIUM LUXURY (masstige and premium brands aspiring to luxury) ENLARGED LUXURY (value & mass brands aspiring to premium) Thanks to its price attractiveness Internet heavily contributed to proliferation of luxury lifestyle and consumption.
  39. 39. What is the risk of massification of luxury?
  40. 40. Challenge: massclusivity In a rush to grow profits many luxury brands try to increase their sales, they come out of their niche and try to appeal to a wider mass-consumer group. So, how far you can: • stretch your brand without destroying it? • go before your brand become mass?
  41. 41. Massclusivity: examples How serious is their luxury diluted?
  42. 42. Massclusivity Is there a winning formula?
  43. 43. Massclusivity LVMH CEO Bernard Arnault: ”Sharply define the brand identity by mining the brand's history and finding the right designer to express it”. „Tightly control quality and distribution”. „Create a masterful marketing buzz”.
  44. 44. Massclusivity Massclusivity is a fact. Massification is happening across a broad set of categories. Every marketer needs to have a Luxury Marketing Strategy in place to be able to answer a question: Who can effectively capture this segment in your category?
  45. 45. How to build new luxury brands?
  46. 46. Luxury Brand Building: define your current and future position on the luxury ladder Pure Artist, Creator and Unique Creation. Exclusive, Prestige Image, Highest Quality and Service, Professional Management Mass Produced, Best Quality in Category, Enjoy Market Share Leadership Mass Produced, Good Overall Price-Value-Image Brand Proposition Constantly Under Cost Pressure, Unable to Build Brand Equity, Usually Out of Top3 in Market Share Leadership Luxury Brand Massification of Luxury Brands Leading Brand Quality Brand Better Brand Luxurification of Mass Brands `Just Another Brand`
  47. 47. Distinctive Luxury Price & Exclusivity High Luxury Brand Building: define your luxury position Experience Luxury Low Essential Luxury Core of Mass Luxury Affordable Luxury Low High Purchase Frequency
  48. 48. Luxury Brand Building: define origins of your luxury Luxury-by-Birth Luxury brands remain true to their heritage and stay expensive and exclusive e.g. Chanel State of the art technologies position as a form of luxury e.g. Apple Luxury brands broaden markets and develop multiple brand extensions e.g. Emporio Armani Popular brands develop/acquire upmarket brands e.g. Ford & Jaguar Niche market players position themselves as luxury brands e.g. Bang & Olufsen Popular brands using `luxury` as a form of differentiation e.g. Avon by Ungaro Value-at-Heart
  49. 49. Price & Exclusivity High Luxury Brand Building: reenergize your brand Low Special Limited Editions Core of Mass Luxury Extended Product Range Low High Purchase Frequency
  50. 50. Emerging Luxury Trends
  51. 51. Trends Traditional luxury brands dramatically accelerate their internet activities
  52. 52. Trends Luxury enters new categories to embrace digitally empowered X…Y generations
  53. 53. Trends Socially Responsible Luxury The global crisis of confidence in governmental, financial and other institutions will drive luxury consumers to demand that luxury brands serve not just them, but society as a whole.
  54. 54. Trends Green Luxury That will rise a need for ecofriendly luxury products in ways that can be documented.
  55. 55. Trends Ethical Luxury Consumers will require luxury brands to be ethical with all constituents, charitable in ways that make a difference to their beneficiaries. Overconsumption won't be longer a sign of success especially when so many people are starving or unemployed. In the era of and post financial crisis philanthropy will help luxury brands to build their reputation and `culture of sharing`.
  56. 56. Trends Return to Classic Luxury In the midst of this financial crisis, and the populist backlash on unearned financial services, many wealthy consumers are confused about luxury, even if they have money to spend. Thus, many wealthy consumers will opt for classic luxury of wellknown and trusted brands, luxury that is unique and exclusive, with exquisite artistic design, craftsmanship, and quality, delivered with impeccable service.
  57. 57. Trends Experiential Luxury Luxury becomes less tangible, less visible, less about material possession and more private, personal and more elusive for the most elite confident consumers.
  58. 58. Thank you