1. Luxury for the Masses
HARSH MITTAL
AKASH KUMAR
ASHISH KUMAR
SHARMA
2. The Middle Market Consumer
• Middle market consumers are trading up to
higher levels of quality & taste
• Well-educated, well- traveled & have high
disposable incomes
• In USA – 47 million household have $3.5 trillion
of disposable incomes
3.
4. New Luxury Products
• Products that evoke & engage consumers
emotions while feeding their aspirations for a
better life
• Automobiles, home furnishings, appliances,
apparel & footwear, food, health & fitness,
personal care, sports equipment, toys, wine &
spirits
5. Product Ladder of Benefits
There are THREE rungs of product benefits that
companies can capitalize upon
1. Technical
2. Functional
3. Emotional
6. Categories of New Luxury Products
1. Accessible Super- premium
2. Old- luxury Brand Extensions
3. Mass Prestige or “Masstige”
7. Accessible Super- premium
• Priced at or near the top of the category, but
affordable to middle market consumers.
• Starbucks coffee
• Belvedere Vodka vs. Absolut
8. Old- luxury Brand Extensions
• Lower-priced versions of goods that have
traditionally been affordable only to the rich
• BMW
• Mercedes
• Tiffany
• Burberry
9. Old- luxury Brand Extensions
Dual challenge -
• To continually enhance the brand at the high–
end
• Avoid diluting it at the low-end
10. Mass Prestige or “Masstige”
• These goods occupy a “sweet spot” between mass
& class
• Commands a premium over conventional
products, they are priced well below super-
premium or old-luxury goods
• Also known as the New Luxury Brands
11. Masstige
• Zara, Gap, Virgin, Microsoft, Nike, EasyJet, or
L'Oreal,
• Coach leather accessories – priced lower than
Gucci’s but well above Mossimo at Target
• Bath &Body Works body lotion is priced at $9,
Vaseline intensive at $3, Klein’s at $24
12. New Luxury Products
When a new luxury brand takes hold it -
• Quickly changes the rules of its category
• Achieves market leadership
• Force the price-volume demand curve to be re-
drawn
• Discovers a new price point
13. New Luxury Products
• Most often developed by entrepreneurs who are
outsiders with little industry knowledge – Jess
Jackson, Leslie Wexner of Victoria's Secret
• They cast a critical eye on categories in which
products & services have become expensive or
stale or cheap & undifferentiated
14. New Luxury Products
• These represent $350 billion or 19% of $ 1.8
trillion of the sales of 23 consumer goods
categories
• Growing at 10% - 15% annually
• Whirlpool Duet, Kendall-Jackson wines,
Pleasant Rowland, Starbucks Coffee, Victoria’s
Secret.
15. Kendall-Jackson Wines
• It took France 4 centuries to build the most
respected premium wine industry in the world
• It took America less than 30 years to adopt some
aspects of the French model, elevate the quality &
taste of domestic wines and make it available to the
Mass market!!!!!
• Today American wines share the same space as the
wines from Bordeaux & Chardonnay
16. Kendall-Jackson Wines
• Changing pattern of wine consumption – from jug &
bulk to table & branded wines that command an
85% market share
• Kendall-Jackson –most successful new luxury
products - $600 million turnover
• Founded by Jess Jackson – industry outsider - a
successful attorney with no experience in wine
making
• Responsible for closing the gap between super-
premium and jug wine
17. Kendall-Jackson Wines
• Hole in the market – really good wines that an
average person could afford
• Emphasized more on taste, texture, blends &
character of wine, rather than the vineyard that they
came from – Chardonnay, Pinot Noir
• Rather than grow his own grapes, he sourced grapes
from different vineyards that “fitted” into his “flavor
domains”
• Able to produce premium wines on a large scale
with strict quality control
18. Demand –side forces
• Higher real incomes
• Rising Home Ownership
• Cash Windfalls – courtesy discount retailers
• Role of women & changing family structure
• Higher divorce rates
• Higher levels of taste, education & worldliness
• Greater emotional awareness
19. New Consumers’ Needs
Classify consumers into emotional pools
• Taking Care of me
• Questing
• Connecting
• Individual style
20. Taking Care of me
• Involves overcoming effects of too much work-too
little time
• Typical women who manage homes & careers, see
no point in working hard, earning good money if
they cannot spend it on themselves
• High-end personal care, bath & body, spas, gourmet
groceries, lines & bedding & home electronics are
important “Taking care of me” categories
21. Connecting
• Finding, building, maintaining & deepening
relationships
• Attracting mates, spending time with friends &
nurturing family members
• Dining out, travel, gifting, apparel are some
“Connecting” categories
22. Individual style
• Demonstrate ones’ success in life, express
individuality & personal values to create in him/her
a sense of uniqueness
• Enable consumer to express their style, knowledge,
taste & values
• Often an overlap with “Connecting”
• Apparel, fashion accessories, cars, spirits & travel
are “Individual style” categories
23. Practices of New Luxury Leaders
• Never underestimate the customer – new
luxury consumer is informed & knowledgeable. They
appreciate quality, innovation & authenticity. Value
brand heritage – Kendall Wines
• Shatter the demand curve- abiding belief in the
elasticity of the demand curve if they offer the right
combination of benefits –Whirlpool duet
24. Practices of New Luxury Leaders
• Create a ladder of genuine benefits – create a product that
is technical superior, functionally better & emotionally satisfying
• Escalate innovation & elevate quality- market for new
luxury is rich but also unstable as new competitors enter market
& standardize innovations – all cars now come with anti-lock
brakes, anti-skid, safety bags, power windows etc. Winners in
this segment render their own products obsolete before
competition does it – shorten the development cycle, control
those elements in the Supply chain that are critical.
25. Practices of New Luxury Leaders
• Extend brand’s price range & positioning –
move up-market to create aspirational appeals –
move down market to make their products more
accessible & competitive - Mercedes
• Customize & control the value chain rather
than own it
• Use brand apostles
• Attack the category like an outsider without
the baggage of pre-conceptions.
26. The Certainty of Change
There remains vast potential to
• Reshape categories
• Create new winners
• Prod rebirth & growth in mature markets
27. The Certainty of Change
Product Managers must always be on the lookout
for
• Ebbing consumer interest
• Sudden shifts in tastes
• Rise of a category transformer
• Businesses that have failed to note that the
consumer has gotten smarter & more active,
need to get busy…. listening & responding….at
every level
