starbrands // built to shine: luxury marketing

Luxury Brand Marketing

What is luxury?

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.

Conception of Luxury:

Luxury Products are Branded

Luxury Products are Expensive

Luxury Products are for Luxury Consumers

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, SUBJECTIVE

BENEFITS

Definitions

According to a dictionary:

Definitions

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.

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.

Definitions

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?

What is luxury brand marketing?

In economic terms, luxury products are those

who can consistently command and justify

higher price than products with comparable

functions and similar quality.

Definitions

In marketing terms, luxury products are those

who can deliver emotional benefits hard to

match by comparable products.

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.

What is luxury brand marketing?

Ultimately

luxury marketing is about transformation of people's

experience, self perception and feeling - from ordinary into

extraordinary!

What is luxury brand marketing?

Luxury Consumers

Luxury consumers

Source: Ad Week Sept`04

Luxury consumers are

everywhere and are very

diverse.

Consumer Segmentation

Source: Marketing Luxury to the Masses, Pamela N. Danzinger

Consumer Segmentation

Source: Marketing Luxury to the Masses, Pamela N. Danzinger

Butterflies and X-Fluents seem to be 2 most promising targets (penetration+spending).

Luxury Cocooners

Want involving storiesbehind 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

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 wealthwith others, not motivated by

status or exclusivity

Source: Marketing Luxury to the Masses, Pamela N. Danzinger

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

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

Luxury Consumers: summary

They are rooted in values

rather than badges.

They are more enlightened,

less materialistic luxury

consumers.

Source: Ad Week Sept`04

Luxury Consumers: summary

Purchases reflect their personal style

Source: Ad Week Sept`04

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

Luxury Consumers: summary

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 haschanged their view of the luxury industry and they cut down on buying luxury products.

Source: The State of the Luxury Industry Study, Luxury Institute, 2008

Luxury Brands Are Failing to Deliver on Luxury Fundamentals!

What is causing the shift in

consumer behavior towards

luxury brands?

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.

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.

Source: Chain Store Age, Feb`04

Luxury = Freedom

Freedom = Comfort + Confidence

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.

It is driven by a hedonism and need for showing one`s status.

There is a growing consumer perception that mass-market 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.

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.

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..

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 expensivee.g. Massimo Dutti, Habitat

Drivers of change

IMPACT: Massification of

luxury brands vs luxurification

of mass brands

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”

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!

Examples of mass luxury brands

Luxury ladder

Upmarket

Premium

Luxury

Super Luxury

Super Premium

Affordable Luxury

Near Luxury

ENLARGED

LUXURY(value & mass brands aspiring to premium)

UBER PREMIUM

LUXURY(masstige and premium brands aspiring to luxury)

CHIC

LUXURY(classical luxury)

Massification of luxury

ENLARGED

LUXURY(value & mass brands aspiring to premium)

UBER PREMIUM

LUXURY(masstige and premium brands aspiring to luxury)

CHIC

LUXURY(classical luxury)

Thanks to its price attractiveness Internet

heavily contributed to proliferation of luxury

lifestyle and consumption.

What is the risk of massification

of luxury?

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?

Challenge: massclusivity

Massclusivity: examples

How serious is their luxury diluted?

Is there a winning formula?

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”.

Massclusivity

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?

How to build new luxury

brands?

Luxury Brand

Leading Brand

Quality Brand

Better Brand

`Just Another Brand`

Pure Artist, Creator and Unique

Creation.

Exclusive, Prestige Image, Highest

Quality and Service, Professional

Management

Mass Produced, Good Overall

Price-Value-Image Brand

Proposition

Mass Produced, Best Quality in

Category, Enjoy Market Share

Leadership

Constantly Under Cost Pressure,

Unable to Build Brand Equity,

Usually Out of Top3 in Market

Share Leadership

Massification ofLuxury Brands

Luxurification of Mass Brands

Luxury Brand Building: define your current and future position on the luxury ladder

Luxury Brand Building: define your luxury position

Purchase Frequency

Pri

ce

&

Exc

lus

ivit

y

Low High

Lo

wH

igh

Core of Mass

Luxury

Distinctive Luxury

Essential Luxury

Affordable Luxury

Experience Luxury

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

Luxury brands broaden markets

and develop multiple brand

extensions e.g. Emporio Armani

State of the art

technologies position as

a form of luxury e.g.

Apple

Popular brands

develop/acquire up-

market brands e.g. Ford & Jaguar

Popular brands using

`luxury` as a form of

differentiation e.g. Avon by Ungaro

Niche market players

position themselves as

luxury brands e.g. Bang

& Olufsen

Value-at-Heart

Luxury Brand Building: reenergize your brand

Purchase Frequency

Pri

ce

&

Exc

lus

ivit

y

Low High

Lo

wH

igh

Core of Mass

Luxury

Special Limited Editions

Extended Product

Range

Emerging Luxury Trends

Trends

Traditional luxury brands dramatically accelerate their internet activities

Trends

Luxury enters new categories to embrace digitally empowered X…Y generations

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.

Trends

Green Luxury

That will rise a need for eco-friendly luxury products in ways that can be documented.

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`.

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 well-known and trusted brands, luxury that is unique and exclusive, with exquisite artistic design, craftsmanship, and quality, delivered with impeccable service.

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.

Thank you

www.starbrandsagency.com