The Future Of Luxury Brands
In an Adweek article, "Boomers Caught in Squeeze Play," which assesses Boomer consumerism in these difficult times, the future does appear bleak.
Eric Almquist, a Bain & Co. partner, observes that a large group of pre-retirement Boomers are entering a lifestage of economic parsimony.
The current Boomer mindset revolves around a nearly universal question: "Can I live off my savings and Social Security for the rest of my life?" This leads to greater risk aversion, obsessive price shopping, and an urge to preserve fiscal equilibrium.
Ben Kline, with Leo Burnett in Chicago, believes that consumers are not just cutting back on spending; they're reassessing what is important.
Also commenting for Adweek, Kline said, "We're seeing shift from a trade-up culture to a trade-off culture."
Kline believes that Boomers view discretionary purchases from an emerging framework. They are seeking more than value, where a product's bundle of tangible and intangible attributes reach an optimum balance with price.
According to Kline, consumers are undertaking something akin to brand triage, assessing discretionary purchases as either indispensable or dispensable based on core values.
David Wolfe, co-author of Ageless Marketing and Firms of Endearment, insists this behavior is being driven by more than lifestage or distressed economic times. In an email to me, Wolfe wrote:
"For most, the onset of midlife is accompanied by an ebbing of narcissism and materialistic appetites because the social and vocational aspirations have typically become trimmed. Now, people begin talking about 'simplifying' their lives and putting their lives in balance. All in all, these shifts are less rooted in volition than in our genes which anticipate the milestones of personality development ... a shift away from narcissistic and materialistic values."
Wolfe maintains that thriftiness in middle-age is not just a byproduct of lifestage; rather, middle-aged adults seek new priorities, driven at the root by fundamentals of human development.
Today's luxury industries are confronting convergence of two trends: Boomers entering a lifestage when traditional materialistic values become less important, plus a recessionary economy that for many has decimated prospects for retirement.
I believe well-run companies producing products of quality and uniqueness will not confront inevitable dissolution. Badly run companies will tumble in this unforgiving economy. However, the rules for marketing luxury products must change, and those failing to adapt branding and advertising strategies may suffer consequences. This is the future of luxury brands: not just value but core values; not just low prices but product longevity; and not just surface bling but deep customer connection.
Accordingly, here are a few strategies we're recommending to purveyors of luxury products:
- Build communities around your products. The legendary Harley Davidson has always commanded higher prices than foreign motorcycles partly because of HOG (Harley Owners Group), a network providing powerful referential reinforcement.
- Differentiate with values that address emerging Boomer needs to seek higher purpose in lifestyle choices. A watch is more than a watch when acquired as a future heirloom for a grandchild.
- Make an unassailable quality and durability case. Most Boomers have been burned by shoddy products that seemed like a good deal but broke after purchase. Boomers believe the adage: You get what you pay for.
- Consider tiered pricing. Just as airlines such as Frontier are unveiling tiered ticket prices in coach class, luxury-class products can be offered to consumers as good, better and best (not cheap, cheaper, cheapest), without compromising brand stature or differentiation.
Many opportunities exist to convert luxury into longevity and superb into sustainability -- core values Boomers seek today with their discretionary dollars.
And don't be misled. Boomers still have billions of discretionary dollars to spend yearly. By far they have greater economic clout than any other generational cohort, so to eschew this market could be an economic catastrophe.