For the first time, it seems, even brands that have succeeded by pursuing strategies of "great product plus major investments in image advertising" are forced to rethink this approach, and many are exploring tactics more like the packaged goods approach.
Why?
The "aspirational" or "symbolic" buyer -- with household incomes of $250 to $500K -- is gone. And, the definition of luxury is radically changing. Words that telegraph this shift include: experience, value, bespoke, heritage, story, discrete, buzz-generating, discovery, adventure, socially conscious, politically responsible, self-enriching, connecting, family-oriented, inner-directed, simplicity, the little things, and customer in charge.
True luxury will continue to be:
advertisement
advertisement
Educated consumers put a premium even on things or experiences that cost little or nothing but provide immense satisfaction: good water, knowing how to tie a bow tie, dry firewood, a hot bath, first press olive oil, fresh-caught fish, a smile, beautiful wrapping paper, elegant packaging, staying in shape, afternoon tea, museum visits, time alone or with family and friends. Did I mention time -- the ultimate luxury -- alongside health?
At no point in 15 years has the "best customer" (3.2 million with liquid portfolios of $1 million+) better mirrored Milton Friedman's view: "Nobody spends somebody else's money as carefully as he spends his own."
Focus On The Best Customer
Every thinking luxury brand is obsessed with its best customers and is focusing marketing efforts on "surprising and delighting," winning greater share of wallet, loyalty and referral.
The bottom line: This "best customer" spends more, is more loyal, refers more if asked and rewarded, is willing to partner, wants favored brands to succeed, forgives more readily (if mistakes are corrected), offers stronger word of mouth, is not price- but value-sensitive, is cheaper to keep than to find and becomes more profitable over time.
This best customer -- self-made, with middle-class values -- is now more curious about the best of the best, wants brands to articulate why great things/services are worth the price, and demands high-touch, sophistication, intimacy, and intelligent courting.
They are more demanding than ever and see wealth as something to be enjoyed rather than displayed; are highly cynical about advertising so demand personalized approaches; desire connoisseurship; search for the unique and memorable and want to "tell the story of a great experience," and rely on friends' recommendations, social networks and buzz instead of traditional advertising.
What Smart Luxury Brands Do
While challenges remain, the prospects for a bright new world of luxury brand success are peeking through the clouds.
Editor's note: If you'd like to contribute to this newsletter, see our editorial guidelines first and then contact Nina Lentini.
Marketers for any level of product ("luxury" on down the line) should be serving their customers with these sorts of rules in mind. Marketing should be seen as investment, not cost, by EVERY brand. And, as such, time/money on marketing efforts will be very carefully & deliberately spent for good of consumer and brand. Great piece.
As head of a San Diego creative marketing agency with a large practice area focused on luxury brands, I completely agree with Mr. Furman's perspective about what to stress in today's new world. Branding for brand sake has given way to careful relationship building that lasts the test of time. Luxury can be an experience just as much as it is a product, and that experience is what builds consumer loyalty in times when dollars are more scarce.