With recognized brands, such as Versace, shuttering stores around the world, LVMH sales plummeting 20% in the first half of the year and the luxury car market struggling to stay above water, branding and how we build and communicate luxury brands, will become even more relevant as we move into 2010 and beyond.
This global economic crisis forced the luxury market to change. What is different today is that luxury consumers are more discriminating about their purchases, and marketers need to concentrate on key branding elements. These include: authenticity, quality, service, dependability and exclusivity.
It will be vital for marketers to continuously keep brands fresh, evolving and relevant. Great luxury brands, such as Chanel, Hermes, Louis Vuitton, Ritz-Carlton, and Singapore Air continue to maintain their leadership position in the luxury market because of their ability to maintain their reputation as lifestyle and influencer brands.
High-end retailers such as Nordstrom, Saks Fifth Avenue and Neiman Marcus learned the hard way that the 70% discounts they offered at the height of the economic crisis turned many consumers off. In addition, this raised immense financial concerns for these luxury retailers.
In the months ahead, the challenge for luxury brands will be to create a credible "story" that taps into icons, myths and compels potential consumers to act with confidence, thereby eliminating the hurdles that may prevent purchases. Impeccable credentials and an authoritative persona coupled with a celebrity spokesperson like Nicole Kidman with Chanel, Sean Connery with Louis Vuitton or even Roger Federer with Rolex and Mercedes-Benz goes a long way to accelerate credibility and build market share.
Luxury consumers today are paying to possess a beautiful object, an iconic brand and exceptional experiences, and marketers must ensure that every touchpoint of their brand is carefully crafted and managed.
Three key points when marketing luxury brands in a recession and beyond:
• Invest in your brand
When competitors are cutting their spending and losing the emotional engagement with customers, it pays in the longer term to spend on the brand. The Morgans Hotel Group (formerly Ian Schrager Hotels), Louis Vuitton and Mercedes do this well.
• Avoid "the sale" mentality
When others are slashing prices and dropping rates, resist the urge. Slashing prices only causes brand erosion and confuses consumers as to what the brand stands for. This is the fastest way to devalue your brand. Retailers are increasingly asking suppliers for merchandise at lower price points, which is not a winning strategy. Any retailer who slashes prices or offers cheaper products is looking at a long-term luxury strategy fiasco.
• Reward customer loyalty with free products, service and advice.
Thank customers for being loyal and valuable to your business -- and more importantly, help your customers work through their fears and find clear and strong intellectual reasons to spend more for your product or service than for anyone else's. In addition, this reason always exists, but the art of "marketing in a recession" is getting consumers to see the value and authenticity of your brand and not feeling guilty in a downturn.