Social Media Revolution

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Branding Luxury

"Affordable luxury as a category is maturing," said Guy Salter, deputy chairman of Walpole, the association that represents British luxury goods firms. Since our recent economic downturn, consumers have redefined luxury. More than ever, masstige is the new mass. What was mass now now perceived as cheap and untouchable to savvy and discerning consumers. In this organic adjustment, luxury has lower its bar to affortable luxury. I am delighted to say, with strategic adjustments, most luxury brands are now [still] doing quite well.

Miles Socha's recent article in the WWD, DEFINING THE NEW LUXURY, is an interesting exploration of this evolution. More than ever, smart, consistent 360º branding is critical to success:

Lucian James, founder of strategic consultancy Agenda Inc., based in New York and Paris, said luxury was not only impacted by the economic crisis, but a “crisis of meaning” as well.

“Consumers spent some time away from luxury products, and the spell was — to some extent — broken,” he explained. “The recession was a time when consumers really connected to discount and fast-fashion brands and found them surprisingly good.”

To win shoppers back in the postcrisis period, luxury brands “need to create more powerful messages, not just evoke aspirational lifestyles and expect consumers to be seduced….They need to explore ways that they can connect the brand to emerging consumer lifestyles and emerging consumer moods,” James said.

"The clientele for luxury today is less tied to income levels than to which brands consumers choose to adorn themselves with, counterfeit or otherwise. “People don’t reach up en masse to luxury brands. They go to the ones that are meaningful for them,” he said.

A Clear Win-Win: Preserve Brand AND Species

From the Lacoste crocodile to Charlie the Tuna, countless brands around the globe use animals and plants to personify and represent them. After years of profiting from those species' images, such companies and organizations can now help preserve and protect them through a new French effort called Save Your Logo.

Nearly one-quarter of the world's mammal species are threatened or extinct, as are roughly one-third of its amphibians and one in seven of its birds, according to the International Union for Nature Conservation (IUCN) Red List of 2008. Launched last fall, the Save Your Logo program lets companies and organizations that use the images of such species donate to the Endowment Fund for Biodiversity to help protect them. Each organization can donate up to EUR 1.5 million over three years to the fund, which is held by the World Bank, according to French press agency AFP; the World Bank will reportedly add up to 33 percent. Also behind the effort are the Global Environmental Facility (GEF) and the IUCN. Companies without plants or animals in their logos can participate as well by supporting 'unclaimed' species, Save Your Logo says. Either way, funds received from the private sector are distributed to organizations that specialize in biodiversity and local conservation projects, with part used to finance the creation of an Emergency Fund for the conservation of lesser-known species on the IUCN Red List. Organizations that participate can enjoy a tax cut of up to 60 percent of their donation, limited to 0.5 percent of turnover, according to the Save Your Logo site.

Tax benefits aside, of course, the effort will not only help endangered plants and animals, but also promises to add that much-sought-after sparkle of genuine corporate generosity to the images of those who participate. Lacoste and French insurer MAAF—which uses a dolphin in its logo—have already jumped on board. Jaguar, Puma, Peugot, Geico, Exxon, Taco Bell and countless others... what about you?

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Luxury Brands Waking to a New Reality

As the recession keeps depressing, luxury brands are experiencing a wake-up call from this nasty cycle and from chastened luxury buyers.

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 re-think this approach and many are exploring tactics more like the American packaged goods approach.

"Aspirational" or "symbolic" buyers, with household incomes of $250,000 to $500,000, are gone. And, the definition of luxury is radically changing. True luxury will continue to be distinguished by its inherent value, or by what Stanley Marcus called, "the impact of the hand" (the best the mind of man can imagine and the hand of man create).

Also, more than ever, great experiences will rate high on the value scale: rare experiences, sensually orchestrated, producing memories so precious they are actually luxury products. These include 'time out' vacations, exotic travel, sensual comforts, etc.

Educated consumers will even put a premium 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 say, time, the ultimate luxury, alongside health.

At no point in 15 years has the "best customer" (3.2 million worth more than $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 smart luxury brand is obsessed with their best customers and is focusing marketing efforts on "surprising and delighting" them. The '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 more economical to keep than to find and becomes more profitable over time.

These best customers are now--they're more curious about the best of the best and want brands to articulate why their products and services are worth the price; while demanding high-touch, sophistication, intimacy and intelligent 'courting.'

More demanding than ever, they view wealth as something to be enjoyed rather than displayed; are highly cynical about advertising and demands a personalized approach; desires connoisseurship' while searching for the unique and memorable, wants to tell the story of a great experience, relies on friends' recommendations, social networks and buzz instead of traditional advertising.

What Smart Luxury Brands Do
Marketing is increasingly seen as the president's job and not just the marketing department's. Luxury marketing, once seen as great product, great location and major investment in advertising, is increasingly following a packaged goods model. Advertising spends are being cut and the investment targeted to niche publications – Departures, Elite Traveler, The Robb Report, Modern Luxury.

Marketing is considered as an investment by the smartest brands. Those that continue to spend enjoy a significant competitive advantage. Luxury Marketing Council research shows that those that do invest are putting their marketing dollars toward: improving customer service, heightening the quality of interaction with best customers, investing in third-party-testimonial generating public relations, engaging people/employees/sales folks "on the line," making direct customer contact as strategic partners, genuinely soliciting their insights from the customer and marketplace and sharing insights with people/employees/sales associates in ways once deemed 'for top management only.'

While challenges remain, the prospect for a bright new world of luxury brand success is peaking through the clouds.

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