Brand management is the process of creating, developing, and maintaining a brand in order to achieve business goals. It involves establishing a brand identity, building brand equity, and ensuring that the brand remains relevant and competitive in the market. However, brand management strategies can vary depending on the type of brand being managed. In this article, we will explore the differences between managing a consumer-packaged goods (CPG) brand and a luxury brand.
What is CPG brand management?
CPG brands are typically everyday products that consumers use on a regular basis, such as food, beverages, personal care products, and household items. CPG brand management is all about creating a brand that appeals to a broad range of consumers and maintaining that brand in a highly competitive market. CPG brand managers need to focus on product innovation, pricing, packaging, distribution, and marketing in order to succeed.
The focus of CPG brand management is on creating a consistent and reliable product that consumers can trust. CPG brands often have lower profit margins than luxury brands, which means that cost control is critical to their success. CPG brand managers need to carefully balance the cost of producing their products with the price they charge consumers in order to maximize profits. Additionally, CPG brands need to be marketed in a way that appeals to a broad audience and drives sales volume.
What is luxury brand management?
Luxury brands, on the other hand, are products or services that are associated with high levels of quality, exclusivity, and status. Luxury brand management is all about creating a brand that conveys a sense of prestige and luxury to consumers. Luxury brand managers need to focus on product design, craftsmanship, exclusivity, and marketing in order to succeed.
The focus of luxury brand management is on creating a sense of exclusivity and rarity that appeals to a select group of consumers. Luxury brands often have higher profit margins than CPG brands, which means that their pricing strategy can be more flexible. Luxury brand managers can charge premium prices for their products, and they often use scarcity and limited availability to create a sense of exclusivity.
Luxury brands are also marketed in a way that is different from CPG brands. Instead of appealing to a broad audience, luxury brands target a niche market of high-net-worth individuals who are willing to pay a premium for quality and exclusivity. Luxury brand managers often use celebrity endorsements, event sponsorships, and other high-end marketing techniques to build brand awareness and create a sense of exclusivity.
Key differences between CPG brand management and luxury brand management:
Target market: CPG brands target a broad audience, while luxury brands target a niche market of high-net-worth individuals.
Product features: CPG brands focus on creating a reliable and consistent product, while luxury brands focus on exclusivity and rarity.
Pricing strategy: CPG brands typically have lower profit margins and need to balance the cost of production with the price they charge consumers, while luxury brands can charge premium prices and use scarcity to create a sense of exclusivity.
Marketing strategy: CPG brands are marketed in a way that appeals to a broad audience, while luxury brands use high-end marketing techniques to build brand awareness and create a sense of exclusivity.
In conclusion
While both CPG brand management and luxury brand management involve creating and maintaining a brand, the strategies used to achieve these goals can be very different. CPG brands focus on creating a consistent and reliable product that appeals to a broad audience, while luxury brands focus on exclusivity and rarity to appeal to a select group of high-net-worth consumers. Understanding these key differences is essential for developing effective brand management strategies in either context.
Recently, I followed a Linkedin luxury sector group thread. Discussion centered on the appropriate manner clients should be treated by sales personnel in a luxury retail shop such as Gucci.
To my astonishment, one participant, posing as an expert stated that salespeople at such boutiques should be snooty. The reason given was that this attitude was part of the luxury cachet.
How ludicrous and puerile, I thought.
In my experience, this is precisely what you should not do. Whether you spend $10,000 or more on a Rolex or $20,000 or more at Hermes all clients should be treated with respect. Period. Aspiration and negative attitude sales pitches are not only counterproductive, but they are also destructive. (I might add, that this should be true of all human interaction and not just the act of buying luxury products.)
Does Luxury Really Have Meaning?
Luxury was never about price. This is an outdated concept built on a social model which is incompatible with democratic values. It is about brands, which are authentic. Authenticity implies function, design, intrinsic value, and in certain cases heritage and pedigree.
Luxury must provide the right experience.
Sophisticated customers want the wow factor.
This means touching the heart and dazzling the senses. When done in this manner, the client feels their lifestyle enhanced. Yes, I know, like you do that a product is just a thing. However, things act as a trigger and can alter perception, inner balance, and outer harmony.
Look at the keys to luxury brand management and you will recognize the essentials in selling aspiration:
1) Self-expression and sense of self 2) Exceptional treatment and experience when in the act of purchase 3) Craftsmanship=Quality 4) Authenticity 5) The Rarity Factor 6) Emotional Bonding 7) Mystique
To achieve these elements the brand must be expert storytellers. One of the grand storytelling kings, Ralph Lauren, understands this like the lines on his hand.
Exceeding Expectations
Luxury goods are not sold the same way as mainstream products. It’s not enough to simply introduce and sell a luxury brand surrounded by a fancy store with design-inspired display cases either. Consumers of luxury brands tend to have higher expectations than that of traditional consumers. They are discerning and sensitive to questionable tactics, as well as intolerant when comes to aggressive salespeople.
The attitude, product knowledge, and overall delivery/presentation of the product by the sales consultant/brand ambassador all play an equally important role. This translates to a well-educated, skilled staff having good communication skills, a high level of presentation skills, and a customer-centric approach.
A study by The Luxury Institute, in New York, finds that Burberry and Bottega Veneta excel far better in CRM (Customer Relationship Management) than other companies. Their key findings were under the title:
“Leading Edge Insights Into The World Of The Wealthy”
Sales associates should be employed from related luxury brands and products, with consideration given to those in the service sector such as hospitality or premium airlines: Singapore Airlines, Swiss Airlines, Emirates, and others — or perhaps from premium apparel brands and high-end cosmetic brands. One thing is certain: Training ought to be based on specific brand requirements.
As more luxury brands open their own retail outlets to stand apart, they need to better control sales channels, image, and front-line personnel.
One cannot stress enough for Sales teams to have the right training. For new sales hires not familiar with selling luxury brands, a company has to invest to train them and ensure occasional retraining including recap courses. Luxury sales training should include: – In-depth product knowledge – specifically how it will help satisfy the customer’s needs; – Focus on the customer – who they are, what they like/dislike, determine needs, motivations and preferences; – Exceed customer expectations by delighting and surprising; – Appeal to client emotions; – Never put down the competition.
Ultimately, craftsmanship, design innovation, exclusivity, and pedigree sell themselves. Correct sales attitudes should personify the luxury branded products and it becomes in the client’s eyes a done deal.
Selling, or Rather, Storytelling with Product Knowledge and Finesse
Consumers today are sophisticated when it comes to shopping – thanks primarily to the internet where information on just about any product can be researched and used for comparison purposes. Consequently, when a prospective client walks into a store, he/she is armed with knowledge – which is why the sales professional should be product proficient and adept at assisting and guiding the client to the purchase by making use of flattery, romance, and showmanship. Charisma is an asset.
To illustrate, if a sales consultant, wearing a pristine white pair of gloves is presenting, for instance, a Chopard watch, he/she will utilize terms with finesse and avoid using language which discusses a specific price tag. In its place, the word “value” can be used. Instead of calling the product an obvious “watch”, the sales consultant can say, “timepiece”, “masterpiece” or simply pronounce the model name. It should then be demonstrated in a dazzling manner emphasizing its innate qualities and timeless design with functionality – amongst other features that focus on one’s sentiments.
When selling a niche automobile such as a Porsche, the sales professional can talk about racetracks, describe road-holding capabilities, and build up a fascinating story – after which time he/she can bring up reliability and the technical details which confirm to the discerning client what he/she is already aware of.
Hiring Selection Process: Who Should Make the Cut?
When seeking to hire sales consultants, there should be a set of criteria established to ensure a successful performance. The people selected for the end-user contact should have the following characteristics:
1) Retail sales experience in a luxury environment;
2) Empathetic: expertise in establishing customer relationships that translate into sales;
3) Image: proper attire and fashion accessories, verbal communication, and grooming. Clients should see the brand made manifest so it has a personal connection;
4) Skilled at the emotional aspects of a sale: bond with customers so that relationship leverage is genuine;
5) Passionate and Professional mindset;
6) Highly collaborative: knows how to work with and through others in a team-based environment;
7) Entrepreneurial, competitive, self-confident, and self-motivated.
Discounted Luxury is an Oxymoron
Under no circumstances should luxury brands be discounted. They need to stick to their true sense of meaning and heritage. By cutting prices, brands risk changing the quality-price relationship in the customer’s mind. This practice normally stems from sales consultants, who may not be convinced that the particular luxury goods offered for sale actually merit the price.
Such an attitude can be tricky to navigate effectively. Customers need to believe otherwise they question and the product is devalued in their eyes. Salespeople, who are not up to this aspect of brand personification should not be hired.
Price discounts should be a tactic of last resort.
A robust alternative is to offer gift items or bonuses such as complimentary tickets to Art exhibitions, gift certificates, or access to a coveted local restaurant.
Employ Mystery Shoppers
In the retail brand experience, nothing should be taken for granted. In a progressive customer-driven entity, training and developing human assets should be an ongoing process. Moreover, brands should be an enemy of the status quo.
Hiring mystery shoppers to gauge the total sales cycle approach and report back their experience to management should not be ignored.
Another suggestion is for the luxury boutique owners to hire a third party such as a consultancy firm, which specializes in the high-end retail domain, to shadow the sales consultants and evaluate their performance.
Both techniques need to be conducted with frequency. How can you understand what the client expects by acting and gauging behavior in the field? You can’t.
The Final Take
Remember, a luxury sales professional does not pressure customers to buy.
He/She plays the role of a luxury purveyor and advisor – someone who is an expert product consultant and keeps a client’s best interests at heart. By demonstrating value, a sales consultant establishes himself/herself as a professional.
It’s about establishing a person-to-person relationship as opposed to a salesperson-to-customer relationship.
In today’s economy, service has become a core competitive advantage. Hiring the right people and training them to sell properly, increase sales and retain the brand’s luster should all be part of its ongoing ambitions.
Sophisticated customers want products that dazzle their senses, touch their hearts and stimulate their minds – which they can relate to and can incorporate into their lifestyles. The degree to which a luxury product is able to deliver a desirable customer experience is vital.
Few brands can really claim the trademark of luxury. It is those which combine allure with pedigree and quality attributes. Discounting is not part of their strategy and their entire raison d’être is geared to the Ultra High Net Worth (UHNW). Many of their products actually increase in value over time since they are either discontinued, necessitate a long waiting list/time and are most desirable (supply/demand). Many also offer bespoke products and services since their type of discreet clientele prefer personalization and/or one of a kind. Brands that become too accessible are less appealing to such well-heeled buyers.
Erwan Rambourg, an HSBC managing director and author of the book, “The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun” created a luxury brand pyramid which depicts how major brands range in accessibility from the lower end with “accessible luxury”, such as spirits, a fine steak and perfume, to ultra-high-end luxury like rare diamonds. This is the luxury influence level ranking pyramid:
Getting On Top of the Pyramid
Luxury purveyors who aspire to cater to the top tier of spenders should have a mission, vision and a sound implementation strategy to reach this elite demographic target ‒ short of simultaneously pursuing the aspirational consumers who are prone to cutting back when the economy takes a dive. This latter group of consumers dilutes the cachet of the brand and can turn out less profitable in the long run. Moreover, the High Net Worth Individuals or HNWI and Ultra High Net Worth Individuals or UHNWI frown upon offerings which are accessible to the mainstream as they desire status and exclusivity.
Products and services should be unique, well designed and packaged, finely crafted ‒ and executed with refinement for the elite. Those are ways to entice the interest of, and ultimately retain, the ultra-wealthy. Products and services should never appear as ordinary yet absolutely personal.
In the luxury sector, traditionally there hasn’t been any shortage of customization for the very well heeled. Exclusive and bespoke travel companies provide tailor made adventures and excursions, whereas, the ultra-luxury and exotic automobile sectors such as Rolls Royce and Ferrari respectively offer a wide array of customization options. Each vehicle coming out of the studio will be completely unique and guided by a personal designer at the manufacturers. This is how ‘the total customer experience’ materializes.
What do the HNWIs and UHNWIs seek in their lifestyle?
According to the white paper, Strategies for Effectively Marketing to High Net Worth Consumers”, written by Richard Becker (August 2008), High Net Worth Individuals enjoy Golf, tennis and physical fitness ‒ endeavors typically associated with exclusive ‘members only’ clubs.
HNWIs/UHNWIs cherish their time and know what they want. Even time is a luxury and limited resource for them, thus saving time greatly trumps saving money. This is part of the reason service is crucial for them. They can be generally described as:
– Seek a higher and exacting standard with a minimum set of expectations;
– Fussy in nature;
– Often require customized solutions to mirror their lifestyle – whether a product or service;
– Take pleasure on getting extra attention from the brands they pursue;
– Prefer the uncommon to the mundane;
– Expect to be offered unique choices and experiences;
– Synonymous with a taste for luxury with pedigree and craftsmanship which they’re able and willing to pay;
– Aspire an aura of exclusivity;
– Crave an experience heightened by exceptional service along with a personal relationship;
– Seek products which are different and more sophisticated – whether it’s apparel, electronics, food or insurance;
– Want to feel in command of their purchase decision without any pressure;
– Expect discretion and confidentiality – most notably from service providers such as private wealth institutions and concierge services amongst others.
Likewise, what they purchase is a visual extension of their individuality and lifestyle. A well-crafted product, for example, reflects an individual call to beauty.
Putting it all into perspective
In the United States the top 1% possess 40% of the wealth owns half of all the stocks, bonds and mutual funds.
Fickle and discriminating, these customers’ purchasing attitudes are based on personal beliefs and taste for finer things in life along with discretion. They are quite selective, know what they want and aspire to be catered to effortlessly. They seek the total customer experience along with pampering, personalized service which can include fashion consultations and exotic journeys. Best of all, they are willing to pay top money for the products and services they want.
An offline strategy requires an equal online presence. This is accomplished by placing stunning imagery, video, engaging content and constant refinements along with savvy Internet marketing to connect the brand with luxury social channels. It’s connecting with its like-minded audience.
Think brand positioning and focus on, as well as cater solely to, your core market rather than be all things to all people. Stay out of the bottom end and aspirational markets and instead, aim at the top end markets.
A “luxury lifestyle” denotes a way of life which is pleasantly enhanced through well crafted products and exceptional services. These include dining at the best restaurants, lounging in the finest hotels, dressing in premium and bespoke clothing, wearing jewellery/watches produced in limited quantities, possessing and driving the most extravagant cars, traveling to exotic destinations, and playing with the most sophisticated tech products – amongst others. Needless to say, those consumers are connoisseurs of the finest products and services money can afford them.
According to a white paper and survey, conducted by the prestigious consulting firm McKinsey & Co., it indicates that there is no widely accepted definition of “luxury lifestyle.” It goes on to say that Attendees of the 2012 Financial Times Business of Luxury Summit suggested the following definitions: “a way of living,” a set of “attitudes and values,” or specific “consumption habits.” Consumers interviewed in London, Milan, Munich, and Paris gave equally diverse definitions. Some offered a broad perspective (“a way of being, dressing, behaving” that “sets you apart from the rest”); others referred to particular products, brands, and experiences (“staying at nice hotels”); still others took a cynical view (“it’s just brand names, that’s all” or “it’s marketing”). Its interviews with senior executives from luxury- goods companies such as Harry Winston, Hermès, and Roberto Cavalli yielded yet another varied set of definitions, including “embodying the lifestyle of an iconic designer” and “offering a holistic brand experience.” Although they all defined the phrase differently, 70 percent of the executives they interviewed said they regard their brands as luxury-lifestyle brands.
A company can define itself as a lifestyle brand when its products promote more than a product with key benefits and attributes. However, lifestyle branding is more than just promoting “a way of life.” It is a product or service that provides consumers with an emotional attachment to the lifestyle of the brand. Take Versace, for example, which besides its fashion apparel and accessories also has hotels, home furnishing/décor, linens, beauty and more. Giorgio Armani also has his eponymous name on hotels, furniture, fashion, jeans and beauty. From these two fashion icons, we can certainly surmise that they have a legitimate claim as “luxury lifestyle” purveyors.
Developing the luxury standard of living through desirable customer experiences
Lifestyle branding is more than just promoting “a way of life”. it is a product or service that provides consumers with an emotional attachment to the lifestyle of the brand. think of Ralph Lauren and you can readily see it is not about the clothes. it becomes an attachment such as the sports car brand Porsche to an exclusive club in which you can be a member through emotional identification through use of the products in question. Smart companies understand these principles and look to keep the customer engaged. By doing so, they clearly forge the sort of long term relationships, which become the envy of their designated sector.
The “Total Customer Experience” is the sum total of the interactions that a customer has with a company’s products, people, and processes. It goes from the moment when customers see an ad to the moment when they accept delivery of a product and beyond.
The experiences customers go through with a purveyor of luxury determine the ultimate perception of its brand and image. Customer experiences also spread the word (offline/online) to others (friends, relatives etc.) about your brand. That said, each customer contact (“touch points”) should be handled with the utmost care to ensure that the total brand experience a person has is constant.
Lifestyle brands develop emotional attachment
Brand loyalty is about building an emotional, and in some cases, irrational, attachment in a product. The most ideal examples are the diehard brand enthusiasts and early adopters who must get their hands on the latest iPhone or iPad. This happens because Apple has built an emotional attachment to their products by creating a lifestyle choice rather than a product purchase.
It’s about how it makes you feel. Same goes for baby boomers, whether accountants or attorneys or business executives who purchase a Harley Davidson motorcycle and ride them for about four or five hours every Sunday afternoon. The bike makes them feel like a rebel – sort of an escape.
A brand that is designed for a lifestyle should have a much higher emotional value to consumers than one based on features like cost or benefits alone. The goal of a lifestyle brand is to become a way that people can utilize it to relate to one another. Those brands are an attempt to sell an identity, or an image, rather than a product and what it actually does.
Lifestyle brands have gained an increased share of the luxury market such as BMW, Armani, W Hotels, Louis Vuitton and Rolex ‒ just to name a few. These have given way to consumers to buy products that they associate with a “luxurious life.” They are essentially a status symbol.
The luxury lifestyle in the services domain
In the category of “services”, the luxury lifestyle is all about execution in delivering an exceptional experience with pizzazz to the discerning ─ whether it is a bespoke travel excursion in an exotic place, producing an exceptional dining experience or organizing an over-the-top event, each one ought to create a pleasant memory which would want to be repeated.
A successful service related luxury lifestyle exists when the following take place.
– Delivered with passion
– Exclusivity
– Discretion
– Exceeding expectations
– Seamless
– Refined
– Posh
– With attention to detail
Consider American Express − most notably for its “by invitation only” Black/Centurion card. For hotels, worthwhile mentions are the Hotel Plaza Athenée, the Four Seasons (including its private jet tours), the Ritz Carlton, and boutique hotels Hotel du Cap and Hotel de Crillon to name a few prominent ones. They splurge and provide the perfect luxury experience with outstanding service, exclusivity, and pedigree.
Exclusive and bespoke travel companies provide tailor made adventures and excursions. The four key players in this category include: Abercrombie & Kent, Kuoni Travel, Orient-Express and Cunard Line. Broadening our view of luxury services, certain firms offer services and privileges to a rare percentile. Such services include fractional jet ownership such as NetJets and FlexJet, as well as global concierge services such as Quintessentially.
In the final analysis
Whether offering a product or service, it is how a luxury brand delivers an experience that distinguishes it and makes it stand-out from the mainstream. In essence, it’s a holistic approach.
Luxury lifestyle brand offerings should be constantly refreshed, giving discerning customers a reason to repeatedly do business with the brand. Tiffany & Co., decided to undergo “investing in the theater of shopping in its stores”, as its CEO Frederic Cumenal implied as regards to the renovations of its largest store ever which it opened in China.
Selling a distinct lifestyle is what discerning clients crave and gladly relate to. Organizing exclusive by-invitation-only events should be considered. Exclusive events make one feel notable. For example, Italian sports automaker Maserati invited a select number of brand loyalists to a new experience in Europe that gave them the opportunity to sail on-board the 70 ft./21,3 m Maserati sailboat. In addition, they drove models in its current range including the new Maserati Gran Turismo Sport model.
In the end, living the luxury life is irresistible to many from every range of background and nationality. The temptation includes the aspirational affluent.
“Masstige” (a combination of two words: “mass” and “prestige” – aka mass with class) is a contemporary marketing term which denotes prestige for products perceived as luxurious and targeted to a wide range of customers known as the “mass affluent.” As per Wikipedia, the mass affluent are the high end of the mass market, or individuals with US$100,000 to US$1,000,000 of liquid financial assets, or consumers with an annual household income over US$75,000. These upper middle class individuals can afford to splurge on some of the finer (and affordable) things in life which include fashion merchandise, sporting goods, cosmetics, various accessories (silk ties, scarfs, small leather goods, perfumes etc.), high-end consumer electronics/gadgets, as well as culinary food and spirits. Brands in those categories depend on the “masstige” crowd for a majority of their sales, despite a few which also happen to be purveyors of inaccessibly priced products catered to the HNWI/UHNWI (aka the very wealthy or the 1% respectively).
This is purely an oxymoron and paradoxical since in the authentic luxury domain, “mass prestige” is an artificial term for “luxury” as it is not generally geared for the mass but rather the well heeled. Sadly, the true meaning of “luxury” has been bastardized by many brands who are falsely in the “luxury” business (in the true sense of the word and definition). However, there are luxury brands which have chosen to offer lowered priced products in a bid to join the “accessible luxury.” Think Coach with its leather bags and accessories or Chanel with its perfumes and cosmetics.
Defining the true meaning of the term “luxury”
Definitions of “luxury” vary significantly and depend on with whom you discuss the topic and in what context. The term “luxury” is not the easiest to define. It is relative, mysterious and elusive. In essence, it revolves around subjective criteria in the mind, which creates a mood and what is generally referred to today as lifestyle.
Gary Harwood at HKLM, one of the founders and directors of a leading strategic branding and communication design consultancy, stated:
“A luxury brand is very expensive, exclusive and very rare – not meant for everyone. When it ceases to be these things, then it’s lost its exclusive cachet. Commoditizing luxury brands and making them more accessible to the middle market puts them at risk of becoming ordinary, common and less desirable. And the more available a brand is, the less luxurious it becomes.”
Authentic luxury brands compete on the basis of their ability to invoke exclusivity, prestige and hedonism to their appropriate market segments not the masses. There is a classic litmus test as follows:
Is the product manufactured in artificially limited quantities? (i.e. the rarity factor)
Does the firm have a story to tell? (i.e. history & pedigree)
Is the firm portraying a unique lifestyle? (i.e. the product or service will enhance one’s experience through an exceptional appeal)
Is craftsmanship the hallmark, which delivers products that only High Net Worth individuals (HNWI/UHNWI) can purchase without question?
Does the brand offer authenticity?
Genuine luxury purveyors remain relatively small and select in their category. Ultra wealthy (UHNWI) consumers purchase rare luxury products because they seek to distance themselves from the mass through the emotional value of acquiring flawless and rare objects of desire.
“Aspirational” luxury, on the other hand, is another fancy marketing parlance which is generally defined as a brand that most want but only a fraction of them can actually afford it. Most cannot afford a $2000 bottle of vintage wine but may be able to occasionally splurge on a $200 bottle of one of the finest single malt Whiskey.
Identifying luxury sectors
Genuine Luxury is classically defined in three key segments:
3) Private/Executive Jets and Yachts: An absolute category in their own right.
Brands which fittingly claim authentic luxury status
Few brands can really claim the trademark of luxury. It is those which combine allure with pedigree and quality attributes. Discounting is not part of their strategy and their entire raison d’être is geared to the UHNW (Ultra High Net Worth). Many of their products actually increase in value over time since they are either discontinued or necessitate a long waiting list/time.
Most notable authentic luxury brands are in the haute merchandise category:
Hermes, Chanel, Louis Vuitton, Bottega Veneta, Rolex and Cartier.
Other players to this core list include: Bentley, Rolls Royce, Gucci, E. Goyard, Charvet, Salvatore Ferragamo, and Bulgari.
Exclusive and bespoke travel companies provide tailor made adventures and excursions. The four key players in this category include: Abercrombie & Kent, Kuoni, Orient-Express and Cunard Line.
Broadening our view of luxury services, certain firms offer services and privileges to a rare percentile. Such services include credit cards with no limits, jet ownership, private plan charters, global concierge services and the like. Think NetJets and Amex.
“Accessible” luxury is a marketing notion, not a merchandise category
The concept of making luxury available to the masses goes against what true luxury is as there is no such thing as accessible luxury ─ it is either luxury or it is not as “accessible” luxury is a marketing notion and not any product category. Think Michael Kors, Coach, Ralph Lauren, Godiva and Apple among others. Top luxury brands such as Hermes, Louis Vuitton and Chanel have accessible luxury with perfumes and cosmetics, sunglasses, as well as accessories (leather, silk scarfs etc.).
In marketing parlance, being coined as an “accessible” luxury good can be deceiving when the quality of materials is not quite at par as one would normally find in a “genuine” luxury product. For such companies, becoming too commonplace is a risk for such brands as they lose their cache due to a lesser price line, as well as risk their reputation for the sake of increasing their revenues. Then there are some non-luxury brands which use the codes of luxury strategy to grow their sales. Needless to say, many consumers will eventually catch-on that such products are merely a gimmick thus on their way to lose their luster.
“Premium” and “prestige” categories defined
If luxury brands are related to scarcity, quality and storytelling then premium goods, on the other hand, are expensive variants of commodities in general: i.e. pay more, get more.
These brands are less ostentatious, more rational, accessible, modern, best in class, sleek design, and manufactured with precision. Beats headphones and TAG Heuer watches are a case in point and so is Audi and Lexus in automobiles.
“Luxury” and “prestige” brands respectively both have a similar status. Although some may disagree, in some cases, brands such as Mercedes-Benz automobiles, are considered to be both “luxury” and “prestige.” There are also brands which are either labelled one or the other. It depends how they are identified in the eyes of consumers.
Prestige brands offer a high level of innovation, craftsmanship ─ and with some categories, the finest ingredients or raw materials. Due to their well-established names, status and pedigree, they boast quite a loyal following. As a result, they can command premium prices which their clients do not mind paying for since they are made to feel special. Examples of some prestige brands include Breitling watches, Lancome cosmetics and Aston Martin automobiles.
The distinction between a prestige brand and premium brand is simply one of perception. In automobiles it is Cadillac and Lexus vs their German counterpart of BMW and Audi. In watches, it is perhaps a Rolex versus a Breguet and a Cartier.
On a final note
When it comes to lower priced supposed “luxury” products for the affluent masses, they are essentially “premium” products ─ otherwise known as “masstige.” The brands succeed at creating fancy designs and utilize expensive looking material to make their products appear very expensive which are then sold at a fraction of the price compared to genuine luxury brands in the same product category. Add clever window dressing and marketing and the result is that those products become affordable objects of desire. Unlike authentic luxury brands which are manufactured at their country of origin (mainly Italy, France or the U.K.), they are outsourced to low labour cost factories in Asia or Turkey. Despite this, they are given a premium markup which is intentionally done to create an aura of high value.
As long as there is a big demand for massitige products that its target market can afford and make them part of their social status and lifestyle, the category will be around indefinitely.
As a final point worth mentioning, at this day and age, there are luxury branding experts who claim that there are actually four categories of luxury: Old, New, Eco and Indie as exhibited in the following table (credit: David Sherwin). This translates into additional choices ─ categories to satisfy most desires.
As in every year, I have once again rounded up the ten most read/popular articles — this time for 2015. The following ten captured the most attention by numbers and from 154 countries in all. See them all below in descending order. Your views are always encouraged including subject matter you think I should be covering more of.
THANK YOU for your readership and I look forward to feeding your mind with much more business practical food for thought this year which can be applied for timely results.
As we look back and close the year, I have rounded up the ten most read articles of 2014 by my readers. The following ten captured the most attention by numbers. See them all below in descending order. Your views are always encouraged.
THANK YOU for your readership and look forward to feeding your mind with much more business practical food for thought which can be applied for timely results.
In part 1 of this 4 part series, the Aston Martin automotive brand was the star focus. In this part, the spotlight is on the customer expectations with the British luxury automaker Jaguar Motors. For over 90 years, this high-status marque has pushed the boundaries of what was once considered impossible in the automotive industry.
Sir William Lyons – founder of Jaguar Motors, combined performance and beauty in the designs and manufacturing of the ‘Jag’. A feat unprecedented of his time, his uncompromising vision set new benchmarks which is still followed by the manufacturer until today. Despite a tumultuous period during the Ford Motor Company ownership, its present owner (the Tata industrial conglomerate based in India) has invigorated a new model lineup together with a bold marketing strategy through a substantial cash infusion. It also acquired, from Ford, the Land Rover luxury SUV brand.
With the big news of Jaguar’s upcoming justDrive™ ‒ an industry-leading app technology that integrates multiple smartphone apps into a single, voice-activated in-car experience; it is now a leading contender amongst its competitors.
The Jaguar driver profile
The Jaguar customer is typically a refined man or woman – for the most part, a university graduate with a dynamic presence, and status symbol visible. Moreover, the Jaguar driver can be classified on some levels to the “blue temperament” – which is an analytical, prudent, detail-oriented and precise personality. In serving a Jaguar customer, one must not sway into personal details on the onset. In addition, the sales consultants have been trained to not ask many open-ended questions but rather ask close-ended questions and listen attentively. I also suggest note-taking, because the majority of Jaguar drivers (most in Executive positions) do not like to repeat themselves. By taking notes, one demonstrates the prospective Jaguar owner that you are unconsciously like them by mirroring their behavior.
Following is an outline on how authorized Jaguar dealers respond to customers – from Sales to Service.
Initial Sales Consultation
– Greeted promptly by the receptionist
– The sales consultant must greet the potential Jaguar consumer with the appropriate handshake (particularly the dominant handshake)
– Ask close-ended questions to ensure need and quality prospect.
– Initiate test drive
– Review objectives & listen to this customer clearly while note-taking
– Warning- there is a fine line between explain the benefits to this customer versus being aggressive in your approach. Allow this customer time to review the advantages of owning a Jaguar.
– An overnight test drive is quite rare, however during the test drive, outline the benefits of the drive and the technology.
Sales Process
Allow the appropriate time for this customer to choose options, colors and technology combinations. At this point, once trust and careful attention has been established- then proceed with open-ended questions.
Delivery
– Short and succinct (keeping in mind that this customer is discerning and either a professional practitioner, executive or a successful entrepreneur who may have to return to the office for an important meeting.
– The customer should be shown the basic functionality of his or her new Jaguar
– The customer should be asked to reschedule a one hour detailed information session at his/her place and time of convenience.
The automobile which reflects a luxury lifestyle
Premium and luxury car owners seek the total package with the car brand they choose to be loyal to as they would when checking in to a luxury resort. They seek more than just a vehicle they can enjoy from point A to B. In practice, its owner might use this automobile to commute to work, but this is not sole incentive. Jaguar is clearly a brand with authenticity and heritage. The principals shaping the consumer’s buyer behavior go beyond intention. There is a sense of engagement in fulfilling a dream. It can be to make a social status statement or a personal style choice. Whatever it is, it is not an unconscious choice. The codifiers are clear: This is who I am, and what I believe in. Ultimately, it can also articulate the owners’ sense of self-worth and their emotional aspirations. The most important emotional benefit is that a product of this caliber and class expresses itself when the consumer can declare: “It suits my lifestyle.”
Discreet and unconventional selling approach
Jaguar in North America is testing, in several major cities in the U.S., a novel way it presents new vehicles by showing appreciation to its most loyal customers, which it labels as “super-loyalists” by hosting elaborate receptions in their homes. In turn, the “super-loyalists” invite friends and associates who may be interested, and can afford, one of Jaguar’s elegant models. This idea takes away the perception of any high pressure sales normally associated with auto sales at dealerships.
Dealers of prestigious auto brands as custodians of heritage
A luxury dealership’s ultimate goal is to make an entire ownership experience a pleasure ‒ let alone a Jaguar. They strive to build relationships, which is why so many of their clients remain loyal. A luxury dealership serves as a guardian for the rich heritage of their prestigious brands thus make certain to continue their legacy.
When we encounter the word “luxury”, images of: seamlessness, awe, the rarity factor, cache, opulence, aristocracy, supreme workmanship, stellar service and reverence come to mind, amongst others
Now, close your eyes for a moment. What images come to mind when you consider mention of the following vehicles: Aston Martin, Jaguar, Bentley and Range Rover? That’s what we will be analyzing in this four part series of the luxury British automotive icons and the above average expectations of consumers seeking such extravagant motor vehicles.
What qualifies the authors to give such commentary? Having worked and served — most notably with prestigious brands such as Gucci, Aston Martin, Jaguar, Bentley and Range Rover, as well as with mega yachts and coupled with extensive research and consultations in this domain –, both can accurately define the exceptional treatment tendered to a HNWI (High Net Worth Individual) luxury seeking discerning consumer. Brands which qualify to serve this exclusive market provide attention to detail, a plethora of product knowledge/competence, and discretion along with an implementation of an anticipated flawless post-sale/follow-up policy.
Price aside, a luxury car brand should embody cache, exclusivity, pedigree, craftsmanship and limited production. R.L. Polk and Company, a global automotive information and marketing firm that provides solutions to automotive and related industries, has re-defined the term with the appellation, “super luxury”, ‒ i.e. cars that cost over $100K. This category includes brands such as Rolls Royce, Bentley, Maserati as well as the Aston Martin being featured here.
Aston Martin: License to thrill
We begin with the initial luxury automotive brand in this four part series: Aston Martin. This high valued motor car producer brings images of James Bond, a ladies gent, British heritage, sophisticated technology, sex appeal, speed, agility and soul.
Considering the above persona, the makeup of a typical Aston Martin customer.is a male (no gender discrimination intended), in his late 30’s early 40’s, handsome, successful, possibly with an attractive spouse (or if single, a striking companion), possesses a deep knowledge of refined luxury, knows what he wants virtually at any price level, and enjoys adventure, as well as thrives at constant new challenges.
Initial impressions and consultative sales process
When a prospective owner, or existing customer of an Aston Martin walks into any impressive looking Aston Martin showroom, the total experience should normally result as follows:
– To be greeted initially by the attractive receptionist/hostess (brand ambassadors) by the owner or General Manager of the dealership;
– Introduce the prospective client to an Aston Martin specialist;
– Offer a hot or cold fine beverage;
– Be given a tour of the impressive premises;
– Exhibit the various models and a test drive initiated during which time rapport is being built;
– Offer of an overnight test drive to create the feel and experience of the automobile and its performance characteristics;
– Thank and greet the prospect by the dealership owner or GM upon returning the vehicle followed by the sales specialist;
– Customer’s contact information should be entered into the dealer database (CRM);
– If a sale is initiated – the sales process should ensue. However, if a sale does not occur, effort should be exerted in a discreet and pragmatic manner (consider “consultative” selling) to close the sale. Statistics show that 60% of car purchases have been consummated on the spot when they received what they considered was an excellent presentation and demonstration. Either way, a follow-up is imperative within 24 hours.
Sale & delivery
– An appointment should be set for delivery;
– Upon arrival to pick-up the vehicle, customer should be congratulated by owner and/or GM;
– Explanation of vehicle model should be thorough along with a post-sale follow-up the following day;
– Customer should be offered a token appreciation for his/her business. This can be in the form of champagne from a strategic partnership for example, Moët & Chandon and/or an additional gift in good taste.
Exceeding customer expectations for the discerning client-driver
To succeed in gratifying the seemingly sophisticated client, a high-end organization should develop a comprehensive strategy along with efficient implementation tactics. These include:
– Having a clear and unique value proposition that hooks them;
– Consider exploiting the five senses to attract and retain them – categorized as “ambiance”/”sensorial” marketing and branding;
– Staff must be customer centric, patient, empathetic, and good listeners – remaining calm under duress during client interactions;
– Employee retention – hiring for attitude and training for skills;
– Utilizing a hands-on approach;
– Probing clients’ specific needs/requirements – recognizing their motivations – reading their body language;;
– Earning their trust and respect by exuding confidence, empathy and transparency;
– Offering a personal touch – individualized attention with customized solutions – It’s all about the customer;
– Being frank and transparent with pricing, offers, proposals and promotions;
– Proposing an expansive product selection and service options;
– Outstanding and consistent levels of customer service throughout the organization;
– Reducing or eliminating waiting times – whether on the phone (reservations, customer service etc.), as well as for service or an appointment at the physical location;
– Offering customer loyalty programs through joint collaborations with other luxury purveyors – a great way to make them feel special by receiving something extra;
– Asking for feedback with regards to service and product experiences for ways to improve those experiences. Discerning clientele are typically strongly opinionated and relish giving their views.
– Implementing the latest technology with all touch points.
The Aston Martin automotive brand with its power, beauty, soul and heritage as its tagline delivers to a specific and limited market segment by giving way to its consumer target to acquire their models they associate with a “luxurious and sporty lifestyle.” The brand is essentially a status symbol.
Brand loyalty is about building an emotional, and in some cases, irrational, attachment in a product. “Total customer experience” is not an option but rather compulsory as part of an alluring brand. It takes savvy planning, execution and perpetual refinements to stand above the crowd. It’s how you get noticed and remain relevant. Luxury brand desirability is driven by standout design, craftsmanship, as well as what is felt.
A typical Aston Martin showroom portrays a super luxury car brand able to offer a “wow” factor to its intended customers with an unconventional retail experience which exploits the five senses. This includes a showroom floor with ideal lighting, the various models well positioned/presented, impeccably dressed/groomed staff, and an upscale lounge ‒ overall, presenting sight, sound, smell, touch sensorial experiences and creating a feeling of lavishness. Some will go as far as offer art exhibitions on the premises, five star dining events and wine tasting to name a few. It’s what its type of clientele crave.
With the proliferation of Italian and French luxury brands bearing the ‘Made in China”, ‘Made in Turkey’ or made elsewhere remote from their land of origin, it makes one ponder whether the brands are diluting their image for the sake of lower prices and higher profits. This begs us to revisit the question of what constitutes an “authentic” luxury product and whether manufacturing in a country unknown and unfamiliar for evoking luxury is a good long term strategy for the brand with heritage.
Luxury vs. Premium vs. Fashion: Clarifying the Disparity
Definitions of “luxury” vary enormously and depend on with whom you discuss the topic and in what context. The term “Luxury” has never been something easy to define. It is relative, mysterious and elusive. In essence, it revolves around subjective criteria in the mind, which creates a mood and what is generally referred to today as lifestyle.
The proliferation and marketing misuse of the word “luxury” on many products across sectors is quite evident. Brands either do it out of ignorance or to enhance the desire for the consumer to purchase their products.
Gary Harwood at HKLM, one of the founders and directors of a leading strategic branding and communication design consultancy, affirmed:
“A luxury brand is very expensive, exclusive and very rare – not meant for everyone. When it ceases to be these things, then it’s lost its exclusive cachet. Commoditizing luxury brands and making them more accessible to the middle market puts them at risk of becoming ordinary, common and less desirable. And the more available a brand is, the less luxurious it becomes.”
Authentic luxury brands compete on the basis of their ability to invoke exclusivity, prestige and hedonism to their appropriate market segments not the masses. There is a classic litmus test:
Is the product manufactured in artificially limited quantities? (i.e. the rarity factor)
Does the firm have a story to tell? (i.e. history & pedigree)
Is the firm portraying a unique lifestyle?
Is craftsmanship the hallmark, which delivers products that only High Net Worth individuals can purchase without question?
Does the brand offer authenticity?
Does it implement an absolutely no discounting policy?
Is the product (and at least most of its materials/parts) manufactured only in its country of origin?
Luxury is not premium – and premium is not luxury. They are two dissimilar categories catering to different market segments.
Luxury Product Roots and Perception: Key Factors of Authentic Luxury
A luxury product is rooted in a culture and comes along with a small fragment of its native soil, of its heritage. This proposes that in order for a “luxury” product to remain true to its origins, as one of its main criteria, its production shall remain in the country of origin ‒ whether that is France, Italy or elsewhere (most notably in Europe). Tempting to relocate production elsewhere can cause the brand to lose its lustre and character.
Professor Jean-Noël Kapferer, an author and lecturer at the Kellogg Business School (Northwestern University, USA), as well as at HEC Paris, Europe’s premier academic research center on Luxury, clarified his views on this subject matter by stating that:
“Looking at luxury companies’ own attitudes, there is a clear segmentation, based on their brand positioning and business model. A first group (such as Louis Vuitton, Hermès, Chanel) emphasize quality and heritage as the main sources of their incomparability. They are patriots. For them, a country of origin is a homeland, much like the soil in a vineyard – a miracle made of earth, nature, sun, rain, and sophisticated human labor, loaded with culture. For them, ‘made in…’ tells a whole story, tying production to a long heritage.”
He further affirmed that:
“To remain a true luxury brand, following the luxury business model, entails sticking to local production. This is not an easy task for many luxury brands. Those that comply must create the conditions that are necessary to sustain this production. This is why they often buy their local sub-contractors in case the latter go bankrupt, to be sure to keep alive a historical know-how that might otherwise disappear.”
France and Italy are considered the leading countries for luxury and trend setters for clothing and accessories. Luxury watches (better known as “timepieces”) are manufactured in Switzerland ‒ the undisputed leader in this category. London, is considered to be the luxury spirit capital of the world with Burberry as the most prominent luxury brand. Whereas, Germany Italy, as well as the UK are for luxury automobiles. However, what they do produce elsewhere in the world are not ‘luxury’ but rather their lower priced “premium” derivatives (think BMW, Mercedes and Audi). Other illustrious automotive names, such as Ferrari and Rolls Royce, continue to manufacture solely in their native country.
Private vs. Public Luxury Purveyors
For the good of their distinguished image and cache, top-tier luxury brands should remain small privately held, with no pressure to sell and family run beyond the reach of speculators. These companies are managed, and their equity held, by those families. Consequently, management of brands, people and profits are done with the long term in mind, not necessarily the next quarter, which most investors would not have the patience to deal with if the luxury brand was publicly traded. In essence, the privately held have the luxury of taking risks as they desire and staying the course when they don’t. They have the freedom to invest for 5-10 years without receiving a financial return. In comparison, the publicly traded ones, which are accountable to their shareholders, are constantly under pressure to trim production costs and increase revenues and profits which lead them to cater to a larger audience ‒ the mass affluent. So much for all the elements of ‘genuine’ luxury purveyors which are doing away with scarcity and exclusivity.
The most prominent smaller and privately held ‘authentic’ luxury brands which fulfill every criteria ‘luxury’ truly exudes are as follows:
Soft Luxury Goods (high-end apparel, leather goods and exclusive fragrances) include: Hermès (70% owned/controlled by the Dumas family ‒ the descendants of its founder), Chanel (100% ownership by the Wertheimer family) and the niche perfume house, Creed Fragrance Company founded in 1760 (100% ownership by the Creed family ‒ descendants of its founder).
Hard Luxury Goods (products such as watches, jewellery and pens) include: Rolex, Chopard, Patek Philippe amongst others.
According to the Millward Brown luxury brand survey, which includes the large luxury groups, Louis Vuitton, Hermes, Gucci, Chanel, LVMH (Moët Hennessy Louis Vuitton), Rolex, Cartier, Fendi and Tiffany & Co. respectively, are the most successful family owned luxury brands. Moreover, research done by SDA Bocconi, renowned for providing world class luxury education, revealed that unique characteristics of most family-owned or managed business fit almost perfectly with the competitive logic of hard and soft luxury approaches. Needless to say, their management culture, retaining the mystique (crucial in the ultra-luxury domain), and long-term decision approach are all instrumental for cultivating and preserving their brand heritage.
Hermes 2013 Ad Campaign
In the Final Analysis
There should be no confusion between luxury and premium or even a fashion category. When someone buys a luxury object, he/she purchases craftsmanship, cache, pedigree, made in limited quantities, a special place in the world of lifestyle and exclusivity (made for the few). The premium business model is based on the manufacturing of best-in-class products, with an image of style. Fashion is a general term for a popular style or practice, especially in clothing, foot wear, and accessories. Fashion references to anything that is the current trend in look and dress up of a person. Usually not timeless. A “luxury” and a ‘premium” product can be both – as in a tailored made fine wool suit for example.
Therein lies the major differences between a luxury product and a premium product. It’s legitimate for a premium product to seek out the most suitable and most economical manufacturing location, so long as quality and service levels can be maintained.
Brands such as Nike, Adidas, Ralph Lauren, Hugo Boss, Tommy Hilfiger, amongst others, are doing an exceptional job of selling solely an image to the masses. Indeed, far from being a genuine ‘luxury’ brand, most of their products are manufactured in low labor countries such as China.
The ‘made in’ label plays a significant role for luxury aficionados who hold higher expectations including a value added quotient to ‘luxury’ brands who produce their products in their respective country of origin – mainly France, Italy and the U.K. For categories other than apparel and accessories, production should be elsewhere in Western Europe.
In the article “Building a Luxury Brand Image in a Digital World” by David Dubois, INSEAD Assistant Professor of Marketing and Debbie Teo, INSEAD MBA, they quote the following:
“Hermès has no desire to become ‘masstige’ (a mass producer of prestige goods) the company’s CEO Patrick Thomas stated in 2009. In essence, he asserted that his brand was not in a position to dilute its image and compromise on quality in the interest of short-term results. This is truly one of very few authentic “luxury” brands befitting the model and criteria in the sense of the word.
Privately held luxury brands are prone to view business with long-term vision and remain rigid with quality over quantity. Comparatively, their publicly traded counterparts go out of their way to please their shareholders which may dilute their “luxury” status for the sake of volume and short–term gains.
Good business decisions are not the domain of tactical “bean counters” — exploiting the luxury brands for all their worth. They may also come from strategic planning and overall financial leadership.
Consider this! You are walking on, what is considered, a prestigious street in a downtown area of a major city lined up with a slew of luxury shops. What do you particularly notice about the look of the shops as compared to mainstream stores? Would you say it’s the window displays which are striking? The entrance? The upscale and inviting interior design? The way the merchandise is displayed?
Designing a luxury shop is much more than four walls, racks and lighting. It’s a meticulous creative and holistic process taking into account that luxury stores have to transmit the identity of a luxury brand, so that the image the customer has of this brand is affirmed by each store visit. Needless to say, it’s a design concept coupled with the total customer experience in mind.
Piaget timepieces, Bond Street, London
Ambiance, personalized service and the total shopping experience
In a world where the consumer has become savvier, luxury products more accessible through an increase in democratization of luxury brands and the rapid emergence of prestige brands, the retail environment in luxury branding is all about heightening the consumer’s brand experience and amplifying the brand aura.
A well designed luxury retail boutique should embody an extraordinary design that is timeless while maintaining a striking interior that is unique, inviting, functional, and most certainly portray a luxurious setting.
A custom designed attractive setting – yet alluring with captivating style, invites customers to truly feel the brand experience by adding character. It exudes a “You’ve arrived!” underlying message. This is accomplished by connecting the feeling of warmth and acceptance ‒ via emotions to a product or service, and infusing it with a tangible and intangible essence that remain in the customers’ minds. The vital elements are:
Location: The luxury brand store perception all begins with its location. A prestigious address/neighborhood makes an initial luxury statement ‒ whether on a prominent avenue such as Bond Street in London, Rue Saint Honoré in Paris or Rodeo Drive in Beverly Hills and at other renowned high-fashion streets worldwide. A high-end mall and airport outlets are becoming ever more popular due to their convenient spots along with an increasingly sophisticated environment.
Facade/Window Display: transparency/opacity of the windows, display highlights for outside windows (product type, arrangement of space, animation, colors and much more.), frequent creative displays and themes all play a vital role in showcasing merchandise with pizazz.
Main entryway: This should reflect an imposing appearance by creating the feeling of grand luxury access to the interior of the boutique. Elizabeth Arden’s signature red door is a distinguishable fixture at her stores and spas worldwide.
Decor: Attention to details including well-crafted attractive furnishings and materials (pillows or decorative accents) throughout. Choice of color palette, textures, combination of materials and accents all influence the overall store image in addition to being part of the overall design esthetics.
Lighting and its effects: The proper choice of illumination adds to the overall design and ambiance.Lighting can bring focus to merchandise displays, hide imperfections, add warmth, and help create a positive shopping experience for the brand’s clients. Halogen spots and LED lighting are the preferred variety for interior designers.
Smell and Background Music environment: These reflect the store’s personality. Smell is considered the olfactory of the fifth human sense. The scenting strategy is part of “sensory”/”sensorial” marketing and branding that’s meant to attach certain smells to brands, drive loyalty, and make people feel at home. Whereas, music/sound supports refining brand communication and in designing a better sounding environment. A discreet volume should be considered as an ideal comfort level.
Merchandising appeal ‒ display and layout: localization of displays (size, colors, kits, messages) while keeping in line with brand values and guidelines. The spaces where your clients see and touch your products have an effect on the visual aspect along with their shopping experience.
Lounge area: possibility or not to have private salons for VIPs, to utilize for private shows/demonstrations, presentations and other special gathering purposes.
Service amenities: Washrooms should possess panache and be spotless. Their design can achieve the look and feel of luxury with both functionality and comfort. A kitchenette can be an additional amenity for preparing and catering light food/hors d’oeuvres. A workshop for bespoke functions such as product setting on the spot, size customization, engraving etc). Perhaps a kid’s space with animation to keep a child/children busy while their mum/dad/parents are shopping. The kids can eventually be converted to the luxury label themselves.
Staff Caliber and Overall Customer Care: Luxury goes beyond good looks. The service offered is a major event in itself. This comprises of dress code, attitude, and politeness regardless of what the client looks/wears. As well as responsiveness, a consultative sales approach and accessibility. This requires proper hiring criteria, on-boarding and repeated training in product knowledge, presentation skills, and anticipating customer expectations to go above and beyond. Luxury firms need to implement KPIs (Key Performance Indicators) to gauge their service effectiveness which do not only measure the performance of organizational processes, but also warrant a consistent quality level of in-store service.
Bijan Boutique, Rodeo Drive
Artisans of timeless and artistic retail interior design
It takes bold strokes to prevail from the competition by showcasing a distinctive look along with creating an emotional bond with the clientele. As such, luxury brands are making their mark on the map with a radical and explosive architectural vision. It’s where design innovation coupled with creativity are paramount when delivering artistic solutions driven by each individual brand’s image.
When it comes to commissioning distinctiveness with luxury ambiance interiors in the retail, restaurant and hotel sectors respectively, Yabu & Pushelberg have become the go-to interior designers akin to what Frank Gehry is to deconstructivist architecture. In over three decades, the duo partners, based in Toronto along with a New York City design studio, have fostered a client list that ranges from Louis Vuitton and Tiffany & Co to Four Seasons Hotels and renowned French chef and restaurateur Daniel Boulud. In their work, Yabu and Pushelberg manage to articulate luxury through contrasts, austere designs with fine materials, as well as through comfort and the casual, strong points of view, including a crafty mix of art and artisanship. For them, luxury is a state of mind, not a material.
A Yabu & Pushelberg sample interior
The final take
The ambiance created in a luxury boutique is one of the finest marketing tools. The aesthetic appeal to human senses, the feel of the brand creates the image. Along with great service, it is one of the most important reasons customers will choose to shop repeatedly. It’s where the brand lives by orchestrating immaculate detailing that engages all senses of the discerning target audience. Surround the brand and its products/services with fashion, beauty, design and attractive models – without any characteristics of tackiness.
It all begins with the choice of store location, the immediate initial impression (window display, entrance, store layout, merchandising, furnishings, lighting and much more), the sales staff presentation and the impact of each touch-point in creating a unique indulging experience. The small touches that regularly go unnoticed help to create a distinct sense of place in luxury commercial spaces.
Emporio Luxury Mall, New Delhi, India
All that said, today’s savvy luxury consumers are increasingly seeking much more than merely a cosmetically elegant looking bricks and mortar shops. They have become more discerning and seeking a more knowledgeable and professional assistance to help them in managing their lifestyle and stature. It all boils down to the total customer experience which embraces knowledgeable and helpful staff, alluring presentations, storytelling, exclusive invites and privileged previews amongst other lifestyle themed activities.
Starbucks is an innovator when it comes to creating brand exposure, content quality and engaging with its audience on social media. It has an impressive following on various social networks and able to cultivate current relationships by encouraging sharing through special promotions, and customized experiences through programs such as My Starbuck Rewards.
Another American company, Farmers Insurance, decided to exploit the benefits of social media to build additional brand awareness, by creating a new campaign that would put their virtual airship on the screens of everyone playing the popular social game Farmville on Facebook. earlier last year, it was reported that Farmville had over 80 million users – and growing.
The raison d’etre of any for profit business is to increase sales and income. For this to occur, a company’s goal and objective is to attract new customers and encourage repeat purchases. Brand awareness signifies how aware existing, as well as potential customers are of your business and its products or services. Ultimately, to achieve successful brand awareness requires that your brand is very familiar and is easily recognizable. Brand awareness is crucial to differentiating your product/service from other similar products/services and competitors.
What does it take to build effective brand awareness?
Brand awareness affects perceptions and attitudes, which drive brand choice and even brand loyalty, which means that without brand awareness there is no brand equity. The latter signifies the value premium that a company achieves from a product/service with an identifiable name as compared to its generic counterpart. Moreover, solid brand equity is an asset that can be sold or leased.
The first dimension distinguishing brand equity is brand awareness. It is influential in consumers’ purchasing decisions and loyalty. This affects customers’ perceptions and attitudes (liking or disliking) and how they build brand preferences.
David Aaker, an authority on marketing & branding, in his various publications defines brand awareness as “a consumer’s ability to recognize or recall a brand in a certain product category”; in other words, the brand is called to mind when a consumer thinks about the category. Greater awareness of a brand increases the likelihood that a consumer will consider it.
Brand awareness has three levels, which is depicted by experts in a pyramid. It ranges from the pyramid’s base as uncertain feelings that begin the moment the brand comes to the consumer’s mind through a name, followed by a belief that the brand is the only one in a particular product category.
Brand Recognition:
This is the lowest level of brand awareness. It refers to consumers’ ability to discriminate between a previously encountered brand and new brands based on prior exposure to the brand. The choice of the brand may not have been supported by the information a customer retrieves from memory.
Thus, brand recognition creates positive feelings toward a brand, and more exposure to a brand name ─ while supported by the company’s image and products, strengthens consumer memory. In a luxury window display, executed by professional merchandisers, the name of the brand will be supported by the ultimate look of the collection.
Brand Recall:
The next level of brand awareness refers to consumers’ ability to recall the name of the brand when provided only with the product category as a cue. It usually takes place in a store, when a consumer compares a brand he/she can recall from memory in the presence of other brands. For example, a product-category cue may be signaled in a department store that has collections from several luxury brands. The significance of brand recognition depends on where a purchasing decision is made: in the store or outside the store. Brand recognition is generally more effective when the product decision is made in a store.
The Purpose of Brand Names & Symbols
Brand names and symbols are the facets of brand awareness that provide basic information for classifying brands as members of product categories. These affect inferences made about brand attributes and benefits.
Jean-Noel Kapferer and Vincent Bastien, authors of the venerable book “The Luxury Strategy”, which includes the notion of ‘Break the Rules of Marketing to Build Luxury Brands”, note that in the luxury domain, because of the complexity of the luxury concept, a “label” reveals the identity, class, knowledge and culture of the brand. It creates, for example, immediate recognition of the unique touch of Chanel, with the particular look of a garment anywhere in the world. In luxury, a name, logo, symbol or color, shapes distinct consumer perceptions ─ forming emotional links to the brand, as well as secondary links to product quality.
Brand name awareness is the basic step in the communication process between brand and consumer that supports the creation of brand identity. To be effective, the name should be easy to remember and have an emotional component. In luxury, a brand name usually belongs to its original creator and founder, as in Yves Saint Laurent, Christian Dior, Louis Vuitton and Coco Chanel.
A prominent brand name that’s different and distinctive enhances recognition. Distinctiveness is achieved through pictorial depiction of the brand name, which facilitates recognition of the symbol. Luxury brands that bear the names of their founders, such as Christian Dior, are already distinctive, whereas less-mature luxury brands could benefit from a pictorial approach, thus enhancing the brand awareness.
Brand symbol is a representation of the brand name and its product category. Companies that want to communicate their product or service effectively should depict their brand name as a symbol. In luxury brands, a symbol usually combines a brand name and a logo.
In this instance, the latter begins to communicate with a customer before a purchase, helping to maintain consistent memories of the brand. A logo provides a great deal of information through a small number of signs that translate the values and vision of the brand.
Other signs of brand recognition
Packaging and colour are also important associative characteristics in identifying the essence of a brand. Such unique appeal helps potential customers easily remember and quickly identify a brand from a distance. A brand’s name and packaging strongly influence quality perceptions and shape a brand’s reputation through purchasing behaviour that leads to brand loyalty Tiffany’s aqua blue colour reflects a relaxing and refreshing state because it resembles the colour of water.
A coordinated color that is used in signs, packaging, web pages and all advertising shows the character of a particular business, which influences customer satisfaction and loyalty. FMRI research (Columbia University’s Medical Center Program for Imaging and Cognitive Sciences) has shown a significant impact of differentiated packages on consumer choice, which can affect a customer’s emotions and increase sales. For example, perfumes presented in distinctively designed bottles linked to the brand name help create a distinctive brand identity.
Brand Awareness Via Social Media
Social media had become an important venue for companies of all sizes in building trust amongst their so-called “fans” or “followers’ who in essence are their consumers. Social media offers an array of functions, which can benefit a company’s reach and objectives. The Harvard Business review recently featured an article on how soft drink brands like Coke and Pepsi use social media to build trust with their consumers. Facebook and Twitter, amongst others, are effective tools for these brands to reinforce and expand their identities ─ as well as enhance customer relationships.
All Things Considered: Strategy & Implementation
A brand can offer the best products in its category, comes backed by the best service and deliver the best overall value; however, it’s meaningless if no one has heard of the brand.
To start with, consumers must be aware that there are different brands in the product/service categories in which the brands operate. Subsequently, they must be aware of the brands ─ ideally, the brands should be the first ones that come to their minds within specific product categories and associated with a USP (unique selling proposition). Consumers should also be able to identify which benefits are associated with the brand. Finally, they should have an idea where the brands are sold.
For companies to succeed in creating effective brand awareness, they should develop and execute a strategy that they can continue to update throughout the development of their brand. Successful brand awareness normally takes time to develop with regards to an effective awareness effort. Furthermore, it takes time for an effective communication to reach potential customers.
A few customers can respond early, while most will take time to hear about the products/services, make a decision to try them, as well as return for more at a later time. Establishing customer loyalty takes even more time as it requires extended experience with any company and its products/services. As a result of the aforementioned actions, positive brand awareness will increase. Brand awareness is essentially the impression people have of a brand.
In the soft drink industry, there is not much, which separates a private/white label soda from a brand name counterpart in terms of taste. However, consumers are very aware of the brands Coca Cola and Pepsi, in terms of their images and names. This higher rate of brand awareness equates to higher sales and further serves as a superior competitive advantage that prevents competitors from gaining additional market share.
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Footnotes
Article based on extensive research that has been conducted for an MBA dissertation based on the topic ‘The Influence of Brand Identity on Brand Equity in Luxury Segment’ by Violetta Ihailanen who has over 15 years of practical retail luxury experience with renowned fashion brands including Burberry amongst others along with an entrepreneurial stint.
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Bettman (1979)
Farquhar (et al, 1990)
Hoyer and Brown (1990)
Kapferer and Bastien (2009)
Keller (1993)
MacInnis (1999; 2008)
Rossiter and Percy (1987)
Zaichkowsky (2010)
Wilcox and Laverie (2008)
As we closed the year 2013, I have rounded up the ten most read articles of 2013 by my readers. The following ten articles captured the most attention. See them all below in descending order. Your views are always encouraged.
THANK YOU for your readership and look forward to feeding your mind with much more business food for thought which can be applied for timely results.
“An empowered organization is one in which individuals have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organizational success.”
─ Stephen R. Covey
“No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organized in such a way as to be able to get along under a leadership composed of average human beings.”
─ Peter Drucker
“Hire people, who are better than you are, then leave them to get on with it. Look for people who will aim for the remarkable, who will not settle for the routine.”
─ David Ogilvy
“Be willing to make decisions. That’s the most important quality in a good leader. Don’t fall victim to what I call the ‘ready-aim-aim-aim-aim syndrome’. You must be willing to fire.”
─ T. Boone Pickens
“You will never understand bureaucracies until you understand that for bureaucrats, procedure is everything and outcomes are nothing.”
─ Thomas Sowell
“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it you almost don’t have to manage them.”
─ Jack Welch
“What’s a brand? A singular idea or concept that you own inside the mind of the prospect.”
─ Al Ries
“Improving your brand is an investment in building your personal profile, reputation and the results you will achieve.”
─ Rachel Quilty
“If you don’t get noticed, you don’t have anything. You just have to be noticed, but the art is in getting noticed naturally, without screaming or without tricks.”
– Leo Burnett
“You’ll never have a product or price advantage again. They can be easily duplicated, but a strong customer service culture can’t be copied.”
─ Jerry Fritz
“People don’t want to communicate with an organization or a computer. They want to talk to a real, live, responsive, responsible person who will listen and help them get satisfaction.”
─ Theo Michelson
“Design is the method of putting form and content together. Design, just as art, has multiple definitions; there is no single definition. Design can be art. Design can be aesthetics. Design is so simple, that’s why it is so complicated.”
─ Paul Rand
“During a political campaign everyone is concerned with what a candidate will do on this or that question if he is elected except the candidate; he’s too busy wondering what he’ll do if he isn’t elected.”
─ Everett Dirksen
“Effective communication is 20% what you know and 80% how you feel about what you know.”
─ Jim Rohn
“The quality of life is determined by its activities.”
─ Aristotle
10 Second Survey
I’m planning something neat for those who participate here. If you don’t mind, would you kindly do my 10 second survey. In return, I will send you my book, “Entrepreneurial Essentials:…” in PDF format with my compliments. Please click HERE for link to the survey.
Today, consumer purchase decisions are increasingly driven by consumers’ hearts. With ambiance marketing/sensory branding, a custom designed attractive setting, yet alluring with captivating style, invites customers to truly feel the brand experience by adding character. This is accomplished by connecting the emotions to a product or service, and infusing it with a tangible and intangible essence that remain in the customers’ minds.
See images and videos which depict the essence of ambiance marketing/sensory branding.
CLICK ON THE IMAGE for the link to the images/video page
I’m planning something neat for those who participate here. If you don’t mind, would you kindly do my 10 second survey. In return, I will send you my book, “Entrepreneurial Essentials:…” in PDF format with my compliments. Please click HERE for link to the survey.
Open any fashion magazine and you are immediately struck by the mystique of perfume adverts. It is an industry, which combines the power to make people dream, to imagine their ability to attract, and better still seduce. It plays on the psychological heartstrings of self worth and self-perception.
When the elements come together with force, people feel sexy and desirable. Billions are spent on their consumption. Large and small houses spare no expense in their creation and marketing. Perhaps this explains why so much effort is spent on designing an appropriate package along with creating the right name.
The Commercialization of Designer Fragrances
Mainstream body fragrances are usually a blend of synthetic elements. They are produced by only a handful of firms.
Niche perfumes however, are not generally associated with fashion labels, celebs or extravagant looking bottles. Their trademarks are rare components constructed to leave an indelible mark.
Such fragrances are built on a pyramid, harness raw materials and are aromatic. Many are botanically sourced and distilled by master perfume makers. Key ingredients include Damascus rose, jasmine, citrus from Sicily or Corsica, and even tree bark such as sandalwood, juniper, and cedar.
For these reasons, trained noses are in high demand. However, the use of perfume and the selection of ingredients are cultural and even generational. Take two well-known brands as examples:
Many young clients prefer the scent marketed by Abercrombie & Fitch. It is light, sweet and attracts. Although everyone knows Chanel No.5 not everyone will wear this fragrance. It is heavy and voluptuous. Marilyn Monroe might have worn nothing else to bed, but who else follows suit? Chanel’s new advert campaign online has been designed to capture a new generation of advocates.
When Only Luxury Perfume Will Do
Recent statistics show that the demand for fragrances continues to grow most notably in the Gulf and Middle East. Euromonitor, a consumer research firm states that perfume sales in Saudi Arabia top sales in 2010 ($827.5 million) followed by the UAE, ($205.8 million) during the same year. On average, a Gulf client will spend $380 per annum on perfumes.
Lifestyle and DPI do not alone explain the stats. It is also the demand for rare elements used in their preferred fragrances some of which contain oud and amber. Just last year Christian Dior has tried to tap this lucrative market with much success.
Other classic brands such as Armani and YSL have tried to do likewise. Historically however, more emphasis was placed on naming the product and the packaging rather than the actual contents. Lifestyle has always been the key market driver when a big fashion brand launches a new perfume. They are seen as key pieces of the accessories puzzle to the brand, which can include cosmetics.
I am often reminded how such brands will even create a timepiece, which sports the brand name. However, these timepieces have nothing in common with genuine luxury watches such as a Patek Philippe.
As consumers become more sophisticated, they begin to shop around for more articulate perfumes. Think of Annick Goutal, Kilian Hennessy (Kilian Paris), Roja Dove (Roja Parfums), Serge Lutyens, or better still Frederick Malle. These houses stress sophistication as well as natural ingredients whenever possible.
The luxury brand Hermes for example, has taken great care to hire some of the noses that work for Frederick Malle. The smell Terre d’Hermes immediately comes to mind. With each creation, there is an eau de toilette and for others there is the perfume. Both products commit the client to the brand and provide accessibility as well as exclusivity, which is the hallmark of Hermes in the first place.
Distinguishing Natural Perfumes from Mainstream Fashion Brands
Contrary to popular belief, France was not the first country in the world to conceive perfumes. The ancient Greeks and Romans were devoted users of fragrance. However, Grasse, a town on the South of France, is today considered the world’s capital of perfume.
The natural perfumer is both a scientist and an artist. He/She demands rigor in his/her quest of creating beautiful perfumes including his/her “nose” as an inherent talent.
According to The Natural Perfumers Guild – the world’s largest trade association dedicated to natural fragrance, natural perfumers do not use synthetic aromatic chemicals. Natural aromatics are natural biological chemicals, thus their scents come from nature. Additionally, the need is greater than the mainstream perfumers in developing a fixative base for the perfume (so it is held onto the skin to last longer.) Mainstream perfumery has a huge number of synthetic fixatives at their disposal, and natural perfumers do not, and would not, use them. Moreover, the bottles or body care containers are filled by hand which, typically, makes the entire process personal.
Niche perfumery maker Creed, established in 1760 and one of the oldest, uses such methods of hand production, including maceration and filtration, instituted at the company’s founding. It is the industry’s firm proponent of natural ingredients in fragrance. As a result, it has a loyal following that includes royalty, Hollywood stars, political leaders, legends in business, sports, music and the fine arts as well as discerning members of the public who value beauty and quality in scent.
Applying the slogan, “Fragrance without compromise” to his brand ethos, Frederick Malle runs the exclusive fragrance boutique in Paris, Les Editions Du Parfum. His shop and the niche perfumes he sells epitomize how the luxury perfume trade has moved on from just name brands to something beyond marketing hype.
Of Art and Storytelling
The fragrance industry is a very personalized one. For this reason, niche perfumes for the discerning and affluent are growing rapidly. This sector is creating new trends in the beauty and fashion world through a niche/artisan approach. As the perfume market grows in important markets including the Middle East and BRIC countries, and as companies expand outward, the traditional perfume tastes are affecting the world of perfumery. Thus, these highly coveted and hard-to-find perfume notes are becoming ever so popular. Those boutiques able to offer the most sought after fragrances such as oriental amber, Agarwood (oud), and musk amongst others, along with their striking ambiance, will distinguish them from their competitors.
Customers expect highly trained staff at bespoke perfumery shops to understand the art of fragrances such as the origins and chemical make-ups as they are able to tell a customer why a certain fragrance will or will not work with her/his body chemistry and suggest alternatives. This includes the suitability of a perfume to someone’s skin chemistry and diet.
At specialty perfumery shops such as Madison, with a location in Bucharest and Budapest, fragrance aficionados will find an exclusive array of scents, niche colognes, hard-to-find perfumes, room scents, and incense. The 46 or so brands they carry are not available in traditional department store beauty and cosmetic counters.
The Role of the Influencer in the Fragrance Domain
With the advent of in the social media sphere, most notably on YouTube, the “influencer” persona was born. An influencer is someone in a niche or in a specific industry with sway over a large target audience. This individual can also persuade others to act based on their recommendations.
The fragrance domain has several of its own. These passionate souls with their YouTube channel have amassed hundreds of thousands and in some cases, over a million subscribers. One of those on the top spot is former German model, “Jeremy Fragrance” (née Daniel Sredzinski). Jeremy vlogs about both women’s and men’s perfumes and features niche fragrances as well as the popular scents. He is a smooth-talking YouTuber who began his video platform in 2014, He has a high influencer equity score. Another one on the top three spot, is New Yorker Tiff Benson, a fragrance and beauty vlogger and blogger. She shares perfume reviews on YouTube who also writes about beauty and lifestyle topics on her eponymous blog. Tiff is part of the Sephora Squad and founder of The Fragrance Society.
The Olfactory Take – in search for something new and singular
Great perfumes are like works of art. They are inspiring, delightful and memorable – despite their staid looking bottles in contrast to those of the designer house perfumes. Perfumes and emotions are also linked together since they impact our mood considerably. They are the new luxury category which is treated as a work of art.
The lesser-known fragrance brands are often touted by celebrities who publicly declare their preference for them, because of the mystique and rarity they possess. Niche labels often use exotic and rare ingredients which make their brand stand out from the rest. The more than two century old Creed Perfumery has a large freestanding store in New York, considered one of a kind in North America, where it sells its own limited produced fragrances.
Small and privately owned fragrance producers are, for the most part, family run – which make them personally involved in all aspects of the productions process. Their uniqueness ranges from fine-quality ingredients stories of pedigree to environment-friendly practices. Such niche brands normally cater to a small, yet extremely loyal clientele. Personalized service, through well trained front line staff, adds to the emotion, as well as the total customer experience demanded by its discerning patrons.
Unconventional Business Wisdom for the refined entrepreneurial mindset - by James D. Roumeliotis 