Luxury Marketing 101

For a luxury brand to develop its customer base, it must build awareness.  But sometimes, high consumer awareness undermines goals - a brand can upset or drive away core or likely customers. 

I find this 2X2 helpful for understanding why a brand appeals to certain consumers, which is a good place to start devising marketing and partnership strategy.  I divided awareness on two axes: the vertical axis represents mass-consumer awareness and the horizontal is awareness among likely and current luxury customers. 

In the upper right-hand quadrant, you’ll find brands that are instantly recognizable.  These brands make big statements.  It’s no wonder that the brands playing in this space appeal especially to consumers who are be a wee-bit ostentatious...  They like driving a Mercedes that everyone knows is luxury. 

Quadrant 2 contains luxury brands for whom mass awareness is unappealing – but its still very important that luxury consumers understand and identify the brand.  Bottega Veneta derives much of its brand strength by creating the perception of discreteness.  A signature weave, never a logo, makes a subtle but clear statement to peers.

Some brands thrive in relative obscurity... lower left-hand quadrant contains brands that are regional or for luxury connoisseurs.  These customers derive a great deal of satisfaction from being in on a brand-secret and might be upset if it becomes too well-known… even by peers.  John Lobb would have a hard time making customers covet $4,000 shoes without this sort of proposition.

Why would a luxury brand ever want to have low awareness by likely customers and high awareness among a mass audience?  Even if it did make sense, I’m not sure it’s possible.

Luxury Brand Marketing Strategy

For a luxury brand to develop its customer base, it must build awareness.  But sometimes, high consumer awareness undermines goals - a brand can upset or drive away core or likely customers. 

I find this 2X2 helpful for understanding why a brand appeals to certain consumers.  It’s a good place to start devising marketing and partnership strategy.  I divided awareness on two axes: the vertical axis represents mass-consumer awareness and the horizontal is awareness among likely luxury customers. 

In the upper right-hand quadrant, you’ll find brands that are instantly recognizable.  These brands make big statements.  It’s no wonder that the brands playing in this space appeal especially to consumers who are be a wee-bit ostentatious...  They like driving a Mercedes that everyone knows is luxury. 

Quadrant 2 contains luxury brands for whom mass awareness is unappealing – but its still very important that luxury consumers understand and identify the brand.  Bottega Veneta derives much of its brand strength by creating the perception of discreteness.  A signature weave, never a logo, makes a subtle but clear statement to peers.

The third and lower left-hand quadrant contains brands that are regional or for luxury connoisseurs.  These customers derive a great deal of satisfaction from being in on a brand-secret and might be upset if it becomes too well-known… even by peers.  John Lobb would have a hard time making customers covet $4,000 shoes without this sort of proposition.

Why would a luxury brand ever want to have low awareness by likely customers and high awareness among a mass audience?  Even if it did make sense, I’m not sure it’s even possible.

Burgers and Gays

France has long been a testing ground for mass marketers in the United States because of its more manageable size and due to its higher demographic diversity. This week, McDonald's launched a television spot targeting the large segment of LGBT consumers. What is now known as "The McDonald's Gay Ad" is a trial balloon to see if a similar campaign in the U.S. is possible.



The commercial is a little depressing. There are no burgers or shakes to be seen, the music is weepy, and the whole thing conjures up a very uncomfortable association for LGBT people – the time immediately before we come out to our parents. For many LGBT people, this is the most painful time in life. Why would McDonalds choose to highlight this period to build rapport with a new segment?

Bill O'Reilly weighed in with his two cents in his predictable bombastic fashion. In the same breath he compared gay people to Al Qaeda he predicted, "I guarantee you that will not run here." Bigotry aside, a boycott is not something McDonald's hopes to inspire with their ads. There must have been countless marketing execs involved in creating the spot: weighing in, poring over brand message and images and ultimately watering down the ad's impact.  The company took obvious pains to only imply homosexuality – the young man at the center of the ad is on the phone with his sweetie and the raciest thing he says is "I miss you too." Pretty tame stuff.

One melancholy ad does not a test make – especially for the world's largest burger shack. Hopefully, McDonald's will try out several different versions before deciding on a go or no-go to the U.S. My advice?  Next time, try something a little more peppy.

Grocery Shopping in Paris

I had grand plans for food shopping during my time in France. The romance was irresistible: I love the idea of walking down the street with my canvas tote and loading it with farm-fresh vegetables, meats and cheeses al fresco. The reality is that I'm not that guy… I cook for one, my cooking centers more on efficiency than pleasure and my kitchen is better suited to an RV than an apartment. Thus, I've explored the frozen food aisles of grocery stores more than street markets.

All of the grocery stores in Paris are compact, but usually offer a terrific variety of frozen foods, cheese, wine and cured meats. You won't find a broad selection of American brands in any of these stores. Even though the Institut Louis Pasteur is just across the river, France doesn't look kindly on Pasteurization or over processed foods of any kind.

Here's my rundown of the French grocery chains:

Franprix:
The convenience factor plays heavily into my shopping here – there's a store right across the street from my apartment. The selection in all categories is limited, however the prices are usually quite good, especially for meats. They have a decent selection of frozen foods although the fresh produce looks a little tired. With the good prices comes a big tradeoff: inferior quality. Regularly, I see less than fresh chicken for sale. 

Monoprix: This is France's answer to Target. On the ground floor you'll find house wares, apparel, electronics, stationery and sporting goods. Upstairs (or down in some locations) you'll find the grocery section. Prices are decidedly higher than at Franprix, but so is variety and quality. Monoprix's selection of fresh seafood is lame, but their prepared foods (salads & sandwiches) are the best of the bunch.

Carrefour City: I was super-interested to shop Carrefour, because it has been competing so aggressively against Wal-Mart in the Asian market. Carrefour was – hands down – the best place to shop in Bangkok. In Paris, too Carrefour City is my favorite of the stores – they have great selection, high quality fresh foods and a well-priced private label. What I noticed most was that the look of the store was so put-together, the lighting is soft and the walls are painted a dark grey which combine to highlight the product.

Leader Price: This is the bottom of the barrel in terms of price. Much like Aldi, this is a limited assortment grocer that sells only their store brand. This can be an excellent store for budget shoppers and folks looking for packaged goods. It is a lousy place for fresh food of any kind: meats, cheese & produce.

Wal-Mart's Fashion Sense

The only time I can recall buying clothes at Wal-Mart was when I was driving my grandparents' car to Palo Alto from their home in Las Vegas. St. Frances of the Highway, the patron saint affixed to the sun visor, did not protect that 1984 Mercury Topaz from suffering a blowout midway between Barstow and Baker. My sister and I were stranded for hours in the middle of the Mojave Desert with only the clothes on our backs. Once we got ourselves towed to Barstow, we pulled into the parking lot of a Wal-Mart Super Center, where the tires were changed (all four) and my sister and I picked up the things we needed to spend another night. In addition to toiletries, I purchased socks, underwear and a clean t-shirt and thanked the heavens for Wal-Mart.

It seems I'm not alone in avoiding Wal-Mart for clothes. WWD published an interesting article yesterday on the many strategies the company has attempted to kick start their apparel business.

"Even as the world's largest retailer powered through the Great Recession while its competitors stumbled, apparel lagged while food and areas such as consumer electronics soared. And the problem has only become more intense now that the economy has begun to recover and Wal-Mart's competitors are closing the gap.

Wal-Mart is well aware of the weakness. Vice chairman Eduardo Castro-Wright last month said the retailer's apparel business was "below expectations and continues to be a work in progress" as the company reported a 10 percent increase in profits to $3.32 billion in the first quarter ended April 30 on a 5.9 percent rise in sales to $99.85 billion, although same-store sales in the U.S. dropped 1.5 percent.

Contrast Target Corp.'s first-quarter results, which reflected a 2.8 percent jump in same-store sales. Target reported a 29 percent increase in first-quarter net income, driven by higher sales of more profitable categories such as clothing."

One reason apparel customers may stay away is the perceived compromise a customer makes when shopping for clothes at Wal-Mart. In order to get the great price, they have to accept tier-two brands and a lower level of fashion. This might be a perfectly fine trade-off in categories where outward appearance and social acceptance play less heavily (grocery, electronics, housewares.) But for clothes – brands and trend matter deeply. In contrast, Target doesn't ask customers to compromise… customers can find top brands, on-trend private labels and brand extensions of top designers.

How do you think Wal-Mart can turnaround their apparel business?

Seeking Inspiration

For many of my b-school classmates, this is an exciting time of new jobs, new cities and new digs – they're setting up a permanent home for the first time in two years. For them, the nomadic student life has come to a merciful end. Some, no doubt, will carry on the dorm inspired living that centers on the question "how can I make my 65-inch plasma/PlayStation/Wii console a focal point in my home?" Others are looking to create an equally personal expression of home by tackling some serious decorating. I've always believed in the high ROI of living well.

The stress associated with decorating can lead to a sort of decorating paralysis… or worse, purchases one ends up regretting in a few weeks or months. Before blowing a signing bonus at your local IKEA or Pottery Barn, I encourage nesters to seek inspiration and develop a plan before getting all starry eyed over that Hänstrūmgorg Sofa.

Apartment Therapy offers a daily record of stylish urban homes. The ideas are often practical, always chic and usually completed stretching a dime. Every week, AT features the best finds on Craigslist from coast-to-coast and every year holds the Smallest-Coolest Apartment contest, which I have vowed to win in 2011. Stay tuned.

Elle Décor just launched a room-by-room look book with all sorts of luxurious inspiration from homes of the likes of Tamara Mellon, Nacho Figueras, John Derian et al. I warn you, this site inspires odd questions: why paint when you can wallpaper… or cover your walls in fabric… or leather… or mother of pearl tiles? The look book will give you a sharp eye of what you want and need in a room before heading to Craigslist or the mall.

If you find the homes in the places above are bit tame for your taste, The Selby is in Your Place tracks the homes of artists and designers all over the world. While the design choices are far from practical, they can be quite inspiring. These folks live full-throttle in the world of creative ideas, which is reflected in their homes.