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.

Hermès' Social Media Problem

Luxury goods firms are finally engaging in social media – some dive right in and experiment with lots of different tactics (LV), others are more cautious (Burberry), while others are just dipping their toe in the water. A couple weeks ago, Hermès launched a new perfume, Voyage d'Hermès, with splashy and expensive banner ads on some of the most trafficked websites, including the New York Times and Le Monde. The banners pointed to a site loaded with beautiful content that hit upon the Hermès' lofty brand theme of exotic travel. Customers can share their own dream travel-experiences… these varied from a candlelight picnic for two on the floor of Sistine Chapel to scaling mystical peaks in far off lands. A Facebook fan group was set up and viewers are encouraged to share the video with friends. It seemed all the key elements (content, networks and engagement) were set for a social media hit.

Two weeks and millions of dollars later, only 40 dreams have been shared on the site and the Facebook page boasts a whopping 70 fans. The video has views numbering in the tens of thousands on You Tube, a resounding flop by Web 2.0 standards. What went wrong? I have my theories:

• The online community has never interacted with Hermès before. Hermès (the parent brand) has never engaged in social media, so there's no core audience with whom it can share the launch and drive traffic.
  
• The level of customer engagement (thinking of a story, writing and editing it) is far higher and more complex than it should be. It also doesn't help that this area of site started with zero examples of content, making it socially risky for the first users to engage. Burberry's Art of the Trench requires only a photo and began with a stable of professional examples to which amateurs could add.
  
• Perfume, especially a new one, isn't a product that lends itself well to digital fandom… the reason is obvious: you can't smell a perfume online. The strategy might work well-established scents, like Chanel No. 5, for which we have sensory memory to reference. It's far easier to become a fan of more tangible Hermès products such as scarves or leather goods.
  

What do you think Hermès could do to improve their social media strategy?

Bienvenue, Ralph!

Perhaps no brand's icon is as quickly and uniformly associated with "The Good Life" as the embroidered rider on his polo pony. It means wealth, leisure and Pimm's cup on the terrace in the afternoon. The story is instantly familiar: a Baruch college dropout working as a sales associate at Brooks Brothers started selling ties of his own design to downtown investment bankers. In several years he builds a multi-billion dollar fashion and retail empire. He was born Ralph Lifshitz, son of a house painter from the Bronx. You know him as Ralph Lauren.

The genius of Ralph Lauren isn't his merchandise, it's his merchandising. He has permanently changed the way we shop by building environments that sell a complete lifestyle. His creation of the Polo Mansion (aka: the Rhinelander Mansion) in 1984 on Madison and 72^nd is the most influential retail concept in the last 40 years. Here, you step into the home of some impossibly wealthy robber baron, wander the halls and acquire good taste. The formula is oft copied and Polo Ralph Lauren went on to create "mini mansions" in fashionable downtowns and tony malls throughout the world.

Today, Polo threw open the doors of its first mansion-store at 173 Boulevard Saint Germain in Paris. Yes, there is a women's store on Avenue Montaigne and his first Parisian outpost on Place de la Madeleine, but never before today has there been a Polo store in Paris which rivaled the Rhinelander. Abby and I rode our Velibs across the Seine to pay a visit this afternoon. Judging from the perfectly coiffed heads milling about us, we were joined by every doyenne in Paris for opening day. The store is laid out on five glitteringly appointed floors of palatial proportions. This isn't Hemingway's post-war Paris… this 17th century mansion is straight out of Edith Wharton.

Upstairs, a perfectly tailored salesman in a tweed jacket helped me discern the difference between two single breasted navy blazers (boring, I know – but a void in my wardrobe.) Following the Colette incident, I've been longing for black boots and thought I struck upon a compromise: a sleek pair of black chukkas that would work well with a suit or jeans (day-into-evening!) I asked a tall, handsome, square-jawed salesman if I could try them on in my size and pondered if I should also ask for his number. "These, sir, are made-to-measure." Out of my league… on both counts.

Abby and I were secretly hoping of running into Ralph, and dressed accordingly.  Regrettably, he was not in the store today. As I stood outside taking a photo of the facade, a well-tailored gentleman with a British accent cracked a joke that my photo was the only thing I'd get free from the store. Turns out I was speaking to Julian Griffiths, Senior Director of Operations for Polo Ralph Lauren in Europe – Griffiths was responsible for developing the new store. He explained that today was the culmination of a four-year labor of love - with heavy emphasis on labor. The mansion, once a grand address, had fallen into disrepair and was used for decades as a less-than-grand office building. The architects and designers had to clear away makeshift walls, rebuild the main stairwell, and completely redesign and replant the central courtyard.

The end product surpasses the Rhinelander store – the light is superior, the flow more conducive to browsing, the setting more splendid and something quite – je ne sais quoi – Parisian?

Photos courtesy of WWD Online

Old is the New New

It seems a bit odd to be living in a servants' quarter studio and be writing about luxury goods, however everyone at school is positively obsessed with them. Job opportunities with brands like Chanel, LVMH, Hermès, etcetera are mentioned in the most hushed and reverent tones. Luxury goods are taken very seriously here – in fact, during my first class session at ESSEC we discussed the role of luxury goods in ancient rituals.

France is fortunate the business has held up through the credit crisis. Luxury firms dodged a bullet as consumers in the United States, Europe and Latin America tightened purse-strings over the last 24 months. Lucky for these firms that the brand message of prestige and exclusivity that ceased to drive sales in western markets still resonates with the emerging upper-middle class in China and India. If you're unclear on what I mean, think about prominently logoed products (big polo pony shirts) that created instant recognition and the "it bag" phenomenon that drove luxury handbag sales in the US from 2004-2007.

For western markets, brands are shifting to a message that emphasizes heritage and craft. Luxury products, from leather goods to timepieces, are sold with the promise of becoming heirlooms – timelessly tasteful and durable enough to withstand generations of use. Brands are reaching for history, even Jimmy Choo is reviving a "greatest hits" line of footwear from its relatively young 14 year-old portfolio. Recent Louis Vuitton campaigns hit on travel themes and connect with the house's legacy as a luggage maker. Hermès reminds customers of its origins as a saddle maker by including horses in their imagery.  Ads for Patek Philippe feature multiple generations of beautiful and aristocratic-looking Europeans.

If this doesn't sound all that new, it's really not – the pendulum is just swinging back. The same game-plan was used during a pullback in demand in the early 1990s, brands have shifted gears into a battle-tested communications strategy. However, because luxury goods consumption was not near as high nor distribution as complicated as now, the stakes have never been higher.