LUXURY MARKETING: 11 claves para su éxito

11. The presumed price should always seem higher than the actual priceIt is a telling fact that advertisements for luxury products often show only the product, without any descriptive copy, and certainly no prices. In the luxury world, price is something not to be mentioned. When you are dining in a top-class restaurant, do you select your dishes on the basis of price? Besides, in many such restaurants the guests’ menus do not show prices.

As a general rule, the imagined price should be higher than it really is. It’s the opposite in traditional marketing. Renault announced its Logan model as starting at $8500, but with the full set of options this would bring it up to $11,000. Every seller tries to attract consumers with a low price, a so-called introductory price, then tries to persuade the consumer to go up-range. EasyJet offers the prospect of round-trip tickets from London to Paris at around $45, but the number of seats available at that price are quickly sold.

In luxury, when an imagined price is higher than the actual price, that creates value and this result:

•    When someone is wearing a Cartier Pasha watch, everyone around them more or less knows its price, but tends to overestimate it (on account of its aura of luxury). This increases the wearer’s standing.
•    When offering someone a luxury gift, the gesture is all the more appreciated for the price being overestimated.
•    And lastly, when advertised, the price is that of the top of the range.

The Anti-laws of Luxury Marketing #10

10. Communicate to those whom you are not targeting

Luxury has two value facets – luxury for oneself and luxury for others. To sustain the latter facet it is essential that there should be many more people that are familiar with the brand than those who could possibly afford to buy it for themselves. In traditional marketing, the keyword is efficiency, but over and above efficiency there has to be a return on investment. In advertising for example, the media plan must concentrate on the target consumers and nothing but the target consumers – every person reached beyond the target is a waste of investment money.

In luxury, if somebody is looking at somebody else and fails to recognize the brand, part of its value is lost. It is essential to spread brand awareness beyond the target group.

(Madonna and her Louis Vuitton bag pictured above)

9. The role of advertising is not to sell

Look at Tag Heuer’s advertising. One side features the endorsing celebrity, the other the model of watch. No commentary, no description of the watch, no sales pitch – just the cryptic line: ‘What are you made of?’

Nothing is more alien to traditional marketing than this declaration; in traditional marketing the first step is  to discover a sales proposal, to have a unique selling proposition  – the text is there to make the sales pitch. In luxury, the dream comes first. The explanations of the salesmen are simply post-rationalizations. If you go to a Tag Heuer shop you are handed a thick brochure the size of a book, which says everything there is to say about the Tag Heuer brand, its origins, its finely tuned processes, respectful of a unique design, etc. Then it goes on to describe the various models, one by one…

If you go to a Porsche dealer they will talk to you about racetracks, about road-holding, about everything that feeds the myth of the hero, after which they will tell you about reliability, etc – by way of post-rationalization. American society being what it is essentially compels people to justify spending dollars by adducing qualities that can be presented publicly by the owner of a luxury item, even if it is the dream that is the major selling point. The purchaser of an impressionist masterpiece could say that it’s a good investment.

8. Protect clients from non-clients, the big from the small

Modern luxury works on the open–close principle. Too much ‘open’ is harmful to the brand’s social function – Ralph Lauren’s success undermined one of the foundations of his success with professionals in Europe: sporting the polo shirt enabled them to be different from Crocodile, the other great casual wear premium brand, from whom Ralph Lauren got his inspiration when he was starting out in the United States. On the other hand, too much ‘closed’ is too confining and leads to financial suffocation.

In practice that meant that the brand became segregationist and forgot all society’s democratic principles. In stores, for example, it is necessary subtly to introduce a measure of social segregation: ground floor for some, first floor for others. Armani set up specialist stores for each of his product lines. Advertising and promotion is for all, but public relations are ultra-carefully targeted, like the CRM for the privileged (personal invitations to meet the designer, the brand perfume nose, or the head wine buyer).

7. Make it difficult for clients to buy

The luxury brand is something that has to be earned. The greater the inaccessibility – whether actual or virtual – the greater the desire. As everyone knows, with luxury there is a built-in time factor: it’s the time spent searching, waiting, longing… so far removed from traditional marketing logic, which does everything to facilitate quick access to the product through mass distribution, with its self-service stores, self-checkout systems, the internet, call centers and introductory offers. Luxury has to know how to set up the necessary obstacles to the straining of desire, and keep them in place. People do eventually get to enjoy the luxury after passing through a series of obstacles – financial obstacles, needless to say, but more particularly cultural (they have to know how to appreciate the product, wear it, consume it), logistical (find the shops) and time obstacles (wait two years for a Ferrari or a Mikimoto pearl necklace).

Luxury needs to excel in the practice of distributing rarity, so long as there are no real shortages. It’s quite natural: just as actual shortages stand in the way of growth, so the absence of rarity leads to the immediate dissipation of desire, and so to the disappearance of the very waiting time that sustains luxury.

6. Dominate the client

Luxury is a consequence of meritocracy. Once the exclusive privilege of the aristocracy, luxury today is what restratifies our so-called classless societies, but on the basis of merit, no longer simply on birth. So everyone is looking for ways to pull themselves up – luxury brands are at the same time a reward and a token of gradual elevation. To preserve this status, the brand must always dominate its client. This is not the same as saying don’t respect them: parents dominate their children, but that does not mean that they don’t respect them; on the other hand, if they treat them as ‘best friends’, making themselves out to be their equals, they lose their aura and profoundly disturb their offspring. This relationship between parents and their children is very close to that between brand and client.

As a result, a certain distance is preserved that is not supercilious or aloof, but nevertheless maintains an aura of mystery.

5. Don’t respond to rising demand

The prime objective of traditional marketing is volume growth. It sets its sights at achieving leadership in market share to gain muscle with mass distributors, department stores and superstores, and presents itself as a force to be reckoned with in some of its lines. This ensures wide distribution and broad visibility and provides the justification for a national television advertising campaign. With sufficient volume, the business can work with small margins and still make money. This is the essence of the mass marketing model. Product managers are then judged on just one criterion – growth in annual results. At Ferrero (Kinder, Nutella, Tic Tac) it is not allowed to fall below double figures. The job of each product manager is to increase the penetration be it of Kinder Surprise, be it of Kinder Bueno, and then to push up per capita volume (consumption frequency). If the demand goes up, there have to be supplies to match it – that’s the key to this economic model. Not to satisfy rising demand is to annoy the distributor because unhappy customers will not wait and will always hold it against the company. They will take their revenge by gossiping over dinner about their bad experience with the brand. What an absolute scandal having to wait! Sheer mismanagement!

At Ferrari, production is deliberately kept to fewer than 6,000 vehicles a year – rarity value sells. So long, that is, as the customer understands why the product is rare and is prepared to wait. Rarity can be managed just like the relationship with the clientele; so it is not a matter here of poor sales forecasting but of a deliberate strategy of resisting demand in order to be master of it.

Excerpted from: The Luxury Strategy: Break The Rules of Marketing to Build Luxury Brands by JN Kapferer and V. Bastien, in partnership with Kogan Page publishing.

The Anti-laws of Luxury Marketing #4

4. Keep non-enthusiasts out

In traditional marketing there is this obsession with poaching clients from other brands: sales growth is management’s principal measure of success and of the performance of its managers. This leads companies to come up with new products that will help extend market penetration and thus steal a march on competitive brands. To increase the relevance of the brand – the number of people who would say that the brand was of interest to them – it is necessary to avoid being too exclusive or too different.

When it comes to luxury, trying to make a brand more relevant is to dilute its value, because not only does the brand lose some of its unique features, but also its wider availability erodes the dream potential among the elite, among leaders of opinion. BMW is typical of a brand that is able to grow without cutting back on its rugged features, which are in any event highly exclusive. The Bavarian management has calculated that BMW’s target accounts for 20 percent of the premium segment of the population – only one person in five.

This means that 80 per cent are not at all attracted by BMW’s values. The brand has preferred to exclude these 80 percent and base its growth on its true target, those who wholeheartedly share its values. Brand growth is achieved by penetrating new countries, not new customer segments. In order to grow, the BMW Group preferred to buy two other brands which on their own, like BMW, define a segment – Mini and Rolls-Royce; having taken good care to keep Rolls-Royce’s identity separate from BMW’s.

The Anti-laws of Luxury Marketing #3

3. Don’t pander to your customers’ wishes

One of the most respected brands in the world is BMW. This ever-growing brand has been successful in creating a cult, a body of owners that are extremely faithful, devoted and committed to their brand. It is in fact, according to the Luxury Institute, one of the ‘the most admired car companies in the world’. What are the factors behind BMW’s success?

•    A clear brand identity, observed to the letter since 1962, summarized in a slogan never challenged since then, translated into every language – ‘Sheer driving pleasure’.

•    A stable, family shareholding. Since 1959 the brand has been owned by the Quandt family. It believes in letting things take their time and accepts that it may lose clients in the short term to increase the value.

•    A very German enterprise culture, characterized by its engineering and its product cult. Moreover, being descended from pioneers of aviation, there is a tremendous pride in this company.

BMW sells unequalled driving pleasure to people who know how to appreciate it. It has never built cars that were boring to drive. BMW has become an icon of standing and performance; in the 1990s it was the ‘official’ car of every yuppie or successful young executive eager to show off their success. What is less well known, however, is that despite its success, the brand has remained true to itself thanks to its willingness to resist client demands when these did not correspond to the company’s very precise vision as to what made for a true BMW. This does not mean the luxury brand should not care about its clients nor listen to them. However, it should do nothing that threatens its identity.

2. Does your product have enough flaws?

This is a provocative statement. For most people, luxury is the last word in hand-crafted or craftsman-built products. It is true that in surveys into the perception of luxury, consumers from all over the world were interviewed and the consensus was that ‘product excellence’ is the primary prerequisite of luxury. It would suffice to imagine a bisecting line between two axes – price and functional quality: at the very top right would be luxury. Now, in our view, nothing could be further from reality.

The aim of an upper-premium brand is to deliver a perfect product, to relentlessly pursue perfection. But it would take a touch of madness for it to be counted a luxury. Functionally, a Seiko watch is superior to many luxury watches – it is more accurate (because it’s a quartz watch) and shows the time directly and in a perfectly legible manner (because it is displayed on a digital face). If you were to buy some of the famous brands of a luxury watch, you would probably be warned that it loses two minutes every year. The flaw is not only known, it is assumed – one could say that that is both its charm and its guarantee of authenticity. It is the specific and singular nature of their movement that is responsible for that. For luxury watchmakers like adding complications, indeed seek them out in their endless quest of art for art’s sake. This is the ‘madness’ touch that goes beyond perfection and makes people collect them.

 

The Anti-laws of Luxury Marketing #1