Redefining “Luxury Brand” for Luxury Brand Marketing
Why do consumers consider one brand to be a “luxury” brand and another brand not? Exclusivity? Performance? Quality? Innovation? Heritage? For the most part, those all have been defining characteristics of a luxury brand, and they still are. However, there’s been a shakeup underway. The traits that carry the most weight with consumers in today’s luxury market have changed. Let’s explore the ways different brands are redefining what it means to be a “luxury brand” when it comes to luxury brand marketing.
“The definition of ‘luxury’ is undergoing a paradigm shift in the consumer market,” said marketing expert Pamela Danziger. Unity Marketing and Luxury Daily recently surveyed over 600 luxury retailers and marketers. They found that the definition of luxury is the “number one disrupter of the luxury business.”
What does this mean for how businesses approach luxury brand marketing? If you know how consumers think of luxury, and what drives their purchases, it can help you determine the best strategy to attract wealthy clients. You can also reduce the cost of acquisition.
The Prioritization of Quality for Brands
Ask any Apple buyer how well they like their Mac or iPhone. They’ll undoubtedly tell you they believe Apple products are far superior to any competitor. It doesn’t even matter if competitive products offer better features. Apple may got its start by launching a unique computer product to compete against Microsoft. But Apple’s following has grown far beyond disgruntled PC users. There may be a certain “status” to owning an Apple product. However, the company built its brand on a reputation of quality and performance.
Now consumers are defining luxury differently. Just a few years ago, quality took over as the leading characteristic of luxury. Data from a recent major report confirms that quality, not exclusivity, is now the key definer of luxury for consumers globally. According to Albatross Global Solutions and Numberly’s fourth annual “The Journey of a Luxury Consumer” report, 85% of luxury consumers say quality is the most important characteristic.
“What separates true luxury from the idea of luxury is quality,” says Javier Calvar, chief operating officer at market research firm Albatross Global Solutions.
Younger Consumers Are Playing a Bigger Role in the Luxury Market
A change in the demographics of today’s luxury consumer is behind the shift in what defines luxury. Traditionally, the luxury market has been made up of older consumers, many with inherited wealth. Baby boomers and those older still make up 60% of the total global luxury market. But the other 40% is made up of Generation X and millennials. So younger consumers are representing an increasingly significant portion of the luxury business.
Younger people, with newfound wealth, are not only moving into the luxury market, they’re redefining it.
“When money goes into the hands of people that didn’t have much of it before, the relationship those individuals have with luxury brands is very different from those who have been exposed to luxury brands for a long time,” said Calvar. “A really large percentage of our top-end product customers are between the age of 30 and 50. It’s no longer a retirement plan to buy yourself a yacht to enjoy in your golden years. ”
Millennials in particular are a luxury marketing segment growing in importance and wealth. They see exclusivity as less important. Instead, they prefer to “belong,” and have little interest in something that separates them from their peers.
Connecting with the New Luxury Brand Consumer
How can you connect with this new luxury market customer? Identify the specifics of your target customer’s profile. Once you know about their likes, dislikes, and best methods of contact, you can build a more effective luxury marketing strategy.
So it’s more than demographic data, it’s about understanding your customer’s mindset, whether your luxury customer is 35 or 65. Appealing to a baby boomer is different than connecting with a millennial, though both may have interest in the same product. Knowing the buying motivations of each allows you to tailor your message to that niche segment.
“Quality always will be essential to luxury, said Lyle Maltz, a director with Kantar Vermeer, WPP’s global marketing consultancy. “But now emotional value and a strong, personalized relationship with consumers are of great importance in luxury marketing.”
Today’s luxury marketing is “highly personalized marketing. It has a very specific and defined message that resonates with an individual’s affinities, interest, and wealth capacity,” agrees WealthEngine’s Patrick Bischoff, president of the Commercial Markets Group at WealthEngine. You need to build that one-on-one relationship with your customer to make them feel they are being treated as an individual.
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Following a Customer-Driven Approach to Luxury Brand Marketing
The new luxury market consumer will define what makes a brand a luxury brand, not the other way around. Today it’s less about marketers and more about consumers. That can make it more challenging for luxury marketing strategy, as the definition of “luxury brand” continues to shift. Still, to truly prosper in the luxury arena, luxury marketers will need to follow the lead of their target luxury consumer.
“The change in how consumers define luxury and the new path to purchase is dramatically redefining the marketing strategy,” said an unnamed marketing industry insider in a Forbes article. “Luxury brands must be very agile and innovative in order to gain the favors of the new luxury consumer.”
Giorgio Armani is a brand known globally for its high-end designer men’s clothing. It began by targeting the ultra high-end professionals who desired a high quality product. Since then, Armani has gradually expanded its brand scope with products aimed at broader customer segments. Armani launched a line of jeans in the U.S. market for fashion seeking, price-sensitive youths in urban metro areas. This is an example of a luxury brand creating sub-brands to capitalize on and cater to a different customer segment.
Leveraging Wealth Insights to Appeal to Luxury Brand Consumers
Since the traditional luxury model has been challenged due to the rise of digital platforms, social mobility, the emergence of ‘affordable luxury,’ and other preferences of millennial shoppers, it is necessary to leverage new methods of appealing to today’s luxury consumers. Here are a couple ways you can leverage wealth insights to boost your luxury brand marketing strategy:
1. Use a Wealth Screening to Inform Your Outreach Strategy
With more younger luxury buyers who grew up in a digital world, you must also change your approach to luxury brand marketing. Part of building a luxury brand involves communicating with customers in the way they prefer. So it’s important to have a keen understanding of their interests and appeal to those preferences by creating forms of tailored outreach. Years ago, that may have been print ads or direct mail. Today it’s more likely to include social media, apps, and other digital means that provide a “total customer experience.” The question is: how do you go about hyper-personalizing outreach today?
Using a wealth screening, you can apply wealth insights to a list of contacts to better understand their propensity and capacity to spend. Wealth screenings, in that sense, can help you identify your best prospects with accuracy and precision. All you have to do is upload a list of contacts or consumers, and select the attributes you want to apply to them. Then, you’ll get a fresh set of information on those clients in relation to those attributes. So, when you append your database with wealth attributes, you’ll know who within your list you should reach out to. Additionally, the insights you gain will help you create hyper-personalized messages that speak to your donor’s needs and inspire them to make purchases, now and in the future.
2. Generate Wealth Models to Find New Consumers
Apart from finding the best ways to market to your existing luxury buyers, it’s also important to find more consumers who are just as likely to spend as your best. But, as the paradigm continues to shift, and as we continue to reconfigure our impression of luxury, how do you predict who will spend on your products?
Using a wealth model, you can predict which luxury consumers are most likely to spend on your products. Using a Look-Alike model, you can uncover the unique qualities of your best customers. This will help answer questions like: What do my best customers spend on? How old are they? What are their interests? If anything, a descriptive model such as the Look-Alike model, will help you develop a customer persona. You’ll gain clarity on their interests and demographics. These insights will help adapt to their behaviors more seamlessly.
But, let’s take this a step further. Let’s say you want to find more customers just like them. Specifically, customers who are just as likely as your existing, loyal customers to buy products from your brand. By generating a predictive model, our data scientists employ WealthEngine data along with yours to create a custom algorithm. Using this, we can predict who’s most likely to purchase items from you. Harnessing the power of wealth models allow you to see how likely your prospective customers are to make a purchase. It helps you target the right customers and focus on appealing to them so they will make recurring purchases. Not only will this inform how your brand should appeal to them now, but it will also help you determine what your customers will want from you in the future.