Luxury Marketing Quiz

luxury brands

• those that offer products or services associated with rarity, excellence, and high prices

  • Often seen as status symbols and are popular among high-net-worth individuals (HNWI) and aspirational consumers

  • Heritage and craftsmanship – celebrated qualities of goods within the “luxury goods market”

• Something adding to pleasure or comfort but not absolutely necessary

• An indulgence in something that provides pleasure, satisfaction, or ease

What has led to the explosive growth of luxury

increased availability of money and time

More global and democratic society has allowed for luxury marketing to ________

distance itself from older connotations of social stratification

Richemont

• Cartier, Van Cleef & Arpels, Piaget, Mont Blanc, Chloé, Peter Millar, Purdey, Baume & Mercier, IWC Schaffhausen, A. Lange & Sohne, Jaeger LeCoultre, Officine Panerai, Roger Dubuis, Vacheron Constantin, Dunhill, Alaïa, Lancel Paris

Estee Lauder Companies

• Aerin Beauty, Aramis, Aveda, Balmain Beauty, Bobbi Brown Cosmetics, Bumble and bumble, Clinique, Darphin Paris, Deciem, Dr. Jart +, Editions de Parfums Frederic Malle, Estee Lauder, Glamglow, Jo Malone London, Killian Paris, La Mer, Lab Series, Le Labo, MAC, NIOD, Origins, Smashbox, The Ordinary, Tom Ford, Too Faced

Kering

Gucci, YSL, Bottega Veneta, Balenciaga

LVMH

• Veuve Cliquot, Dom Perignon, Moet & Chandon, LV, Dior, Loewe, Kenzo, Fendi, Givenchy, Kenzo, Sephora, Tiffany & Co, BLVGARI, Hublot, Tag Heuer, Fenty

• Wine & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry, Selective, Other

Tiers of Luxury Marketing

ultra luxury

core luxury

aspirational luxury

accessible luxury

massige

premium mass-market

Trends in luxury marketing

personalization, sustainability, digital transformation, inclusivity, experiential luxury

personalization

• customization of products and services to reflect consumer preferences

sustainability

emphasis on eco-friendly products and processes

digital transformation

• leveraging virtual platforms and AR/VR technologies

inclusivity

• broader market targeting beyond traditional affluent consumers

experiential luxury

providing immersive experiences rather than just products

Luxury Consumers

aspirational luxury consumer

high net worth individuals

ultra high net worth individuals

HENRYs

Aspirational Luxury consumer

ALC’s purchase at least one luxury item annually & spend between $3,000-10,000 on fashion annually

High net worth individuals (HNWI)

people with assets between $1 million and $30 million

Ultra high net worth individuals

people with more than $30 million in net worth

HENRYs (High Earners Not Rich Yet):

• people in upper-middle to high-income brackets but have not yet accumulated enough wealth or assets to be considered affluent

  • Tend to be 43 year olds with an income of $100,000 along with investable assets of less than $1 million

consumer behavior

• the actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions

• Brands must tailor their product portfolio to their target customer base

puchase decision process

1. problem recognition

2. information search

3. alternative evaluation

4. purchase decision

5. post-purchase behavior

1. Problem Recognition

perceiving a need

Difference between a person’s ideal & actual situation that’s big enough to trigger a situation

2. Information Search

seeking value

Personal source, public sources, marketer-dominated sources

3. Alternative Evaluation

assessing value

Evaluative criteria, consideration set

4. Purchase Decision

buying value

Whom to buy from, when to buy from

5. Post-purchase behavior

consuming/using value

satisfaction/dissatisfaction, potential for cognitive dissonanc

Maslow’s Hierarchy of Needs

a conceptualisation of the needs (or goals) that motivate human behavior

Luxury Article Takeaways

• Drivers: 

  • Luxury goods can satisfy the need for status – respect, admiration, and voluntary deference

  • Conservatives use luxury to signal they are “better than”; liberals want to signal “different from”

• Forms

  • Luxury to consumers has become highly individualized

  • Luxury consumers have started looking outside of the traditional luxury categories & increasingly invest in education and health

• Consequences

  • Wearing luxury brands may help consumers project competence and lead to preferential treatment

    • Does not help make new friends

    • Perceived as less warm and less social as they are viewed as attempting to manage impressions

    • Want to convey sense of accomplishment – often signal arrogance

  • Luxury consumption can make consumers feel inauthentic because it can be seen as an undue privilege – can trigger negative emotions such as shame and guilt

primary research

research conducted specifically for your business, funded by your business

secondary research

research available for you to access for free or for a fee, conducted for another reason but that could be applicable to your business

quantitative data

data is numerical and can be displayed in charts/graphs

qualitative data

interviews, quotes, stories that add sentiments to a research question

Hedonic consumption

• buying products & services for pleasure and enjoyment, rather than for practical reasons

  • Based on emotional and irrational buying behavior

  • Focuses on sensory experience, symbolic meaning, aesthetics

  • Can be used to signal status

  • For fun, entertainment or mood enhancement

Utilitarian Consumption

• purchasing and using goods and services for practical needs

  • Used to accomplish a task or meet goals

  • Focuses on efficiency and cost-savings

leveraging hedonic consumption

• Sensory appeal: Emphasizing the look, feel, and smell of their products, using high-quality materials and meticulous design details to create a luxurious sensory experience

• Experiential marketing: Providing unique and immersive experiences like exclusive events, VIP customer service, and personalized consultations to engage customers on an emotional level.

• Brand storytelling: Crafting narratives that associate the brand with aspirational lifestyles, luxury travel, and high-status individuals, creating a sense of belonging for the consumer

• Limited editions and exclusivity: Creating limited-edition products or offering access to exclusive collections to foster a sense of desire and prestige among customers

• Aesthetic design: Prioritizing elegant and timeless aesthetics in product design, packaging, and store environments to convey a sense of luxury.

• Heritage and craftsmanship: Highlighting the history and expertise behind the brand's craftsmanship to emphasize the perceived value and quality of the product

companies reduce risk of purchase decision through

• Obtaining seals of approval, social proof, testimonials

• Providing warranties and guarantees

• Shifting from price to value, the investment; positioning as a long-term benefit vs. short-term expense

• Loss aversion – i.e. this is one of the last pieces in this collection

Veblan effect

• refers to a situation where an increase in the price of a good leads to an increase in its demand due to its appeal as a status symbol

• Contrasts the law of demand – holds that as the price of a good increases, its demand decreases

Luxury Brands use Velban effect in marketing

• Emphasize exclusivity, unique design and high quality to justify high prices and attract status-seeking consumers

• Invest in creasting exceptional and personalized shopping experiences for customers – further reinforces their perception of exclusivity

overcoming status seeking perception

• Attribute extrinsic motivations: status, social approval – judged as inauthentic and self-promotional

• When passion is expressed – following the luxury brand on social media, learning about the brand and displaying admiration for its products, it becomes certain that the consumption is intrinsically motivated

  • Pursing the pleasure inherent in consuming luxury rather than pursuing the external benefits of luxury

• Luxury passion increases perceived authenticity – alleviates social costs of consumption

trends to study to understand consumer behavior

category trends, regional trends, generational trends

market tour

Brand managers conduct market tours to gain firsthand insights into consumer behavior, market trends, and competitor activity by directly interacting with customers, retailers, and distributors in their target market – allow them to make informed strategic decisions about positioning, product development, and marketing campaigns

Sara Verman

• x LVMH, Meta, and more

• Topic: luxury marketing strategic brand challenges & frameworks

• 1. I learned that careers aren't linear and you can be taken differently from what you immediately thought! She has had an incredible career and worked for a wide variety of brands, all of which she mentioned were unexpected but rewarding.

• 2. I also learned the importance of understanding your target audience when marketing for a brand. For Belvedere, a lot of their brand activation was done in clubs and parties because that is where the product is being enjoyed.

Luxury 4 Ps

• Product: the attributes and benefits of what you are trying to sell

  • Products or services associated with rarity, excellence and high prices; pleasant to have, but not necessary

• Price: how much you will charge for the price

  • high

• Placement: where people can find your product

  • In physical stores, online, in higher income neighborhoods

• Promotion: how will you promote your product

  • Brands are experimenting with digital channels, using influencers, celebrity, etc

3 Cs of Marketing

• Consumer: people who use and/or buy your products

  • Target aspirational to ultra high net worth individuals

  • Luxury consumers buy for self-expression, heritage, and status

  • Customers expect service, customization and exclusivity

• Company: your organization, its employees, board, and leadership, its capabilities, strengths, weaknesses, opportunities and threats, its culture, mission, and vision

  • Many are private, family owned, many are part of conglomerates

• Competition: who you are up against to gain consumers and customers

  • Luxury brand differentiate themselves through prive points (accessibile luxury vs. ultra-luxury, storytelling)

STP

• Segmentation: aggregation prospective buyers into groups that hve either common needs or will respond similarly to a marketing action

• Targeting: deciding which segment to go after

  • Who to prioritize

Positioning: the place a product occupies in consumer’s minds relative to competitive products

power of storytelling

• Enhanced brand perception: research indicates that consumers exposed to brand narratives describe the brand more positively and are willing to pay a premium for its products

• Emotional connection: effective storytelling fosters an emotional bond between the brand and consumers, leading to increased loyalty and trust

Differentiation in a crowded market: in a saturated market, compelling narratives help luxury brands stand out by conveying unique heritage, values, and craftsmanship

digital

• E-commerce

• NFTs

• Augmented reality/virtual reality

• Web advertising (google ads, social media ads)

• Social media

• Websites & SEO

augmented reality

AR allows you to see and interact with real-world objects while adding digital elements on top, AR can be accessed through smartphones or dedicated AR glasses

Virtual Reality

• VR completely blocks out the real world and presents a purely virtual environment

  • Typically requires a dedicated headset

NFTs

• Non-fungible tokens

• A unit of data that lives on a blockchain

• Each NFT has a unique identification code that can’t be replicated or copied and metadata that can be linked to a variety of things to provide immutable proof of ownership

• Used for a variety of things: verifying ownership, accessing paywalls or exclusive content, to the data being linked or stored on the blockchain

  • Digital images, songs, videos, avatars, linked to physical items (luxury watches, cars, and yachts)

• Cryptocurrency is monet whereas NFTs are the goods or services you can purchase on the blockchain

Phygital: the element of both the physical and the digital world – marketing term that describes blending digital experiences with the physical ones, bridging both worlds together for customers

lucid motors

• Price: The cars cost between $69,900 to over $249,000.

• Place: They sell the car online and in person. They mentioned that they have worked hard to make their online shopping experience more efficient by allowing consumers to tailor their car how they want without input or other individuals confusing their experience. 

• Product: Luxury, Electric vehicle cars. Two products: Lucid Air and Lucid Gravity

• Promotion: They are focused on getting to know consumers and their needs so that they can tailor their advertising to their experiences. They mentioned that for them, their biggest challenge is getting individuals to realize that switching to an EV is not as difficult as others imagine. 

•  

• Customers: 40-60 year olds, wealthy individuals, environmentally forward, luxury oriented

• Competition: They mentioned that their competitors are luxury legacy auto makers such as Mercedes, Porsche, and BMW.

Company: The company is differentiated by being the best. They charge the fastest, travel the furthest, and overall the purchase experience offers more efficiency for customers. They incorporate sustainable practices throughout the manufacturing process and offer a seamless experience for consumers.

sustainability

Meeting the needs of the present without compromising the ability of future generations to meet their own

benefits of selling in global markets

• More regions – potentially more sales

• If one regions does poorly – another region can make up for it

• You get to learn from trends in other markets that could trickle across the globe

  • Sustainability trends typically start in Europe and then trickle to the U.S.

  • During COVID brands like Gatorade saw what happened in China and learned how to pivot before COVID came to U.S.

3 Elements make up a good positioning statement

1. Target: who the brand is intended for

2. Benefit: key thing the brand offers the target

3. Reason to believe: proof that the brand lives up to its promises

A good PR team

• A strong PR team can help you promote the good and manage the bad

• “Control the narrative”

• help you book influencers, talk shows — can be done in house or with agencies

• Teams develop key messages that can be tailored to different stakeholders, events, and channels

• Proactively reaching out to others to talk about your products & services helps expand your reach, more so than if you let “word of mouth” take its course

Characteristics of a good PR

• Messaging that is succinct yet comprehensive

• Information that is fact-checked

• Both proactive and reactive messaging strategies

Proactive

•  include the key message document + press kit

  • Key messages helps your leaders stay on message, share accurate information and be good brand ambassador

Reactive

• used in case of an unfortunate situation and is not to be shared with the press or public

• Providing media training & briefing your staff can help you leverage media opportunities to present your organization’s mission

• Plan ahead of crisis so you can respond quickly if one occurs

• How you react will reflect the values of your organization

• If donors and investors feel like an organization isnt staying true to its values, investment dollars can come under jeopardy

• Have a list of people who can speak on the organization’s behalf

PR: Key Message

• Start with the orgs purpose

• Then share information organized by key themes

Press kits help reporters by

• Giving them the story so they can quickly get the highlights, add their take, and submit their story for press

• Gives reporters data points and images to write their stories

press kits include

• A press release

• FAQ document

• Images or videos that are cleared for use

• Contact information of who the press could reach out to if they want more information or interviews

• Links to other stories

Press kits should include

• Where the event will be

• When it will be

• Who is coming

• How to register

• Goals and outcomes desired for the event

• Contact information & social handles

When planning a reactive PR, consider

• Current events and political climate

• Judgement and experience of internal leaders

• Expertise of external thought leaders your organization has developed relationships with

• What is congruent with your organization’s values

CSR

• Corporate social responsibility as a comprehensive strategy

• Encompasses the overall commitment of a company to operate ethically, sustainably, and responsibly

• It involves integrating social, environmental and economic concerns into the core business strategy

• CSR initiatives affect various aspects of operation from sustainable supply chains and ethical labor practices to reducing environmetal impact – ensuring that the business contributes positively to society as part of its everyday activities

Philanthropy

• Philanthropy typically seen as the voluntary donation of money, time or resources to support charitable causes

• Narrower activity within the broader CSR strategy

• While philanthropy might involve donating to nonprofits, sponsoring community events or supporting charitable programs it does not necessarily change the underlying operations of the business – it is one way companies can give back to society

Innovations & Technology

Lab grown diamonds

leather like material from pineapple (pinatex)

New business models disrupting the luxury market

• Renting high-end fashion

• Resale and circular economy

  • The RealReal, Vestiare Collective

Vestiare Collective

• 2022 they banned fast fashion brands to be sold on the platform

• Some criticized

  • Exclusionary: removing accessible brands from a resale platform limits entry points for some users

  • Performative: some argues it was a PR move rather than a structural commitment to sustainability

• Helped to solidify its ethically-driven identity and align with B Corp values

RealReal Controversy

• Investigative reports revealed that The RealReal was not always authenticating items thoroughly, despite its promise of expert authentication

• Some exployes were tasked with authenticating luxury goods

• The company’s core value proposition – trust and authenticity – came into question, raised doubts scaling authentication at volume 

• What the brand did

  • The RealReal committed to improving training, hiring more authenticators, and enhancing AI tools

Chanel sues the RealReal

• In November 2018, Chanel filed a suit against the RealReal in the Southern District of New York alleging trademark infringement, counterfeiting, false endorsement, false advertising, and unfair competition under the Lanham Act

• Alleged the website sold at least seven counterfeit Chanel bags

• Said they didnt have any of the necessary qualifications to authenticate Chanel products

Some brands lean in vs. sue

• Some brand choose to partner instead of sue

• Stella McCarntney, Burberry, and Gucci have all collaborated with the RealReal

Galaxy FBO

• They offer incredible amenities for pilots and flight crew. They mentioned that for them, pilots are their #1 target for prioritizing customer service. To ensure they have a high-quality experience, they have added a pilot lounge and snooze room, as well as other amenities to elevate their experience.

• 2. Galaxy FBO also offers high-quality customer service that elevates customer experience. For them, there is nothing more important than the people that you hire. They ensure that their employees are excited to come to work and, therefore, treat customers with the utmost respect. Additionally, they mentioned that all their employees are trained at a high level to ensure the best treatment. 

• 3. They tailor their experiences to their customer. They mentioned that they would change the lights inside depending on who was flying. For example, green for the Dallas Stars and orange for Home Depot. This shows a level of care, appreciation, and consideration for clients that highlights their luxury experience.

• 4. They offer high-quality services and a great overall experience for customers. They ensure that baggage is timely and handled with care and there are no time restraints or rushing. This ensures that customers have a relaxing time when flying out of Galaxy FBO, compared to commercial flying which can have long waits for collecting bags and often rushes boarding. 

• 5. Galaxy FBO offers customers a seamless experience during their travel day. The speakers mentioned that they modeled their facilities so that there would be no distinction between customers leaving their hotels, driving their luxury vehicles, and boarding their planes. Their buildings are clean, modern, and sophisticated. Furthermore, they put a lot of money into their bathrooms to ensure a high-quality experience for all customers.

•  

• For private jet owners and high-net-worth individuals seeking luxury, efficiency, and safety in their aviation experience, Galaxy FBO is the premier fixed-base operator that delivers unmatched service, modern amenities, and operational excellence. Galaxy FBO stands out due to its state-of-the-art facilities, award-winning customer service, and commitment to excellence in all aspects of aviation.

Guest Speaker: Danielle Azoulay

• Anything less than 2 x 2 x 2 is not recyclable. This means that these makeup items are not sustainable, and many components go into each one. Furthermore, she said packaging is a level of sustainability that a brand can claim. 

• 2. Aora was inspired by the colors of Mexico and was looking to revitalize sustainable makeup. She mentioned that most sustainable makeup is very beige, and this brand sought to bring more excitement and sustainability to the packaging and product. The brand is also heavily influenced by Mexican culture, and the names of products are in Spanish.

• 3. Anything that shimmers has an ingredient called Mica. Most of the Mica comes from India and is mined by child labor. Palm oil is also a flawed industry, and there is a lot of human trafficking and human rights issues.