Welcome to the world of luxury. Once a world of extreme exclusivity, inaccessibility and elusiveness, today the world of luxury is evolving to target a wider audience.
The world of luxury is experiencing changes – both from the way consumers are developing, as well as the way luxury businesses themselves are being run. Luxury marketing has now shifted to reflect these trends.
On the consumer side, Sumindi Peiris, global director of Johnnie Walker – Reserve Variants of Diageo, says consumers are more interested in unique experiences and the social currency that comes with them rather than owning or collecting “possessions”, as in the past.
“The more traditional idea of conspicuous consumption is being replaced by an emphasis on quality, authenticity and uniqueness. Modern consumers are demanding more meaningful and personalised returns on their spends; intangible success is measured in the form of ‘one of a kind’ experiences as well as deep personal development,” she says.
She explains the definition of “wealth” has become more and more segmented today. As an increasing number of people enter the world of wealth, luxury is available to more. However, the 1% of ultra wealthy consumers still seek exclusivity.
While brands obviously want to benefit from the growing pool of wealthy consumers, they also need to do so in a way that does not “cheapen” their cache in the eyes of the “most wealthy”, she adds.
Simultaneously, the rise of the ultra high-net-worth individual places new demands on luxury brands to think creatively – to go that extra mile and offer something truly rare and extraordinary.
Global takeover by luxury conglomerates
Second, the way luxury businesses are being run has evolved as well. Sebastien Vacherot-Toure, chief creative officer of Publicis 133 LUX Asia Pacific, the agency’s newest arm catered to luxury marketing, says just a decade ago luxury maisons were mostly family owned and had much smaller setups. However, today, luxury conglomerates are taking over these maisons.
These small in-house setups have thus grown exponentially and have evolved to take on specialised functions such as public relations, communications, customer service, digital, CRM, marketing and e-commerce, among others on a global scale.
“We’re seeing the democratisation of luxury at an unprecedented level, driven by globalisation and the digital revolution. Long gone are the days when luxury was only available to the select few. The idea of luxury, once perceived as a ‘rarity’, has now evolved into ‘masstige’,” Vacherot-Toure says.
This has also led to the rise of using technology in the luxury sector, allowing luxury brands to reach their target audiences on a larger and more accurate scale.
Brenda Pek, Asia Pacific’s marketing manager for Rolls-Royce Motor Cars, says with the exponential growth in the digital media space in recent years, more ultra high-net-worth individuals are embracing technology as a source of information. However, this remains a growing development for the brand, which still spends 50% to 60% of its marketing spend on events and 3% to 5% of its marketing spend on digital.
Ultimately, what digital effectively does is it allows brands to add a layer of richness to the client experience. This, in return, encourages a closer and deeper connection in creative ways, says Rick Lam, senior vice-president of global marketing for Accor Luxury and Upscale Brands.
According to LuxHub, Havas Media’s newly launched luxury consulting boutique, one of the strongest trends is the growing role of digital in the luxury consumer journey. LuxHub recently completed a global luxury survey of the top 10% of consumers by household income.
It found nearly 57% of all respondents and 72% of Millennials felt that luxury brands should engage with social media. In China, social media engagement for luxury consumers can be expected to rise to 88%. While a rich in-store experience is key for many brands, (49% of respondents said it was their preferred method), the focus on digital for luxury marketing is only set to rise.
“It’s now necessary to create a consistent and engaging luxury experience across channels and devices – something many luxury brands have been slow to adopt given the difficulty of creating a rich luxury experience on some devices. Even if consumers still prefer to buy luxury items in physical stores, many will research, compare and decide on products online before making the offline purchase,” says Stuart Clark, managing director of Havas Media APAC.
One brand clearly leading the way in integrating online and offline is Cartier.
The luxury brand has invested in creating a series of social media films and content that is consistently animated across platforms such as YouTube, Facebook and Instagram. As such, the content engages its audiences on various levels, leading to chatter, awareness and brand affinity – all of which has led to a huge increase in the brand’s online following.
Other luxury brands have also been experimenting on digital platforms, particularly for their localised focus.
Last year, just six months into a collaboration with mobile platform WeChat, Burberry decided to extend its partnership and enhance its social and mobile presence in China. The expanded digital deal allowed Burberry followers on WeChat to watch its London Fashion Week show and hear WeChat-only audio content about the inspiration and details of key runway events.
Vacherot-Toure adds that clearly marketers who are ahead of the curve can leverage social technology to amplify their presence and raise awareness in local markets. Ultimately they are able to create sustainable desire, allure and demand for their brands.
Can brands keep their exclusivity with digital?
While digital no doubt has had a profound impact on the world of luxury, it is a double-edged sword.
In a conversation with Marketing, Erica Kerner, VP of marketing communications for Asia Pacific at Tiffany & Co, explains that while embracing digital is vital for most brands today, brands should be selective.
“For every brand there is a delicate balance of keeping it luxurious and exclusive, while reaching the masses when using social media. However, luxury brands do need to remember it is OK to go a little bit mass market because as a brand you want to be aspirational and inspire consumers to buy your product in the future,” she says.
Social media is ultimately for the masses. Hence, for every brand using digital, the challenge is slightly different, she adds.
Despite digital having the ability to increase sales numbers and reap great profits, it can, at the same time, put brands at risk of crass commercialism and destroy their allure. Hence, luxury brands need to learn to balance this paradox while interacting with consumers on a cultural level.
Myths should be conveyed indirectly and should be consistent across all touch-points – across product, merchandising, retail, digital and marketing platforms, says Vacherot-Toure.
“Brands such as Chanel, Hermès and Loro Piana focus on myth-telling, product savoir-faire and craftsmanship. They do not push consumers to buy their products, but rather communicate the allure of the brand and stories associated with it.”
A touch of class: Impressing the consumer
With the struggle for attention only increasing, how does a luxury brand now stand out?
Recent trends have seen brands heavily invest in event marketing to impress clients. No longer confined to a product showcase or the launch of a new store, brands are pushing their creative muscle with all kinds of events such as art exhibitions, galas and even experiential walk-throughs.
Examples of cool events:
Kerner explains that while a print ad may set the mood of your brand, until brands can get customers into their stores, consumers have not really experienced the living breathing brand. While unable to release numbers as to how much of the brand’s spend currently goes into digital or event marketing, she does say that over the years the numbers have significantly increased.
When done right, the pay off these event experiences present to marketers is immense. Events allow for storytelling to come to life and to communicate a brand’s code, DNA and values. A well-executed and thought-through event experience can generate immeasurable emotional affinity between a brand and its audience.
This in turn increases loyalty and top-of-mind awareness.
Lam talks about the vital role of events in playing a more active role in a consumer’s experience.
Its luxury hotel chain Sofitel, for example, created a photo exhibition “Revealed” that took an intimate look at the world’s greatest modern artists at work as they revealed themselves to the photographer. Olivier Widmaier Picasso, grandson of Pablo Picasso, curated the exhibition and personally selected the 30 photographs from the collection of Paris Match, a well-known French weekly magazine. First opening in New York, the exhibition then crossed the US and Canada before coming to Europe.
Another example would be the brand’s launch last year of Sofitel So Singapore. Sofitel So is a contemporary lifestyle brand under Sofitel Luxury Hotels. It is a collection of designer lifestyle hotels with unique personalities and chic style – each expressing the essence of its unique destination.
Each Sofitel So is crafted around a design “signature” – a collaboration with a world-renowned designer or artist that links the essence of the destination.
Sofitel So Singapore featured the graphic touch of Karl Lagerfeld who exclusively designed “The Lion’s Seal” emblem of the hotel, which commemorates the birth of “Singa Pura”, the Lion City. The emblem paid homage to the lion as a symbol of innate courage and dignity, values which underpin the ethos of Sofitel So Singapore, driving the evolution of the local hospitality industry.
Lagerfeld was also inspired by the property itself – an iconic neo-classical heritage building first built in 1927 as the Eastern Extension Telegraph Company Building and which was given conservative status in 2000 and is today situated in the thriving heart of Singapore’s central business district.
Sofitel So Singapore guests are now surrounded by Lagerfeld’s graphic touch through a variety of objects, including hotel collaterals from correspondence cards to check-in folders, door knockers and many more surprise touches that guests are encouraged to discover themselves.
By creating such luxurious events, Lam explains the brand was able to underscore the passion that Sofitel brings to the art of hospitality. It also allowed Sofitel to reinforce its commitment to culture in an engaging and enriching way for both the brand and Sofitel’s clients.
Keeping it fresh
Nonetheless, constantly raising the bar in a very niche space, all the while keeping in line with the brand’s image and DNA of a luxury brand, is no easy feat.
For Diageo, says Peiris, the brand actively tries to differentiate its events by collaborating with creatives “who push the frontiers of what is possible”.
Last year the brand collaborated with renowned food architects Bompas & Parr and Done+Dusted, independent producers in branded content production, for its immersive production “Symphony in Blue”. This was a theatrical experience challenging consumers to touch, think and talk differently about whisky.
Agreeing with him, Lam says luxury brands face the constant need to stimulate and engage their audiences. Often this needs to be done by creating new and differentiating content. However, this content must still be created in a way that is authentic to the brand’s story and savoir-faire and create meaning and value for the consumer and the brand.
With all that said and done, Kerner adds that what sets the world of luxury apart ultimately is the attention to detail and the consistency of the brand value – both of which are vital in executing a flawless event. Hence, she explains, a common practice among many of the luxury brands is to have an event team in-house to ensure complete control over detail and ensure brand alignment.
Rise of the East
It is hard to raise the subject of luxury marketing without looking at the burgeoning Chinese market – a market that is taking up the minds of luxury brand owners.
According to Bain & Company’s 2014 China Luxury Market Study, 70% of the 1,400 Mainland Chinese consumers surveyed said they liked to try out different brands and styles. Almost 45% of respondents planned to buy more products from emerging luxury brands in the next three years.
“This creates a new window of opportunity for emerging brands. At the same time, it is imperative that more established brands don’t grow complacent as China’s luxury market continues to evolve or they risk falling out of favour with consumers,” said Bruno Lannes, a Bain partner and author of the study.
He adds that brands’ future positioning and popularity within the luxury market hinges on their willingness to revamp concepts to serve the needs of the increasingly sophisticated and well-informed Chinese consumers, “while managing the growing diversity of sales channels such as daigou”.
Daigous are overseas personal shoppers who buy luxury goods and ship them back to their customers in the Mainland. The daigou market grew to an estimated market value of RMB 55-75 billion last year.
Also, Southeast Asia will be an upcoming market in the next few years and the region is on the radar of many global luxury brands.
Kerner explains that while in the past brands did not always feel like they had to debut ideas in Asia, and product launches would usually happen in Europe and then hit Asia, today many brands are debuting their collections here.
Singapore and Malaysia have a longer history, but there is still a lot of room for growth, says Kerner. Meanwhile, markets such as Thailand, Indonesia, Vietnam and Cambodia also possess incredible opportunities.
The concept of luxury also varies greatly in each market in the region, according to Agility Research & Strategy, which recently released a study of associations consumers made with the concept of luxury. The agency administered the Agility Affluent Insights study online among 1500 (equally distributed) affluent respondents in five countries – China, Hong Kong, Singapore, Indonesia and the US.
Here are the results for the Asia markets.
Meanwhile, Jae Soh, general manager of Publicis 133 LUX Singapore, explains that tailored and localised marketing strategies are essential as the luxury sector is experiencing a surge in a diverse range of consumers.
Wealth centres are shifting from the west to the east. Asia is where the largest number of newly minted billionaires are based. The region saw strong growth in the size of its billionaire population and total billionaire wealth in 2013 – 30% of the net increase in global billionaire wealth came from this region. Billionaires – defined as those individuals with a net worth of US$1 billion or above – control nearly 4% of the world’s wealth.
These ultra wealthy individuals form one of the most exclusive clubs in the world: there is only one billionaire for every three million people on the planet.
“Striking a balance between global consistency and localised individuality when marketing these brands in a local context is key,” Soh says.