The luxury market has grown into a 300 Billion dollar category.
Luxury Marketing is a completely different category from traditional brand marketing. And the reason is it is in the business of selling fantasy. In other words luxury marketers are in the “Dream Business”.
While we know that a luxury item must be of superior quality, the most important feature is “Emotional”. There is no doubt about it. luxury items offer us something that regular items cannot.
The luxury watch you’re wearing may keep great time, but the real magic of the watch is how it makes you feel. Luxury is the opposite of necessity and the need for both is an interesting aspect of human nature and one that has evolved over time.
Not that long ago people would only buy what they needed to survive, food, shelter and practical rugged clothing, but in the early 19th century a new category took on a larger importance in the world, and that category was luxury goods.
The word “Luxury” comes from the latin word “luxus” meaning “excess” or “sinful indulgence”.
Hmmmm sure sounds like “Lexus” to me.
In many ways the luxury market was born in the 18 hundreds and profoundly changed the world through invention and discovery. This was the century of great population growth and the century of the industrial revolution which created new social economic groups ranging from the dirt poor to industrial titans.
And one the of distinguishing factors between the classes was the acquisition of luxury goods which signified wealth and social status, so it should come as no real surprise that 6* of the top 10 luxury brands were born in that era.
Here are the top 10 luxury brands:
1) Louis Vuitton – founded 1854*
2) Armez – – founded 1837*
3) Gucci – founded 1921
4) Chennel – founded 1909
5) Hennessy (Cognac) – founded 1765*
6) Rolex – founded 1905
7) Moet et Chandon (champagne) – founded 1743*
8) Cartier – founded 1847*
9) Fendi – founded 1925
10) Tiffany & Co – founded 1837*
Most marketing done is to solve a problem; to get out stains, get rid of that pounding headache or to keep you toasty warm using a blanket that has sleeves, but not so in the world of luxury marketing.
Luxury is in a category unto itself, whereas running shoe brands compete with other running shoe brands, and kitchen stoves compete with other kitchen stove brands, the luxury category is unique. As the CEO of Rolex once said “Why do I need to know how the watch market is doing I’m in the business of luxury” This is a very telling statement.
Because luxury marketing is in the dream business the luxury market cannot rely on research and focus groups like traditional markets. Instead luxury marketers must create a vision of the future that propels their customer to a place they could have not imagined themselves.
Luxury brands are sold on fantasy. Take a flip through the first 60 pages of Vanity Fair most of the advertisers are luxury brands; now look at these brands, the images, does any of that resemble your life in any shape or form?
I’ll answer that for you… NO, these are fantasy stories and luxury expert Adam Stagliano states the story of a luxury brand must satisfy the emotions, reason, esthetics, memory and deliver extreme pleasure all at the same time.
Compare this to the relative simplicity of a beer advertisement where the task is just to convey crisp, clean and refreshing.
Buying luxury goods says many things about our human nature. Regular products make you feel good; luxury brands make you feel special. And feeling special has different ways of manifesting itself.
First, is privately or inconspicuous consumption. Let’s say you have the top luxury bath soap and it’s enjoyed by you and you alone, you love the quality, the ingredients the sensory benefits, so the experience is the reward.
However the super wealth also enjoy the sensory benefits but they don’t see luxury as a reward, they see it as accumulating the finer things in life as a matter of taste and privilege, and while they buy huge homes and large yachts, they are not doing it to impress strangers.
Ask the high end real estate agent, most multi-million dollar purchases are done very discretely, the client knows exactly what they want, rarely haggle and are very patient in looking or what they want.
And then there is conspicuous consumption (a phrase coined in 1899), which is the need to show off your extravagance to friends or strangers.
This type of consumption is the outward expression of achievement, status, power and influence, which is deeply rooted in self-esteem. Now pair this with the tactile feeling the luxury item gives you and you have the dual pleasure principle: Superior Quality and Out Ward Expression.
The subset to conspicuous consumption is the world of knock off luxury items, people buy knock off Gucci purses purely to empress strangers, the feeling of owning a real quality item is absent because the owner knows it isn’t real.
The other element of owning luxury goods is the concept of exclusivity, having what others do not. Now this can be fueled by snobbism, it is usually driven by personal expression and individualism, for example, American Express has long positioned itself as an exclusive credit card, by advertising:
“Membership Has Its Privileges”
They have gold, platinum and the rarely seen Black Card, which has a $5000 signup fee, a $2500 annual fee and you’re required to charge a minimum of $250,000 per year to qualify before you are invited to apply for the card.
Another way marketers advertise luxury brands is to link them to a celebrity. It’s believed that the concept of “prestige” must be transferred. A product, on its own, isn’t prestigious until it’s seen in the right company.
There is still another aspect to luxury items; they provide a way for consumers to feel like insiders. By having that special bottle of whiskey their friends will appreciate and value it when they serve it.
But what it all comes down to is our need our deep desire to feel distinct and uncommon and that’s a lot different than just treating yourself. You can by a nice Gap shirt, but that purchase is really about looking good and fitting in. Luxury purchases are about standing out.
When you look at it the reason we buy luxury items is a fascinating look into human nature, and much of it is deeply rooted in our self-worth and our desire to reach out and touch a world outside or daily existence.
And while luxury marketing is very different from traditional marketing, it is based on the fundamental insight that has been the foundation to Madison Avenue for more the 150 years, that we are really two people:
The person you are, and the person you want to be. The dreams and fantasies the luxury markets weave ONLY want to talk to the second person.