Luxury Marketing Session 2 - PDF

Luxury Marketing Session 2 – Operational marketing Luxury Marketing Session 2 – Luxury brands The strong identity of luxury brands Brand identity consists is a set of tools or elements used by a company to create a brand image (ex: brand name, logo, colors, tone etc). The more powerful, cohesiv...

Luxury Marketing Session 2 – Operational marketing Luxury Marketing Session 2 – Luxury brands The strong identity of luxury brands Brand identity consists is a set of tools or elements used by a company to create a brand image (ex: brand name, logo, colors, tone etc). The more powerful, cohesive and complementary these elements, the stronger the brand. The concept of identity reminds us that a newly founded brand is just the name given to a product, but, in time the brand becomes autonomous with its own meaning. The brand is the memory of past communications and products, it will never fade away. It delimits a field of competences, potentialities and legitimacy. Jean-Noël Kapferer 10/09/2024 3 Thoughts Logos and branding are so important. In a big part of the world, people cannot read French or English, but are great in remembering signs. Karl Lagerfeld German fashion designer 10/09/2024 4 The strong identity of luxury brands PICTURE OF SENDER PHYSIQUE PERSONALITY Kapferer’s identity prism EXTERNALISATION INTERNALISATION is a tool to analyze brand identity. RELATIONSHIP CULTURE This tool is not specific to the field of luxury and can be applied to all brands. REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 5 Explaining the identity prism PICTURE OF SENDER The brand seen from PHYSIQUE …the firm PERSONALITY the outside by… EXTERNALISATION INTERNALISATION RELATIONSHIP CULTURE The brand seen from the inside by… …customers REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 6 Explaining the identity prism thanks to Burberry PICTURE OF SENDER PHYSIQUE PERSONALITY EXTERNALISATION INTERNALISATION Tangible and visual elements that allow consumers to identify the brand RELATIONSHIP CULTURE (logo, grapics, design, usual physical characteristics of products etc) REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 7 Explaining the identity prism thanks to Burberry PICTURE OF SENDER PHYSIQUE PERSONALITY Strong, distinguished EXTERNALISATION INTERNALISATION personality; full of pride. The classic feel of the brand also The way the brand would be adds toRELATIONSHIP the appeal, CULTURE described if it were a person. while still being able to remain youthful. REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 8 Explaining the identity prism thanks to Burberry PICTURE OF SENDER PHYSIQUE PERSONALITY EXTERNALISATION INTERNALISATION The relationship between the brand and its customers. Inconsistencies and abrupt RELATIONSHIP CULTURE changes may have endangered a durable relationship between the brand and consumers. REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 9 Explaining the identity prism thanks to Burberry PICTURE OF SENDER PHYSIQUE PERSONALITY Consists of values, history, heritage, beliefs, norms, processes etc that contribute to EXTERNALISATION INTERNALISATION define the firm’s personality. RELATIONSHIP CULTURE REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 10 Explaining the identity prism thanks to Burberry PICTURE OF SENDER They sure look pioneering and PHYSIQUE PERSONALITYprestigious, and definitely embody the classic British man ! The way consumers are EXTERNALISATION INTERNALISATION perceived from the outside. Usually stereotypical beliefs RELATIONSHIP on the brand’s customers. CULTURE REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 11 Explaining the identity prism thanks to Burberry PICTURE OF SENDER PHYSIQUE PERSONALITY I belong to the The way the customers feel EXTERNALISATION INTERNALISATION elite. I am a higher-class and see themselves when person who is they consume the brand. RELATIONSHIP proudly Britsh. CULTURE REFLECTION SELF IMAGE PICTURE OF RECIPIENT 10/09/2024 12 Do Van Cleef & Arpels’s identity prism PHYSIQUE PERSONALITY RELATIONSHIP CULTURE REFLECTION SELF IMAGE 10/09/2024 13 Van Cleef & Arpels’s identity prism Physique Personality Clover, qualitative and precious raw Romantic brand, that embraces nature materials (gold, platinium, diamonds etc), Modern and creative style iconic store on Place Vendome Relationship Culture One-to-one, privileged relationship for a Love story between founders lucky few for which exceptional jewelry is Jewelry as a lifestyle created Contact with royalty and stars Iconic pieces (ex: la minaudière) Reflection Self-image Belonging to an elite, high class, modernity, Romantic, refined, modern, close to nature refinment 10/09/2024 14 Luxury Marketing Session 2 – Product Characteristics of luxury products A luxury product is: Symbolic Qualitative Extraordinary Rare Very expensive Aesthetic 10/09/2024 Source : Kromray, 2009 16 Product between fuctionality and symbolism Functionality Symbolism Needs Desires Dreams Break from reality Associated services Timelessness Imperfections Luxury product Iconicity 10/09/2024 17 Luxury product range Narrow range Every product has a precise purpose High-range Every product has its own personality Mid-range Significant price gap between categories (15/30%) At least one entry- level product Entry level 10/09/2024 18 Rules of thumb for the product Handcrafted or No made by humans externalization Respect brand roots No licenses Dreams Innovate Customized No offshore services production 10/09/2024 19 Thoughts Luxury takes many forms nowadays, but one thing doesn't change: luxury is about desire and the ability to create dreams. Antoine Arnault CEO of Berluti 10/09/2024 20 Luxury Marketing Session 2 – Price Rules of thumb for the price The supposed price is always higher than the real price Increase prices to increase demand. Luxury = Expensive Increase the average price of each range. It is not luxurious because it is expensive, but it is expensive because it is luxurious. 10/09/2024 22 Communicate on prices with caution No or little communication on prices… except for entry level products. Salespeople should sell the price of the product rather than the product itself. Fantasizing about the price of product makes it even more desirable as a gift. 10/09/2024 23 Thoughts If you ask its price, you probably cannot afford it. Charles Rolls Co-founder of Rolls-Royce 10/09/2024 24 Thoughts The quality will remain when the price is forgotten. Henry Royce Co-founder of Rolls-Royce 10/09/2024 25 No sales No sales in luxury Always have a specific purpose to Loyal customers grant price discounts. Granting them reductions will not turn them away from the brand. Discounts reward their loyalty and gives and impression of driving a good bargain. New customers A discount gives them the opportunity to discover the luxury brand’s universe and culture. It should be justified by specific circumstances not to tarnish the brand’s perceived value. 10/09/2024 26 Luxury Marketing Session 2 – Promotion Promotion pyramid Art shows, brand ambassadors, foundations, charities, PR in shops, exclusive events, etc. Ads in press, relations with press, collection shows, website, institutional etc. Ads, celebrities, online ads, etc Increase promotion actions at the top of the pyramid Mass media, in shop promotion 10/09/2024 28 People and the promotion of luxury A double-sided association +++ Transfer of values between brand and person Communicating towards the person’s audience « The best people consume the best products » --- Luxury product shouldn’t need people to sell them Risk of sliding into non luxury 10/09/2024 29 Online promotion Increase transparency, reduce counterfeiting Smartphone-friendly communication Bring a community together Respect and inform bloggers and influencers Create brand content Innovate 10/09/2024 30 Communication themes in luxury Institutional rather Creativity and Universalism and than product uniqueness dreams Geographic roots and Storytelling and myths Heritage and history anchorage Prestige and Craftsmanship, know- Authenticity performance how and expertise 10/09/2024 31 Luxury Marketing Session 2 – Place Strategy EXCLUSIVE SELECTIVE INTENSIVE Good reach, coverage and Control of brand image, brand Relative control of brand image, visibility universe, contact with client, brand universe, price strategy, salespeople, price strategy… No with a higher reach …but intermediary fees, loss of finder’s fee. contact with clients, image …but intermediary fees and loss dilution and risk of being …but costly with little reach of contact with clients considered non-luxury 10/09/2024 33 Strategy EXCLUSIVE SELECTIVE INTENSIVE 10/09/2024 34 Some offline channels Directly operated stores Shop in shop Third party stores Door to door 10/09/2024 35 Online experience Information on price disclosed Part of a well-rounded phygital experience No human contact Instantaneity When clients are difficult to reach Few sensory cues Allows brands to reach new realms such as the metaverse Democratization 10/09/2024 36 Retail Location Architecture and design Technology and digital Light Sensory cues Customized services Colors and materials Customer journey Scenography and mechandising 10/09/2024 37 Staff Brand ambassadors Expertise Customer loyalty One-to-one relations 10/09/2024 38 Luxury Marketing Session 2 – Luxury offers in a nutshell Luxury offers More than usual products, the marketing-mix of a luxury offer: Associates the Creates symbolic product’s form with Creates an experience interactions for its functions for the consumer consumers 10/09/2024 40 Exercise Explain how the marketing mix of these products differs Isabel Bernard handbag Hermès Birkin bag 10/09/2024 41 Exercise - presentation Isabelle Bernard handbag Hermes’s Birkin bag Product Price Promotion Place 10/09/2024 42 Answer Isabel Bernard Bag Birkin Bag Hermès Product Standardized, mass produced Personnalizable bag, named bag after the iconic Jane Birkin Price App. 200 euros App. 7400 euros Promotion The advertisements prominently Communication around the feature the bags brand. No communication around the bag, since it is iconic. Place Many websites: brand site, Hermès and second hand zalando, amazon… 10/09/2024 43 Luxury offer VS premium offer Generalization What differs in the marketing-mix of a luxury product VS a premium product? Premium product Luxury product Product Price Promotion Place 10/09/2024 44 Luxury offer VS premium offer Premium offer Luxury offer Product - Offshore production - Local production, « made in » effect - Lengthy product lines - Short product lines - Fashionable, trendy creations - Timeless, off-trend creations Price - Quality warrants the price - High price, that does not matter to the purchaser Promotion - Advertising - Personnalization - Digital - Institutional communication (sponsoring, - Sales PR) - Catalogue - Digital - No sales or confidential sales Place - Exclusive / selective - Exclusive (owned stores) - Qualified staff acting as brand 10/09/2024 ambassadors 45 Kapferer’s 8 commandments of luxury 10/09/2024 46 Kapferer’s 8 commandments of luxury 1) No offshore production. 2) No advertisement to sell. 3) Communicate towards an audience that is outside of the core target. 4) The value chain should be entirely controlled by the firm. 5) The firm should control the whole distribution. 6) Licenses should not be granted. 7) The average selling price should always increase. 10/09/2024 8) Direct one-to-one relationships with the clients should be developed. 47 Specificities of a luxury offer mix Luxury products Product - Very few entry-level products - Personnalization and style proliferation are encourage Price - Average expense on last purchase: 2500 dollars - Price discipline to reinforce luxury perceptions - Exponential prices Promotion - 98 % luxury clients use their smartphones (average percentage in all sectors: 65 %) - Ostentatious and extraordinary communication that focuses on the most expensive creations Place - 78 % luxury consumers swear by RoPo (2019). - Scarcity - Pick splendid points of sale that will be closely monitored 10/09/2024 48