Luxury Marketing Session 4 – Luxury Services PDF

Luxury marketing Session 4 – Luxury services Luxury services Session 4 – Differences between goods and services Goods Services Tangible...

Luxury marketing Session 4 – Luxury services Luxury services Session 4 – Differences between goods and services Goods Services Tangible Intangible Easy objectification of luxury Difficult objectification of luxury Homogeneous due to rigourous quality control Heterogeneous quality depending on the employees, the customers, the context etc. Production and consumption are temporally and Produced and geographically consumed in seperated real time Can be stored until sold Perishable, cannot be stored 27/09/2024 3 Transfer of ownership and its implications The customer The customer receives the receives an Material consumption Experiential consumption ownership of experience. the good. Reinforced self-extension Psychological through ownership ownership Time based experience → within Long-term ownership → the firm’s control out of the firm’s control Conspicuous consumption More difficulties for conspicuous consumption 27/09/2024 Counterfeiting No counterfeiting 4 Reminder: 7Ps Product People Price Staff in direct contact with customers, Promotion will contribute to consumer experience and shape customer journey. Place Process Customer journey from the first contact with the firm until after purchase. Physical evidence Any element that may convince consumers of the offer’s legitimacy. 27/09/2024 5 The Birkin Bag’s 7Ps To complement the 4P analysis carried out in session 1, analyze the last 3Ps for the Birkin Bag. People Process Physical evidence 27/09/2024 6 The Birkin Bag’s 7Ps People Staff in contact is expected to know the clientele, to smile, be pleasant, have a good knowledge of products, wear Hermès accessories and have an impeccable attire. Processes The bag being only available by order, clients have to come on the premises, be greeted by the staff to get a glimpse of the Hermès universe. The experience is complete thanks to the personnalization of the bag. The craving for the product is then increased by the waiting time. A repair service is at the customer’s disposal to maintain the bag’s life expectancy. Physical evidence The legitimacy of the offer is supported by the aura of the brand, the iconicity of the product, the intrinsic qualities of the bag (design, smell, touch of the leather etc), but is enhanced by the exceptional in-store atmosphere and service. 27/09/2024 7 From 4Ps… …to 7Ps The product and its quality are the essence of The other 3Ps are core of a luxury service a luxury good, but the other 3Ps support the and determine service quality. positioning of a good as luxury. Poor service quality (even minor aspects) can destroy the consumption experience. Poor supplementary and retail services will not necessarily destroy the experience. + Intense focus on the consumption stage Focus on pre and post purchase stages 27/09/2024 8 7P relevance, explained through servuction Physical GOOD evidence Value Back office Production Front office Sale Customer Value Physical evidence SERVICE Coproduction Production Back office Front office Customer facilitation Sale 27/09/2024 9 Luxury marketing Session 4 – Exclusivity in luxury service 4 types of exclusivity Monetary exclusivity Main type of exclusivity for goods High prices decrease affordability and exclude the less wealthy from consumption Social Accessible to certain people according to their relations, social circle, status, etc. Hedonic exclusivity Tastes, education and habits predispose individuals to enjoy certain types of consumption. Artificially constructed exclusivity Constructing conditions that are conducive to scarcity (limited availability, waiting lists, etc.) 27/09/2024 11 Examples 27/09/2024 12 The ordinary-extraordinary continuum Luxury perceptions are subjective. → they need to be classified in a continuum Exclusivity and extraordinarity degrees vary (as do their perceptions). → continuum 27/09/2024 13 Example: from Bordeaux to London Elite Standard Ordinary service Everyday 27/09/2024 14 A typology for luxury services Characteristics Everyday luxury Standard luxury Elite luxury service service service Prestige Low High Very high Monetary exclusivity Easily affordable High, occasionally Difficult if not affordable impossible to afford Social exclusivity Easily accessible Somewhat exclusive Exclusive Hedonic exclusivity From low to medium From low to high High / very high Extraordinary Low Low to medium High / very high experience 27/09/2024 15 Patricians and luxury services Everyday luxury service Habitual consumption sphere, unlikely to be considered as luxury Standard luxury service Habitual consumption sphere, might not be considered luxury Patricians Elite luxury service - Very high consumption - Consumed for its intrinsic quality - Discreet and tasteful consumption, privacy and discretion, no conspicuousness - No interest in socializing 27/09/2024 16 Parvenues and luxury services Everyday luxury service Habitual consumption sphere Standard luxury service Conspicuous consumption Parvenues Elite luxury service - Low consumption frequency, if at all - Conspicuous consumption - Would like to socialize with patricians 27/09/2024 17 Poseurs and luxury services Everyday luxury service « I want the best » attitude in everyday consumption Standard luxury service - Occasional consumption for potentially conspicuous motives - For self-perception motives Poseurs Elite luxury service Aspirational, consumption frequency is rare, if at all 27/09/2024 18 Proletarians and luxury services Everyday luxury service Potentially occasional consumption as personal rewards Standard luxury service Admirers, lurkers, may aspire to consume but generally cannot afford it Proletarians Elite luxury service Once in a lifetime consumption if not ever 27/09/2024 19 Luxury marketing Session 4 – Value in luxury services Value creation process in luxury services Firm Customer Value creation (independent of After the Value learning service provider) interaction During the Cocréation de valeur Value cocreation interaction Before the Value facilitation Value anticipation interaction 27/09/2024 21 Hedonic escapism VS hedonic adaptation The moment of luxury is a temporary break from everyday routines. The thrill of luxury will disappear if consumers are exposed to luxury too often. Luxury then shifts from extraordinary to ordinary. 27/09/2024 22 Satisfaction or instatisfaction? Being satisfied ≠ not being unsatisfied Insatisfaction factors Satisfaction factors Functional aspects Emotional aspects Emotional aspects Relational aspects Relational aspects Sensory aspects Sensory aspects 27/09/2024 23 Functional aspects Mastery of professional Knowledge of movements professional tools Knowledge of Knowledge of products competition Managing third parties Continuous adaptation Expertise and experience 27/09/2024 24 Emotional aspects Only when functional aspects are perfectly mastered. Heavily lies on sensory and relational aspects. 27/09/2024 25 Sensory aspects Decor Location Pleasant for customers Light Scents Music Easy to navigate Volumes for staff Materials 27/09/2024 26 Relational aspects: ON and OFF theory BEFORE: Customer is King NOW: Interaction prevails Service was a reaction to the Both customer and staff have to be open to customer’s whims. A submissive communication for a successful interaction. attitude was usually expected Skills and attitude of staff can from service professionals (except switch ON an OFF customer. sommeliers and concierges). The OFF button was always on. 27/09/2024 27 Why customers can be OFF Stress Intimidated by brand Shyness Mood Fear of staff Fear of the unknown Fear of judgement Cultural difference Complex Language barrier Stakes of purchase... 27/09/2024 28 Why staff can be OFF... Fear of failure Professionnal stress Fatigue Personal issues Fear of customer Language barrier Previous bad experience Judgement and preconceptions Routine Mood 27/09/2024 29 How to switch customers to ON? SUPERIORITY SERVILITY PASSIVITY GUIDANCE Sometimes adopted by Excessive submission is Merely following the Active listening: the staff from very successful outdated and does not fit customer and answering customer has a chance to brands when demand with today’s craving for their questions. Can favor ask questions and express exceeds offer. Very human contact. But can be demanding and agressive needs, but staff remains dangerous in terms of effective to contain an behaviors from customer. in charge. brand image. agressive customer. 27/09/2024 30 How to switch customers to ON? When customers believe that the staff is acting in their interest rather than their DEDICATION own or the company’s. When generosity transcends commercial concerns. The ability to make customers feel that they had a special and unique experience that CUSTOMIZATION was tailored to their needs. Staff must put themselves in the customer’s shoes to understand their feelings EMPATHY and expectations. Show genuine interest for customers. Politeness 3.0 is based on sincerity, simplicity, kidness, gratefulness and POLITENESS psychology rather than rigid codes that could make customers uncomfortable. Respect for oneself, to improve and grow as an individual and professionnal RESPECT Respect for others: keep judgements and preconceptions at bay when dealing 27/09/2024 with customers 31 Luxury service in a nutshell HUMAN DIMENSION PROFESSIONAL DIMENSION - Show interest for the customer and concern for their expectations - Mastery of the functional aspects of service - Keep and « ON » attitude, turn customers ON - Staff competence and know-how - Crisis management - Fulfil the promise made to customers - Loyalty SERVICE AESTHETIC DIMENSION COMMERCIAL DIMENSION - As brand ambassadors, staff’s appearance must be flawless (hygiene, neatness, etc) - Fulfil customer needs and expectations - Retail design - Guide the client: explore the brakes, the - Refined gestures and movements motivations, the needs, the expectations etc. - Use refined words, loaded with emotions - Provide advice on products - Polysensuality 27/09/2024 32