Damian Madden, Creative & Social Director at Spectrum Group, pushes luxury brands to think differently when it comes to engaging connected consumer communities.
Luxury brands have long relied on a certain allure or mythology to make customers part with their hard-earned money. Tech brands like Bose and Bang & Olufsen, fashion houses like Hermes and Chanel, hotel chains like St. Regis and Four Seasons, car manufacturers like Rolls Royce and Jaguar; this has been a consistent theme in the way these top-tier brands, and others, have presented themselves.
Buying into the brand allowed consumers to become part of their gentrified world; they were one of the elite, in the know. The customer attained a social status by proxy that made others want to be like them. Nothing sells quite as well as aspiration.
This approach was particularly prevalent in emerging Asian markets, most notably China, in the 1980s where luxury houses set up shop en masse hoping to tap into all that newfound wealth.
This social status was enough to position these brands at the forefront of the market but, now that more people can afford them and engagement models are changing, it’s quickly losing appeal. As a result many of these premier brands are struggling to stay financially viable, especially in these Asian markets, as recent research from Bain & Co illustrated. So how should these luxury brands respond?
“ One fundamental aspect of all branding is the consumer desire to be part of something ”
Ask Not What You Can Do For a Brand …
One fundamental aspect of all branding that still holds true is the consumer desire to be part of something. Yet rather than being part of some exclusive club, with entry obtained via purchasing one of these luxury products, they’re now more interested in being part of a community. There’s great appeal in joining a group united by a common bond (in this case a brand) to share similar ideals and aspirations.
Creating a strong brand ‘world’ is crucial to any effective brand strategy. Most of your marketing needs to be focused on establishing this world so that people want to join. The main way you do this is by aligning with your customers’ needs, wants and desires. This is big shift from previous models where you expected them to align with you.
Joining a ‘club’ is only the first part of the process. Many traditional luxury brands feel that just being part of this club is enough but they’re wrong; it isn’t enough anymore. The aspirational element that once saw these brands through is slipping away. If they are to maintain relevance, and success, they must adapt quickly. This brings me to my second point.
“ Creating a strong brand ‘world’ is crucial to any effective brand strategy ”
It’s All About The Product
Buying into a brand is still based largely on the product and whether or not it suits an individual customer’s need. This sounds rather basic but labels alone are no longer a primary purchasing consideration. As the aspirational, social aspects of brands fall away people are far more likely to buy because a particular dress or music system functionally suits their need or chosen aesthetic.
Luxury brands need to take this information to heart and shift focus onto some of the craftsmanship qualities that elevated them to a rarefied market position in the first place. Make an exceptional product and people will buy it.
The Vanishing Game project by Land Rover
Riding The Digital Wave
Most consumers have now done their research online before they ever walk into a store – they have a good idea of the features they want and what they expect to pay for them. Luxury brands have traditionally prided themselves on delivering a memorable bricks and mortar customer experience and this is still a big part of their appeal.
Yet the rapid uptake of digital engagement in Asia has caught some of these brands by surprise, contributing to their collective financial pain, and something must be done sooner rather than later.
Some luxury houses will argue the accessibility of digital goes against their exclusivity, putting them at risk of commercialisation, which could further erode brand perception. While this is a valid concern, and care must be taken when developing a digital brand strategy, it cannot be relied on as an excuse. Brands must work harder, using their history to influence and guide their approach.
Land Rover did this well recently with its brilliant Vanishing Game campaign, which featured a story by novelist William Boyd. Burberry has also enjoyed some success with its activations on WeChat. As long as your digital strategy is an extension of your brand this approach will work.
Sticking with how you’ve always done things and attempting to ride out the storm is incredibly dangerous, especially in emerging markets where you don’t have the same legacy.
“ Sticking with how you’ve always done things is incredibly dangerous ”
European Brands Are Now World Brands
One of the other problems facing luxury brands based in Europe is that they apply the same messaging across all markets with slight tweaks. Particularly in markets like China these brands must work on engagement strategies, or maybe even distinct products, that reflect the heritage and culture of the market.
I’m not suggesting whole new lines or campaigns, because there’s something to be said for global uniformity, but there needs to be more effort placed on becoming relevant to individuals regardless of their backgrounds. This means doing something different.
Luxury brands have earned their place among the best known in the world but they risk being pushed into the background by a new generation of nimble and digitally aware upstarts. The smart ones have realised they can no longer trade solely on their tradition.
They’re engaging consultancies to help them embrace digital and broach new markets. The successes and failures of these new engagement strategies will provide valuable lessons for the rest of us in the years ahead.
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Published on April 13, 2015 under Strategy