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Luxury Marketing Trends

Molly CheslinSummer 2013Intern Havas Media

+Overview of LVMH

Louie Vuitton Moet Hennessey (LVMH) is one of the largest luxury fashion houses in the world. LVMH umbrellas over 60 of the most admired brands in five different categories: Wine and Spirits, Fashion and Leather goods, Perfumes and Cosmetics, Watches and Jewelry and Selective Retailing. LVMH was created in 1987 and has experienced significant growth in its retail network. LVMH values themselves on representing the most esteemed and well sought after brands while continuing their history of class, creativity, and excellence. Being one of the largest fashion houses in the world, LVMH holds a significant amount of the market for luxury goods, making them a worldwide leader. LVMH has a portfolio with a wide variety of market goods helping them expand their horizons and generate more profits.

+ConsumersThe consumers of luxury goods are constantly changing. The department of luxury leather goods was primarily for the wealthy and elite group of people. Despite the recent falls in the economy the LVMH and luxury fashion houses are still seeing increasing sales and profits. Luxury goods are not being purchased by only elite members of society. Consumers from the middle class have increased because of the “aspirational” feeling when carrying, wearing, or drinking a luxury product. The demographics of luxury consumers showcase a wide variety, but certain groups hold the majority of purchase history. Women are far more likely than men to report buying luxury items. Asian Americans have the highest amount of buying power in today’s economy typically because of their higher levels of education leading to higher levels of disposable income. Young adults, ages 18-34, are more likely than their older counterparts to purchase luxury goods. It is possible that younger adults are spending the most in the luxury goods market because they have yet to acquire them on their own or have high hopes for their economic future.

The wealthiest 10% of luxury consumers account for 68% of Luxury Spending

+Luxury Goods

A reason for the increasing numbers of luxury consumers is because the definition of a “luxury good” is not definitive. Many consumers have different definitions of what qualifies as a luxury item and what products are considered a luxury. Recently, electronics and travel have been classified as luxury products but are not yet categories under LVMH. Mintel report stated that the notion of luxury goods are simply goods that are representing the top sector in any product market. 52% stated that is was buying brands with a long-standing history of exclusivity and 44% indicated that it was the act of purchasing a non-necessity item.

+Classifications of Luxury Goods

Price

Craftmanship

Prestige

Design

0% 10% 20% 30% 40% 50% 60%

55%

48%

47%

38%

Differentiation Points

+Brand Communication

Well known luxury brands have been able to communicate their value and luxury to affluent consumers over the years. They have built up respect and loyalty from these consumers over the years. When advertising luxury products it is important to instill the elitist ideas to make these consumers feel like they are part of a special class. The consumer’s typically purchasing luxury goods have higher levels of education and want to feel like they are above conventional advertising for the masses.

+Luxury Trends

1.Print Advertising2.Television Advertising3.Social Media4.Digital Experience5.Multi-Channel6.Native Advertising7.Consumer Feedback8.Flash Sale

+Print Advertising Primary marketing for centuries

in luxury space Fashion loving consumers like

the feel of the glossy magazine ads

Creates a elite feeling while reading

Older consumers will not make a switch to digital as easily, still prefer print advertising

Print has an essence that digital does not have the ability to recreate

Advertisers are able to receive more value from print buys because still specifically tailoredOnly 7.5% of the print

subscribers moved their subscriptions to the tablet versions when offered at no cost

+Television Advertising

Television still plays an important role despite emergence of digital age

Largest reach of all platforms Advertisers need creative and engaging ways to keep

consumers involved because of channel surfing and DVR

Need to advertise on channels that attract people with higher educational levels

New technology will make it possible to buy TV more personally

Publicized commercials or celebrity endorsed products will get high web traffic

Can no longer just focus on TV alone, need to have content livable on another source

TV’s reach is particularly high among luxury prospects 82% in the $75,000+ and 81%$250,000+ income brackets.

+Social Media

Marketers have realized that social media has the potential to increase loyalty and brand affinity among consumers, aspirational and actual. When social profiles are commonly viewed by potential customers it creates familiarity bringing consumers closer to purchase. Luxury brands need to be shareable on social media. Marketing to the aspirational consumers via social media is important because once these consumers decide to make a purchase they are more likely to purchase from a brand that they recognize, trust and resonates positively. Facebook is the most popular social networking site and is more likely to be visited in the last week by respondents in the highest income group. There are multiple social media platforms that must be utilized.

62% of affluent consumers reported that they had a social media profile or social networking site

+Social Media – Catch a Choo

Foursquare Check in – Jimmy Choo was the first to check in an object rather than a person

Real Time Scavenger Hunt Facebook and Twitter activations to increase

knowledge of scavenger Winner was given a pair of Jimmy Choo shoes of

their choice

+Digital Experience

The digital experience is enhancing the traditional media approach to luxury advertising. The experience is no longer solely in-store. Luxury brands have been reluctant to enter into the digital space. Digital is no longer optional as it is a great revenue driver. Luxury brands are branching out into multi-platforms: mobile apps, blogs, editorials and news; expanding to reach a wider array of consumers in different areas and markets. Luxury consumers expect more than just a high quality product; they want to have an experience that goes along with the purchase. Reaching out to consumers in a more digitally influenced lights makes younger, more technologically based, consumers feel more comfortable with the brand. Digital can deepen the affluent consumers relationships with the brand bringing them closer and more likely to comeback. Creating a cross- channel perspective becomes more entertaining for the consumer and makes the experience more personally tailored. Luxury brands need to be careful not to expand digital to the point where it is no longer personal for the consumer because the luxury consumer likes the feelings of exclusivity and elitism. Those positive feelings associated with the brand would dissipate if brands are not careful.

+Digital Experience Activations

Marc Jacobs Partnered with BumeBox to make interactive social

media overlays during live stream of their shows Inviting fans to RSVP and win prizes- airfare, tickets,

hotel Created #marcjacobslive to evoke twitter and

Facebook conversation making 90mm impressions

Mr. Porter Online luxury retailer that focuses on the digital

experience Every Tuesday they come out with new stories and

features of the week working online and offline channels

Launched a Global Treasure hunt in Hong Kong, Sydney, New York, London and Paris using GoldRun app

Giveaways to encourage active participation

+Multi-Channel ApproachA multi-channel marketing approach is a great extension for brand reinforcement. Brands that have been using multi-channel approaches have experienced positive feedback from consumers. Using multiple channels to communicate a brands messaging creates buzz and seems to work the best for the luxury market. Affluent consumers are now increasingly seeing a brand in a magazine, researching it online and going in-store to make the final purchase. Luxury brands need to extend their presence to as many platforms as possible to drive up sales. Expansion helps create impressions on the clients as well as increasing sales and downloads. If they are able to bring customers to the apps it also needs to be possible to order from the apps. The apps and extensions need to be simple to use and ultimately drive them into the store or encourage a purchase.

92% of luxury consumers regularly shop online and spend four times as much on online purchases than non-luxury households

+Multi-Channel Approach

Bergdorf Goodman QR codes in magazines linking

to in-store incentives Bring people in store bringing

consumers closer to making the luxury purchase

Gucci During anniversary of the

loafer Gucci employed a large scale campaign through multiple platforms

Using web, social media, email, in store marketing, mobile apps and blogs

Multiple approaches reaching the client from different angles increases impressions

+Native Advertising

Seamless integration of content High numbers of engagement and

positive feedback Does not interrupt the flow of content

and browsing Incorporates the brand and products

into social, video and content Allows the brand to tailor content so

that it fits seamlessly Creates a better experience than

traditional advertisingNative advertisements registered 9% higher lift for brand affinity and 18% higher purchase intent than banner ads

+Cole Haan and Refinery 29

Cole Haan needed to revamp its image to be younger and cooler rather than comfort

Collaborated with Refinery29 to make interactive shopping experience

Refinery29 created an separate underground platform for night life

Refinery29 was able to take consumers through the purchase funnel

Cole Haan increased consumption from a younger demographic and was able to seem more editorial than interruptive in their advertising

+Consumer Feedback

When luxury consumers are getting ready to buy a luxury product they have reported that they prefer to hear from other customers. Whether it is their Facebook friend or a peer they want to hear consumer reviews from people who they know or are somehow connected with. 57% of consumers asked their friends on Facebook for advice before purchasing a product. This is an extra incentive for brands to push into the social media realm so that they are present on the pages and consumers will be reminded to post on their behalf. It is important that purchasers of the luxury products are satisfied with their experiences so that they report positively on the brands behalf. 6 out of 10 consumers reported that they read reviews before purchasing a luxury product. Consumers find that when their friends are happy with the service and experience they will report on it and find that they also agree.

70% of consumers would prefer to hear about a product from their Facebook friends rather than from the brand itself

Consumers want other consumers

+Flash Sale Sites

Luxury brands have been selling themselves to flash sale sites in order to increase sales and awareness. The increased availability on these sights has made luxury items more attainable to consumers making it less valuable in many consumers’ eyes. This new phenomenon of flash sales is inevitably making products become no longer classified as luxury goods because of increased availability and price cuts. Products become less idolized once more people obtain them. It is important for retailers to pay attention and uphold the standard of uniqueness to their products, so that they do not lose consumers and brand value. If brands are not careful when, where and how much they place their goods on flash sale sites they may find that they are tarnishing their brand’s image. Once the brand becomes over licensed it may dilute the brand image.

Raise Awareness, Loose Exclusivity

+Flash Sale SitesRaise Awareness, Loose Exclusivity

52% stated that Luxury was buying an item with a long standing history of exclusivity.

33% agreed that once a luxury or designer brand becomes attainable by most shoppers it is no longer considered luxury.

+Trend Take Aways

Older consumers still enjoy the experience of print advertising

Younger consumers need to be targeted on multiple platforms that are livable

Continue marketing to consumers who are still aspirational to gain affinity before they have the purchasing power

Younger consumers need to feel wanted by the brands-- Brands need to continue interacting digitally with them

Make brand content shareable Younger consumers enjoy being rewarded or given

incentives Limit flash sale appearances to prevent brand image

from being tarnished Television is still important in the digital age of

advertising Multi-channel is imperative for success Shopping is a story and it needs to create an

experience