The New Rules of Luxury Marketing
There is a simple distinction buyers make between premium and luxury products. We pay more for premium products because of extra features, quality & design. Luxury however has an intangible value that goes well beyond functional benefits. We know that the majority of consumer decisions are intuitive, not rational. But it can be easy to forget this when promoting up-market goods. Having worked on luxury and premium brands for more than 20 years, we’ve distilled some of the more successful drivers of luxury brand marketing.
Luxury brands are driven by instinctive desires. Not rational utility.
While access to luxury goods assumes some level of wealth, increasingly our perception of luxury is defined by psychological cues rather than simply economic factors. For instance, a luxury marketer wanting to maximise their on-target media allocation has traditionally focused on high-net worth individuals. However this neglects a growing segment of groupings around prestige, aesthetics and performance that are massive drivers behind purchasing decisions. It’s simply not enough to know the affluence of our target market. We must dig deeper into the underlying ‘why’ behind their choices. The psychology of buying luxury products often falls into two camps; implicit and explicit. For experienced luxury buyers, a purchase is can be an affirmation to themself. It’s about rewarding their own success privately. For others it’s the reverse, who instead use luxury products as a proxy to signal their status to others. Nowhere is this more important than the development of communications for luxury marketing and advertising. Know your why.
Luxury products make us work for them. We value them higher when they do.
Making things easy and simple is a good rule of thumb for consumer decision-making. In psychology, this is called fluency. Deployed well, it makes our brands easily thought of and seen in buying situations with next to no effort. The rules for luxury products however are reversed. According to Adam Alter, a psychologist and professor at New York’s Stern School of Business, ‘people associate more complexity with luxury products and so disfluency, or cognitive difficulty, makes luxury products more appealing.’ Hermès and Louis Vuitton for example, are names that require us to think a little more about how to pronounce them, at least for the first time. It’s why the visual language for luxury is so different. Ornate labels that make type more difficult to read, such as Dom Pérignon, create the need for effort. These things add intangible value to a luxury product and at a non-conscious level enhance our perception of their overall value.
Luxury brands use anticipation and scarcity to increase their value.
Consider two scenarios. One, a new luxury product launches and you decide to buy it. You choose to ‘pay securely online’ and then conveniently arrange for ‘free same day delivery’. Scenario two, you’re put on an exclusive wait list. As you’re finalizing your purchase you learn that there are a limited number of these products available worldwide. You’re going to be one of the few that own one. The difference in these two scenarios is a potent mix of scarcity and anticipation. The experience of attaining a luxury product can increase our value of the product itself. Research shows that the anticipation of a vacation can often be the emotional high-point – higher than the vacation itself. This runs counter to a world where instant gratification rules. Luxury brands know how to use anticipation to their advantage. The long-wait times for luxury cars for instance allow plenty of time for people to anticipate the pleasure that driving them will bring. Intelligent customer relationship management can also turn this wait into a unique brand experience, with digital storytelling that boosts a customer’s knowledge and mastery of the category. Scarcity has famously been used by Ferrari, making one less car every year. In 2013 Ferrari cut production by about 5 percent. In turn sales for the brand rose 5 percent and profit surged to 9 percent.
Luxury brands use advertising to enhance desire.
Among one of the most powerful tools within the luxury brand marketers arsenal is the development of emotional advertising. A mountain of evidence shows that the use of emotional creative is most effective, as it makes for stronger memory connections and drives greater long-term business effects. For up-market goods, advertising has three audiences. Those that own, those that will own in the future, and those that will never own but will credit owners with various desirable traits. Advertising for luxury brands is as much about acquiring new customers as it is about signaling the brand’s high status to future buyers. Evolutionary psychologists go so far as to suggest that luxury products are markers of sexual and social selection. The beautiful and rare products that we prize become a sign to others they should prize us.
Luxury marketers know they have to work to understand what truly turns their customers on. But it’s also critical to understand that the broader perception of the brand will support the aspirational triggers that drive purchase decisions. A point perfectly illustrated by Matthew Willcox in his terrific book, ‘The Business of Choice: Marketing to Consumers Instincts’. He writes, ‘Aston Martin’s long-term relationship with the James Bond franchise is all about making the brand recognized by people who will never own one, clearly establishing that those that do buy one know they will be sending a strong impression to other people.’
Luxury brands must stay close to the cultural drivers that ensure their products remain desirable. Not just for those with the means of buying, but to the broader public as well. Despite all the changes in how we plan, create & deliver communications; great luxury marketing is governed by a solid grasp of human instinct and emotional responses.
Interested in applying this to your brand? Talk to us today.