TOP of MIND – marketing of luxury brands
Recession-Proofing Your Luxury Brand
The good times were more than just good–they were great. Over the past seven years, the ranks of the affluent grew at an unprecedented rate, giving way to huge demand for quality brands and services. Then came the wake-up call.
The rocket ride is over for now and marketers of high priced goods are facing the reality of managing brands in volatile economic times. How will this effect the luxury consumer? How can luxury brands maintain market share?
Consumption of luxury goods and services is expected to grow: Manolo Blahnik shoes are up 60% this year, while personal shoppers are busier than ever. “Mass Gone Class” brands are thriving, too, as evidenced by Warren Buffett’s purchase of eight million shares of the Gap. There is still room to indulge, but it’s necessary to define new luxury customers and the best ways to reach them.
Identifying the luxury customer used to be easy: There was Old Money and New Money, with little crossover in between. But new categories of affluence now cross, and sometimes blur, the lines of income, age and culture. Our agency’s proprietary study (see related story, page 16) classifies them as “Millennium Money” (business people, athletes and entertainers worth millions) and “Middle Money” (middle-class types, who aspire to be, but are not yet, rich.) Together, these four groups comprise a luxury brand’s most promising targets.
In a volatile economy, it’s important to use common sense and apply the principles of sound portfolio management to managing your luxury brand. Specifically:
Don’t panic. Focus. Don’t be consumed by negative expectations. In the last two recessions, consumer spending actually went up. Persuade customers that the environment is safe. Resist cutting marketing and ad expenditures during a recession–you’ll only lose market share and sales when the recovery hits.
Think long-term. The market will bounce back–it always has. Until then, keep the brand dynamic. Reach out to new customers or form new strategic alliances. The emotional connection between the brand and consumer will endure recession, provided you keep the brand top-of-mind.
Re-evaluate your audience. Are you targeting the right customer? How have your customers and their priorities changed? What does that mean to your current strategy? Maybe it’s time to forego some mass media in favor of other high-impact marketing communications vehicles.
Leverage assets. Keeping your brand front and center during difficult times will ultimately increase market share. Look at where your brand is being hit hardest and hit back. Is your competition gaining, or do they have their heads in the sand? Brands that react most aggressively during economic slowdowns gain more share, and many times, can bury a frightened competitor.
Offer real value. Reinforce your brand’s value proposition with meaningful intangibles, like superior customer service. Use the Web to provide added-value–information, tools and an extended brand experience. Ferret out great media deals and lock them in long-term. When the economy comes back, your competitors will be paying top dollar.
Capitalize on trends. Technology will soon allow consumers to watch TV programs and zap ads. They will also be able to stop an ad to learn more about a product. When you extend and reinforce brand awareness through pr, product placement and relationship marketing, customers will already identify with your brand and want to know more.
Look at hidden opportunities. Broaden your franchise and expand into new segments with Class Gone Mass and Mass Gone Class products. Mining your existing database is very cost-effective. Take a leadership role in the industry. Get on the lecture circuit. Write a book. Uncertain times demand especially creative thinking.
Learn, adapt, plan. During the Great Depression, people spent what little money they could on entertainment-wit ness the opulence of the Busby Berkeley musicals. People still want to escape their dreary days and will check into a day spa for a little pampering, or shop ’til they drop. We’re not so quick to give up our not-so-simple pleasures.
Stand by your brand. Ultimately, you can’t forget to use common sense Step back and look at your brand as a customer. If it’s a name that people have known and trusted for years, and have built an emotional relationship with, you have to say,” My customers have been loyal to the brand. I have to be loyal to it too.” Stand by your brand in slow times, and watch it grow when the storm clears. Don Ziccardi is president/CEO at ad agency Ziccardi & Partners, N.Y., whose clients include Ellen Tracy, Loews Hotels, Departures, YM and Family Circle magazines.
COPYRIGHT 2001 BPI Communications, Inc.
COPYRIGHT 2001 Gale Group