Leveraging Brands in Challenging Times
Luxury Marketing Council President, Gregory Furman positions the luxury market as consisting of seven million individuals or families in America with liquid portfolios of one million dollars or more. The Council represents over 300 companies, all purveyors of luxury products and services. Common concerns of all luxury product marketers include: innovative loyalty, public relations, customer segmentation and data base management. The Council's mission is to bring together CEOs and heads of marketing to exchange information about reaching and keeping their "best customers."
Furman summarizes the macro trends on the minds of luxury marketers:
- The power of the brand has become more powerful than ever
- Personal contact with "best customers" must be on an on-going basis
- Collaborative partnerships help share intelligence and spread costs
- Knowledge about the behavior of best customers is key and can be achieved by understanding data segmentation
- Loyalty programs reward customers and bring them back again and again
- Importance of communicating strategy to everyone on the team
- Give customers a reason to shop and buy from you
Daniel Miele, Partner and retail specialist for Deloitte & Touche noted when consumers have money, "they spend it." "Low interest rates have been stimuli toward spending. Over a period of 12 months, in excess of one hundred billion dollars of financing money is going into the US economy. Consumer income is strong."
Michael Calman, Sr. VP and Marketing Director of Bergdorf Goodman knows the importance of giving customers the reason to come in to shop. "Consumer confidence numbers after the Presidential election would almost inevitably show up affecting our business within 48 hours. We study consumer behavior and do a great deal of data mining with our customer database. We feel it's more about consumer psyche and confidence in terms of customer behavior than their actual state of affluence.
When the stock market started to take a decline in 2002 and with a huge amount of instability in the world we experienced a real resurgence with a pent up demand with our luxury customers. These people had affluence all along but were just holding back, not trading down, in terms of shopping. They weren't coming in to shop as often, but when they did, they did in a serious way.
We can't underestimate the value of customer research, particularly qualitative, one-on-one interviews with best customers, current customers even lapsed ones. It's critical to do on an on-going basis for tracking purposes as well as understanding the diagnostics. We are finding that success comes with how one touches them on a one-to-one basis, offering unusual, exclusive and customized products. We send thank you notes too!"
Elliot Rittenband, President of The Branding Iron counts Mercedes Benz among his prestige and luxury clients and feels that quantative research "has gone that way of the dodo. In the luxury arena, qualitative research from friends and best customers is a major trend and you're missing a bet if you're still looking at old zip code demographics; today, you have to look at real behavior segmentation.
Many luxury products and services, among them Steinway and Sons and Mercedes Benz, did not the feel the impact as greatly after 9-11 as many other companies did. Over a period of time, Mercedes broadened its strategy to reach more customers by producing new models, lowering the price of entry and dropping the age of the customer. They have also concentrated on customer service more than ever before. Customers are very smart today; they go on line and probably know more than most sales people do about what it is they are looking for."
(above excerpts from a roundtable discussion presented through the Luxury Marketing Council during the Fall Tabletop Market at Forty One Madison, October 2002