How luxury went mass mar­ket

The Australian - The Deal - - First Up - An­drew Bax­ter

AS long as you have the cash, you can have a $500 Chanel hand­bag de­liv­ered in two days – some­thing hard to imag­ine 20 years ago, but rou­tine to­day. It’s an ex­am­ple of the way luxury mar­keters have em­braced the chang­ing world around them, and bril­liantly un­der­stood both the shift­ing needs of their cus­tomers and how to best man­age their brands. The cat­e­gory has thrived through the GFC and the dig­i­tal age. In 20 years global sales have tripled, to around $1.2 tril­lion last year. Twenty years ago the cat­e­gory had an al­most for­mu­laic and very tra­di­tional go-to-mar­ket strat­egy. To­day it’s mak­ing the most of the nu­mer­ous me­dia chan­nels avail­able in a tech­nol­ogy-driven world.

The essence of a luxury brand means it is for the few: rel­e­vant to a small per­cent­age of cus­tomers but highly dif­fer­en­ti­ated by its unique­ness. Im­pec­ca­ble qual­ity, yearned for and priced ac­cord­ingly. As pri­vate com­pa­nies be­came cor­po­ra­tions, and the need for share­holder growth in­creased, luxury mar­keters faced a dilemma. How to sell more in a cat­e­gory based on sell­ing to few? The tac­tic has been to widen a brand’s rel­e­vance while main­tain­ing its unique­ness. Luxury car mar­ques launched smaller mod­els at a lower price, mak­ing the brands more ac­ces­si­ble. Think Mercedes’ A Class and BMW’s 1-Se­ries. Luxury goods brands launched ac­ces­sories such as sun­glasses that were half the price of one of their fa­mous hand­bags, mak­ing buy­ing the brand more pos­si­ble to oth­ers. Mass luxury, or mass-tige, was here to stay. It has meant not just triple the sales, but triple the cus­tomers over the past 20 years. And for ev­ery cus­tomer gained, luxury mar­keters needed to aug­ment the prod­uct of­fer­ing, and de­liver unique and en­gag­ing ex­pe­ri­ences both in-store and on­line.

The al­lure of luxury brands has al­ways been driven by sto­ry­telling and crafts­man­ship. John­nie Walker is a great ex­am­ple. To high­light this to the new af­flu­ent mar­ket in Asia that is crav­ing unique ex­pe­ri­ences, the brand has built four John­nie Walker Houses, three in China and one in South Korea. In the Shang­hai lo­ca­tion, the first floor walks cus­tomers through the his­tory of the brand. The sec­ond floor has an ex­clu­sive whisky mix­ing room where peo­ple can have a mas­ter dis­tiller mix their own Sig­na­ture Blend from more than 40 sin­gle malts. The third floor is a restau­rant avail­able for pri­vate func­tions and the op­tion of bring­ing in your own mas­ter chef, with whiskys matched to the food. Pic­tures of celebri­ties who’ve dined there adorn the walls. All re­it­er­at­ing the brand’s story, qual­ity and crafts­man­ship in the most con­tem­po­rary way. Brands such as Cartier have also man­aged to trans­late such sto­ry­telling into the on­line world.

As sales of luxury cars, hol­i­days and goods con­tinue to grow, mar­keters have pulled many of the right levers. To grow sales by 300 per cent when the pop­u­la­tion only grew by 30 per cent and CPI only rose by 55 per cent is a ter­rific suc­cess story.

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