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Introduction to communication

Communication is defined as a process by which we assign and convey meaning in a


n attempt to create shared understanding. This process requires a vast repertoir
e of skills in intrapersonal and interpersonal processing, listening, observing,
speaking, questioning, analyzing, and evaluating. Use of these processes is dev
elopmental and transfers to all areas of life: home, school, community, work, an
d beyond. It is through communication that collaboration and cooperation occur.

Figure 6: A Ecological Model of the Communication Process


A number of relationships are described in this model:
a) Messages are created and consumed using language
b) Language occurs within the context of media
c) Messages are constructed and consumed within the context of media
d) The roles of consumer and creator are reflexive. People become creators
when they reply or supply feedback to other people. Creators become consumers wh
en they make use of feedback to adapt their messages to message consumers. Peopl
e learn how to create messages through the act of consuming other peoples messag
es.
e) The roles of consumer and creator are introspective. Creators of message
s create messages within the context of their perspectives of and relationships
with anticipated consumers of messages. Creators optimize their messages to thei
r target audiences. Consumers of messages interpret those messages within the co
ntext of their perspectives of, and relationships with, creators of messages. Co
nsumers make attributions of meaning based on their opinion of the message creat
or. People form these perspectives and relationships as a function of their comm
unication.
f) The messages creators of messages construct are necessarily imperfect re
presentations of the meaning they imagine. Messages are created within the expre
ssive limitations of the medium selected and the meaning representation space pr
ovided by the language used. The message created is almost always a partial and
imperfect representation of what the creator would like to say.
g) A consumers interpretation of a messages necessarily attributes meaning
imperfectly. Consumers inteprete messages within the limits of the languages use
d and the media those languages are used in. A consumers interpretation of a mes
sage may be very different than what the creator of a message imagined.
h) People learn language by through the experience of encountering language
being used within media. The languages they learn will almost always be the lan
guages when communicating with people who already know and use those languages.
That communication always occurs within a medium that enables those languages.
i) People learn media by using media. The media they learn will necessarill
y be the media used by the people they communicate with.
j) People invent and evolve languages. While some behavior expressions (a b
aby's cry) occur naturally and some aspects of language structure may mirror the
ways in which the brain structures ideas, language does not occur naturally. Pe
ople invent new language when there is no language that they can be socialized i
nto. People evolve language when they need to communicate ideas that existing la
nguage is not sufficient to.
k) People invent and evolve media. While some of the modalities and channel
s associated with communication are naturally occurring, the media we use to com
municate are not.
A medium of communication is, in short, the product of a set of complex interact
ions between its primary constituents’: messages, people (acting as creators of
messages, consumers of messages, and in other roles), languages, and media. Thre
e of these constituents are themselves complex systems and the subject of entire
fields of study, including psychology, sociology, anthropology (all three of wh
ich study people), linguistics (language), media ecology (media), and communicat
ion (messages, language, and media). Even messages can be regarded as complex en
tities, but its complexities can be described entirely within the scope of langu
ages, media, and the people who use them. This ecological model of communication
is, in its most fundamental reading, a compact theory of messages and the syste
ms that enable them.
Messages are the central feature of the model and the most fundamental product o
f the interaction of people, language, and media. But there are other products o
f the model that build up from that base of messages, including (in a rough orde
ring to increased complexity) observation, learning, interpretation, socializati
on, attribution, perspectives, and relationships.
Persuasive Communications
Key issues in designing the Designing Persuasive Communications are:
1. Communications strategy
2. Media strategy, and
3. Message strategy the key
1) Communications strategy
In developing its message, the sponsor must establish the primary communication
objectives. These might consist of creating awareness of a service, promoting sa
les of a product, encouraging (or discouraging)certain practices ,attracting ret
ail patronage, reducing post-purchase dissonance, creating goodwill, creating a
favorable image, or any combination of these and other communication of these an
d other communication objectives. In addition, messages might be aimed at reinfo
rcing beliefs, not changing them.
Defining the strategy
Communication does not just happen. It must be organized, developed, and built.
The first step in the process is to define a communications strategy.
A good communications strategy allows you to exercise better control over your w
ork and to frame the issues in a perspective other than research. A communicatio
ns strategy removes doubt, emphasizes planning, and involves all the project par
ticipants in raising the visibility of the research.
Defining the communications strategy is a task that is best carried out as a gro
up. In addition to pooling expertise, a group approach has the even more importa
nt advantage of building on interactions between the participants.
Even a small-scale communications strategy will facilitate your work. After all,
a small-scale plan is better than no plan at all and you may be able to develop
and perfect it as you go along.
A collective process
There is much to be gained by making the development of the communications strat
egy a collective process. For a small-scale communications strategy, only part o
f the research group may be needed, but, when possible, par¬ticipation of all me
mbers of the research team should be enlisted, in addition to one or more commun
ication re¬source people, if they are available.
The pooling of skills and competencies is essential: al¬though the researchers a
re familiar with the content of the project, they rarely have the qualifications
needed to devel¬op an appropriate communications strategy. This is where an exp
ert in communication can make a valuable contribution.
The strategy can be developed in several stages:
1. A preliminary outline is prepared by the research team and close collabo
rators.
2. The outline is submitted to various partners for comments and revisions.
These partners can be consulted individu¬ally, in groups, or in a brainstorming
session that includes anyone you think could make a contribution.
3. The team meets to finalize the strategy. The input of a communications e
xpert is highly desirable at this stage.
4. Once the strategy has been established, it must be com¬municated to the
partners and groups you want to reach. This will make it easier to integrate the
m into the process of developing the various tools intended for their use.
Updating the strategy
Once the communications strategy has been defined and communicated, it must be i
mplemented. The best ; although perhaps not the easiest is the way to ensure tha
t the strategy is developing according to plan is to hold regular team meetings
to get updates on the situation. Are we following our plan? What is left to do?
Who does what? What are the deadlines?
These team meetings on communication are a good way to keep everyone up to date
on needs and to keep the dossier active.
The suitability of the strategy is also continually verified during meetings in
the field, where you have to be able not only to explain the strategy to others,
but also to adapt it to local needs. The same applies to the tools.
Target groups and audiences
Selection of the appropriate audience is a key. It is essential that the sponsor
segment the audience into groups that are homogeneous in terms of some relevant
characteristics.
There is a need for an umbrella message for all audiences.
The target audiences are the groups or individuals at the local, national, or in
ternational level with whom you are seeking to develop a synergy and to share in
formation. They can be local communities, state agents, funding agencies, or res
earchers.
Because each target group has specific characteristics and is faced with differe
nt problems or situations, a specific communication strategy is needed for each.
The importance of defining your target groups cannot be overstated. Knowledge, b
eliefs, and customs often vary widely from one group to another and the ways in
which knowledge is acquired are not the same in each commu¬nity. Even within a
given target group, it’s important to learn how to segment. For example, within
a group of vil¬lagers, you may want to reach the leaders and the women in partic
ular, because you believe this is the best way to influence the behaviour of the
population as a whole.
No matter what group you are addressing, the aim is always to promote the result
s of your research and the proc¬esses by which you arrived at those results and
to make sure that the different target groups are aware of them.
2) Media strategy
Communication via the media
First, the sponsor should develop a consumer profile of the target market.
Next, a medium with an appropriate audience profile needs tobe selected.
Before selecting a specific medium, the advertiser needs to selecta general medi
a category that will enhance the message.
Once marketers have identified the appropriate media category, they can then cho
ose the specific medium (or media) in that category that reaches their intended
audiences.

In its most basic form, communication is the transmission of a message from a se


nder to receiver via a medium of some sort. An essential component of communic
ation is feedback, which alerts the sender as to whether the intended message ha
s in fact been received.
a)The sender
The sender initiates the communication. Using appropriate words, images and symb
ols, the sender encodes the message. As formal source, the sender is likely to r
epresent either a for-profit (commercial) organization or a non-profit organizat
ion; an informal source can be a parent or a friend who gives product informatio
n or advice. Consumers often rely on informal communication sources because, unl
ike formal sources, the sender apparently has nothing to gain from the receiver’
s subsequent actions. For that reason, informal word of mouth communication tend
s to be highly persuasive.
b)The message
The message can be verbal (spoken or written) or non-verbal (a photograph) or a
combination of the two. A verbal message, whether spoken or written, usually con
tains more specific product information than does a non-verbal message.Sometimes
; both are combined to provide more information to the receiver than either woul
d alone. On-verbal information takes the form of symbolic communication, such as
logo or symbol exclusively associated with a particular brand.
Persuasive messages strategies
Persuasive messages should begin with an appeal to the needs and interests of th
e audience, and end with an appeal relevant to the marketer’s own needs. Adverti
sements that do not conclude with an action closing tend to provoke much less re
sponse from the consumers than those that do. Advertisers need to recognize thos
e consumers are increasingly knowledgeable and ambivalent about how advertising
strategies are developed and the devices used to attract attention and persuade.
Senders must also know their target audiences characteristics in term of educat
ion, interests, needs and realms of experience.
Once the audience characteristics are known, senders must then try to phrase the
ir messages so that their audiences decode the messages in the ways intended. A
strong fit between the receiver and the message on both the emotional level and
the cognitive level is known as resonance of an ad, they can improve liking for
the advertisement, brand attitudes and unaided recall of advertisement headlines
.
Non-verbal stimuli, such as photographs or illustration, tend to reinforce verba
l message arguments. A number of studies have manipulated the proportion of visu
al and verbal content used in print advertisement to investigate their relative
impact on learning and persuasion, but the findings were inconclusive.
At times, body copy alone was more effective than the body copy visuals, while i
n other experiments the reverse was true. One study showed that when verbal info
rmation was low in imagery the inclusions of visual examples increased consumer
recall of the verbal information.
3) Message strategy
Message is the thought, idea, attitude, image, or other information that the sen
der wishes to convey to the intended audience.
Nonverbal stimuli, such as photographs or illustrations, are commonly used to ad
d meaning or to reinforce message arguments.
Message strategies will include
Message Presentation which is a very important aspect of communication. In this
case you need to take care of the message framing, one-sided versus two-sided me
ssages, order effect and repetition.
a) Message framing
What you say is just as important as how you say it when it comes to influencing
decision makers. Who is speaking your message can also be very important for ma
king
change happen. Shaping your message so that it can be understood and interpreted
exactly how you want it to be is known as framing.
Key in framing message effectively:
i. Every issue needs a specific message.
If there is no message, people will believe whatever they want. Making sure that
your message is the one that people hear will begin the process of convincing t
hem of your cause.
ii. Every message needs to be direct and understandable.
Stick to one unified concept with your message. Multiple ideas in one message ca
n become confusing and will weaken your message.
iii. Always work toward a solution.
Saying that something is bad is only half of the message. You must go further an
d tell people why and what you want to happen.
iv. Different frames work for different groups.
The same standard response will not persuade everyone, so be prepared to speak
differently to different audiences.
v. Work the most on those audiences who might not agree with you.
Convincing thosewho are already with you is not the best use of resources.
vi. But don’t forget to remind your allies to take action. Just because your
allies agree
with you, does not mean that you should ignore them. They can help spread your
message and provide valuable connections. Also, when things get busy everyone ma
y
need a little reminder of what work is needed.

vii. Always include your position when conveying your message. Without connec
ting
yourself to the message, it is hard for you to be seen as a persuasive source of
information
on that side of the issue.
viii. If the public is opposed to your issue,
reframe the message to fix their opinion
(turn negatives positive).
Do not talk about the issue in negative terms used by the media
or your opponents. Speak only of the positives that will drive people to action.
b) One-sided versus two-sided messages
Persuasive communication that presents only one point of view; also called one-s
ided appeal. Most mass media advertising messages are one-sided. A one-sided mes
sage is more appropriate for an audience that is favorably disposed toward the v
iew being presented or is unlikely to be exposed to the other side. A religious
fund-raising appeal is usually one-sided on the assumption that the targeted aud
ience is favorably disposed toward the view being expounded and is unlikely to b
e receptive to other religious beliefs. With a more skeptical audience, a one-si
ded message is less effective than a two-sided message which presents both point
s of view and then arguments to counter the opposing view.
Persuasive communication that presents two points of view and then presents argu
ments to counter the opposing view; also called two-sided appeal. A two-sided me
ssage for a service bureau might acknowledge that a competitor is located closer
to the prospect and then assert that proximity is irrelevant if the service bur
eau is doing a good job. A two-sided message is more appropriate to an audience
that is favorably disposed toward the opposing view or is likely to be exposed t
o strong arguments for the other side. An audience that favors another brand or
point-of-view must be persuaded to abandon that view before a new view can be ac
cepted. Two-sided messages work best with an educated audience that tends to mak
e informed choices like industrial buyers. The order in which the views are pres
ented in a two-sided appeal can affect the impact of each message depending upon
the audience characteristics.
c. Order effects
Communication researchers have found that the order in which a message is presen
ted affects audience receptivity. For example, on TV, the commercials shoe first
are recalled the best, whereas those in the middle are recalled the least when
just to competing messages are presented, one after the other, the evidence as t
o which position is more effective is somewhat conflicting. Some researcher have
found that the material presented first produces a greater effect (primacy effe
ct),whereas others have found that the material presented last is more effective
(regency effect).magazines publishers recognize the impact of order effect by ch
arging more for as advertisement on the front, back, and inside covers of magazi
nes then for the inside magazines pages because oh their greater visibility and
recall.
Order is also important in listing product benefits within an ads if audience in
terest is low, the most important point should be made first to attract attentio
n. However, if interest is high, it is not necessary to pique curiosity, so prod
uct benefit can be arranged in ascending order ,the most important point mention
ed last.
When go favorable information and unfavorable information are to presented, plac
ing the favorable material first often produces greater tolerance for the unfavo
rable news. A recent study found that prevailing the brand name at the onset of
a message enhances brand recall and messages persuasiveness.
d. Repetition
This repetition technique can be applied across all strands of your marketing. I
t re-enforces your message. Every day we are barraged with advertising. To get p
ast these tidal waves, we need to be reminded; otherwise, we tend to forget.
You have to identify the single most important benefit to be emphasized to poten
tial customers.
You need to identify the single most important benefit for potential customers.F
or example, if you’re promoting your company name, repeat your name and address
at least twice. (Or if on the radio, repeat the telephone number both at the sta
rt and finish).
When you define your target market, advertise where you believe people will hear
it. Find out if it’s radio, TV, or Direct Mail. To get maximum effect, you shou
ld tailor your content for each medium.
Advertising Appeals
Advertising appeals are created for the purpose of activating human needs and de
sires
The advertiser has to determine the needs which can be targeted with the message
. Taking a deck at the human needs - As per Abraham Maslow physiological needs a
re the most basic of all human needs. An individual is first concerned about sat
isfying his basic needs like food, water ,sleep and other biological needs .Once
these basic needs are satisfied , he looks up to satisfaction of the next highe
r order of needs and then the next and so on.
Generally several needs operate simultaneously to generate a specific response f
rom the consumer, but some are more important than the others. These are the one
s to be identified and kept in mind by the advertiser.
Appeals and buying motives: Both of them are closely inter-linked to each other.
Appeals provide the stimulus required for the customer to act. They are thus de
veloped on the basis of buying motives.
Appeals can be categorized into rational, emotional and moral appeals. Rational
ones are aimed at the mind of the customer and set him thinking logically regard
ing the message contained in the advertisement. Sometimes there arises a conflic
t between the rational and emotional appeal but since there is no clear line of
distinction or demarcation therefore it is difficult to segregate the two into s
eparate compartments.
i. Emotional Appeal
An emotional appeal is related to an individual’s psychological and social needs
for purchasing certain products and services. Many consumers are emotionally mo
tivated or driven to make certain purchases. Advertisers aim to cash in on the e
motional appeal and this works particularly well where there is not much differe
nce between multiple product brands and its offerings. Emotional appeal includes
personal and social aspects
a. Humor Appeal
Humor is an element that is used in around 30% of the advertisements. Humor can
be an excellent tool to catch the viewer’s attention and help in achieving insta
nt recall which can work well for the sale of the product. Humor can be used eff
ectively when it is related to some benefit that the customer can derive without
which the joke might overpower the message. Humor proves to be a more effective
type of advertising appeal, but it too must be used carefully. What one person
finds funny, another considers appalling.
For example, the people who create most advertising campaigns for television are
creatives at large marketing agencies. The burn-out in those positions is great
. So advertising employees in these positions tend to be young – Generation Yers
and Xers.
a) Fear Appeal
Fear ranks low as a type of advertising appeal. However, many Internet marketing
gurus contend that fear is effective.
If you agree with the gurus, choose your fear appeals carefully. This appeal wor
ks best when it’s related to lesser fears like having bad breath or losing out o
n a money-making opportunity.
When it relates to the big fears like dying or loosing a loved one, people are m
ore inclined to block the advertising message. They move into denial mode and ig
nore the rest of the message.
b) Sex Appeal
Sex and nudity have always sold well. Sexuality, sexual suggestiveness, over sex
uality or sensuality raises curiosity of the audience and can result in strong f
eelings about the advertisement. It can also result in the product appearing int
eresting. However use of sex in types of advertising appeals can have a boomeran
g effect if it is not used carefully. It can interfere with the actual message o
f the advertisement and purpose of the product and can also cause low brand reca
ll. If this is used then it should be an integral part of the product and should
not seem vulgar. The shift should be towards sensuality.
c) Music Appeal
Music can be used as types of advertising appeals as it has a certain intrinsic
value and can help in increasing the persuasiveness of the advertisement. It can
also help capture attention and increase customer recall.

d) Scarcity Appeal
Scarcity appeals are based on limited supplies or limited time period for purcha
se of products and are often used while employing promotional tools including sw
eepstakes, contests others.

ii. Rational Appeal


Rational appeals as the name suggests aims to focus on the individual’s function
al, utilitarian or practical needs for particular products and services. Such ap
peals emphasize the characteristics and features of the product and the service
and how it would be beneficial to own or use the particular brand. Print media i
s particularly well suited for rational appeals and is often used with good succ
ess. It is also suited for business to business advertisers and for products tha
t are complex and that need high degree of attention and involvement.
a) Masculine Feminine Appeal
Used in cosmetic or beauty products and also clothing. This type of appeal aims
at creating the impression of the perfect person. The message is that the produc
t will infuse the perfection or the stated qualities in you.
b) Brand Appeal
This appeal is directed towards people who are brand conscious and wish to choos
e particular products to make a brand statement.
c) Snob Appeal
This appeal is directed towards creating feeling of desire or envy for products
that are termed top of the line or that have considerable qualities of luxury, e
legance associated with them.
d) Adventure Appeal
This appeal is directed towards giving the impression that purchasing a product
will change the individual’s life radically and fill it with fun, adventure and
action.
e) Less than Perfect Appeal
Advertisements often try to influence people to make certain purchases by pointi
ng out their inadequacies or making them feel less perfect and more dissatisfied
with their present condition. These types of advertising appeals are used in co
smetic and health industries.
f) Romance Appeal
These advertisements display the attraction between the sexes. The appeal is use
d to signify that buying certain products will have a positive impact on the op
posite sex and improve your romantic or love life. Frangrances, automobiles and
other products use these types of advertising appeals.

iii. Emotional Words/Sensitivity Appeal


These advertisements are used to drive at and influence the sensitivities of con
sumers.
a. Youth Appeal
Advertisements that reflect youth giving aspects or ingredients of products use
these types of appeals. Cosmetic products in particular make use of these appeal
s.
b. Endorsement
Celebrities and well known personalities often endorse certain products and thei
r pitching can help drive the sales.
c. Play on Words
Advertisements also make effective use of catch phrases to convey the message. S
uch appeals help in brand recognition and recall and can be quite popular with t
he youth in particular.
d. Statistics
Advertisements also use statistics and figures to display aspects of the product
and its popularity in particular.
e. Plain Appeal
These advertisements use every day aspects of life and appeal to ordinary people
regarding the use of a product or service.
f. Bandwagon Appeal
This type of advertising appeal is meant to signify that since everybody is doin
g something you should be a part of the crowd as well. It appeals towards the po
pularity aspect or coolness aspect of a person using a particular product or ser
vice.

Introduction to Our Product

Rolex
Arguably the most recognized name in luxury watches, Rolex was originally called
Wilsdorf & Davis. It was founded by a German national in 1908. A perfectionist,
Hans Wilsdorf worked hard to improve watch standards and prove that high qualit
y products could be produced outside Switzerland (though he received his movemen
ts from a small Swiss company).
Special Features
A hallmark of Rolex is its continuity in design. The models produced several dec
ades ago still have the same outer appearance (though internal pieces are of cou
rse improved and upgraded). This faithfulness to tradition helps to give Rolex i
ts reputation. Rolex s production is limited to about 650,000 watches a year, b
ased on industry estimates. This is below market demand, but it allows the compa
ny to maintain its high standards in quality control.
As luxury brand and product, we have make some research to segment our market t
o the affluent consumer. This is one of the important aspect to choose the best
approach on our advertising strategy.

The Luxury Consumer Market: A Wealth of Opportunity


“These new customers for luxury are younger than clients of the old luxe used to
be, they are far more numerous, they make their money far sooner, and they are
far more flexible in financing and fickle in choice. They do not stay put. They
now
have money to burn. The competition for their attention is intense, and their
consumption patterns-if you haven t noticed- are changing life for the rest of u
s."
As Professor James Twitchell insightfully observes, the modern concept of luxury
has been “democratized” and marketed to a wide swath of the consumer
population. From clothing to cosmetics, watches to a wine, vehicles to vacation
travel, luxurious indulgences are no longer reserved solely for the likes of the
Rockefellers or Rothschilds. In a society where financial and social betterment
are widespread and attainable goals, luxury marketers are in the enviable
position of being able to sell their goods and services to an ever-expanding
market of affluent families and individuals.But how large is the luxury market?
That, of course, depends on the luxury being provided. For example, a middle cla
ss household with a penchant for some of the finer things may occasionally splur
ge on a $2,000 watch or a $7,500 home theater system, but only those with a much
higher degree of affluence will be able to spend $2 million or more on a luxury
home or purchase a $75,000 automobile. Even fewer can afford the penultimate lu
xuries of private jets and
super-yachts.

Targeting the Right Clientele


As it does to many social and economic situations, Pareto’s Principle, or the
80/20 rule, applies very well to the luxury consumer market: 80% of sales and
profits tend to come from 20% of customers. Quality management guru Dr.
Joseph Juran referred to this phenomenon as the "vital few and trivial many."
Identifying that “vital” 20% is absolutely crucial for the luxury marketer.
Indeed, at the heart of successful luxury marketing is the ability to identify a
nd
develop lasting relationships with that exclusive but dynamic group of people wh
o
are willing and able to spend more on a cocktail dress or piece of jewelry, for
example, than many people spend to buy a car—or, for very high-end marketers,
to find those willing to spend on a car what others would on a house.
Successful companies—and especially those that serve luxury
consumers—expend no small effort in seeking to identify their “sweet spot” of
target consumers. This means using market research to quantify and segment
the consumer population in order to focus on the consumers whom they can
most profitably serve.
The goal of this report is to provide marketers with insights into the luxury ma
rket
by presenting the best and most authoritative research that describes and
quantifies the demographics of the luxury consumer. The focus is on the various
classifications of the luxury consumer, rather than on the specific luxury produ
cts
Differing Definitions
The luxury market is not a matter of what something costs, observes Bill Cur
tis,
chief executive of CurtCo Media, publisher of the luxury lifestyle magazine Robb
Report. It s a matter of the entire visceral and emotional experience attached
to
it. It is about being inspired by products and services, whether that means hote
ls,
boats, cars, or jewelry.”
As Curtis observes, luxury is not confined to a particular price point. Nor, for
that
matter, are luxury consumers confined to a singular level of wealth or income.
The body of luxury market research mirrors this multifaceted approach to
understanding just who classifies as a “luxury consumer” and the corresponding
size of the opportunity.
Some researchers take an inclusive approach and consider households with
minimum annual incomes of $75,000 to be luxury consumers, while others are
more exclusive and focus only on the part of the population with $1 million or
more in investable assets.
Taking the Broad View
Some prominent luxury market research firms reflect the increasingly massmarkete
dnature of luxury. Unity Marketing and Mendelsohn Media Research,Inc. a subsidia
ry of Monroe Mendelsohn Research are two of the most respected outfits taking th
is approach, and use government data such as the Bureau of Labor Statistics’ Con
sumer Expenditure Survey or the U.S. Census
Bureau’s Current Population Survey to measure the size of the luxury market.
Of the 112 million households in the most recent (2002) Consumer Expenditure
Survey, BLS breaks down household incomes into the following equally sized
quintiles, each with approximately 18.5 million consumer units:

Income vs. Wealth


Defining the luxury market by household income is useful for marketers of “mass
luxury,” but in some industries—such as high-end real estate, private banking,
yachts, and private jets—targeting customers by level of wealth is a more
appropriate strategy. Wealthy families and individuals may be more appealing to
these types of marketers because of the degree of financial security and
wherewithal associated with high levels of wealth.
Although there may be a high degree of overlap between groups of target
customers selected for their level of wealth, and those selected for their level
of
income, one compelling reason to target the wealthy is to cultivate deeper and
more profitable long-term relationships. Mass luxury marketers such as those in
industries like high-end consumer electronics or even automobiles are more
transaction oriented than financial industries like private banking and investme
nt
management, where fees and compensation are usually based on a percentage
of assets under management. In these cases, the relationship, and not individual
transactions, determine profitability—the higher the level of assets under
management, the more profitable the relationship.

Measuring the Market of Luxury Consumers


Considering Real Estate Wealth
Although several of the top researchers into the affluent market exclude the val
ue
of a primary residence from their calculations of wealth, luxury marketers may
find tremendous value in focusing only on home values. In general, the more
valuable the home, the higher are the income and wealth of the homeowners.
According to Harvard University’s Joint Center for Housing Study, “Million-Dolla
r
Homes and Wealth in the United States,” the median income for owners of
“million-dollar” homes in the U.S. in 2001 was $469,000. In contrast, the median
income for all homeowners was $51,000 per year.
A particularly exclusive demographic profile is found among families who own a
home valued at $2.5 million or more. A survey released in the fall of 2003 by Th
e
Institute for Luxury Home Marketing and Unique Homes magazine finds that the
typical owner of this type of home “is married; under age 55; works as a top
corporate executive, business owner, or self employed professional; makes a
million dollars or more annually; is ‘new’ money…and owns multiple residences.”
In addition to serving as a reliable proxy for wealth, home values also represen
t
purchasing power in their own right. Given the widespread use of home equity
loans and flexible loan structures in the past several years, homeowners with
substantial equity can easily tap into the value of their home to access additio
nal
funds for spending and investment.

Considerations for Luxury Marketers


The luxury market is not a singular entity, but several large and growing groups
of luxury consumers. There are multiple definitions and demographic profiles of
who they are. The most appropriate strategy and demographic focus depend on
the unique objectives of individual luxury marketers. Here are some points to
consider.
As a company, you must define your brand and your value proposition not
only through the products and services you provide, but also by defining
the most important “affluence aspects” of your target market. Is it a
particular level of income or a particular level of assets? Which makes
more sense for your company? Effective segmentation is one of the keys
to successful luxury marketing.
Every company has its own 80/20 rule. Identify that important 20% who
make up 80% of your sales and profits. These customers are your most
loyal and loyal customers are better customers because they are easier to
deal with and more profitable to serve. They are also the best source of
new referrals since they’ve demonstrated that they enjoy doing business
with you, and they will want to tell their friends and family about you.
The most important action that luxury marketers can take is to build and
maintain an in-depth understanding of their clientele -- their needs and
wants, and how these evolve over time. Next, they must profile their
habits, their spending behavior, and their motivations for spending. And
lastly, take every opportunity to ask them what they want and what they
like best (and least) about your company.
This appeal is directed towards people who are brand conscious and wish to choos
e particular products to make a brand statement.
a) Brand Appeal

Considered the negation of color, black is conservative, goes well with almost a
ny color except the very dark. It also has conflicting connotations. It can be s
erious and conventional. The color black can also be mysterious, sexy, and sophi
sticated.

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