The Luxury Client

LUXURY BRAND MANAGEMENT

MFM-III
 Heavy users and day trippers
(also called excursionists)
• Up until 2000, the luxury market had grown
worldwide based on what we call ‘luxury day trippers’
or ‘excursionists’. These people are less wealthy but
are advanced in sociocultural terms, and therefore
allow themselves to occasionally purchase an object
from a luxury brand, motivated by self-indulgence or
hedonism or to celebrate a person or a moment. This
announced the democratization of luxury. Today, it is
no longer the case: the principal volume of the
market is made up of those who buy frequently.
• Why this reversal? From the beginning of the 2000s, the Western
middle classes have been worried about the future, and less
optimistic: progress is no longer automatically associated with
happiness. They fear that their children will have a less pleasant life
than their own. This puts a brake on their occasional consumption
of products perceived as luxury. It is true that in the West,
individuals are ten times richer than the Chinese, for example. But
their income is stagnating, their discretionary purchases are
reduced by rising property prices, energy, service and health costs,
etc. Paradoxically, therefore, they feel themselves to be ‘poor’. In
contrast, young Chinese who see their income perceptibly
increasing are much more optimistic: they feel rich.
• In China, there is no brake on the economic
rise of new population layers, unlike India
where the caste system blocks the mechanism
of climbing the social hierarchy through
economic success. Hence the luxury market in
India is much less dynamic than in China.
 The four luxury clienteles
• Beyond the sociodemographic and sociocultural
variables, what is it about luxury that is so seductive?
• Why do clients indulge themselves in luxury?
• What intimate benefits do they gain from it?
• The statistical analysis of the responses by an
international sample of young managers with high
disposable income, asked about the characteristics
that define luxury in their view, make it possible to
identify four concepts of luxury.
• The first type of luxury, according to this
international sample of affluent young executives
with high purchasing power, is the closest to the
average hierarchy emerging from our studies: it
gives prominence to the beauty of the object and
the excellence and uniqueness of the product,
more so than all the other types. The brand most
represent-ative of this type of luxury is Rolls-
Royce, but it also includes Cartier and Hermès.
• The second concept of luxury exalts creativity,
the sensuality of the products; its luxury
‘prototype’ is for example Jean-Paul Gaultier.
• The third vision of luxury values timelessness
and international reputation more than any
other facets; its symbols are Porsche, with its
immutable design, Vuitton and Dunhill. These
are the institutions of the safe choice, of the
certainty of not making a mistake.
• Finally, the fourth type values the feeling of
rarity attached to the possession and
consumption of the brand: in their eyes, the
prototype of the brand purchased by the
select few is Chivas or Mercedes, possession
of which clearly signifies that you have
‘arrived’. The presence of Mercedes as a
symbol of this fourth type of luxury testifies to
the brand’s problems at that time.
Consumers’ four concepts of luxury
 A strong axis of segmentation:
relationship with the product or with the logo?
• The four types of clients described above may
be situated in relation to one another along a
key dimension: one that opposes sensitivity to
the logo to sensitivity to the product, the
search for emblematic brands rather than that
for small masterpieces.
• This dimension plays an important role in structuring
and differentiating clients, and even countries,
regarding the relationship to the logo. It is no accident
that luxury brands exhibit their logos. The logo is the
semiotic version of ‘étiquette’, or the code of correct
dress at the Royal Court. This external manifestation
may vary according to circumstances, from more to less
visible, knowing that luxury needs a certain minimal
visibility, even if only discreet, to signal that absolute
separation to which it bears witness.
• The fourth of the above groups is very ‘pro-
logo’: they consume the sign. They need
known and recognized badges to distinguish
themselves from others, to transmit their
success. It is significant that a Mercedes
advertisement in 2007 talked about ‘the car
that has succeeded... like you’.
• The third type is also moved by strong signs,
visible and recognized logos: they enjoy the
magic of the great names and become sure of
themselves through these known brands,
incontrovertible institutions of luxury
worldwide, in the same way that we feel more
at ease when we put on a dinner jacket.
• In contrast, type one clients see themselves as
connoisseurs, aesthetes, capable of
appreciating what is exceptional in a product:
they like the authentic and are sensitive to the
intangibles, the intensity of a rare, shared
moment. As for type two clients, they are more
concerned with showing their individuality,
through choices that set them apart, above the
rest, through the originality of the creator.
 A second axis of differentiation:
authentic does not always mean historical
• Luxury is long term. Even if the sales are written
in short-term plans, the luxury brand has time
for itself, much more than a fashion brand.
• For Europeans and many Asian fans, there is not
authenticity without temporal compression. A
brand that has a true history draws an absolute
prestige from it, which does not mean that it
communicates only in a passéiste, traditional
form.
• Hennessy knows how to play with ultra-
modernity, even if its logo is a medallion
representing the historical figure of Mr
Hennessy. The same is true of Veuve Clicquot.
However, young people and most Americans
do not have the same relationship with time:
the authentic, for them, does not require
vintage or historicity.
• An examination of luxury brand strategies clearly shows
these two brand construction models. The first is based
on product quality taken to the extreme, the cult of
product and heritage, History with a capital H, of which
the brand is the modern embodiment. The second is
American in origin, and lacking such a history of its own,
does not hesitate to invent one. These New World brands
have also grasped the importance of the store in creating
an atmosphere and a genuine impression, and of making
the brand’s values palpable there. America invented
Disney and Hollywood – both producers of the imaginary.
 A third axis of differentiation:
individualization or integration?
• Finally, the four groups identified above differ
according to a third, classic axis: individuation
on the one hand, and integration on the other.
For the former, luxury is used to show that
they are different: some will not buy a known
champagne brand, but will be in search of
new, creative, audacious brands. For others,
this individuation is achieved through visible
excess.
 Luxury by country
• These three axes make it place to situate
countries according to their relationship to
luxury. If France can boast of having given
birth to modern luxury, the luxury market, for
its part, can hardly count on the French. In
fact, in this country, a principle of non-
ostentation reigns, where wealth must be
hidden: we buy Peugeots, not Jaguars.
• France is brought up on a vision of intimate luxury, for
the connoisseur, where history, know-how and detail are
consumed, before enjoying the object on its own terms.
For the French, luxury is pleasure: hence haute cuisine.
Italy is inspired by art.
• The United States wrote into its constitution that the
pursuit of happiness was a duty and a right: in short, you
become happier through consumption rather than
through pleasure. You progress through life through
more comfort, more performance, and more efficiency.
• A diamond is forever, so in addition to
professing love, it is also a good investment.
• A Porsche is beautiful, but with its high
reliability also has a good resale value.
• A Nautor Swan yacht has exceptional
navigation qualities. It is always necessary to
be able to talk of the superiority that the
luxury object confers.
• The emerging countries of luxury (Russia, China,
etc) are very different. Like the USA they are
countries where you can climb the rungs of society
through economic success. Having done so, you
then wish to benefit your clan through it and make
it widely known. It is a more hedonistic, sensual
relationship with luxury, where the signs of value
must be strong, known and recognised: you drink
the special cuvées of the great names of
champagne, as if at a historical potlatch.
 Why are the major emerging countries so
avid for luxury?
• Nothing speaks more clearly than etymology. The word
‘luxury’ derives from Latin luxus. How, therefore, do the
Chinese transcribe it? Through two characters (she chi):
the first means ‘important people’, the second means
‘much’. As we can see, luxury in China relates to VIPs:
through luxury you become someone important, or
simply someone. You acquire an immediate distinction.
China is the country where the number of dollar
billionaires shows the highest growth: they will desire
distinctions in line with their success.
Four ways of distinguishing oneself
• In countries where an entirely new moneyed
class is emerging, the Western brands are
somewhat mixed up: a Spanish prêt-à-porter
brand such as Mango will be seen at the same
level as Boss, or even Bulgari or Davidoff.
• In India, the same RISC survey elicited the names of
Park Avenue, Wills Lifestyle, Rolex and Omega. The
first two are local brands: the first is a clothing
brand, the second a textile extension of a cigarette
brand (Wills) that is well known but expensive by
Indian standards – at the level of Marlboro. This is
why the salespeople of Western luxury houses in
India are half-salespeople, half-PR agents: they
must spend much of their time explaining and
educating as to why the price is so high.
• An expensive product is not necessarily a luxury
product, it requires a cultural transformation
• to turn it into a vehicle of social distinction and
stratification. In order to appreciate it you need the
keys of this culture, and therefore an education. To
date in the moneyed classes of India, 30 per cent of
the people have acquired this culture, and 70 per
cent only wish to signal that they have arrived. This is
characteristic of emerging countries, such as China
and Russia.
What luxury evokes
• What explains the attachment that Asian consumers feel for
luxury? Above all, the exceptional economic growth and the size of
the potential market (linked to the emergence of a sizeable middle
class). Through loss of culture, and denial of their own history,
certain countries have no other standard by which to measure the
value of things other than their price and reputation.
• Money becomes the standard of all things. Moreover, it testifies
not to your heritage, but to the fact of your own success. It is a
measure of your merit. We would add that luxury is the medal of
this merit. The old Marxist class struggle is replaced by the
individual struggle for class. For lack of culture, international luxury
brands have become the language of immediate distinction