Building on Dr. Mostovicz’s PhD work, this section applies his insights on human interpretation to diverse fields of ethics, leadership and social responsibility.
Isaac Mostovicz writes...
Recently, the European Union proposed a new body, the European Stability Mechanism (ESM) . Watching the YouTube clip (click on the link) I came to the conclusion that since this body will have so much money that can be spent without any control and since those who will head this body would be legally immune even when embezzling the vault I should pursue a new career and become the chairman of this body.
Once elected, I promise to handsomely pay anyone who endorsed me and I will have enough money to do so. This is not bribery because bribery and graft are legal terms which cannot be used to describe what I did since I will be immune from any legal persecution.
However, as long as I am on the other side of the fence I would look at this initiative with the critical eye. Even if what this clip describes is only marginally correct it tells a frightening truth. Those who had this lunatic idea of creating the ESM lost all their hope and optimism. They lost their faith in people and in their ability to get over difficulties, as big as they are. They are fearful and despaired. Losing all hope for life, they have committed virtual suicide waiting now for their own death.
Thus, if endorsing me is unrealistic simply choose whether you want to be dead or alive.
Isaac Mostovicz writes that regardless of what marketing discipline they advocate, marketers must try to understand their customers' inner motivations ...
People sometimes ask me what is so special about Janus Thinking. In my previous blog, I positioned myself as operating within the qualitative research field. We cannot expect people to be fully aware of their deepest, most hidden motivations. Even when they are, not many would be able to express themselves in a coherent way. That’s why people use metaphors when discussing these motivations. For example, a customer called us and asked us to visit him. When we agreed upon a date he asked us whether we were going to offer his staff some training. However, when we asked him what issues he wanted us to address he said: “With me, it’s different”. Well, the customer did not invite us to check what his problems were but asked for ”one size fits all” training while telling us that whatever we were going to provide would be rejected because with him “it’s different”. Some psychologists would use this as an example of how irrational human beings are, and criticize such behavior. But we think differently. There was a hidden message within that customer’s request, disguised within an oxymoron, which we needed to discover. Our client simply expressed his concerns in a very precise, yet illogical way. I do not know of any quantitative method which would be able to shows what exactly was on this person’s mind. Only systematic exploration could have revealed what those concerns were.
Well, Dichter emulated this approach too and we at Janus Thinking operate in the same manner, with a slight difference. To expand on this, I will explain a little about psychology. It all started with Sigmund Freud, the champion of behavioural psychology, who theorized that we have our preconscious and subconscious which guide us. Our motives are deeply hidden in our psyche and influence our behavior. Freud went on to develop psychotherapy, a dialogue between the therapist and his client to treat diverse psychological distortions. Over the years, different theories emerged and different techniques were introduced. However, all these techniques and theories had one thing in common – you need to delve deep into your client’s psyche if you want to really understand him.
Cupid and Psyche
Dichter was the first to adapt this approach to marketing. The popular maxim in marketing is that people buy with their heart and attempt to justify their behavior, post-sale, with logical arguments. Dichter explored the first part of the maxim and gave it a scientific basis. However, he did not have the tools to address the second part of the maxim and did not understand the psychology of this logical justification. To understand what lies behind the logical justification we need to explore another branch of psychology, the cognitive one introduced by George Kelly in the 1950’s. Kelly’s theory, the Personal Construct Theory, postulated that “a person’s processes are psychologically channeled by the ways in which he anticipates events.” In other words, we constantly build theories that will arrange the world around us according to our own brand of logic. We see a series of dots and immediately we look for a pattern whether it exists or not. Using Kelly’s work, I was able to find out the way people try to explain their behavior. These justifications have nothing to do with our perceptions but with the format they use. However, understanding the language allows us to read between the lines. Again, one of the most important tools for discovering what lies behind these claims of logic is developing a dialogue with the client.
Each approach, whether Dichter or Kelly’s, has its own merit. When dealing in mass marketing, for example, then we actually try to go over the head of the salesperson to have a dialogue with the customer. We may find that in that situation, there is nobody there who is qualified enough to build such a dialogue at all. Things are different in luxury, for example because we mainly deal with our clients face to face. I haven’t met every diamond salesperson on the planet, but after thirty years I can recommend only three who are able to do a good job.
Dichter, following the tradition of behavioural psychology, faced an ethical challenge. Behavioural psychologists deal with our ugly hidden secrets that we try to repress. Taking these theories into marketing, there was always a sense of trying to manipulate the customer using sophisticated methods. Since Dichter was aware of this possible negative manipulation he tried in his books to persuade readers that this was not the case.
However, are our motives based on these ugly hidden, archaic and primitive motives? I don’t think so. The role of these unchanged, hidden values is to help us find our ultimate goals that are worth pursuing. Such a noble task cannot be based on ugliness and cruelty but on something very pure and beautiful. One man to address this in a professional way was Victor Frankl, the father of Logotherapy whose approach was to search for real meaning in life. Yes, this search puts the responsibility of searching squarely on us. We, as consultants, cannot advise because this takes away the responsibility from our client. Our job is to guide them to face reality, to discover their beauty within and to use it for self-development.
The marketing of luxury is a challenge. It is very easy to manipulate people to spend more and more; neuroscientists show that by acting this way we manipulate the region in the brain called Nucleus Accumbens which is responsible for our pleasure and laughter but also for addiction, fear and aggression. However, other areas in the brain can be influenced which are responsible for altruism, for example. As a marketer, understanding this and choosing the right way to use this is key to sales. And it needn’t all be about fear – when we manipulate the positive values of man then we can create through marketing someone whose self-esteem is enhanced, who is more refined, and who cares for the world around him.
Isaac Mostovicz writes that marketers must focus on understanding what motivates their customers above all else ...
I recently gave a keynote speech at an international conference in Lisbon, Portugal. The topic of the conference was “Marketing & Consumption: What future?” I offered a variation on this topic which discussed the way marketing heads are discussing, “Marketing: quo vadis?”
Reflecting on luxury, I think that we sometimes err in our thinking. We believe that if we could only define what marketing or luxury or brand are, we’d have found a Holy Grail. Thus, with the mysterious exception of luxury, many articles and textbooks try to create as accurate as possible definitions of what marketing or brand are. The question is, of course, once we have a definition what can we do with it? The answer is very obvious – nothing.
Isaac Mostovicz presents at the “Marketing & Consumption: What future?” conference
Well, some of us enjoy knowledge for the sake of it and there are experts in brands and marketing just as there are experts in medieval Mongolian poetry, pre-historic music or other esoteric topics. However, when we want to put this marketing knowledge to use, we fail. One of the leading journals in marketing checked how many practicing marketers research their field or read the findings that appeared in that journal, which claims that its audience consists of both academia and marketing practitioners. The answer was, as you might expect, that nobody cares to read or learn what those findings are.
In my opinion, we make the cardinal mistake of asking the wrong question. The question is not what marketing is but what marketing /brand/ luxury does. How does it affect us, what benefits do we draw from it and how can we properly use this knowledge? This question is not simply a different question but indicates a mindset that is opposite to the one prevailing in academic and practitioners’ circles. While trying to understand what a term like marketing is reflects on us and on our egoistic satisfaction, asking what something like marketing does recognises that there is a world around us that we need to satisfy, that we want to affect and influence and that we need to consider first.
Others agree with my approach, e.g. Ernest Dichter, the father of motivational research that changed the landscape of US marketing . Additionally, in 1960, Theodore Levitt published “What is Marketing?”, arguably the most popular article to appear in Harvard Business review of all time and said, “when a customer asks you for a ¼” drill he actually asking for a ¼” hole”. Both of them told us that marketing starts with knowing who your customer is and what they want. However, despite the sound nature of this simple idea and vast empirical proof, marketers are not as focused as intensely as they should be on what emotions are driving their customers. When checking who the customer is, marketers must look at the deeper psychological layers that motivate the customer to choose one product or option over the other.
This lack of customer insight is widely apparent, and to cite the recent Goldman Sachs example, it’s clear that treatment of customers can range from extremely bad to extremely good. To take myself as an example, I would not choose Goldman Sachs as a financial provider because they are apparently untrustworthy, but it’s possible that they employ managers that are genuinely nice people who have merely acted in an untrustworthy fashion. In this way, my motivation for choosing a product has been selecting what I perceive to be a “good” brand (if such a one exists) over a “bad” one.
To use a different example – Blackberry, iPhone and Android phones are all excellent products but customers will choose one option over the other equally good option. In this instance, as marketers we should understand what the parameters are that have made each customer identify with the different product. The assumption is that the customer who wants a BlackBerry doesn’t want an iPhone – I know that some people prefer the Android operating systems over those of the iPhone, for example. Nevertheless, they might advise me to buy an iPhone since my psychological needs are totally different to theirs.
When dealing with my own customers I always ask, “Who is your customer?” and gradually, people start to realize that they cannot describe him or her to me. What I am actually looking for is a description that allows me to identify the typical customer according to defined parameters, but it seems that nobody can describe what those parameters are. For example, one client told me that he has 10,000 customers. But he was actually referring to 10,000 people he has served in his shop at one moment or another. Yes, they were his customers in the past but can he consider them future customers? Will they visit him the next time they shop? Past performance is not a guarantee for future success.
Another question I ask them is what the needs of their customers are. Of course, every jeweler will tell you that their customer is looking for jewelry and every owner of a shoe shop knows that people come to their shop to buy shoes. But does the shopkeeper know what motivates the customer? Can he recognize their deeper reasons for wanting a particular product? When dealing with my customers, most cannot answer this simple question or, in Theodore Levitt’s words, my clients know that the customer wants a ¼” drill but they do not know what the ¼” hole looks like.
Brand consulting suffers from a similar problem. A typical request that one of my clients made was that “we need to be differentiated and we need branding”. I told him that the cheapest and quickest way would be for his entire company to paint their faces green – that would differentiate them and even attract a lot of media attention. Actually, my client realized what his company’s problem wa – all the companies in his industry (hi-tech) look the same. He failed, though by spelling out only half of the problem. While he wanted to be differentiated, he did not consider the situation through the eyes of his clients or consider how this differentiation would address his client’s needs. Well, this is the just the beginning.
Brand takes us one step further. When I asked this client to describe his customer of choice and to use a real-life example, his face lit up and he told me about two of his preferred customers. He quickly told me that it was not the money his company earned on the deals that was important to him, but the bond he created with these customers. Not all our customers are those we would like to work with and not everyone is our customer of choice. It is not enough to know who our customer is or what his needs are. We need also to know who we are and what our needs are. If we manage to match our needs with those of our customers, then we have a strong brand. Do we need to differentiate? Not exactly. What we need to understand is that if we really want to interact with only those who share the same worldview and deep needs with us, our market is limited. A brand’s profit does not come from sheer volume of sales but from our ability to address the needs of our customer of choice in a way nobody else can – because we truly and intuitively understand their needs.
Luxury marketing is the ultimate test. Luxury is the behavior of needlessly overspending. We cannot begin marketing if we do not intimately know who our customer is and what their needs really are. Describing luxury behavior as needless tells us that those needs are much deeper and cannot be logically explained. Do we know what they are and do we know who our customer is? Can we describe the parameters that will allow us to find our customers? In terms of our brand, are we proud about what we offer? Will we be able to look back when time arrives and say that we believed in what we were doing? Luxury strips away all superficial logical arguments and asks us to delve deep and to face the real questions. Do we know how to do this?
Apple is the rare example of a brand that does know how to do this. It really understands its customers and that is why its fans are so loyal. The brand also develops its products according to the needs of its customers. The fact that their systems are a “walled garden” to other technology companies and that each application for the iPhone requires Apple’s approval is not mere greed, but based on a deep understanding of their customers’ needs.
Isaac Mostovicz writes that luxury brands must connect with their customers post-purchase ...
An interesting article on Luxury Daily has revealed some research from Condé Nast Ideactive, the research arm of the publishers, which showed that luxury brands must improve their marketing efforts to high net worth customers past the point of sale.
Image courtesy of Stock. XCHNG
The research shows that unsurprisingly, most brands focus all their attention on customer attraction but when it comes to retention, they could be missing out on the chance to turn brand loyalists into brand advocates. Condé Nast Ideactive examined consumers’ emotions at each stage of the sales journey and what marketing devices are used to satisfy their needs at each point.
Previous posts on this blog have discussed the importance of marketers connecting the luxury purchase process with emotions and making customers feel special, singled out, or important.
Pat Connolly, head of strategy for Condé Nast Ideactive, New York echoes this idea.
He comments: “Brands need to invest in emotion, and these gaps where people are very emotional [explore and post-purchase] is an opportunity for brands to invest in things like content and experience,” he said.
“Doing this post-purchase will create advocates and content-creators that deliver on the first gap [the explore stage].”
Post-purchase, the research has found that consumers, especially the youth market, need almost immediate validation from friends and family post-purchase – often carried out through mobile or social media.
Within Janusian thinking, this is a particularly Thetan trait – as Thetas seek belonging through bonding or affiliating with their peers. Thetas aim to fit in or contextualize themselves within their desired group and use socially derived understandings of product characteristics as a basis for their consumption.
However, the idea of a personal gift or something that singles out the buyer post-purchase is something that will particularly appeal to Lambdas. Lambdas seek distinction as an ultimate end goal – so a personal touch from a luxury brand that helps them stand out will satisfy their desire for uniqueness.
Clearly, brands should take advantage of this part of the buying cycle and view the post-purchase experience as an opportunity to reach out to their consumers.
Isaac Mostovicz writes that Pandora represents a great example of a luxury brand seeking to personalise and empathise ...
Previous posts on this blog have discussed the necessity of emotion in luxury marketing, and the jewellery retailer Pandora is the latest to demonstrate a good understanding of this.
Image courtesy of Stock.XCHNG
Unity Marketing’s fourth “Luxury Tracking” survey has ranked Pandora as the second most popular jewellery brand amongst 1,200 affluent consumers, just behind Tiffany & Co (which recently executed its own emotion-charged marketing campaign, What Makes Love True.)
More established brands like David Yurman and Bulgari were left behind as even other brands considered “mass” – e.g. L’Oreal Paris and Amazon.com are slowly making inroads with luxury consumers, the report found.
This is significant, if only because Pandora’s mainstay item is a silver charm, which consumers are able to add to a bracelet or necklace to create a personalised piece of jewellery.
This approach gives customers the ability to customise a one-off piece that others are unlikely to be wearing and something that is totally personalised.
From the point of view of Janusian thinking, where there are two opposing worldviews, Pandora’s approach appeals to the Lambda personality. Lambdas are more likely to make choices based on how a product will help them stand out, and be unique versus Thetas, who long to fit in and seek affiliation.
Pandora jewelry allows the personality of the wearer to shine through rather than be overtaken by the brand, showing that the company understands its target market.
Isaac Mostovicz writes that luxury names like Burberry are British not only by brand ...
Image courtesy of Stock.XCHNG
A recent article in the Sunday Times writes that manufacturing is on the rise in the UK, particularly when it comes to the creation of luxury goods. It reports that a number of high-end fashion houses are using not only British materials to create these goods but are also using UK factories to manufacture them.
British success story Burberry hand-makes its trench coasts in Castleford, Yorkshire. Pringle, the Scottish knitwear retailer, creates its goods in a factory in Hawick, Scotland. And it’s not just UK brands that are sourcing and manufacturing in the British Isles – even the European and American fashion houses such as Chanel, Prada and Ralph Lauren manufacture their own cashmere, tweeds and shoes in the UK.
As provenance becomes less of a marketing term and more of an intrinsic demand for affluent consumers, the appeal of manufacture in the UK becomes obvious. Buying a British-made product is seen as akin to buying a quality investment piece, with lasting appeal.
Says James Eden, managing director of English outerwear brand Cooper & Stollbrand: “People want more understated, credible garments that are steeped in authenticity.”
Sustainability is also a key factor of “buying British.” There are no ethical concerns for either manufacturers or consumers around UK labour laws as with lesser economically developed countries; all goods are created under EU labour directives. And of course, the amount fashion miles within the supply chain are significantly reduced compared to manufacture in the Far East.
There are a number of factors that influence consumers’ buying choices – at Janus Thinking, these consumers are separated into two categories; Lambda and Theta.
For a Lambda, the provenance of British goods would be the key attraction – knowing that they are purchasing a product with an impressive history embedded within it. For a Theta, the appeal would come from the high-end brand and the well-known cachet of “buying British” amongst their social group.
All of this would mean little without significant demand for products that are “Made in Britain;” however – Burberry’s recent financial results indicate that their appeal is not only widespread, but looks likely to continue.
Isaac Mostovicz writes that the Chinese Year of the Dragon may be significant for luxury retailers ...
A recent article in the Wall Street Journal wrote that Richemont, the Swiss luxury goods group, has reported third-quarter sales of €2.6 billion ($3.3 billion) – in no small part down to its Asian, and in particular Chinese customers.
Image courtesy of Luxos
The Asia-Pacific region cemented Richemont’s position as one of Europe’s most important luxury manufacturers, with results of €1.05 billion, 36% up from the previous year. However, it is not only the domestic Chinese market that is prompting such strong profits. Sales in Europe also rose 16% to €914 million as Chinese tourists are purchasing the group’s goods – with items such as Cartier jewellery and Jaeger-Le Coultre watches finding favour – whilst visiting European cities such as Paris, Rome and Geneva.
Bernard Fornas, chief executive of Richemont’s Cartier brand commented: “The number of Chinese tourists is growing… and will help to “cushion the landing” in case things get worse in Europe’s economy.”
As previously discussed, South-East Asian demand for luxury looks set to continue. Sparkle Roll Trading Development, a distributor of luxury goods in China, has five boutiques in Beijing and Shanghai selling Richard Mille and Parmigiani watches – with the average Parmigiani watch costing around 68,000 Swiss francs ($71,882).
“Sales are really good at the moment. At one of our boutiques we sold 60 watches in one month,” commented Mr. Firth, Sparkle Roll’s Chinese Marketing Director. By comparison, their stores in Europe sell on average five or six watches a month.
The year 2012 – which in Chinese horoscopes is the Year of the Dragon – is also affecting luxury sales. Chinese New Year is on January 23, with the emblem of the dragon being symptomatic of wealth, royalty and nobility. To celebrate this, independent watchmaker Parmigiani has created a dragon clockwork automaton crafted of white gold, imperial green jade, rubies, sapphires and a diamond.
At Janus Thinking consumers are characterized into two different groups – or world views – of Lambda and Theta, which explain how different personality types influence our choice of luxury.
The Parmigiani automaton might appeal to Lambda consumers due to the level of its craftsmanship, its uniqueness, and the fact that it there is a meaningful story behind its creation – rather than because of its price.
Theta consumers, however, will be attracted to such an item as it is a one of a kind, high-end design, and its high price helps to establish them within their preferred social class. Thetas seek acceptance, and their purchases reflect that.
Priced at 3.5 million Swiss francs ($3.7 million,) regardless of whether Theta or Lambda, its purchaser will no doubt have a strong affinity with the symbolic dragon.
Isaac Mostovicz writes that that our subconscious psychological impulses may affect our buying habits more than we believe, according to Ernest Dichter...
A recent article in the Economist describes how Ernest Dichter, “the Freud of the supermarket age,” transformed marketing in the USA through his behavioural research and ground-breaking ideas around the role of the unconscious in sales.
Dichter was convinced that traditional analysis of consumers (at the time carried out through speculative and somewhat slapdash polling techniques) offered very little insight into buying psychology and presented a limited view of what makes consumers opt for one product over another.
Rather, by advocating in-depth psychoanalytical research in lengthy interviews, Dichter gathered that subconscious urges and socialized inhibitions are what affects consumers’ buying habits. Furthermore, Dichter understood that possessions are extensions of our own personalities, serving as “a kind of mirror, which reflects our own image.”
I have argued previously that luxury marketers must focus on the human characteristics that drive consumers. By a simple characterization of consumers into two personality types – Theta and Lambda, I created a dichotomy that allows marketers to better understand how consumers behave according to their values, unconscious motives, and desires.
The Theta personality seeks affiliation and control as an ultimate life purpose, so they seek acceptance to fit in within a desired group and use socially-derived understandings of product characteristics as a basis for their consumption.
Lambdas, on the other hand, seek achievement and uniqueness as an ultimate end goal, and so are more likely to interpret products based on their individual responses to the product, how it helps or prevents them to stand out, and how the product benchmarks against their regular consumptive patterns.
Today, in addition to the empirical analysis marketers carry out through geographic location, gender and income, new research and developments based on neuroscience show that Dichter’s insights are coming back into fashion.
Isaac Mostovicz writes...
While the US administration imposes budget cuts to mend the state of the country after the financial crisis, American consumers are showing behaviour that is unexpected of a country facing huge amounts of debt.
They called it the “new austerity”, which would see the spending habits of Americans to permanently change due to the events of 2008/2009. However, the Wall Street Journal has published data that goes quite against this grain. Instead of purchasing only convenience goods, a study has suggested that in February of this year, US consumers spent an annualized $1.2 trillion on non-essential items including pleasure boats, jewellery, alcohol and gambling. This spending was up 3.3% from a year earlier, compared to 2.4% for essential items such as food, housing and medicine.
So what does this tell us about the modern-day recession? Rather than a desperate hoarding of the essentials in a thrifty spirit, US consumers seem to be brimming in confidence in their economic future and splurging out on luxury treats. This obviously is good news for these luxury industries. Rather than a spirit of austerity, American consumers are still seeking the dream and not letting an economic crisis bring them down.
Isaac Mostovicz writes that luxury carmakers are enjoying strong sales in emerging markets...
Which car you drive has long been established as a symbol of status. That doesn’t look set to change, and in emerging nations where consumers are eager to make a statement about their newfound wealth luxury carmakers are enjoying strong sales.
According to a recent article in the Economic Times, China is the global driving force for premium luxury cars as consumer enthusiasm fuels sales. This is perhaps not surprising given China is close to having one million millionaires with a personal wealth of 10 million yuan or more – up 9.7 percent from last year.
At the Shanghai Auto Show last week, British car manufacturer Aston Martin claimed that all of its five One-77 cars for the China market were ordered even before the Auto Show opened to public, demonstrating the strength of the demand.
According to Zhong Shi, a Beijing-based auto analyst interviewed for the Economic Times article, “Chinese consumers love to show off their wealth by having unique luxury products or getting them one step ahead of the others.”
This clearly reflects the habits of a Lambda personality type who are likely to make choices based on how it will help them stand out and benchmarks them against others. This is in contrast to a Theta personality type who, instead of wanting to stand out, would seek to contextualize themselves, and so perhaps would not always be driving demand.
Stephan Winkelmann, president and chief executive officer of Italian super sports carmaker Lamborghini, says China will be Lamborghini’s biggest market this year, after its sales nearly tripled year-on-year in 2010. Other high-end carmakers such as Ferrari have similar expectations.
For an insight into how luxury carmakers evolve over many generations, and continue to meet emerging market demand, you may be interested to read this interview between the CEO of Rolls-Royce, perhaps the most renowned luxury carmaker of all time, and Forbes India.