Janus Thinking

As stories continue about how much the wealthy are suffering in this economic downturn, it’s interesting to note what people are still spending on. This article from the Wall Street Journal reports that many luxury firms have so far been resilient in more difficult economic times, finding consumers at the high and low end of the luxury market who are still willing to spend. The article includes examples from three individuals:

Jordan Shapiro, a 25-year-old Wall Street recruiter, says he isn’t sure what his income will be this year, so he put his plans for an African-safari honeymoon on hold. But he splurged a few weeks ago on a $3,000 Omega watch, which he considers an investment. “I hope it’s going to retain or gain value,” he says.

Stephanie Wickouski, a 55-year-old New York attorney, walked out of an Hermès store this week with a “heart-stoppingly expensive” $950 cashmere shawl. Despite the price, she says the shawl is a good value for the money, because it has “range and permanence,” meaning it can be worn over a dress, paired with a skirt or even worn on an airplane when it gets cold.

Margaret Schwartz, a 24-year-old assistant ad-sales representative in New York, shops for clothes at cheap-chic chain H&M. Yet she recently bought a $300 pair of Bulgari sunglasses — one of the Italian jewelry label’s least-expensive items — because she figured she could afford an “investment piece.” “Aviators are always in style,” she said, strolling past Tiffany’s Wall Street store.

This small amount of information about each individual is enough to categorize them as Lambda or Theta. I would consider Mr. Shapiro and Ms. Schwartz to be Thetas. In their mid-twenties, they consider their luxury purchases as investments. I would guess that they are also using their purchases as a way to stand out among their peers (Mr. Shapiro can be seen in his watch on Wall Street, and Ms. Schwartz’s sunglasses are “always in style.”). This desire to fit in is a typical Theta characteristic.

Ms. Wickouski, on the other hand, seems to be more of a Lambda. She recognizes how expensive her new Hermès shawl is, but the pleasure and utility she derives from it makes it completely worth it to her. She interprets “range and permanence” as something highly desired; the shawl makes her unique.

An awareness of what Thetas and Lambdas are looking for, and of what products represent to them, can help marketers reach these individuals more directly.

Photo by Doozle

Social networking sites like Facebook and MySpace haven’t traditionally been associated with luxury brands–largely because they’re mainly used by young people who aren’t able to afford expensive luxury goods. However, two complementary factors–increasing numbers of users with discretionary income on the sites and an increasing desire to ‘hook’ young people early on a brand–are changing some luxury brands’ online strategies. Case in point: Cartier. The company recently created a page on MySpace for its new ‘Love by Cartier’ collection. The page, more tastefully done than most user MySpace pages, shows audio, video and photos related to ‘Love by Cartier.’ As of this posting, the campaign has 3929 friends, including celebrities like Lou Reed and Sting.

I wonder about the value of these sorts of pages to the brand. From the IHT:

Ben Hourahine, futures editor at the London branch of the ad agency Leo Burnett, said the use of social networks was appropriate at a time when consumer attitudes about luxury were changing. In a recent survey of U.S. consumers by the agency, only 7 percent said they thought “luxury” meant being part of an exclusive club.

“Luxury brands in the past had this unattainable aspect to them,” he said. “Now they realize they need to connect and communicate with people.”

I’m skeptical because I’m not so sure the MySpace audience matches up well with the Cartier’s target audience. Given the quality of some of the interactions on the page (THX 4 THE FRIENDSHIP!! ALL THE BEST! GREETZ FROM HAMBURG, RALF), I wonder if the positive association these users gain with the brand is worth the tarnishing they’re giving the brand by being so, well, MySpace.

John Donne once said that no man is an island, but newly released findings from U.S.-based Coldwell Banker suggest that man still wants to buy himself a piece of one as the ultimate luxury home site.

More than 300 rich households in the U.S. were interviewed for the poll.  To be classified as such, they must own a home worth in excess of $1 million dollars and have an equal amount of liquid assets to invest.

27% responded that their dream home would be located on an island while another 22% preferred a more rustic setting and only 18% selected a suburban or foreign location.

Interesting that many of these choices seem to reflect a desire to escape — or at least get away — rather than become more connected.

Most people go to an art museum to appreciate fine art and broaden their cultural horizons. Is this still the case when the art on display is known to be fake? Next year the Brooklyn Museum in New York will put on a show featuring pieces of Coptic sculpture known to be counterfeit. Acquired between the late 1950s and early 1970s, these pieces have never before been shown to the public, and their provenance is dubious at best. One example from a recent article in the New York Sun:

One New York dealer, Jerome Eisenberg, acknowledged in a phone interview that he had sold the museum one piece now considered to be fake, a roundel with a border of palm fronds and a central bust. The museum acquired the piece in 1960.

Asked where he bought the roundel, Mr. Eisenberg said that he purchased it from a “very reliable, very ethical” dealer in Cairo, a Copt named Kamel Hammouda. Asked if he knew where Mr. Hammouda got the sculpture, Mr. Eisenberg said that it was against the rules of the trade at the time to ask such questions.

“When you’re buying antiquities in Egypt or Beirut or Turkey or Algeria, you don’t ask the dealer who dug things up,” he said.

Hopefully the museum will provide enough information in the exhibition such that visitors can learn what characteristics make these pieces forgeries–that will certainly foster the connoisseurship of Egyptian art.

[Photo by Dan Diffendale]

Connoisseurship, the art of appreciating fine things and understanding their provenance, importance and distinguishing characteristics, is certainly a worthy way to spend one’s time. Connoisseurs learn about objects that interest them and use that knowledge not (only) to impress people but to make others excited and see what they find so unique and interesting.

Perhaps there’s an element of schadenfreude to it, but I’m always intrigued when self-professed “connoisseurs” reveal a lack of understanding that puts into question the knowledge they think they have. Two upcoming films about the ‘Judgment of Paris,’ the 1976 French wine jury that improbably found a selection of American wines altogether superior to French wines, reveals the conceit on the part of some of the jurors. From an article in Canada’s Globe and Mail:

No nose? Talk about calling the kettle noir. But then, I’ve always advocated calling connoisseurs “cons” for short. I’ve attended far too many professional blind tastings to have much respect for people who boast about their tasting abilities.

Am I being too harsh? I think not. Frankly, to confuse an aristocratic Bâtard-Montrachet from continental-climate Burgundy with a warm-weather Napa chardonnay is the wine equivalent of mistaking a Massenet opera for Cats on Broadway. The tasters knew it, too, which is why some tried to suppress or dismiss the Paris results after the bottles came out of their paper bags

As wines can differ so much by vintage, can we be really be critical of the connoisseur who occasionally gets it wrong? I’d say as long as the stakes are ‘impressing people at a dinner party’ and not ’substantially misvaluing cases of wine for auction,’ it doesn’t matter that much if the connoisseur is occassionally wrong. He or she will be right most of the time, imparting wisdom and helping others learn about something worthy of connoisseurship.

We’ve seen gem-encrusted phones before, but here’s something new that toes the line between luxury and excess. Most people just use a cell phone to make and receive calls–in many markets they can get one free. But Dior recently released a pair of phones that add a little sparkle to one’s regular regime. Actually a lot of sparkle–their new top of the line “Lady Dior” phone is encrusted with 3251 carats (in 640 stones) of Swarovski crystals and comes with a crocodile-skin sheath and a mini-phone that women can attach to the outside of their handbags so they don’t need to dig when they get a call. The phone costs $26,000 (a version without the crystals and crocodile costs $5000).

Much like luxury waters, some people will find this phone irresistible and interpret it as worthy of its price, the very best phone money can buy. However I think most people will stick with phones that price in the hundreds rather than thousands.

Tiffany was in the news this week, not for a new line of diamond rings or earrings but because it lost the long-running lawsuit it’s had with eBay about the sale of counterfeit Tiffany goods on the site. Tiffany maintains that eBay knowingly encouraged sellers to dilute Tiffany’s value and trademarks by not putting a stop to counterfeit Tiffany listings on the site. Rather than resting with eBay, the burden for identifying counterfeit goods rests with Tiffany, who have to report counterfeit listings to eBay and have eBay remove them. EBay argues that like YouTube it’s up to the trademark holder to report false listings, and they already take enough action against counterfeit items because these are bad for their marketplace.

This American ruling is interesting because it diverges from recent findings in European courts. In Germany a ruling for Rolex found that eBay must make greater preventative measures against the sale of counterfeit Rolexes, and in France eBay was ordered to pay Louis Vuitton 40 million euros in damages for the sale of counterfeit goods.

Counterfeit goods damage brand value–if discovered, they’ll upset people who purchase them and receive them as gifts; they mock the effort that people make to show their love and appreciation for one another. The takeaway from this case is that one needs to be careful when make purchases from a source that hasn’t been completely vetted. When a deal sounds too good to be true, it probably is.

[Photo by minxlj]

A little follow-up on Rolex from an article (subscription only) about the Baselworld watch fair in Monocle magazine:

Swiss watch brands are patriotic to a fault. Rolex is one of the few high-end manufacturers that does not stamp "Swiss Made" on the watch face in the belief that Rolex defines Switzerland rather than the other way around.

An iconic brand is one that defines its country. But is it easy for Rolex to define Switzerland because it’s, well, Switzerland? Can larger, more controversial nations have iconic brands in the same way?

[via Kottke]

Do accessories make the (sports)man or (sports)woman? The Wall Street Journal recently highlighted some luxury products sponsors have given athletes or athletes have otherwise chosen to endorse. Among the ’spoils’: Tiffany Elsa Perretti Wave Earrings (for tennis pro Maria Sharapova), Rolexes (for golfer Phil Mickelson) and luxury moisturizers (for NBA player Steve Nash).

Could an appreciation of these fine items by athetes lead to better performance on the field? Perhaps. The brands certainly enjoy being associated with high performers. As Rolex says on its website:

In 1927, a young woman named Mercedes Gleitze swam through the icy waters of the English Channel wearing a Rolex Oyster. It marked the beginning of a long tradition: the linking of Rolex watches with exceptional individuals.

Since then, many of the world’s greatest explorers, sports figures and artists have endorsed Rolex timepieces. These Testimonees all share Rolex’s guiding spirit: the constant pursuit of perfection.

Is it personal investment and independence (by the designer or the founding family) that makes a luxury brand special? Such is the suggestion of this article in Forbes last week. Recently Millward Brown, a market research company owned by WPP, put together a list of the world’s most powerful luxury brands using WPP’s Brandz database, which according to the article is the world’s largest repository of brand equity data, including over a million interviews with consumers about their attitude towards brands.

Louis Vuitton was on top, but there were several companies on the top end of the list (including Armani and Hermes) that are private or still have a family as a primary shareholder–by having a majority or entire stake in the company, these companies can focus on quality and design without having shareholders breathing down their necks about higher profits.

There’s also a nice quote about the longevity of luxury from Nikhil Gharekhan, senior vice president at Millward Brown:

Luxury brands do very well because they command high levels of emotional loyalty. They ensure that the loyal customers are going to come, and, therefore, revenue stream is assured. Even in times of recession these brands don’t cut costs; they continue to deliver top quality. It’s almost a justification to splurge on these brands.

Forbes also has a slideshow of some of the luxury brands on the list here.

Do private luxury brands have an advantage over their public peers?

[Photo by Donna Grayson]