An article in Luxury Daily reveals that Stella McCartney has debuted its first fragrance in nearly ten years, L.I.L.Y, via a mobile application and partnership with retail department store Selfridges. Using augmented reality app Aurasma, consumers will be able to access content related to the new perfume – and Selfridges has also provided iPads instore for those shoppers that don’t have smartphones or iPads to access it. The department store will also have interactive windows featuring a film by British artist Dan Tobin Smith where shoppers will be able to “edit” the film themselves by moving around.

Image courtesy of Stock.XCHNG

The campaign is also geo-targeted – through the fragrance’s Facebook page, consumers can check in to Selfridges on Foursquare to win exclusive prizes and “like” the page to win free samples. Then, when these customers are actually in-store, they can use the app on their smartphones or the provided iPads to activate a 3D display of a behind-the-scenes video or a large animation of the L.I.L.Y bottle.

Aurasma technology appears to be the latest means of multichannel for luxury brands to connect with their consumers. Net-A-Porter used the app to promote its new Karl by Karl Lagerfeld collection, where consumers could interact with window displays in New York.

Emmet Shine, founder and president of Gin Lane Media, New York which created the campaign commented: “Real 360 degrees is being in the hands of a user anywhere at any time, in person, to online to a combination of both.”

Tapping into customers’ emotions by making them “part of the story” as with the brand interaction through store windows is key. 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, marketers will better understand how consumers behave according to their values, unconscious motives, and desires.

A recent article in the Financial Times discusses how Western retailers are attempting to capitalise on the Chinese love affair with luxury and woo high net worth consumers from that region.

Image courtesy of Stock.XCHNG

To coincide with the Chinese New Year, Affinity China, a luxury club for the wealthy Chinese organised a tour of New York where several brands “hosted” their high net worth visitors – among them Mont Blanc, the pen maker, which treated the shoppers instore to a recital by Lang Lang, the Chinese pianist.

These kinds of tailored experiences are just one of the ways that upscale Western brands are trying create and nurture relationships with affluent Chinese shoppers – and are discovering where the differences in these consumers’ attitudes lie.

Even when luxury stores accommodate Chinese shoppers by hiring Mandarin speaking staff and accepting the China UnionPay credit card, there are still contrasts. China engenders a “natural distrust” of overeager sales associates and many of the rich guard their privacy carefully – meaning that the cosy relationship Western luxury brands try to initiate with their most affluent customers is not a viable route.

Furthermore, as the desire for more flashy means of demonstrating their wealth recedes, there are many Chinese millionaires who are now interested in the provenance of their goods – or rather, what justifies the high price tag attached to them.

As per previous posts on this blog around the Lambda / Theta distinction of luxury shoppers, these kinds of Chinese consumers could be classed as Lambda – who see the item’s value not in terms of price, but rather, in terms of craftsmanship.

Victor Luis, president of Coach’s international business comments of these shoppers: “They are interested in understanding the history of the product, how it’s made, the quality, how to take care of the leather. ”

An interesting article in the Financial Times described the rate at which the luxury men’s market has expanded of late – to the point where it is beginning to outperform the women’s luxury market. According to the 10^thedition of Bain & Company’s luxury goods worldwide market study, men’s items now make up half of the luxury market – in no small part down to the appetite of male consumers from emerging markets like Asia, and particularly China.

Men's luxury lifestyle emporium Heartless

 “In Asia, the development of men’s wear is extremely rapid, and in China we expect an organic growth close to 20 per cent for most of the European luxury names,” says Thomas Mesmin, a luxury goods analyst at CA Cheuvreux.

But it’s not just emerging markets that are seeing the of explosion of the luxury men’s market. Globally speaking, theUSbrand Coach has seen its men’s business double over the last year, and eventually men’s sales are expected to make up 15% or more of their total sales.

Hermes reports similarly spectacular expansion in its men’s categories. Meanwhile, major retailers and department stores are making plans to create exclusive areas for men’s luxury accessories and footwear – including Harrods and French retailer Printemps.

Alexis Morout, COO of footwear designer Christian Louboutin, has similarly positive projections for the future growth of their men’s business, commenting: “The men’s business represents today less than 5 per cent of our overall business, but could easily become 15 to 20 per cent in the near future.”

The Bain & Company study also reported that the luxury market continues to perform strongly in all categories, with apparel experiencing 8% growth in 2011, driven by both menswear (9%) and womenswear (7%).

With plans to trial men’s only concept stores by Gucci and Bottega Veneta in China, it will be interesting to see if this is a long-term evolution in consumers’ buying behaviour or if it remains a buying trend more exclusive to emerging markets.

What do high net worth individuals look for in their goods? A recent study from the Luxury Institute has identified what attributes of luxury products affluent consumers value the most. Analysing wealthy consumers from across the globe with a minimum annual income of $150,000, the study found that the top attributes that they value are superior quality (73%), followed by craftsmanship (65%) and design (54%.)

Customer service is a key brand attribute that was cited by 47% of correspondents – and interestingly, one of the most important to Chinese consumers who cite it as a one of the main considerations. However, it’s also one that US consumers feel has deteriorated in recent years (34%,) alongside craftsmanship (17%.)

In China, however, satisfaction levels remain high. In the world’s most rapidly growing luxury market, 63% of affluent consumers say that customer service has improved and the vast majority applaud higher quality, craftsmanship and design.

Previously on this blog, entries have explored the success of those brands that tap into their customers’ emotions, providing a positive experience and remaining relevant to their contemporary customer through multichannel platforms such as social media.

At Janus Thinking, consumers are characterized into two different groups – or world views – Lambda and Theta, which explain how our different personality types influence our choice and perception of luxury.

The Lambda personality will see an item’s value not in terms of price, but rather, in terms of craftsmanship. If the item has taken a long time to make, is unique or has a story behind the item’s creation then it is more likely to be valued by a Lambda. On the other hand, if the item is attractive, and something that’s likely to establish them within their preferred social class, it will be valued by a Theta.

While the luxury industry identifies what attributes customers value in their goods, it is a good time for brands and retailers to understand how consumers’ core differences can assign different values to luxury items.

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.

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.

I have written previously about luxury brands’ adoption of digital campaigns, for example designer Marc Jacobs’ MarcFam which encourages consumers to interact with the brand online via Twitter and Instagram.

I read with interest about the latest instalment of luxury jeweller Tiffany’s digital campaign “What Makes Love True,” which has adopted a similar approach in terms of digital user interaction. However this campaign, based on the concept of the art of love and romance, invites users into a world charged with emotion, presented in a highly immersive digital environment.

The first part of the campaign incorporates brand and user created content – videos of consumers narrating tales of “true love,” an interactive map where consumers share locations where they have experienced romance, and additional filmed content. For the second part of the campaign, launching next week, consumers will be able to upload their own tangible examples of “true love” through a user-curated gallery.

I have written in the past on the importance of brands connecting to consumers’ emotions, and this is a very successful association for a brand that wants to position itself as having a major significance at “life-stage” events such as engagements and weddings – with that significance now firmly embedded through its own virtual environment.

Chris Ramey, president of Affluent Insights, Miami commented: “Selling product benefits is, today, a failed strategy. Tapping into your prospect’s deep-seated values and emotions is key.

“Tiffany understands this marketing evolution as well as anyone,” he said. “Emotive selling connects neurologically to consumers who are disinclined to buy more stuff.

“This is the new reality for selling luxury.”

The What Makes Love True microsite can be found at

http://www.whatmakeslovetrue.com.

True Love in Pictures by Tiffany & Co

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.

A recent article by Vanessa Friedman in the Financial Times talks about the recent trend towards “causesumerism”, a new term that has been coined by Lisa Ann Rochey and Stefano Ponte in their new book Brand Aid.

Causesumerism refers to

” …the increasing tendency of luxury and fashion brands to help consumers justify purchases by injecting a note of do-goodism into the selling of the product.”

The book focuses mainly on product (RED), which aims to stop the spread of AIDA in Africa by using the sales of branded goods such as Armani and GAP to support the global fund for fight AIDS, tuberculosis and malaria.

I have previously written about the relationship between luxury brands and CSR, and I believe that luxury and good causes are not mutually exclusive. This not only makes good sense for the long-term prospects of the brands in question, but can also be a positive attribute in luxury marketing – particularly if the brand aligns its CSR initiatives to core brand values and identity, and resonate with consumers.

Kahro, a jewelry stores Raleigh NC store which I run, has teamed up with Kay Yow Cancer Fund, a Raleigh NC based charity that work to fight female cancers. Giving to charity is seen as an aspect that Kahro shares with its customers; just as they spend extra, Kahro spends extra. This charitable giving builds self-esteem for all the Kahro employees, as they know that their workplace gives something back to the local community. In turn, this raises productivity and staff commitment.

Is this good in terms of marketing? Yes. But I also believe that it can deepen brand identity, and that it is not always driven by profit – it may make sense from an employee satisfaction perspective, or from a genuine wish to impact local communities.

Image courtesy of Homeplus

In the wake of Kim Jong Il’s death and the changes taking place in North Korea, I was interested to read a recent article on Reuters that discussed the ways luxury marketers are targeting South Koreans.

I have previously written on the trend for Chinese consumers to purchase fake luxury carrier bags, demonstrating that the Asian love affair with luxury seemingly continues to go from strength to strength.

As the world’s 13th largest economy and an increasingly affluent base of consumers, marketers have offered consumers there a novel way of purchasing luxury goods – through mass-market access.

South Koreans will now be able to purchase designers items during their weekly shop at Seven Eleven. The chain, ubiquitous throughout South East Asia, also sold Gucci shoulder bags and wallets during Korea’s Thanksgiving festival in September.

“It was a big success, and we are thinking of expanding our luxury gift line to other accessories for the New Year,” said Seven-Eleven marketing official Cho Yun-jung.

But it’s not just convenience retailers like Seven Eleven that are cornering this market. Retailers Tesco and Lotte Mart, an Asian hypermarket, are also selling Chanel, Prada, Ferragamo and Balenciaga.

The luxury goods market is booming in Korea, with sales growing “at least 12% to an estimated $4.5 million last year,” according to a report by McKinsey & Company in August. This can be attributed to demographics – with more working women who have additional disposable incomes – as well as tourists from nearby China and Japan, who stock up on luxury goods in trips to the region, attracted by South Korea’s cheap currency.

Furthermore, South Koreans have increased access to credit as local banks are eager to provide shoppers with tailored credit cards to fund their spending habits, for example the Hyundai Card which offers “the Black” and “the Purple,” with various luxury life style-friendly features.

The Financial Times has reported that the latest strategy of French luxury giants in Korea is investing in affluent districts such as Chungdham and Apgujeong-dong.

It seems South Korea is the latest strategic location where luxury marketers are investing to strengthen their brands.