Janus Thinking

In difficult economic times, where can brand owners find equity? Several are turning to nostalgia–bringing back shelved brands and tweaking slogans and mascots to draw on heritage and appeal to old and new consumers. Hydrox cookies from Kellogg’s and Eagle Snacks are two examples–Kellogg’s discontinued Hydrox cookies (which are similar to and compete against Nabisco’s Oreo cookies) in 2003, but plans to bring the brand back after discovering brand equity in people discussing and remembering the cookies on the internet. Reserve Brands, the company behind Eagle Snacks, found that 6 out of 10 adults remembered the brand, meaning bringing it back would cost less than creating a new brand.

Playing to nostalgia is a great way to appeal to Theta personalities–Thetas use socially-derived understandings of product characteristics as a basis for their consumption, meaning they want to fit in and are driven a great deal by what their peers and social group like. If their social group has been reminiscing about these brands, or nostalgia is something that their peer group values, then these revived products will find a Theta audience and have a greater chance for success.

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

The way in which consumers interpret companies’ marketing efforts affects how successful their marketing has been.

This might seem like an obvious point to make, but it is a particularly useful point to remember in the marketing of luxury products.

To understand better these different pathways to interpretation, I have developed a simple characterisation consisting of two personality types.

I call them Theta and Lambda. These two personality types differ based on what individuals perceive to be
their life goals or purposes.  These differences are central to how they then interpret the products they buy.

The typical Theta (Θ) personality seeks affiliation and control as an ultimate life purpose.  Because of this, they loom to fit in or contextualise themselves within a desired group and use socially-derived understandings of product characteristics as a basis for their consumption.

Lambdas (Λ), on the other hand, seek achievement and uniqueness as an ultimate end goal.  As a result, they are more likely to interpret products based on their individual responses to the product, how it helps/prevents them to stand out, and how the product benchmarks against their regular consumptive patterns.

What this means is that marketing strategies – and particularly those of luxury brand owners – can apply different positioning to similar products in order to fulfill people¹s different expectations for how the product is meant to help them represent themselves and reflect their life goals.

Trying to lead others in a humane way is a challenging task. “With success comes responsibility,” they say. But what does this responsibility actually entail? Should well-intentioned leaders actually call themselves “ethical”?

To understand how ethics is applied in the practice of leadership, I usually start by acknowledging the idea that humans – as imperfect beings – are not fully capable of grasping the full spectrum of their ethical code. Because this life purpose will always remain a bit of a black box, we can only move toward this goal but can never actually reach it.

Leaders within organisations face the same ethical dilemma. They have to pursue their organisation’s purpose through their own choice of strategy development, which is inherently based on personal choice and interpretation. This also means it is easily distorted.

So how do leaders cope with these uncertainties and matters of interpretation? To start, they stay true to their own interpretation. But then they must engage with others within the organisation in order to understand how they perceive the leader’s strategy.

This engagement process requires them to be respectful and empathetic of others’ opinions while still acting purposefully in progressing toward true organisational purpose and to their own sense of ethical leadership.

Ahh, wine. Beginner and expert connoisseurs alike can appreciate it for different reasons. I was reminded of this earlier this month when I saw this story about wine psychology in the New York Times. Food writer Robin Goldstein has written a book called "The Wine Trials" in which he found, in a survey of 500 volunteers, that less expensive wines were being rated higher than more expensive wines in blind tests. However, there’s more to the story than that–he found that novice wine drinkers don’t appreciate the same things as more experienced drinkers, and that, as Eric Asimov notes in the article:

Most people in the wine trade understand that consumers have any number of reasons for their buying decisions, whatever their psychological and financial state. Some are reassured by easy-to-understand labels with friendly animals. Others want only naturally produced wines or bottles with a modest carbon footprint. Some are status-seekers and score-chasers, while others are contrarians, or only drink red wine.

The story also mentions how people seem to appreciate wine more when they think it’s more expensive (something we’ve noted on Janus Thinking before). When people are interpreting an item and figuring out it’s value for themselves, how much should the price matter, and how much will this differ among beginners and true connoisseurs?

[Photo by rpeschetz]

Isaac’s Mostovicz’s philosopy of luxury challenges us to examine the ‘Why?’ of luxury…rather than just the ‘What’, or the ‘How’….

Don’t ask ‘What’s luxury?’.
Ask Why do we seek luxury?

Isaac is very clear that luxury is a good, not an evil thing. Thinking about his philosophy of luxury… it seems clear that taking a ‘What-based’ view of luxury is causing us to make expensive decisions which will be deeply unsatisying….

What we need is more ‘Why-based Luxury’, which understands users real luxury needs and creates individualised luxury experiences to address them…

Here’s one way to bring this luxury philosophy to life…

Try this little thought experiment, removing the scaffolding from a ‘What-based’ worldview…

1. Imagine yourself alone on a desert island…now ask yourself: what is luxury?

Here are some thoughts to get you started:

a) By removing the social dimension of luxury you’ve already moved towards a more personal definition…rather than a piece of social exhibitionism

b) By removing people, you’ve also removed any quality dimension. You’ve assumed that nothing has been crafted as there is no-one else to craft it. When there is no craftsmanship, All that remains is the beauty constructed by nature.

c) Finally, by removing people you’ve also removed the social conditioning/upbringing that creates an appreciation of such beauty – albeit you have to assume that you are born or at least placed on the island with no prior memory.

What is luxury now?

2. Now assume that the island contains an infinite self-replenishing supply of everything you’ll ever need.

Here’s some food for thought:

a) In doing this, you’ve now removed the scarcity dimension of luxury - so nothing can be luxurious by virtue of exclusivity or rarity or unusualness.

b) And you’ve also removed the waste/gratuity dimension of luxury – by assuming that all resources are self-replenishing.

What is left of luxury now?

3) Now, finally, imagine you will live forever on your abundant self-replenishing island.

a) Eeek! now we’ve removed the time-incorporation element of luxury that considers that things that have taken a long time to make are luxurious –

b) We have also removed the aspects of luxury which are a defence or a reaction against death - a vivid expression of our aliveness…

With all the ‘What’s’ eliminated, all we are left with is the desire - the ‘Why?’…

SO ASK YOURSELF - WHY DO YOU REALLY NEED LUXURY?

AND WHEN YOU CURRENTLY USE LUXURY, ARE YOU USING IT WELL?

How much money, time and anxiety have you wasted on ‘What-based luxury’…

With regard to philosophy generally, we have a tendency to mix the “what” with the “why” and “how” questions. For example, a Rabbinical college that I chair is known to be unique in the way it forms its students. Nevertheless, no one has ever tried to identify where this uniqueness comes from. While we know that the students interact and learn at a very high intellectual level, not all of them are geniuses; overall they reflect a certain average intelligence of all Rabbinical colleges.

As it is clear that something is done differently at this Rabbinical college, I asked the dean to try to define what this uniqueness is. This is a clear “what” question but the answers I got had a “how” characteristic. The dean told me many stories and brought many examples of “how things are done over here” but all I wanted to know was what happens over there and eventually, why things happen the way they happen. I did not get the answer.

On the other hand, people will readily answer “what,” in their opinion, luxury is. However they have difficulty in expressing why some product or service or behaviour is a luxurious one or where this luxury is embedded. The recent insert in the blog shows that the six facets identified by Dubois and his colleagues are valid; hence, we know what constructs luxury. These are dimensions such as rarity, high quality and expensiveness. However, the question remains how we define these dimensions. We know that luxury is subjective as for different people different products or services are luxury, but is there one common denominator that is similar to all?

People also are quick to say that luxury is something that we don’t need. This is not a very good definition as it does not explain why we need what we do not need. The need for luxury goes into our deepest layers of personality and we do not wish to associate those important needs with our day-to-day needs. Thus, luxury is important for us. The question remains: why is it so?

Relying on luxury to satisfy our needs is shrouded with social pressure. However, let’s experiment. If we are to be put on an isolated island with no restaurants to indulge in and no shopping arcades for spending, how then is luxury going to be expressed? Is the need for luxury going to evaporate or is it going to take a different dimension?

Luxury serves a good purpose. It implies choice and free will, something that is unique to mankind. This freewill is what differs man from beast. Thus, using luxury properly and consciously would improve us as human beings. However, are we really consciously aware of the positive qualities that luxury has and do we use luxury for the right purpose?

I recently came across an article about marketing by Louis Cheskin and L. B. Ward, originally published in the Harvard Business Review in 1948. In discussing the difficulties of marketing nearly 60 years ago, it’s interesting to see how there’s still a lot to learn about customer preferences. Participants in their study made unexpected choices: when asked to pick “the best” or “most beautiful,” their answers were different from what they said they would choose for themselves. Could the same be said for diamonds?

I would ask the following questions:

1. When you are offered a selection of diamonds, which one is the best?
2. When you are offered to select a diamond for use, which diamond will you select?
3. Will you select the same diamond in each case?

I doubt it. Beauty remains in the eye of the beholder, with respect to different situations and different purposes.

Connoisseurship is not a closed product area. Increasingly, everyday items consumed by ordinary individuals are making their way into the realms of mass-market connoisseurship. Luxury has opened its gates, paving the way for items such as fine cheeses, chocolate and coffee to enter.

Taking the example of Starbucks, its stellar performance in the coffee industry is set to expand, and is based on the accessibility of the positive lifestyle that is associated with its brand. Content Research forecasts predict that Starbucks may overtake McDonalds as the world’s largest fast-food brand. The company has turned a staple beverage into an indulgence associated with connoisseurship. Or has it?

From the point of view of indie coffee houses, vast companies such as Starbucks have replaced skillful barristas with the cold rattle of the automatic machine, drenching its espressos in a milk and syrup mix, thereby driving smaller shops out of business.

But simultaneously and somewhat paradoxically, Starbucks is promoting cafe culture and generating a new generation of coffee drinkers. Tully’s, a small chain admits to locating new stores within the vicinity of existing Starbucks locations. People are given a taste of what they like, the gourmet coffee experience, after which they can venture beyond the land of the big green giant.

The former connection between connoisseurship and class distinction is to an extent, still existent. But the trend analyses indicate a sharp turn-around in the form of connoisseurship: the new symbol of high status in a market governed by luxury that is available to the masses is blatant non-consumption, by which the super-rich might be identified.

As David Brooks describes in his book Bobos in Paradise, the rich wear scruffy clothes and drive run-down cars. Celebrities sport clothing lines such as Von Dutch, the idea being that only the very rich or very pretty are able to pull-off trucker–style caps and tops, and still manage to look good.

So the new message seems to be that the rich have more money than they know how to spend: welcome to paradoxical luxury in the modern world.