luxury market

Cupid and Psyche: Marketers must “delve deep” to know their clients

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.

Luxury Condos says of this article...

This is an interesting article. With competition so tough these days, marketing of luxury goods, services, and properties is difficult. Understanding the market is tricky but it will definitely help to reach your goals. It can be time consuming but yes, there are great rewards for those who patiently do their homework. Cheers!

Isaac Mostovicz says of this article...

All what counts is whether customers exist. If they do exist a good research will find them, tell you how to communicate with them, what media to use, etc. If you feel that the time is tough maybe it worth changing your strategy a bit?

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Taking Notice of Luxury

Isaac Mostovicz writes that that luxury can be a powerful industry in itelf...

After two years of lobbying, the European Cultural and Creative Industries Alliance – the overarching European luxury organisation – has finally got the attention of the European Commission (EC) according to this blog post in the Financial Times.

The article notes that it is surprising that this has taken so long, as of the top 25 worldwide luxury companies 17 are from the EU, and Europe is responsible for 75 per cent of the global luxury market, more than €170bn of the worldwide luxury goods consumption and employed in 2010 up to 1 million people in the sector.

Until now, luxury items were classified by the EC under sectors such as ‘fashion’, or ‘textiles’ which does not seem to recognise that luxury is a powerful industry in and of itself – and one which is, for now, growing at a rate which other sectors can but admire, with brands such as LVMH and Hermes posting strong quarterly results.

Hermes Bag

Hermes Bag

Luxury brands have a history of being innovative – either through their products, stores or, more recently, their digital brand building. This innovation is something which I believe organisations at all levels can learn something from, and I hope that the EC will encourage this innovation and growth as much as possible.

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Dubai makes its comeback

Isaac Mostovicz writes that the recession blues is over for Dubai, where the luxury market is back in full swing...

The luxury market is showing further resilience, and contradiction, from the economic crises spanning the world. In the Middle East, amongst high unemployment and rising food prices, one city is displaying a resurgence in its luxury retail sector.

Dubai was not immune to the financial crisis, and retailers reported a 45% decrease in sales in 2009, but thanks to demand by wealthy Emiratis and tourists from Russia, China and India, business activity in the UAE private sector hit an 18-month high in January 2011.  Back to indulge in their luxury delicacies, Dubai is back on track to regain its position as the second most attractive city in the world for retailers.

Chocopologie is one of the retailers that is ready to get Dubai back on the up. The chocolatier claims to sell the world’s most expensive truffle “La Madeline au Truffe”, selling for $272 a piece. Other truffles include the Antoinette, a dark chocolate heart dipped in white chocolate and French rose water.

Other products making a comeback include Dior mobile phones in a jeweled finish, and calf-skin leather bags, both from Dubai’s Rivoli Group, and platinum Breguet Double Tourbillion Classique Grand Complication watches, priced at over $440,000 apiece.  Auction houses Sotheby’s and Christie’s are also wanting a slice of the pie in Dubai, where they have seen some of the biggest sales.

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About Janus Thinking

Isaac Mostovicz writes...

Dr. Isaac Mostovicz provides personal coaching, team training and marketing programme development.

 

Following an early career in the diamond industry as CEO of S. Muller and Sons, he retains a strong professional interest in the diamond industry and in the wider world of luxury marketing where he continues to conduct research.

Academically, his post-doctoral work is focused upon understanding human logic –- specifically the nature of human interpretation and its impact on decision-making. The work has application in the fields of ethics, leadership, social responsibility and marketing.

His research has unearthed two opposite psychological types — Lambda (challenge-seeking) and Theta (unity-seeking). The tension between these two preferences affects choices we make in everything from diamond buying to corporate governance.

His consulting work is focused on overcoming ‘high stress’ or apparently ‘intractable’ situations where existing strategy processes may be failing.

Dr. Mostovicz applies ‘Janusian Thinking’ principles to help participants understand the hidden paradoxes undermining decision-making — and find ways to transcend them.

Dr. Mostovicz regularly contributes to journals and presents at conferences. Some highlights from his CV are as follows:

Qualifications:

  • Ph.D., University of Northampton, University of Northampton, Business school, 2005-2008; Thesis title: Understanding of Consumers’ Needs for Luxury: The Role of Interpretation in Knowledge Creation
  • MBA, Open University (UK), 1998-2000
  • Hebron – Knesset Israel Rabbinical College, Jerusalem, Israel, 1973-1980

Career History – Summary:

  • 1980 – 2006, CEO of S. Muller & Sons Diamonds NV, Antwerpen, Belgium
  • 1987 – Present, President, Allied Diamond LTD., Tokyo, Japan
  • 1997 – Present, President, Allied Diamonds, Inc. Los Angeles, CA
  • 2002 – Present, Chairman, Janus Thinking LTD, HK

Business special achievement:

  • 1999-2000, selected as one of ten DTC (De Beers) customers to market the De Beers Millennium Special Edition Diamond.
  • 2000, Brand development under direct supervision of Prof. Leslie De Chernatony, Honorary Professor of Brand Marketing, Birmingham Business School

Membership of Professional and Other Associations and Bodies

Editorships:

  • Associate editor, International Journal of E-Politics (IJEP)

Memberships:

  • Academy of Management  (since 2008)
  • Official Supplier, American Gem Society (since 1998)
  • American Marketing Association (since 2000)
  • Association of MBA, UK (since 2000)
  • Fellow of The Chartered Institute of Marketing (since 2002)
  • Chartered Marketer, CIM (since 2002)
  • Member of the Antwerpen Diamond Bourse (Beurs voor Diamanthandel) (since 1982)
  • Head of the steering committee, the Department of Management and Marketing Technology, The Hochstein Business School, Jerusalem College of Technology, Jerusalem, Israel (since 2009)
  • Founding Member of the International Board of Governors, Jerusalem College of Technology, Jerusalem, Israel (since 2009)

Publications

Refereed Journal Articles/accepted:

  1. Mostovicz, Isaac, Kakabadse, Nada and Kakabadse, Andrew, (2007), ‘The Diamond Industry as a Virtual Organisation: Past Success and Challenging Future’ Strategic Change, December 16(8): 371-384.
  2. Mostovicz, Isaac, Kakabadse, Nada and Kakabadse, Andrew (2008), ‘Janusian Mapping: A Mechanism of Interpretation’, Systematic Practice and Action Research, June 21(9): 211-225.
  3. Mostovicz, Isaac, Kakabadse, Nada and Kakabadse, Andrew (2009), ‘The Role of Leadership in Driving Ethical Outcomes’, Special issue of Corporate Governance: International Journal of Business in Society, EABIS special issue, September 9(4): 448-460.
  4. Mostovicz, Isaac and Kakabadse, Nada (2009), ‘Dynamic model of Organisational Leadership’, Leadership and Organizational Development Journal (LODJ), 30(6): 563-576.
  5. Mostovicz, Isaac and Kakabadse, Nada, (2009), ‘Means-End Laddering: A Motivational Perspective’, Problems and Perspectives in Management, September, 7(3), 65-74
  6. Mostovicz, Isaac, and Kakabadse, Nada, (2009) ‘Is an Ethical Society Possible?,’ Society and Business Review,4(3) (forthcoming)
  7. Mostovicz, Isaac, Kakabadse, Nada and Kakabadse, Andrew, (2009), ‘Is Leading through Strategic Change Necessary?’, Proceedings of the 5th European Conference on Management Leadership and Governance (ECMLG), Mini track on Management, Leadership and Governance in Relation to Information Systems, Hellenic American University, Athens, Greece, 5 – 6 November 2009, pp 117-124

Practitioners Journal Articles:

  • Mostovicz, Isaac (2006) ‘Unmined Potential: How Coffee Could Save the Diamond Industry’, Market Leader, Summer, 33, 18-22,

Papers Presented at International Conferences

  1. Mostovicz, Isaac and Kakabadse, Nada, (2008), ‘Debunking the Relationship Marketing Myth: Towards a Purposeful Relationship-Building Model?’, the 5th International Conference for Consumer Behaviour and Retailing Research (CIRCLE), University of Nicosia, Cyprus, March, 26th-29th.
  2. Mostovicz, Isaac and Kakabadse, Nada, (2008), ‘Ideal Leader or Purposeful Strategist?: The Theory and Practice of Organisational Leadership’, 15th International Symposium on Ethics, Business and Society, Business and management: Towards more human models and practices, IESE Business School, University of Navarra, Barcelona, Spain, May 16th-17th.
  3. Mostovicz, Isaac, Kakabadse, Nada and Kakabadse, Andrew, (2008), ‘Leading for Corporate Social Responsibility: The Role of Purpose’, 7th EABIS Annual Colloquium, Cranfield School of Business, Cranfield, UK, September, 11th-2th.
  4. Mostovicz, Isaac and Kakabadse, Nada (2009), ‘Best Practice or Best Governance?’, 8th EABIS Annual Colloquium, IESE Business School, University of Navarra, Barcelona, Spain, 21 – 22 September.
  5. Mostovicz, Isaac, Kakabadse, Nada and Kakabadse, Andrew, (2009), ‘Is Leading through Strategic Change Necessary?’, 5th European Conference on Management Leadership and Governance (ECMLG), Mini track on Management, Leadership and Governance in Relation to Information Systems, Hellenic American University, Athens, Greece, 5 – 6 November 2009
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UK Market for watches

Isaac Mostovicz writes...

Sales of jewelry and watches in the United Kingdom have seen strong growth since 2000, with the market reaching $8.1 billion in 2005. Much of this market growth, which averaged 8% per year, is due to higher levels of consumer disposable income. While this growth is expected to slow down to an average of 5% annually between 2005 and€“ 2010, there are many factors which will continue to support strong market demand.

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