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.

I have often argued that for luxury marketers to be successful, they should apply different positioning to similar products in order to fulfill consumer’s varying expectations of how a particular product is meant to help them represent themselves and reflect their life goals.

To better understand the different ways in which consumers reflect on products, I developed the characterization of two personalities – Theta and Lambda – and argued that marketers should take both into account when planning a campaign.

That is why I was interested to read that a presentation made at the Luxury Briefing World Summit 2011 by Ledbury Research argued for the need for luxury brands to try and understand their consumers better, saying that:

“…Luxury brand marketers need to stop thinking of the affluent population as one group and try to understand the different cultural aspects, lifestyles and spending habits at play within the various levels of the world’s wealthy.” (Luxury Daily)

The presentation argues that the wealth landscape of the world is changing, and that brands need to alter their marketing campaigns and stores accordingly. For example, Asia-Pacific is starting to take a larger share of wealthy consumers, whereas the number of millionaires in Western Europe is declining.

James Lawson, the founder and director of Ledbury Research, said at the summit:

“The first thing is to think about your marketplace and avoid the trap of talking about the wealthy as one population too much… the group is large, and I encourage you to think of them as many different segments.”

This is important as there are key differences between luxury consumers in the same countries, and even more variants when we consider consumers globally.

I think that more and more we will see brands who take the time to understand their varied sets of customers – whether the differences between Theta and Lambda personalities shopping in the US, or the differences between first and second generation wealthy clients in the United Arab Emirates – reaping the rewards.

Recent articles with names such as ‘Harrods ups digital ante with content-to-commerce link’ and ‘Burberry continues digital domination to deepen connection with Gen Y’ are just some of those highlighting the recent trend – and increasing importance – of luxury brands embracing social and digital media as a key part of their marketing strategy.

I have written about this previously, arguing that if luxury brands are to appeal to a global consumer market, brands are going to have to bring newer technology into stores, on mobiles and to people’s homes.

This article on Business 2 Community titled “Social Media Impacts the Luxury Customer, Too” argues that the luxury consumer, as well as engaging online because of brand affinity, is also impacted directly by what transpires in the social media space.

“According to a recent survey from Unity Marketing, of those individuals classified with a high-net worth, as defined by having more than $1 million in investible assets, indicated that comments, tweets, Facebook posts and so on directly influenced what websites they visited (59%), what retail stores they patronized (56%) and also what designer brand they purchased (57%).”

Unity Marketing Luxury Tracking Study

The article concludes that luxury marketers need to be pro-active in the social media space, as the luxury consumers are out there.

For Theta personalities, who seek affiliation and to contextualise themselves within a desired group, social networks both on and off line are likely to highly influence their consumption decisions. Digital media, with its emphasis on sharing, recommending and ‘liking’, is thus not an opportunity to be missed.

QR, or Quick Response, codes – a type of code which can be read through a smartphone and redirects the user to a webpage, links to text or pre-composes an email – are becoming increasingly present in luxury marketing, both in magazines and newspapers, and on billboards and posters.

As this article on Luxury Daily notes, QR codes can be an effective tool to take a print advertisement to a multi-channel campaign. They enable consumers to engage with the brand in a new way, through real-time content and creating more of a personalised experience.

This style of marketing could work particularly well for consumers with Lambda style personalities, who are likely to judge products based on their individual responses to it. For those with Lambda traits, luxury marketing that goes the extra mile to ensure a personalised service that stands out from its competitors is likely to be effective.

However, the article reminds marketers to be wary of how these codes are used – if the website the code directs to is not properly optimised for mobile phone use, for instance, then this would be a negative experience rather than an enriching one, and potentially harmful for the brand.

China, India and Russia will account for a progressively larger percentage of worldwide luxury travellers, according to this recent article in Travel Weekly.

As younger luxury travellers tend to favour authenticity and adventure over opulence as they reject rigid sets of planned activities – something I have written about in the past as appealing to Lambda personalities – nature-oriented destinations such as New Zealand, and culturally vibrant places such as Peru will gain popularity, alongside “traditional” accommodation such as Yurts and eco-lodges.

Destinations in Europe are proving popular too, with over 40 per cent of all luxury travellers saying that their next destination would likely be in Europe, with France and Italy high on the list – destinations which would likely appeal to more traditional Theta personalities.

A report by the International Luxury Travel Market claimed that around two-thirds of luxury travellers make at least four trips a year, lasting on average ten days. Around one per cent of the world’s hotel rooms qualify as ‘luxury’, where room rates are approximately four times that of a chain like Hilton, so it is perhaps not surprising that over half of luxury travellers are between 45 and 54 years old, and earning at least $100,000 a year.

British luxury brand Burberry last year launched its Burberry Bespoke service, which will allow consumers to select a made to measure trench coat, from the choice of fabric and its colour to the style of buttons and lining. Burberry has promised this will allow over 12 million variations of design – and price.

With the rise in mass production replacing craft production as the dominant form of process in the luxury goods market, the voice of the individual consumer was limited to deciding which of the products on offer they would purchase, and not what the product should be in the first place.

The Burberry Bespoke service illustrates a new turn in production referred to as “mass customisation”. This customisation seeks to restore individuality to the design process. It achieves this through involving the consumer in choices – what colour should the product be? What additional features? What design, pattern or print? – resulting in a product which is effectively made to order.

Another example of this “mass customisation” might be Louis Vuitton’s Mon Monogram service, which allows consumers to monogram the ubiquitous design with their own initials. This also applies to clothing, where an approach that is individual led may be more favourable in terms of getting the perfect fit.

I have written before about the difference in Theta and Lambda personalitites; the Theta seeking affiliation and control, and the Lambda seeking uniqueness. Lambda types are more likely to select products based on their individual responses to it, how it helps them to stand out, and how the product benchmarks against their regular consumptive patterns. Mass customisation is likely to appeal to Lambda personalities as they navigate the luxury market, with the opportunity to mark their choices as theirs and theirs alone rather than following the crowd.

If we needed further proof that the world’s super-rich have rebounded from the financial crisis, we need look no further than this recent article in Reuters showing that the demand for art, watches, vintage cars and other luxury items expanded in 2010, with collectibles such as boats and jets accounting for almost a third of these investments.

Whilst taste and personality – whether they are Lambda or Theta, for example – determines what each individual will enjoy investing in, certain items such as artworks are more likely to be acquired for their potential to gain value.

The demand for diamonds has benefited from rising prices of raw materials, as they are seen as a particularly safe investment.

This demand has partly been spurred on by wealth in growing economies, particularly those in Asia (see my recent post on Chinese luxury bathrooms), which are reviving markets in ‘investment’ pieces as well as dictating the luxury goods that are manufactured in the first place. With Asia surpassing Europe in number of millionaires for the first time ever last year, it is clear that to see new luxury trends emerging we must cast our eyes East.

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.

For many, a luxury brand is not just a product, but connotes a whole way of living. Starting this month, guests at all Morgans Hotels will be offered lessons on everyday living from the School of Life. Exploring philosophy, psychology, literature, the visual arts and sciences through evening conversations, along with a “Minibar for the Mind” that contains conversation starter cards and a selection of “collected thoughts”, The School of Life offers guests “an intriguing and thought-provoking alternative to the usual minibar fare”.

The idea of bettering one’s life is in line with foundations of luxury marketing. The concept of Morgans’ new partnership is simple: “luxury hotels do an exceptional job of catering to the needs of the body, and now their challenge is to address the needs of the mind.”

This new School of Life service could definitely appeal to Theta personalities, for whom buying luxury means acquiring something that makes them feel like their true selves. Aligning themselves with a luxury brand that is concerned with people’s inner selves is a way of affiliating themselves with the same ideals.

The Lambda personality may also be attracted to the hotel’s offering. If the service is dignified and genuine, it can offer the Lambda person a chance to explore their own selves with the aim of differentiating themselves from others. From either perspective, receiving personal life guidance, and being given the opportunity to ponder on life’s many questions is a luxury in itself.

After the Christmas break, many luxury brands, including Swiss luxury watch brand Richemont, and Rolls Royce, have announced record sales increases. In the US, the Telegraph reported a few weeks ago that while luxury brands are on the rise, discount stores are seeing a slower pace of growth, and in the UK, a similar trend was witnessed that saw consumers preferring to pay more for just one present rather than buying enormous quantities of presents. The pattern emerging in the UK shows a preference for trusted luxury brands over high street offerings.

In the age of “Austerity Britain”, retailers have seen consumers buying with a Victorian style of generosity – spending more on one main present. Items such as Apple iPads, iPods and the Amazon Kindle were along the Christmas bestsellers, with upmarket department stores like John Lewis and House of Frazer drawing in the cash.

In an interview, consumer behaviour specialist Henry Enos explained, “People are looking for value for their money. People have been made to realise that money issues are prevalent, so what people have gone to in times of uncertainty are tried and trusted brands.” With more of a limit of their spending, people plan their purchases more, and spend wisely on items that guarantee durability and value for money. For those brands that tick the boxes of traditional, tried and tested, their resilience and dependability is the main attraction to the consumer. Brand heritage is key.

For the Theta personality, the emphasis on the context of the product – it’s brand name, the connotations it has in society and the legacy it has achieved – are the points that persuade someone to purchase it. Yet also, the heritage of a tried and tested product is built up through performing well and showing its resilience and in this way, the quality and durability of the product appeals to the Lambda personality.

Whatever causes us to purchase a product, it is apparent that as conscious as people are of the need to curb their spending, they are setting their sights higher on the familiar, more expensive brands that have proven to stand the test of time. Plus, when money is tight, quality rather than quantity may help consumers feel upbeat when all anyone around them talks about is the slump.