wealth

Luxury marketing: the importance of understanding consumers

Isaac Mostovicz writes that that it is important to for luxury brands to understand their different global consumers...

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.

Fructuosa Almadin Luib says of this article...

“A diamond is forever.” ~ De Beers

Who can forget that catchy phrase? 😉

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Satisfaction is the ultimate luxury and the key to happiness

Isaac Mostovicz writes that that our inability to foresee the future honestly leads to our inability to find real happiness...

Is money the key to happiness? Is losing your job always an unhappy event? New research in psychology and economics has revealed the seven secrets of a happy life.

The psychologists who conducted the study explored the reason behind why many people struggle to find real happiness. According to the study, we overestimate the emotional impact that events will have on our lives, preferring to linger on the most salient features of an experience, without taking into account all the repercussions. That means that when we chase a dream, say, of living on a paradise island, we only anticipate sunny weather, beautiful beaches and pure luxury. Instead, we might find ourselves homesick, without our friends and feeling displaced. Our inability to honestly conceptualise a new experience will leave us unsatisfied when we arrive there.

Instead of continually looking to greener pastures, the new research suggests that the secret of happiness lies in what we already have. It cites the value of friends over wealth and shows the brighter side to divorce and losing your job.  The most important finding, is that to achieve happiness, you should be satisfied with that you have.

This contradicts research that was released last month that offered the sum of $75,000 as the benchmark for achieving happiness.  The concept of buying happiness is, as I said in my post reflecting on this previous research, irrelevant to the nature of happiness itself.

The research also brings up the question of what luxury really is. Luxury is not a need – no one needs a diamond, for instance, but instead diamonds are a want. To desire and to want is key to giving us a purpose to live for and aspirations to target. If we reached the level of happiness in the way proposed in this research, whereby we should be satisfied and not yearn for more, we may fall into despair, because our goals had already been reached leaving us no further journey to take. Instead, luxury tells us that we do have a purpose by accentuating the difference between a must and a want, enabling us not to sink into constant pursuit of need with a false hope for happiness.

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Bank bonus recipients will spend it — quietly

Isaac Mostovicz writes that the fury over bank bonus pay-outs has translated into extreme financial discreetness for bankers...

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There’s an interesting story in the New York Times today about the coming bonuses that rescued banks will begin doling out to its employees. Setting aside the furor over whether it’s the right thing to do, I want to look at what happens after the money is awarded.

The article suggests that those who get the bonuses will indeed accept them. However it will be a quiet affair, not a flashy, borderline show-off event. Purchases made with bank bonus money are treated with secrecy, as one New York Times reporter found:

In the Hamptons, where real estate agents court bankers looking for summer homes, the sales are also expected to be a boon for contractors, movers and groundskeepers. “A community like the Hamptons depends on house trades,” said Diane Saatchi, an agent with Saunders and Associates who just sold a home to a banker for $4.9 million. “Don’t ask to talk to him about it, because he won’t,” Ms. Saatchi said of the buyer, deflecting a reporter. “They don’t want anyone to know they are buying.” That includes the banker’s extended family, she explained, because he is worried they will ask him for money.

A by-product of the global recession has been how people feel about wealth. More specifically, how people feel about individuals who have great wealth.

Instead of being seen as the fruits of hard work and business savvy, it’s instead being seen as a sign of extreme greed and selfishness. It’s too early to tell if this will be a short-term side effect, or if the public psyche has been forever altered by it.

The torrent of populist rage against bankers enriching themselves in the midst of a global recession has had an impact inside the banks, according to the article:

“Bankers are being told by their bosses to be careful,” said Janet Hanson, who was an executive at Goldman Sachs for 14 years and is a founding member of 85 Broads, a professional women’s networking organization. “I mean, how does it look if you got a $1 million bonus from Goldman Sachs and you are sporting around in a new Audi TT? People will hate you.” (To deflect criticism, Goldman announced last week it would pay its top 30 executives in stock only.)

As the global economy continues to recover, it will be very interesting to see what the longer term affects that the recession will have on people’s perception of wealth.

Was the rage and, at comes, contempt, because others around were suffering? Or is it the build-up of years of frustration? If it’s the latter, then perhaps we will see this phenomenon continue, long after the economy has fully recovered.

Bryson says of this article...

A few years ago I’d have to pay someone for this infomrtioan.

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How the downturn affects us, depends on what we value

Isaac Mostovicz writes...

Interesting story in the New York Times this week about working at Christie’s in New York. While the auction house has reduced employee perks and will have to lay off some staff due to the downturn, many of the (mostly) women who work there have felt almost vindicated as they keep the jobs they love while their friends lose much higher paying (but less satisfying) finance jobs.

How much money does it take to be happy? It’s a question that has been on the minds of many in recent weeks and months. Those bankers and financiers who have lost their jobs will almost certainly need to curtail spending and may find that their standard of living has dropped. But people used to a ‘normal’ or even ‘poor’ standard of living, who are happy with what they have, might not see much of a difference in how they’re living.

As I’ve said before, luxury depends on how one interprets what luxury is, and knowing what makes one happy is a true luxury. The things or experiences that give a Theta or Lambda pleasure may still be expensive, but if you know what it takes to make you happy, less time and energy need to be focused on other, less important things.

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The luxury market in India on the rise

Isaac Mostovicz writes...

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Brioni, Rolls-Royce and Stella McCartney are among the luxury brands pondering or already operating stores in India, where spending on luxury goods is expected to grow from $4 billion this year to $30 billion by 2015. India now has 54 dollar billionaires, gaining 19 in the past year. Of course these and other luxury companies are seizing a growing opportunity, but should the major disparity of wealth in India (three quarters of Indians survive on 50 cents a day) give us pause? As we’ve seen before on Janus Thinking, acting in a socially responsible manner can help luxury companies grow their markets. Those companies going in to India would be wise to understand the full impact of their entry.

[Photo by Ooodit]

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Fortunate recipient of a mistyped cheque

Isaac Mostovicz writes...

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Interesting story out of Minnesota today. Last March, the Minnesota Department of Human Services erroneously sent a cheque for $2.6 million dollars to a high school employee after mistyping a single digit in directing the check. Instead of going to the Hennepin County Medical Center, the check went to 37 year old Sabrina Walker, an ‘equity and integration specialist’ offering student support at Hopkins High School in Minneapolis.

The interesting thing, aside from how such a mistake could be made and not noticed for two months, is how Ms. Walker spent the money. She and her boyfriend did have a bit of a shopping spree. They purchased luxury cars (a classic Buick, Chrysler Crossfire, and two Land Rovers), $5,500 in jewelry and $3,800 in electronics.

But she also opened a portfolio account at Wells Fargo, with a $100,000 opening deposit linked to a $2.4 million dollar brokerage account. She also maxed out her Roth IRA (individual retirement account) and purchased a $500,000 U.S. treasury bond. She told Wells Fargo that the money came from a sealed settlement with the state.

And she might have gotten away with it for longer than she did. The error wasn’t discovered until Ms. Walker herself called a financial services employee of the state’s Department of Human Services on May 17 to ask why she had received the money. The state has now requested the money’s return and charged Walker and her boyfriend with four felony counts: theft by swindle, loss of property, failure to pay over state funds and concealing criminal proceeds over $5,000.

What would you have done if you were put in such a position? I’m sure I would have reported the error immediately (if only due to the guilt that would come from knowing it was an obvious mistake to which I wasn’t entitled). While ethically dodgy, part of me *theoretically* could see how one might feel entitled to any interest accrued before returning the initial amount when the state notices its own error. What do you think? The comments are open…

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