Buying Luxury Goods…is product differentiation important???

How Important Is Differentiation In The Luxury Category?

Contributed by , Angelo Ponzi

Director of client services for PhaseOne

As a marketer, you know that different audience segments have different needs and motivations for making purchase decisions.  And, regardless of the amount of money your customer has in the bank, the decision process leading up to the purchase of an Omega is longer than the decision to purchase a Timex.  Brands selling to the affluent know that their marketing efforts need to be highly persuasive and that they need to differentiate themselves with not only design, quality and craftsmanship, but also price.

Examining a slice of the luxury market — watches — a recent article in WatchTime identified 60 brands that spent more than $1 million on ads for their watch brands in 2012, according to Kantar Media.   Rolex (often considered the optimal sign of luxury) topped the list with more than $52 million spent on advertising. And, according to Kantar Media, watch brands spent more on U.S. advertising in 2012 than ever before.

You and I know, however, that media spend doesn’t necessarily translate to sales or a strong positioning of your brand among consumers the way you intended.  Marketing of a luxury brand is also different than marketing mass brands.  Luxury brands need to convince consumers that their brand is worth the extra money.   Consumers of luxury brands tend to buy for a multitude of reasons, which can include perception and self-worth.  The desire to own luxury brands could be based on the individual consumer’s need for high quality, exclusivity, craftsmanship, precision, innovation, recognition, status or even envy among their peers.

Sticking with the watch category as a point of discussion, while there were huge advertising investments made by brands to help them tell their stories, how does a luxury brand market itself differently from fashion brands?  How do these brands in different watch segments approach their communications so their customers identify with their preferred brand and see that it is a reflection of who they are or hope to be?

Based on recent research conducted by PhaseOne among 16 high-end/luxury watch brands across North America, Europe and Asia, we found that brands tended to cluster into three segments, both creatively and by price:  Fashion Brands, Personal Lifestyle Brands, and Luxury Indulgence.

Fashion Brands (e.g., Swatch, Guess) presented themselves through an expression of trends and style.  In their advertising, Fashion Brands highlighted the aesthetics of the watch and its role as an accessory.  For brands that clustered in Personal Lifestyle Brands (e.g., Raymond Weil, Tissot), they tended to add more specific personal or lifestyle interests in their advertising, such as music and travel, as a way to build a connection with the intended audience.  And the communications by brands that clustered into the Luxury Indulgence segment (e.g., Rolex, Patek Philippe) tended to focus on quality craftsmanship and design to imply exclusive status and indulgency in opulent luxury.

What is of most interest is that a brand’s communication alone does not carve out the niche in which it clustered.  After all, if you take a Fashion brand and produce an ad that contains all of the visual and descriptor cues found in brands in the Luxury Indulgence segment, it does not make that brand a luxury brand.  What the research confirmed is that price also plays a significant role and that not only did these 16 watch brands cluster based on their brand attributes and personality, but on price as well.

Therefore, regardless of if you’re a Luxury, Lifestyle or Fashion brand looking to reinforce your current positioning or to move up or down into a new segment, you need to make sure you ask yourselves the right questions prior to making a significant investment.  Consider these as a starter:

1. Determine the cluster in which you currently compete or want to compete.

2. Conduct an analysis of each competitor’s communication in order to determine how they use visuals and/or text to reinforce their position.  What “cluster” cues are they using to reinforce their positioning?

3. Determine what brand attributes you and your competitors currently own.

4. Determine the brand attributes you would like to own.

5. Develop a brand positioning by breaking down the rational and emotional aspects of your brand that you would like your consumer to reflect:

– Rational:

i.      What does the product do for me?

ii.      How would I describe the product?

– Emotional:

i.      How the brand makes me look?

ii.      How does the brand make me feel?

6. Test your concepts before rolling out your creative campaign to minimize your risk and ensure your messages are persuasive and clearly resonate with your target audience.

Keep in mind that brands in a cluttered market struggle the most to clearly differentiate themselves, therefore consumers tend to select brands they are familiar with or believe are the leaders.  Having a significant point of differentiation, especially in the luxury category, is key to becoming a category leader.

To see the findings of PhaseOne’s study on luxury advertising, click to download the whitepaper, “Luxury Advertising: Is now the time to break the mold?

Written by

6 Comments to “Buying Luxury Goods…is product differentiation important???”

  1. Olivier says:

    Aw, this was an incredibly nice post. Finding the time and actual effort to generate a great article… but what can I say… I put things off a lot and never manage to get nearly anything done.|

  2. Bette says:

    some really marvellous work on behalf of the
    owner of this site, utterly great articles.

  3. DannaNKunkel says:

    I like the helpful info you provide in your articles.
    I will bookmark your weblog and appearance again here frequently.
    I’m quite sure I’ll learn lots of new stuff
    on this site! Best of luck for the next!

  4. Shellie Leftridge says:

    Admiring the hard work you put into your website and in depth information you provide. It’s good to come across a blog every once in a while that isn’t the same unwanted rehashed material. Wonderful read! I’ve saved your site and I’m including your RSS feeds to my Google account.

  5. Shaunte says:

    keep up the superb piece of work, I read few content on this website and I think that your web site is rattling interesting and has circles of superb info .

  6. Buy Socks5 Proxy For Fraud says:

    Good day! I just would like to give an enormous thumbs up for the good info you have here on this post. I will likely be coming back to your blog for extra soon.

Leave a Reply