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Why are brands successful? Interview with Charles de Brabant

Charles de Brabant Dozent am Lorange Institute of Business Zurich
When we hear the expression "luxury goods marketing", we see Nicole Kidman with an Omega watch. What has that particular form of marketing to do with luxury?
Let me say first something about the notion of luxury.
By calling it Luxury Goods Marketing, we narrow the scope of what luxury means. As a result, in many reports on luxury, they only include the following categories - cosmetics, fashion, accessories, jewelry and watches - in their analyses.

I believe that luxury today goes beyond and includes categories such as cars, travel, entertainment, fine dining, spas & health centers, art & antiques, ….  Often wealthy consumers are deciding between spending money on a new car or a modern art piece, on a great vacation or buying a watch, … 

Let me also give you another example on how the terminology determines our perception and behaviors. For many years, the L’Oreal Group has had among its four operational divisions the Luxury Products Division which includes brands such as Lancome, Biotherm, Shu Uemura, Kiehl’s, ... By calling it so they realized that most of their focus was on the products. They just recently changed the name to just Luxury Division, so that they could focus on the complete consumer experience – products, service, in store experience, digital, consumer loyalty,  …

Coming back to your question:  I am always cautious to put a spokesperson to a brand like Nicole Kidman and Omega. Remember the consulting company 'Accenture' or Tag Heuer ? They had a great spokesperson in Tiger Woods. But it turned sour when he got caught up in the sex scandal and his divorce. Or think of Kate Moss. She has such a strong persona and has worked for so many brands, that we often focus on her, not on the brand in question.
Some luxury experts would suggest not to use spokesperson in luxury advertising, so that the brand and eventually the product that is being advertised are the Star(s).

Nevertheless, I would say that LV has recently done a very good job with their travel campaigns using spokespersons (eg. Sean Connery, Gorbachev, Bono, …), whilst still retaining a great focus on the brand. Also Burberry has a very unique and recognizable advertising approach, while using select British spokespersons, such as Emma Watson.

We rarely speak about luxury without mentioning brands. The brands need to reinvent themselves to maintain their rank and also to draw in new generation buyers. How would they do it?
Take a consumer standpoint. To be successful, a brand needs to do three things: First: It must be rooted in its heritage, in its 'DNA'. Second: it must be modern and in line with current trends. And third: it needs to be relevant to the local market place.

One brand that does this extremely well is Chanel. It has over the years built up a portfolio of symbols – spokespersons (eg. Coco Chanel, Karl Lagerfeld, Audrey Tatou, Keira Knightley …), iconic products (eg. Chanel no5, the 2.55 bag, J12 watch…), codes (eg. The logo, the camellia, black & white, pearls, tweed, …).

This allows Chanel to always be steeped in its heritage, modern & innovative by putting forward & playing with symbols that are in line with today’s trends and by being relevant by choosing the most adapted symbols for a particular market, such as China, Brazil, …

Sounds like the art of outstanding marketing of luxury goods is just a communications strategy?
Strong communication is important, but far from sufficient. Many other facets go into outstanding luxury marketing.  For instance,
  • Great Products. Look at the Swiss Watch industry and how it has re—invented itself around unique products. And now, they are pushing the boundaries even further in terms of craftsmanship, technology, movements, design, …
  • Retail. Brands are creating outstanding retail spaces to express their brands and aim to offer consumers unparalleled service experiences
  • Service and hospitality. Look at luxury hotels and restaurants. What they offer is a unique experience in a unique environment that hopefully will leave unforgettable memories.
Let’s even look a great communications strategy by Patek Philippe with its storyline: you don't buy the watch for yourself; you only keep it for the next generation.  It is a wonderful communications strategy that is anchored in a reality. Their watches are really items that we can proudly cherish during our lifetime and then gladly pass it on to the next generation.
The difficulty in luxury goods marketing is both something I like and something that causes unease, which is the unpleasant part. Luxury brings beauty and positive emotions to people. But it also feeds envy, comparing yourself to others which I personally dislike, at least with regards to myself.

Even in difficult times the luxury industry tends to boom!
In fact, it is one of the fastest growing industries in the world at an annual growth rate of 7 to 8 % over the last 20 years. However, the luxury industry did suffer a downturn following the 2008-2009 financial crisis.

But it recovered much more quickly than other industries, in part due to the growth in the BRIC countries. In China for instance, luxury is the fastest growing consumer segment with annual growth rates of 20-25%, compared to overall consumption growth rates of around 10-12%.

What makes it grow so strongly?
What allows the industry to boom is 1) Asia’s fascination for luxury.  2) The Rich around the world has suffered less for the recent economic difficulties than the middle class. 3) Luxury brands have been very good at creating entry-level products to entice middle class or younger consumers to enter luxury.

And is it tempting them through the power of the brand?
Yes, but not exclusively. It is a bit of both: our inborn quest for being and doing better and the seductive power of the brand. Even when I did my MBA at Stanford we were taught to grow business. But think of a well running restaurant. Why should it grow? We are pushed to grow, which is probably pretty human. And now we have brands that entice you, because they are so attractive with great products, enticing retail environments and great advertising.

Do purchasing habits differ from country to country and do manufacturers take into consideration the growing purchasing power of China?
I could organize a weeklong seminar to answer that question. Of course, habits differ and are taken into consideration. Just take the following fact. In China, 50 to 60 % of the luxury goods consumption is done out of Mainland China. That is in Hong Kong, but also Europe & other parts of the world. Europe has become the biggest destination area for Chinese consumers. Stores like Harrods, Galeries Lafayette, El Corte Ingles in Spain organize the layout of their stores and hire Chinese staff to cope with consumption patterns of the Chinese tourists.

Do you believe the Internet is of benefit to brand manufacturers as a way of reaching an elite global audience?
Again, a question for a whole seminar, but my answer is short: absolutely. Burberry is doing a fantastic job on the digital side with 60% of marketing spending going through digital means.

In general I would say that the Internet could bring brands to life, teach and entertain their consumers. Storytelling in marketing is something extremely effective and it makes consumers to rediscover a brand, its products, its heritage, ... The digital world is an excellent platform to bring these things to life and to teach people about brands, products and services.

There is a future for the luxury goods industry in e-commerce, even at full price. Net-à-Porter, recently bought by the Richemont Group, is a full price luxury e-commerce portal for fashion. The Internet at the moment is a complimentary channel. But who knows where we will be in a couple of years.
Published: 19/04/2012
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