The marketing of luxury goods during the economic downturn

The Wharton Knowledge Online recently published an article, "Luxury brands: The high end of the economic downturn in the high-end marketing," the middle point is very enlightening: "As the 2009 will be the pursuit of luxury in the generations facing the most challenging year, Marketing programs used by marketers to lock in fashion-chasing young girls and quickly expand into a new rich group in Russia or the UAE are suddenly "outdated". Today, the "popular" way to sell luxury goods in tough times is to cater to the needs of the richest and most loyal customers. ”

The following is an excerpt of some of the points and analyses:

"I think we will find that we have lost a group of customers chasing fashion because of the economic crisis," said Ford International, Tom Ford Analysys, director of global marketing and advertising. ...... The core of luxury brands is truly wealthy customers. ”

Panel members agree that even high-end consumers will find themselves stretched in a recession to follow consumers living at the bottom of the socioeconomic ladder as a bad strategy.

Many experts believe that the economic pain of a deepening recession will disproportionately fall on marketers who sell high-end perfumes, fashion or exquisite fashion ornaments. In a October report by Bain, the personal luxury goods industry, including footwear, jewellery and fashion, has seen a slowdown in growth, according to the survey's forecast that sales will fall 3% to 7% in 2009 if current trends continue to Bain.

Several panellists pointed out that their core customer base, the real rich, might cut some discretionary spending, but would not make a "one-size-fits-all" purchase of luxury goods. Randy Kabat, marketing and advertising executive Landy Kabat of Prada, said that about 50% of the company's sales came from 5% of its customers, but she feared it might have lost some of the so-called "fashion-chasing" middle-class consumers during the recession. Those young girls who extravagantly when buying designer bags.

The key is not to take any measure that would damage the value of a well-known luxury brand. "Good management can withstand adversity, and fashion will not change," said Patrick Abouchalache, Patrick Aipo Charache.

Panel members agree that the marketing and branding problems of high-end luxury goods companies are very different from those of large mass-market consumer goods companies, which often look for market openings of a certain size, and then create new products to fill such vacancies. For luxury goods, they point out that business plans rely on the artistic imagination of designers and hope to attract consumers.

Luxury goods marketers believe that if they succeed in creating a halo of demand, they will eventually get through the financial crisis. This may be counterintuitive, but April Charache that demand for consumer goods such as Cheerios Cereals is limited and, to some extent, the demand for luxury goods is limitless.

Despite the global economic tensions, luxury marketers say their main task will still be to shine: sell more glamorous lifestyles to fashion-chasing consumers. "You're buying that dream," Kabat said, "You're buying that gorgeous theme, and that's what we do." ”

See link in full text

(C) All rights reserved Please do not reprint
Understanding is important, but understanding without understanding is meaningless. Fang Jun Business Diary (bdaily), published from Monday to Friday, understands the intricacies of the business world.

RELATED links:
Luxury brands: high-end marketing during a downturn
Harvard Business Review Chinese web: Luxury Marketing