Luxury Brand Management�Session 3

SUMMER 2021

MGIPSON

Agenda

7/25

• Luxury, Mass and Premium
• The Luxury Client
• Customer Segmentation Models
• Brand Loyalty

NEXT 🡪

Luxury, Mass Market, and Premium Brands

Quasi-Luxury Brands and Business Models

Premium Brands

Masstige Brands

Bridge Lines

Brands that touch on luxury in some aspect of their business strategy

Scarcity, craftmanship, uniqueness/design, etc

Created by incorporating upscale packaging and presentation into what is considered a basic product category

Popular in cosmetics and personal care

Category in retail departments where products are priced between designer/luxury products with more contemporary styles (trend driven)

Ex. Target and H&M collaborations

How do Premium, Masstige, and Luxury Brands Differ?

• Premium and masstige would not exist without Luxury – use elements from Luxury strategy
• Luxury can exist without premium and masstige -- Luxury strategy is stand alone
• Premium and masstige attempt to partake of luxury in terms of perception
• Consequence – can not migrate across landscape on the brand concept continuum

Mass to Luxury Brands: A Price/Prestige Continuum

Strategic Marketing Drivers of Luxury Brands

• “Positioning” is fundamental distinction
• Need unique value proposition – what makes them unique
• Need to be in consumer’s mind during purchase
• Need strategy that conveys brand’s attributes

​

NEXT 🡪

Competitive Perception Map of U.S. Premium Handbag Market

Positioning and Differentiation as Counter Luxury

The Role of Heritage and Craftsmanship as Differentiators

• Chanel and Louis Vuitton
• Neither look to the other for positioning
• Own brand/identity

​

The Role of Symbolic Experience as a Differentiator

• Transcends positioning slogans
• Touches soul of consumers

The Luxury Consumer & Segmentation Models

Who is the Luxury Consumer?

Anderson Cooper

Daymond John

Alexandria Ocasio-Cortez

Jeff Bazos

Luxury Client: 4 Consumer Segments�� �

How can we classify these consumers?

Anderson Cooper

Daymond John

Alexandria Ocasio-Cortez

Jeff Bazos

The Purpose of Segmentation Models��Tools to understand human decision making�� ��

• Neuropsychology – studies the dynamics of biology and human behavior
• Behavioral Economics – studies the impact of economic stimuli on human behavior
• Cultural Anthropology – studies how cultural codes differ among nations and their influence on human behavior
• Macro-determinants of human behavior – big picture view of how the 3 systems influence behavior together
• Micro-determinants of human behavior – “small picture” view used to create segmentation models based on the macro view
• Segmentation Modeling – technique used to structure and create a deeper more granular understanding of your consumer behavior to align with wants and needs

Micro-determinants of human behavior led to segmentation modeling

• Understanding human behavior = ability to align with their wants, needs, dreams
• Luxury focuses on desires/dreams
• Mass focuses on wants/needs

​

STP Process:

Core of strategic marketing

​

The Purpose of Segmentation Models �

Segmentation Models �

Annual Consumer Spending Segmentation Model

Annual Shopping Frequency Model

LV Segmentation by Spend and Behavior

• 10K Clients
• Lifestyle Clients
• High End Clients

Types of Segmentation Models

NEXT 🡪

• Demographic: age, gender, education, race, occupation or income.
• Geo-demographic: organizing by region, city/metro size, population density, or climate
• Hybrid model:
• Traditionalists: Born prior to 1946
• Baby Boomers: Born 1946 – 1964
• Generation X: Born 1965 – 1980
• Generation Y/Millennials: Born 1981 – 1995
• Generation Z: Born 1996 – 2010
• Socio-graphic: aka Lifestyle based on patterns of why people live their lives as a way of priorities
• Life stage: aka rites of passage segments according to significant life events
• Behavioral: based on shopping and purchasing patterns
• Psychographic: determines the why that motivates the behavior

​

​

Aligning Models With Business Objectives

NEXT 🡪

Model depends on business objectives

• Optimize merchandise assortments – right product, right time
• Inform cost per customer – calculation to find the cost to acquire and/or retain customer relative to ROI

​

Segmentation helps prioritize research/product development initiatives

• Target product-message-offers (mass marketing communication)
• Different categories or types of purchasers (frequent shoppers, bargain hunters, new shoppers)
• Co-creation programs (personalized products/advertising)

​

Developing segmentation models requires data

• Primary research: source of research data that directly interface with core customer of brand
• Focus groups, sample survey

​

​

Aligning Models With Business Objectives

NEXT 🡪

VALS: (Values, Attitudes, and Lifestyles)

Clusters customers into psychological types based on personality dynamics as indication of behavior pattern

​

PRIZM: (Potential Rating Index for Zip Marketers)

Clusters customers on socio-graphic level (household, shopping patterns, etc)

​

​

PRIZM Clusters: Map of USA With Colors Showing Degrees of Different Concentrations by Zip Codes of a Particular Consumer Cluster

The Role of Segmentation Models in Engaging Consumers

The Four P Types: A Luxury Consumer Segmentation Model Based on Degrees of “Signaling”

Segmentation Models in Engaging Consumers

NEXT 🡪

Behavioral Segmentation

• Unity Marketing Segmentation Model
• X-Fluents: Extremely affluent. Spend the most on Luxury and highly invested in luxury living
• Butterflies: Highly evolved luxury consumer looking for meaning and experiences
• Luxury Cocooners: Focused on hearth and home.
• Aspirers: Luxury consumers who have not achieved level of luxury to which they aspire. Luxury is expressed by what they own
• Temperate Pragmatists: Newly emerged luxury consumer, careful spender

​

Segmentation Models in Engaging Consumers

NEXT 🡪

• Three major types of brand engagement:
• Involving: Engaging customers in a way to ensure customer centric alignment – blogs, online communities,
• Romancing: Emotional engagement with the brand, aspirational connection
• Delighting: Offering a unique service or experience that is unexpected by consumers

The Brand Persona and Successful Engagement

NEXT 🡪

• Successful engagement requires brand alignment and balancing brand image

​

• Brand identity = What brand manager brings to market

​

• Brand image = What the market reflects back to brand manager

​

• Identity + Image = Brand Persona

​

BRAND LOYALTY

Brand Touchpoints and Co-Creation

What are brand touchpoints and why are they important?

Need to be aware of all touch points

​

Brand Touchpoints and Co-Creation

Experiential Branding

Utility model no longer works

Emotional/neurological drivers better explain how/why of behavior

​

Customer Relationship Management (CRM) is key to optimize customer loyalty and engagement

Help brands to achieve extraordinary service by getting to know your client

Helps to understand how/why

CRM at Louis Vuitton

CRM at Louis Vuitton

LV Segmentation by Spend and Behavior

• 10K Clients
• Lifestyle Clients
• High End Clients

Brand Loyalty and Touchpoints

Co-creation of the Brand Experience

​

Brand sponsorships

Amex – U.S. Open

Prada – Americas Cup

​

Luxury = VIP Access

Gucci, Louis Vuitton – tours/events

Preview product, attend fashion shows

LV Brand Experiences

LV Brand Experiences

Brand Loyalty Matrix��Managing �The Brand Experience