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Excerpted from Knowledge @ Wharton “Luxury Brands: Marketing the Upscale During a Downturn“, November 12, 2008

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As 2009 shapes up to be the most challenging year in more than a generation for luxury items such as high-end apparel and fragrances, marketers’ plans for targeting aspirational 16-year-olds and expanding rapidly into the new money hubs of Russia or the United Arab Emirates are suddenly “out.”  What’s now “in” for marketing luxury in this difficult era is pampering the wealthiest and most loyal customers…

In a recession in which even upscale consumers may find themselves strapped for disposable cash, it is a bad strategy to chase customers too far down the economic ladder. “We don’t want to see huge price cuts that will create a lower-priced brand…you don’t want to tarnish your brand…you still have your brand reputation to uphold”…

Many experts believe that the economic pain of the deepening recession could fall disproportionally on these marketers of high-end perfumes, trendy clothing or sleek fashion accessories…Conspicuous consumption seems practically un-American in these troubled times…As a result of the hard times, consumers are likely to see some moves aimed at selling high-end products at a slightly lower cost.

The key is not to make any move that will diminish the value of a brand with a well-established name for luxury…For luxury goods, the business plan places trust in the artistic vision of a designer — and hopes that will lure customers.

Because of the luxurious image they must portray, these marketers said they also need to guard their brands in ways that mass-market companies do not…That does not mean, however, that luxury firms do not want their products to reach a fairly broad audience… But to boost the bottom line, fashion firms are likely to focus now on pampering their best and most loyal consumers, using computer technology to increasingly customize upscale products that will be designed or tailored especially to their needs.

The success of individualized luxury goods — such as designer clothes or eyewear — is a development that could keep a customer repeatedly coming back for more, according to the panelists…Among the designer trends in customization are monogrammed handbags, personalized options for a color or a fabric in accessories, or a wider array of fragrances that are “personalized”…

Ironically, while the panelists were not particularly enthusiastic about the short-term prospects for emerging overseas markets, their companies continue to position themselves for when the time is right…

Still, regardless of where the global economy winds up, luxury marketers say their principle mission will remain the same: Selling a more glamorous way of life to aspiring consumers. “You’re buying into that dream…And you’re buying into that grand theme, which is our job.” 

Edit by SAC

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Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2091

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This entry was posted on December 10, 2008 at 6:30 am and is filed under Mktg - Consumer Behavior. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.