Luxury Institute News

February 9, 2016

Using digital to connect luxury shoppers with luxury brands

Luxury Daily
By: James Green
February 9, 2016

Every industry has been disrupted by technology and pushed to evolve their marketing strategy. In some ways, luxury advertisers have embraced the digital revolution and found new methods of improving the customer and user experience. But a large number of luxury marketing spend is still happening offline, despite the brand opportunities that are now available online.

There seems to be a common understanding among luxury brands that high-priced items are not going to thrive online and that using an ecommerce platform may even devalue products. True or not, direct sales are not the only way to get value out of the digital world.

Net net
Most luxury brands have a very specific target audience, typically affluent individuals. Therefore, luxury brands have traditionally bought digital media within specific owners such as The New York Times, Bloomberg and The Wall Street Journal because they feel that it is the best way they can safely find their audience online.

But what about all the people signaling their intent to buy luxury items across the Greater Internet? How do brands effectively reach out them?

Research from Epsilon and The Luxury Institute shows that 98 percent of luxury shoppers use the Internet regularly.

In addition, more than 50 percent of the time they are online, they are researching products and comparing prices on their mobile devices.

Throughout the years, studies from Google and McKinsey have shown that people spend a good amount of time researching luxury or high cost goods online before making their purchase.

And most likely, the number of times people visit a store to browse and conduct research has diminished because of the availability of information online.

With all this data about people, including demographic and information about brand affinity, along with precise data related to what people are searching for or what items they have recently purchased, there is a tremendous opportunity to use digital to identify luxury shoppers, provide them with immersive experiences and forge stronger customer relationships.

Researching signals purchase intent
Data offers established brands the opportunity to get in front of in-market buyers, including new customers and previous buyers.

Consider the amount of research that takes place before making a luxury purchase, whether that is a new car, piece of jewelry, handbag or high-end vacation.

According to WBR Digital, 45 percent of luxury purchases are influenced by what consumers find online.

The benefit of digital is that you can depict who is actually looking for information about your product and use that trail of data to determine intent to purchase.

For the luxury category, these insights will help brands determine who is ready to make a purchase and allow you to predict which people to keep informed about brand updates, such as new products, sales and seasonal marketing promotions.

Intent-based targeting is a strong complement to more traditional brand-centric media buying and helps luxury brands zero in on the people who are more likely to buy their products. It is also a great way to help them move through the buying journey, either in-store or online.

Enticing luxury buyers with digital creative
Luxury shoppers are very much part of the digital nation. They are using laptops, tablets and smartphones to follow trends, connect with brands, research products and make purchases.

Digital creative is critical to the luxury shopper – it needs to drive awareness without jeopardizing brand integrity and exclusivity.

Digital platforms have transformed their environments into creative canvasses for luxury brands. We have seen this through beautifully produced digital videos, immersive creative experiences and native advertising taking place across mobile devices and platforms such as Instagram and Facebook.

There is enough creative stability in digital for luxury buyers to bring their brand to life and to do so amongst the people who are most likely to buy. The dynamic characteristics of digital also allow brands to feature more products and change up creative more easily than television or print ads.

Forging lasting relationships online
People do not have to visit a store for you to know when and how interact to with them.

Online interactions between consumers and brands inform content, marketing frequency and promotions at the individual level, which can help increase customer loyalty and brand awareness.

Loyalty can be accelerated through social, email and digital display advertising at any point within the customer’s lifetime, and data can help predict these optimal moments.

This means that you need to be constantly learning and adapting to what people want so that your brand remains relevant and generates the engagement and desired response. There is simply way too much insight and value rooted in the digital medium for brands not to invest in it.

DIGITAL MARKETING may appear to be about data and targeting, but it is more about customer interaction, immersive experiences and interactive communication.

The luxury experience is more likely to stay very much in-store focused in the next few years. But this might be able to change once luxury advertisers find a way to prolong the experience that they are providing in-store across digital channels.

Data, adaptability and device versatility makes digital a strong brand vehicle for the luxury category.

 Source: https://www.luxurydaily.com/using-digital-to-connect-luxury-shoppers-with-luxury-brands/

January 22, 2016

Events crucial at defining brand community: Neuehouse founding partner

Luxury Daily
By: Sarah Jones
January 21, 2016

NEW YORK – Luxury brands can work relentlessly to develop a quality product, but without creating a controlled experience and consistent message around their merchandise and identity, there may be a disconnect between reality and public perception.

During the “Going Beyond the Product: Creating Physical Experiences for Luxury Consumers” session at Luxury FirstLook: Strategy 2016 Jan. 20, panelists agreed that finding one consistent brand personality and ideology and communicating that across all touch points, whether online or in-store, is the key for effective brand positioning. From there, letting consumers engage with a brand through product, entertainment or creative experiences can further help to build a community.

“The brand has to drive the interaction, whatever it is, and then I think you have to be aware of what consumers’ expectations are,” said Matt Powell, co-president of KBS. “So digital has made it so that whether it is a luxury brand or not, people have certain expectations in terms of understanding everything from what’s going on in the supply chain to price comparison, things that normally luxury could avoid.

“And you have to think about how do you take advantage of what consumer expectations are altered by the Web when you’re creating any experience—online, offline, in-store, out of store,” he said.

Leaving a message
When trying to communicate a brand message to many different generations, brands should not let age be the primary focus, since consumers do not like being defined by this demographic. Mr. Powell said instead brands should speak to characteristics that consumers prefer to be identified by.

James O’Reilly, founding partner at Neuehouse, agreed, explaining that the private work collective tries to find common threads among its multigenerational audience rather than point out differences. Additionally, Neuehouse offers programming at different levels, allowing consumers at varying points in their lives to use its spaces and join its private community.

When designing retail spaces, brands should work to create elements of surprise. For instance, Neuehouse’s bathroom doors feature images of a pump and a mustache, fashioned out of magnets, showing more ingenuity than a painting.

In-store digitization efforts should center on creating an experience that the consumer cannot have at home on her tablet or phone. For instance, Puma took the concept of the in-store iPad and made it more memorable by creating a wall of iPads eight across.

“Physical and digital should be seen as complimentary as opposed to standalone items,” Mr. O’Reilly said. “I typically reference how much better educated people, more informed people are prior to an in-store purchase.

“I think those should feed off each other, and what I’ve seen more is people in-store are referencing digital moments, which consumers have prior to purchase,” he said.

Another way to surprise is in sensory and hospitality touch points. For instance, Dover Street Market was one of the first to include an in-store eatery, and its stores use a museum-style layout.

Prada at Dover Street Market 1
Prada at Dover Street Market

Creating a consistent experience at point of sale can become more difficult when a brand does not handle its own retail outlets.

This is true of automotive brands, which typically have a network of dealerships, but no flagship stores. Geoff Cook, founding partner of Base New York, said that he finds this lack of brand-owned store presence “bizarre.”

One option to make up for this would be hosting experiential events where consumers would be able to test drive and see the cars in person.

Similarly, Mr. Powell is working with BMW to bring its fragmented online presence together, uniting dealer, regional and corporate sites into one. The automaker’s corporate team also set up a showroom in a mall, giving itself an opportunity to reach consumers directly.

BMW South Coast Plaza
BMW Gallery at South Coast Plaza

Mr. Cook believes that brands should be more focused on creating news than on designing ads. Neuehouse employs this strategy, identifying itself as a publisher and introducing itself to potential members through editorial placements in media such as Vulture and Vanity Fair.

Face time
Having a consistent brand identity extends to personnel across facets of the business.

Mr. Cook said that the human connection is important in all channels. Ecommerce should therefore be more than just a transaction and a faceless shopping cart, particularly at luxury price points.

This starts at hiring. Neuehouse looks for an “emotional IQ” in potential new hires, searching for employees who fit into its community. Mr. O’Reilly said that it is difficult to tell who is a member and who works at Neuehouse.

When training new team members, brands should communicate not only what is done, but why it is done. For instance, a genius at the Apple store in Shanghai told Mr. Powell that when he resolves an issue, he is not just repairing a device, but he is fixing a fractured relationship between the consumer and Apple.

While luxury brands typically know the best practices in client building, most are not practicing these strategies for their own customers, according to the CEO of the Luxury Institute at Luxury Interactive 2015 Oct. 14.

The traditional training program for sales associates is out of date, as the focus should be on education that can be applied in a creative way rather than a rote set of rules and checklists that take the human element out of interactions. Additionally, these important members of a brand’s team should be rewarded more for their actions than their results, putting the emphasis on client retention and engagement, which will lead to sales over time (see story).

“I think for me, the most powerful thing is clarity and purpose for a brand,” Mr. Powell said. “So lots of people know how they do, lots of people know what they do. The best brands know why they do what they do.

“And that kind of clarity affects a lot of the behavior of the people on that team that end up being some of the most important touchpoints that exist, because they really define the experience,” he said.

Source: https://www.luxurydaily.com/events-crucial-at-defining-brand-community-neuehouse-partner/

December 18, 2015

Luxury travellers have dim view of Trump brand: survey

Marketing experts weigh in on how to do a hotel rebranding properly
Business Vancover
By: Glen Korstrom
December 17, 2015

The Trump brand is weak among luxury travellers, according to a new survey – a finding likely to fuel more controversy over whether Vancouver’s Holborn Group made a wise decision by contracting with Trump International to put the Trump brand on its under-construction hotel.

Trump ranked 40th out of 40 luxury hotel brands when wealthy travellers who were familiar with the brand were asked whether they would recommend the brand to family or friends, according to the 2016 Global Hotels Luxury Brand Status Index, which the Luxury Institute released December 17.

Strict privacy laws in Canada meant none of the survey respondents were Canadian, CEO Milton Pedraza told Business in Vancouver in an interview.

Instead, the New York-based Luxury Institute found its 3,900 respondents by buying lists from reputable companies that were able to determine income for those who live in the U.S., U.K., Japan, China, France, Germany and Italy.

Luxury brand Maybourne Hotels ranked No. 1 in each of four metrics, for which respondents were asked to grade hotels on a scale of 0 to 10:

•delivering consistent superior quality;

•being unique and exclusive;

•being visited by people who are admired and respected; and

•making guests feel special.

Trump ranked No. 34 for quality, No. 30 for exclusivity, No. 31 for having admired and respected guests, and No. 37 for making guests feel special.

“The survey was in the late summer,” Pedraza said. “This was before [company owner and Republican presidential candidate Donald Trump] started making all of the super-vile statements.”

In fairness, the sample size for those who graded Trump hotels was lower than those who graded much larger brands, such as Ritz-Carlton, Four Seasons and JW Marriott, because participants were only allowed to grade brands that they were familiar with or had experienced.

This was the first year that the Luxury Institute included the Trump brand because, in previous years, the nine-hotel brand was considered too small. Trump representatives then lobbied the Luxury Institute to be included, Pedraza said.

Trump is expected to open hotels in Baku, Azerbaijan in early 2016 and then one in Rio de Janeiro before Vancouver opens in July to make the chain a complete dozen.

Trump International Hotel & Tower Vancouver general manager Philipp Posch told BIV that he would not comment on the survey because he was not familiar with it.

Marketing for his hotel has not yet started.

“We’ll wait out the holidays and probably by January or so, we’ll reach out to clients and start the marketing process and machine,” Posch said December 17.

Click here to read a profile of Phillip Posch

How to do a rebranding properly

Branding experts say Holborn likely wishes that it never hitched its horse to the Trump cavalcade and that the situation underscores the need to have an escape clause in contracts.

“People who do these masthead deals for hotels might want to look at sports sponsorships,” said Brandever principal and branding expert Bernie Hadley Beauregard.

Those deals often end the day after a sponsored, star athlete does something objectionable.

A recent spate of hotel rebrandings in B.C. has experts pointing out both how to do a rebranding properly and what to avoid.

(Victoria’s Hotel Zed has won awards for its rebranding of what was previously known as the Blueridge Inn | Crazyintherain.com)

Branding experts’ biggest lessons are to keep the name short and catchy while making sure that the brand is consistent across the chain so guests will know what to expect.

Keeping a brand consistent across properties is a lesson regardless of the sector.

“The art form of branding is to bring the name down to be something that is usable and memorable to the consumer,” Hadley Beauregard said.

He pointed to Portland, Oregon-based Ace Hotels, which has seven hotels around the world in cities as varied as London, Panama City and Seattle.

“Always artistic, eclectic and hip, Ace Hotels often redefine their host city’s magnetic centre,” he said. “Their brand aura is such that you want to make a pilgrimage to see their properties, even if you aren’t staying there.”

Victoria-based Accent Inns’ rebranding of its secondary, economy hotel to Hotel Zed from Blueridge Inn, in 2014, similarly aimed for a hipper image and a short succinct name.

Rooms at Hotel Zed in Victoria have modern elements such as flat-screen TVs, which have media hubs to project iPhone screens onto the TV monitor.

Basically, however, the hotel’s shtick is that it is made to look retro – complete with rotary-dial telephones and furniture and lamps that appear to be out of the 1970s. A multicoloured 1967 Volkswagen van is parked outside and typewriters in the lobby are for guests to use.

“Because Accent Inns starts with an ‘A,’ we can also say that we’ve got brands that go from A to Zed,” Accent Inns marketing director John Espley told BIV.

The rebranding was such a success that Accent Inns plans to open a second Hotel Zed, in Kelowna, next summer. Accent Inns won recognition for the rebranding at the Victoria Real Estate Board Commercial Building Awards in the hotel category. Destination British Columbia then highlighted the hotel when it unveiled its new $2.6M marketing strategy late last year.

Beauregard, however, is less enthusiastic about Vancouver-based Pinnacle International’s rebranding of its longtime Renaissance Vancouver Harbourside Hotel as the Pinnacle Hotel Vancouver Harbourfront.

“Too many words,” Hadley Beauregard said. “My head hurts.”

Making the rebranding more puzzling, he said, is that the new Pinnacle Hotel Vancouver Harbourfront is virtually across the street from a second hotel that also has “Pinnacle” in an even wordier name: the Vancouver Mariott Pinnacle Downtown Hotel.

(Kyle Matheson is director of hospitality marketing at Pinnacle Hotel Vancouver Harbourfront | Rob Kruyt)

What’s worse than simply having two hotels extremely close together, with both carrying the distinctive word “Pinnacle” somewhere in the brand, is the fact that the two hotels are managed by two different companies – Marriott International and Pinnacle International – even though they are both owned by Pinnacle International.

The two hotels therefore have different offerings for guests.

The Marriott Pinnacle, for example, requires guests to join a loyalty program to get free Wi-Fi whereas the Pinnacle Harbourfront provides guests free Wi-Fi with no need to join any program.

“This creates confusion in consumers’ minds,” Hadley Beauregard said.

“Brand consistency is key.”

Rationale for recent Pinnacle’s rebranding

Pinnacle International has contracted Marriott to manage the Marriott Pinnacle for the past decade.

Paying a management company a fee up to about 5% of revenue to be able to use a global brand such as Marriott is called “flagging” a property.

The common practice is exactly what happened when Holborn Group agreed to pay Trump International to be able to use the Trump brand on Holborn’s hotel.

The point of this strategy is to coast on the brand recognition of a well-known manager such as Marriott or Trump.

Pinnacle International, which is best known as a real estate developer, ended its management contract with Marriott’s Renaissance Hotels earlier this year. That meant that it had to come up with a new name for the property.

Its director of hospitality marketing, Kyle Matheson, told BIV that the new Pinnacle Harbourfront name makes it clear that the hotel is near Vancouver’s harbour.

Using Pinnacle in the name was done because Pinnacle International both owns and manages two other B.C. hotels: Pinnacle at the Pier in North Vancouver and Pinnacle Hotel Whistler.

“The goal with rebranding the [former Renaissance] property as Pinnacle Harbourfront was to broaden our hospitality and hotels and restaurants portfolio under our own Pinnacle name,” he said.

 Source: https://www.biv.com/article/2015/12/luxury-travellers-have-dim-view-trump-brand-survey/

 

October 22, 2015

Tesla, Musk shine from free celebrity marketing, but will it last?

Automotive News
October 22, 2015

SAN FRANCISCO (Bloomberg) — When “The Late Show With Stephen Colbert” debuted on CBS last month, the host chose Tesla CEO Elon Musk as one of his first guests.

Colbert, who commutes into Manhattan in a Model S sedan, took his enthusiasm for Tesla Motors Inc. one step further in an episode last week. He spoke for almost six minutes about his car’s latest autopilot features, the march toward self-driving vehicles and efforts by competitors Apple, Google and Uber.

“I love my Tesla — it’s so fast, it’s all electric,” he told viewers. Comparing his car to a laptop computer on wheels, he said that with the company’s latest over-the-air software update, “Tesla owners woke up to find their cars could drive themselves.”

That glowing Colbert report shows how Tesla benefits from celebrity enthusiasm — for free, from customers that include Oprah Winfrey — to promote the brand. Throw in some viral Internet clips, test drives and customer referral programs, and Tesla is able to spend money on developing products instead of on marketing. In stark contrast to other automakers, Tesla doesn’t currently pay for traditional media such as television, radio or print advertising or celebrity sponsors.

“The Colbert segment was amazing because it was so long, it was Colbert, it was Colbert’s new show and instead of being playfully sarcastic he was overwhelmingly positive,” said Lincoln Merrihew, senior vice president of client services for Millward Brown Digital in Boston, who first watched the Colbert clip on YouTube. “The magic of a celebrity evangelist is that they love a product so much that they will talk about it for free. It was more than a simple endorsement; it was more like a commercial.”

That air time is valuable. On average, 30-second spots on the “Late Show” will average $38,400 from Colbert’s debut through the end of the fourth quarter, according to media-cost forecaster SQAD Inc. It helps, of course, that the 44-year-old Musk is a brand and a celebrity in his own right — making him a worthy guest — as well as a deft user of social media.

Stock decline

At the moment, Tesla can use a little extra fan love. Its once high-flying stock has fallen to the low $200s from its July peak at $282 in the wake of last month’s long-awaited introduction of the company’s Model X SUV. Three analysts have cut their price targets amid concerns that Tesla, which aims to deliver at least 50,000 vehicles this year, faces a steep production ramp in the fourth quarter.

On Tuesday, the Model S lost its recommendation from Consumer Reports after owners complained about quality issues as mundane as a squeaky sunroof to major issues like the electric motor needing to be replaced, the publication said in its forthcoming December issue. The Consumer Reports news sent shares tumbling 6.6 percent to $213.03, its biggest drop since Aug. 6.

Musk has pushed back on Consumer Reports via Twitter, saying the publication’s reliability survey “includes a lot of early production cars. Already addressed in new cars.”

Fan power

The auto industry already is also legend with celebrity ads, from Matthew McConaughey’s oft-parodied commercials for Lincoln to Clint Eastwood’s two-minute “It’s Halftime in America” spot for Chrysler, a hit of the 2012 Super Bowl.

For Tesla, the celebrities do the work on their own accord, not for a paycheck. Stars such as actress Alyssa Milano, director Jon Favreau, and Teller, the silent partner in the magic duo Penn & Teller, have praised Tesla or promoted the brand to their social-media followers in an increasingly fragmented media market.

Teller’s “customer story” is one of several that can be read in full on Tesla’s website. Oprah shared photographs of her recently purchased white Model S with her millions of followers on Instagram and Twitter. Colbert talked in detail about autopilot — a Tesla product announcement — just as it came out.

“On a daily basis, Stephen brings a smart comedic voice to all types of topical issues,” said CBS in a statement. “We don’t tell him what to say, but we certainly enjoy it.”

Automotive advertising

Other automakers usually have to rely on traditional marketing. General Motors, Ford Motor Co. and Fiat Chrysler Automobiles all rank among the top 10 advertisers in the U.S. in terms of money spent, according to Advertising Age, an affiliate of Automotive News. In 2014 alone, GM spent almost $1.7 billion on advertising in the U.S., according to Kantar Media; Ford spent $841 million and Fiat Chrysler spent $1.1 billion. Those figures are just from the manufacturers and don’t include the vast millions that dealerships spend as well.

In its annual report filed earlier this year, Tesla notes that “we have been able to generate significant media coverage of our company and our vehicles, and we believe we will continue to do so.” But the Palo Alto, Calif.-based company also notes that “to further promote our brand, we may be required to change our marketing practices, which could result in substantially increased advertising expenses.”

For now at least, Tesla’s strategy is working.

“Colbert benefits from talking about Tesla, because it’s a brand that his millennial audience associates with,” Milton Pedraza, CEO of the Luxury Institute, said in an interview. “It’s a massive multiplier effect that is equivalent to spending tens of millions of dollars on media. Tesla doesn’t advertise: They are playing the game of not playing the game, and you win by that. They are doing it brilliantly.”

Source: http://www.autonews.com/article/20151022/RETAIL03/151029937/tesla-musk-shine-from-free-celebrity-marketing-but-will-it-last

She Who Controls the Purse Strings

IDEX
October 22, 2015
By: Danielle Max

There’s good news from a recent survey released by the Luxury Institute, which revealed that watch and jewelry companies are more successfully marketing to affluent women these days. In fact, 62 percent of respondents said that these companies do a good job of marketing to them; up from 53 percent in 2012.

The research from the New York-based Luxury Institute ranks industries and specific brands based on their success marketing to women with a minimum household income of $150,000 per year. Respondents reported average household income of $289,000, and a $2.9 million average net worth, so these are exactly the sort of households that the diamond and jewelry industries need to be targeting.

Overall, the watch and jewelry category ranks fifth among industries trying to sell their goods to women – and, given that high-ticket items such as watches and jewelry are not exactly a spur of the moment purchase – that seems pretty good to me.

The top four industries most frequently viewed as doing a good job marketing to women from high-income households through advertising and social media are clothing (75%), shampoos and conditioners (74%), fragrances and cosmetics (72%) and shoes (72%).

And it seems that marketeers overall are doing a better job of selling to what is clearly a key demographic. The Luxury Institute says that compared to 2012, each of these categories enjoys a wider share of women who view their marketing efforts favorably.

However, lest you think the gender gap is a thing of the past, among the industries that affluent women say are doing the poorest jobs of marketing to them are insurance, liquor, electronics, banks, brokerages and private jets, each of which earns an approval rating of less than 5 percent and has fallen in approval since 2012.

In addition, the automobile industry also needs to stop thinking (and acting as if) men hold the purse strings. Apparently, only 6 percent of women are impressed by the efforts of car companies to market to them.

Of course, it’s not just money that comes into play in such issues. According to the research, affluent women in the 45-64 age bracket are much more likely than women under the age of 45 to say that companies are doing well in marketing specifically to them.

Part of the problem seems to be that companies just don’t seem to realize who they should be targeting. The Luxury Institute specifically singles out married women who, according to its research, make two-thirds of all household purchasing decisions.

“Women maintain huge economic power and it is a necessity for companies to step up marketing and how they connect with affluent women regardless of industry,” says Luxury Institute CEO Milton Pedraza. “Research that includes speaking directly with these women about what appeals to them and what turns them off removes much of the guesswork in making marketing decisions.”

We couldn’t agree more.

Have a fabulous weekend.

Source: http://www.idexonline.com/Memo?Id=41250

Women neglected by marketers despite making two-thirds of household purchases

Luxury Daily
October 22, 2015
By: Staff Reports

Brands in the apparel, personal care and footwear sectors are among the best at marketing to affluent women, according to research by Luxury Institute.

The best industries targeting affluent women through advertising and social media do not come as a surprise, but it does shine a light on the sectors that are not doing well at focusing their attentions on this demographic of wealthy consumers. Survey respondents felt that the industries doing the least to target affluent women include insurance, liquor, consumer electronics, banks and brokerages and transportation including automobiles and private jets.

Luxury Institute surveyed women ranging in age from 21-years-old to more than 65-years-old with a household income minimum of $150,000 per year. The respondent pool’s had a reported average household income of $289,000, and a $2.9 million average net worth.

A battle of the affluent sexes
When it comes to marketing to a female demographic, brands in apparel (75 percent), shampoos and conditioners (74 percent), fragrances and cosmetics (72 percent) and footwear (72 percent) unsurprisingly fared the best.

In regard to the industries that are failing at capitalizing on the purchasing power of affluent women, each had an approval rating of less than 5 percent. This approval rating has continued to fall since 2012.

Efforts put forth by automotive brands, for instance, have only impressed 6 percent of the female respondents. Although traditionally associated with a masculine culture, the auto industry should expand its marketing efforts to cater to the sentiments of its female consumers, especially those with families, by touting the safety of high-end vehicles.

On the corporate side, automakers have made strides in being more inclusive of females in general. For instance, British automaker Aston Martin looked to close the gender gap in engineering by teaming up the Royal Air Force to introduce female students to various career routes (see story).

Sectors improving outreach to female consumers include the jewelry and watch sector, which has seen the largest improvement over the past three years. Sixty-two percent of respondents felt that these brands do a good job marketing to their demographic, a 53 percent increase from 2012.

In addition, department stores are listed sixth, with 60 percent of affluent women appreciating the efforts put forth by retailers.

Lux institute.womens marketing graph
Graph provided by Luxury Institute 

Across the board, older affluent women aged 45-64 felt that brands across industries are doing well when marketing to their demographic. This response was much more likely from the older age group than it was for women 45-years-old and under.

But, 25 percent of women 21- to 44-years-old felt that the wine industry is not doing enough, or not marketing to them well enough. This propensity decreases with age, with 21 percent of 45- to 54-year-olds, 16 percent of those between the ages of 55 and 64 and 12 percent ages 65 or older approve of the wine category’s marketing efforts.

In a statement, Luxury Institute CEO Milton Pedraza said, “Married women tell us that they make two-thirds of all household purchasing decisions. Women maintain huge economic power and it is a necessity for companies to step up marketing and how they connect with affluent women regardless of industry. Research that includes speaking directly with these women about what appeals to them and what turns them off removes much of the guesswork in making marketing decisions.”

Source: http://www.luxurydaily.com/women-neglected-by-marketers-despite-making-two-thirds-of-household-purchases/ 

October 3, 2015

Can a fast fashion vet steer Ralph Lauren’s ship?

Retail Wire
By: Tom Ryan
October 2, 2015

Shocking many fashion insiders, Ralph Lauren Corp. hired Stefan Larsson, a former H&M executive and president of Old Navy, to replace Ralph Lauren as CEO.

Mr. Lauren, 75, will remain active as executive chairman and chief creative officer and is expected to continue to oversee the luxury side. Mr. Larsson will report to Mr. Lauren in what’s described as a “partnership.”

Mr. Larsson, 41, is credited with reviving Old Navy after taking over in 2012 with a focus on upgrading design and bringing over some quick-turnaround supply chain tricks he learned in his 15 years at H&M. He takes over as CEO of Ralph Lauren Corp. in November.

Ralph Lauren Corp.’s revenues slid 5.3 percent in the second quarter due to a strengthening dollar that affected both overseas profits and tourist traffic at its stores in the U.S. The company has also faced heightened competition in the luxury channel this year. Shares are down around 40 percent this year.

The recruitment of Mr. Larsson was the latest example of the insular luxury industry looking outside for talent. LVMH recently hired an Apple executive as chief digital officer, Chanel SA’s CEO spent 15 years at Gap, and Grita Loebsack, a former VP at Unilever Plc, was recently hired as CEO of Kering’s emerging brands, which include Stella McCartney and Gucci.

Stefan Larsson
Stefan Larsson – Photo: Gap, Inc.

“You see a lot of luxury brands now recruiting from other industries,” Milton Pedraza, the CEO of the Luxury Institute, a research firm, told The Wall Street Journal. “They need executives with skills the luxury industry doesn’t necessarily have such as an expertise in global distribution or digital marketing.”

Mr. Larsson, who is Swedish, is expected to be useful in expanding Ralph Lauren’s business overseas. An outside CEO may also make aggressive calls to reduce expenses and bring more sophistication to an organization.

Odeon Capital analyst Rick Snyder told Reuters the company had grown to a size where it needed more “systems and controls.”

The New York Times said that for the legendary designer, the hiring “indicates that he, at least, feels it is still important to separate the roles and have a professional manager running the brand and reassuring Wall Street.”

Still others felt the business model may be due for a more radical change, with department store growth slowing and fast-fashion retailers like H&M, Uniqlo and Zara leading fashion’s growth.

“Larsson has a track record of expanding very well,” longtime industry analyst Walter F. Loeb told the Daily News. “His contribution to Ralph Lauren will be global expansion and, more importantly, discipline within the company.”

Source: http://www.retailwire.com/news-article/18579/can-a-fast-fashion-vet-steer-ralph-laurens-ship

August 14, 2015

Millennials’ wealth management preferences differ from boomers: report

Luxury Daily
By: Kay Sorin
August 14, 2015

Millennial investors have different preferences compared to their baby boomer parents when it comes to wealth management, according to a new report by Luxury Institute.

While baby boomers and older generations prefer to work with full-service brokerage firms, wealthy millennials and members of Generation X are showing an increased preference for working with private advisors. Independent financial advisors can offer a more individual approach that is often appealing to younger investors who are accustomed to personalization.

“Independent financial advisors are able to do more things for their clients, because they are not working for a firm that has rules and regulations about what they can or can’t do,” said Milton Pedraza, CEO of Luxury Institute, New York. “The IFA is the fastest growing industry in wealth management.”

Different strokes
Luxury Institute surveyed investors earning at least $150,000 and found that at least 46 percent used some form of advisor to help them manage their finances. Among respondents aged 65 and over, this number rose to 59 percent.

Michael Kors affluent couple car
Wealthy millennials are inclined to prefer independent wealth managers

Respondents varied in their preferences for an independent wealth manager versus a full-service brokerage firm such as Morgan Stanley or Merrill Lynch. Interestingly, this preference strongly correlated with age.

“A full service firm doesn’t have a fiduciary relationship with the client, meaning that they are not legally obliged to serve the client’s interests only,” Mr. Pedraza said. “They can recommend an investment in which they will make a bigger commission.”

Millennials and members of Generation X and Y, defined as those 45 and younger, showed a significant preference for independent wealth managers compared to full-service brokerage firms. Thirty-eight percent chose to work with individual advisors while 27 percent preferred a big brokerage firm.

Michael Kors case
Millennials have access to more information and are well informed

Investors over 65 were much less likely to work with an independent advisor and only 28 percent reported doing so. They strongly preferred to go full-service with 56 percent using large firms to manage their wealth.

This difference between the generations is likely a result of their upbringing. Baby boomers were raised to expect to work with a big brokerage firm, while millennials may be more wary and distrustful after the recession of 2008.

Sotheby's London Property
Financial advisors can assist in major life decisions such as purchasing a home

Additionally, millennials have more information at hand, which allows them to be more selective with their advisors.

“Millennials are so much more informed that they depend less on a brokerage firm providing them with research,” Mr. Pedraza said. “Millennials don’t need as much because they are so informed.

“They know that very few financial advisors can outperform the market in the long term.”

One way in which individual advisors often distinguish themselves is by providing a more personal connection for clients. Luxury Institute found that expertise, trustworthiness and generosity were the most valued traits in financial advisors.

Affluent family
As millennials age they are in greater need of financial advice

More than numbers
Investors looking for both a personal relationship and a full-service brokerage firm may seek other solutions to find the ideal compromise. Ultra-affluent consumers often appreciate the relationship-building culture fostered at boutique wealth management firms, according to a report by the Luxury Institute.

The New York-based Rockefeller Wealth Management firm received the highest score in the report, followed by Atlanta-based Atlantic Trust Private Wealth Management and Convergent Wealth Advisors. As wealth management firms continue to repair their reputations following the financial crisis, prioritizing relationships over transactions will be important (see story).

Regardless of the size of a firm, relationships are often the deciding factor when it comes to choosing a financial advisor. To differentiate themselves from competitors, wealth management companies must make crucial changes that will only work if the alterations are part of the company’s core DNA, according to a speaker from the 2012 Forrester Customer Experience Forum.

It is no longer enough to just return calls and give a great customer experience, since clients at wealth management companies are not even thinking about those that do not require this. Instead, Morgan Stanley Smith Barney was forced to bolster its customer service in terms of technology, getting to know the customer and its consultants (see story).

Looking forward, it is essential for wealth management companies to take personal relationships into account in order to appeal to wealthy millennials.

“Millennials will be keen to stay with those who deliver and will dispense with those who don’t,” Mr. Pedraza said. “They will choose advisors based more on the client’s experience than on the client’s return.

“The baby boomers are kind of exiting the stage. Millennials will demand a far more objective and independent metric.

“Advisors need to be completely trustworthy and very responsive,” he said. “They need to go above and beyond to make the client feel special.”

 Source: http://www.luxurydaily.com/millennials-wealth-management-preferences-differ-from-boomers-report/

August 10, 2015

The Death of the Swiss Fine Timepiece Has Been Greatly Exaggerated

The Lilian Raji Agency
By: Lilian Raji
August 10, 2015

Late last month, Edward Faber, co-owner of Aaron Faber Gallery and author of  American Wristwatches: Five Decades of Style and Design,  Gary Girdvainis, editor of WristWatch magazine and AboutTime magazineand Jeffrey Hess, CEO of Ball Watch USAMilton Pedraza, CEO and Founder of The Luxury Institute, and Jason Alan Snyder, Chief Technology Officer of Momentum Worldwide reconvened Aaron Faber Gallery’s annual Watch Collectors’ Roundtable to debate the question, “Will Smartwatches Disrupt the Swiss Watch Industry?” The Roundtable was moderated by Eleven James CEO, Randy Brandoff.

With the recent  release of a report by market research firm Slice Intelligence announcing that Apple watch sales have declined 90% since their initial launch, the unanimous predictions of the Roundtable panelists has been proven accurate:  no, smartwatches will not disrupt the Swiss watch industry.

What the panelists couldn’t agree on, however, was if smartwatches would impact the industry in any way.

  • Jeff Hess, who also owns Hess Fine Art, noted his customers have been coming in wearing a smartwatch on one wrist and a fine Swiss timepiece on the other.  In this, there seems to be the possibility of harmony between the two types of watches.
  • Edward Faber asserted that a smartwatch will never seem as prestigious as walking into a boardroom wearing a Rolex Presidential or other high status watch.  Smartwatches will only be a gadget.
  • Milton Pedraza agrees on the novelty factor of watches, but didn’t dismiss that smartwatches could ultimately be more a fashion statement than a power statement.
  • Gary Girdvainis predicted that smartwatches would ultimately become gateways for the millennials who gave up watches for their smartphones to now begin entertaining the idea of wearing a watch.  When these same millennials reach their 30s, after spending the last few years wearing a smartwatch, graduating to a Swiss timepiece will be their next step.
  • For tech industry expert, Jason Alan Snyder, smartwatches are about functionality and features.  They are about advancing technology to make our lives easier. The debate shouldn’t be about smartwatches vs timepieces, they should be about smartwatches and all the major advancements going on in technology.

As Randy Brandoff moderated the panel, addressing such issues as the future of the watch industry for collectors, what future technological functions make sense for wristwear and Swiss watch manufacturers pursuing their own smartwatches, panelists made predictions and gave insights that will make many watch, technology and luxury industry people “wait and see” over the next few months as smartwatches set the stage for the evolution of how people tell time.

Click the link to watch the video of the roundtable for quotes by Milton Pedraza, CEO of Luxury Institute: The Watch Collectors’ Roundtable – Will Smart Watches Disrupt the Swiss Watch Industry?

To learn more about the Roundtable at http://smartwatches.lmrpr.com or contact The Lilian Raji Agency at lilianraji@lmrpr.com or (646) 789-4427.

July 10, 2015

Tesla Hires Ex-Burberry Executive to Lead North American Sales

Bloomberg Business
By: Dana Hull
July 10, 2015

Tesla Motors Inc. has hired former Burberry senior vice president Ganesh Srivats, adding a sales executive to help the electric-car maker extend its reputation for automotive luxury to an increasingly global audience.
Srivats, whose position as vice president for North American sales was confirmed Thursday by the company, will help Tesla deepen its already formidable brand into a premium lifestyle experience to go with its high-tech image, taking a cue from the kind of marketing BMW, Porsche and Ferrari have done.

“This makes all the sense in the world,” said Scott Galloway, a professor of marketing at New York University’s Stern School of Business, in a phone interview. “Tesla is not an automobile company, it’s a luxury company.”
Srivats joins the automaker from a British fashion house known for its heritage plaid cashmere scarf and trench coats as well as digital savvy. Apple Inc. hired former Burberry Group Plc Chief Executive Officer Angela Ahrendts as head of its retail operations in 2013.

The new Tesla executive held strategy and retail posts for Burberry starting in 2009 and most recently was senior vice president for retail in the Americas, according to his LinkedIn profile.

The North American sales job is a newly filled position for Tesla. The Palo Alto, California-based company said in March that it was reassigning Jerome Guillen, who was vice president of global sales and service, to a role focused on delivery and long-term customer care and would hire new executives to lead the sales operations by region.

Sales Target

Tesla plans to introduce its Model X SUV late in this quarter and says it will sell 55,000 vehicles worldwide this year. The automaker ended the first half with 21,552, about 40 percent of the target.
Tesla doesn’t have dealerships and sells its products directly to consumers via stores and galleries. It doesn’t pay for traditional advertising and relies heavily on free media and word-of-mouth among its customers, many of them tech-savvy early adopters.

“Srivats absolutely brings a client-centric approach to doing business,” said Milton Padraza, chief executive officer of the Luxury Institute, in a phone interview. “It’s about long-term relationships, not a transaction. Burberry is the master of client relationships.”

Digital Innovation

Burberry was one of the first luxury brands to embrace digital innovation, from live-streaming runway shows to launching on Periscope. The London-based company has had a makeover in the past five years, moving from conservative high-end fashion to haute couture, said Ken Harris, managing partner at Cadent Consulting Group in Chicago, which advises consumer and retail companies.

“If Tesla is thinking that they are selling a lifestyle and a way of thinking, then someone from Burberry could be the right choice,” Harris said in a phone interview. “Burberry gets lifestyle.”
The 159-year-old company with a “distinctly British attitude” has more than 4 million followers on Twitter and is led by Christopher Bailey, a 44-year-old designer who had been the company’s chief creative officer.

High-end automakers like to push expensive clothing and accessories to boost revenue and deepen their relationships with affluent customers. Besides T-shirts and messenger bags, Tesla has the Tesla Design Collection, which includes a $300 tote bag, $100 sheepskin leather driving gloves and a $40 iPhone sleeve.

Similarly, Porsche sells watches, luggage and other accessories under the Porsche Design brand. Ferrari also offers clothing, shoes and even a cigar box under its brand name. BMW and its Mini brand also sell pricey accouterments.

Source: http://www.bloomberg.com/news/articles/2015-07-10/tesla-hires-ex-burberry-executive-to-lead-north-american-sales

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