Luxury Institute News

May 23, 2014

60pc of affluent Baby Boomers inclined to use social media: report

By: Joe McCarthy
Luxury Daily
May 23, 2014

Generational distances regarding social media use are not as wide as commonly thought, according to a report from the Luxury Institute.

Eighty-five percent of millennials surveyed for the report said they were inclined to use social media, compared to 73 percent of Generation X’ers and 60 percent of Baby Boomers. As luddites become further marginalized, brands must adopt a marketing approach that prioritizes individuals over segments and personas.

“The surprising part for me is that Boomers, Gen X’ers and millennials are all consuming all of these media at some level,” said Milton Pedraza, CEO of The Luxury Institute, New York. “It’s not as if they’re getting left behind. These are all affluent people, and tech savvy.

“Life stage matters tremendously but because of the new age of data, analytics and one to one marketing, we can look beyond the segments to the individuals and market to them,” he said.

The Luxury Institute surveyed 1,200 consumers 21 and older with an annual household income of at least $150,000.

Less boundaries
The report aims to get marketers to reconsider media consumption in general. The dynamic of how consumers “consume” is messier than the laser-drawn segments of millennials, Gen X’ers and Baby Boomers suggests.

Age provides broad indications of consumer behavior, but individual behavior is more granular, rife with the unexpected.

Baby Boomers do watch more television, with respondents averaging seven hours per week, but millennials are also flipping through channels, with these respondents averaging four hours per week. About 70 percent of all segments surveyed watch previously recorded programs on DVR.

“Marketers need to go beyond stereotypes and propensities, and start doing real one-to-one marketing now,” Mr. Pedraza said in a press release. “The data and analytical firepower are there to build relationships, and wealthy consumers, especially millennials, demand it.”

“We have to look at individual needs, lifestyles and life stages and combine something that’s optimal for each person,” Mr. Pedraza said.

See full article with quotes from Milton Pedraza, CEO of Luxury Institute: http://www.luxurydaily.com/60pc-of-affluent-baby-boomers-inclined-to-use-social-media-report/

March 6, 2014

Would You Pay 70 Per Cent More For Chanel?

By: Lauren Milligan
Vogue.com
March 5, 2014

IT’S not just the recession and higher property and living costs that’s making you think it, the price of luxury goods is actually rising. The Wall Street Journal reports that the price of a quilted Chanel bag has on average risen by 70 per cent in the past five years, while Louis Vuitton’s classic Speedy bag is 32 per cent more expensive in America than it was in 2009.

There are several theories behind the increases – which represent a general trend across the luxury goods industry, including watches and jewellery. Some say the prices are intended to help customers differentiate between the high-end brands and their increasingly popular mid-market competitors.

“The more Tory Burches and Michael Kors there are, the more the Chanels and Louis Vuittons will try to price up,” said Milton Pedraza, chief executive of the Luxury Institute, told the WSJ. Others explained that the price increases, although far outpacing inflation, were unavoidable in order to maintain quality – thanks to rising production costs.

Click the link to read the entire article: http://www.vogue.co.uk/news/2014/03/05/price-increases-for-luxury-items—chanel-louis-vuitton-bags

February 19, 2014

Jaguar takes over New York subway trains with Good to be Bad promotion

By Joe McCarthy
Luxury Daily
February 18, 2013

Jaguar Land Rover North America is targeting New York subway commuters with train takeover promotions for its Good to be Bad campaign.

The Good to be Bad campaign officially debuted during the Super Bowl Feb. 2, which makes it safe to assume that many of the commuters will recognize the slogan. Since one of the chief aims of the multichannel effort is to reposition the brand’s image, the venue will serve the purpose of attracting and holding the attention of significant numbers of consumers.

“As a general concept I would say that some of Jaguar’s target market goes on the subway, so I don’t think it’s illegitimate, but I do think that there are probably better places to spend your money,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“Unless they just wanted to have us talk about the campaign, which we’re doing, then in that sense it becomes the antithesis of what someone might expect,” he said.

“When you get consumers to talk about the benefits of the brand, then you’re talking about relevant and reliable and positive awareness. When you just create a mild controversy, you’re going to get a mixed crowd.”

Mr. Pedraza is not affiliated with Jaguar, but agreed to comment as an industry expert.

Jaguar did not respond by press deadline.

Step inside
New York’s F Train travels from deep in Queens through Manhattan and down to Coney Island, Brooklyn. The F Train travels through the third busiest subway stop, Herald Square 34th Street, according to the Metropolitan Transportation Authority.

Another attractive aspect of the F train for marketers is that it spends much of its time above ground.

The E train also experienced a Jaguar makeover, and this train travels through Times Square, the busiest stop in the system.

Overall, New York has the seventh busiest subway system in the world with an annual ridership of 1.665 billion.

What this means is that colossal amounts of people will see Jaguar’s promotion and perfunctorily register the message, especially since, in comparison, the other train exteriors will be far less spiffy.

However, the percentage of commuters who will be moved to buy a Jaguar is likely insignificant.

The brand’s intention may be to change the public’s perception rather than stimulate sales.

The “Good to be Bad” campaign centers on the idea that “British Villains” dominate Hollywood.

Sir Ben Kingsley, Tom Hiddleton and Mark Strong were tapped to play villains that muse on what makes British actors so attractive for villainous role. The subtext of the television spot is that the only car suited for these figures is the new F-Type.

Jaguar will likely extend this campaign for several months.

We will be moving shortly
Although it is hard to measure the direct impact of out of home advertising on sales, the medium attracts attention if positioned effectively.

Other luxury brands regularly turn to heavily trafficked transportation venues for outdoor advertising.

For instance, Swiss watchmaker Breguet took over the departures concourse of Geneva International Airport with an exhibit featuring its high-tech watches, the Type XXII 3880 and the Classique Chronométrie 7727.

Breguet’s exhibit, which ran in January, focused on the brand’s technical innovation in watch design and manufacturing along with the brand’s history with aviation. This exhibit drew attention because of its size, and Breguet was able to increase brand awareness among travelers, who are a captive audience.

Also, LVMH Moët Hennessy Louis Vuitton eyed affluent travelers by placing brand advertisements on large digital screens at John F. Kennedy International Airport in New York.

The screens displayed images from a number of LVMH brands including Christian Dior, Donna Karan, Marc Jacobs, Bulgari, TAG Heuer, Hennessy, Parfums Givenchy and Louis Vuitton.

Since the general reaction to an outdoor ad is unpredictable, brands must ensure that they unequivocally reflect key values.

“Usually, what I like to do is to create a campaign that talks about the benefits of the campaign,” Mr. Pedraza said.

http://www.luxurydaily.com/jaguar-takes-over-new-york-subway-trains-with-good-to-be-bad-promotion/

October 2, 2013

By Noon, These Two Will Have Brought In Another Half a Million More Dollars

By Paul Wachter
New York Magazine
October 1, 2013

One Kings Lane
Founded: 2009
Age of co-founders: 38 and 58
Most recent estimated valuation: $440 million
Lesson: Better than a deal on flatware is the perfect set delivered to your in-box.

The name emblazoned on the outer wall of 1355 Market Street, an Art Deco building ­in San Francisco completed in 1937, is a tribute to the past, not the ­present: Western Furniture Exchange and ­Merchandise Mart. As late as 2005, the premises housed 300 furniture wholesalers. By 2008, the number was down to 30, and the developer, brandishing city tax credits, made the sensible decision to re­invent the space for techies. Twitter moved in, followed by Microsoft-owned Yammer. Also came a company that can lay claim to the building’s former identity: One Kings Lane, an online purveyor of furniture and home accessories that is now projecting $300 ­million in annual revenue.

When I met the company’s co-founder, ­Alison Pincus, in One Kings Lane’s offices in late August, this historical symmetry went unmentioned. It wasn’t, I’m certain, because she was unaware, but rather because from the outset, she said, “we thought of One Kings Lane as always trying to be more than furniture.”

Click the link to read the entire article which includes multiple quotes from Milton Pedraza, CEO of Luxury Institute: http://nymag.com/news/business/boom-brands/one-kings-lane-2013-10/?imw=Y&f=most-emailed-24h5

August 20, 2013

Wealthy Shoppers Enjoy Brand Partnerships, But Brand Dilution Is A Risk

(NEW YORK) August 20, 2013 – The Luxury Institute surveyed consumers with a household income of $150,000 or more about the appeal and impact of brand partnerships. These wealthy consumers also shared brands that they would be excited to see partner in the future.

Half of all affluent shoppers surveyed agree that the biggest risk for a luxury firm partnering with another brand—luxury or mainstream—is damage to the brand’s image or reputation. Joint advertising, products, events and sponsorships are the most effective types of collaboration.

Among the industries where partnerships are seen as most fruitful are hotels and resorts, travel, fashion and airlines.  Women are far more likely than men to applaud fashion partnerships, as well as those involving jewelry and beauty.  Men, on the other hand, are most enthusiastic about partnerships involving automobile companies.  Affluent shoppers older than 50 are exceptionally interested in airline and cruise collaborations.

Luxury brand collaborations wealthy shoppers would like to see include Michael Kors and Apple, Chanel and Air France, and Lexus and The Ritz-Carlton.  Missoni offering its fashions at Target and Vera Wang selling at Kohl’s are two high-profile examples of luxury brands partnering with a non-luxury outfit.  Affluent shoppers would like to see additional partnerships of this ilk, including Starwood Hotels and Resorts and Bed Bath & Beyond, Gucci and Coca Cola, among others.

“Brands should partner with companies with similar values and service standards to avoid potential risks of collaboration,” says Luxury Institute CEO Milton Pedraza. “This maintains credibility and helps to ensure a consistently positive customer experience.”

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

August 15, 2013

Report: Even the wealthy love loyalty programs

Editorial
RetailCustomerExperience.com
August 14, 2013
In a new survey of affluent consumers by the Luxury Institute, wealthy shoppers earning at least $150,000 a year share detailed observations and evaluations of various loyalty and rewards programs, and offer suggestions for improvements to existing frequent shopper initiatives.Overall, 72 percent of wealthy consumers participate in some kind of loyalty program, with the most popular ones connected to credit cards, airlines, hotels and grocery stores. Men are significantly more likely to be members of airline and hotel rewards programs, while women are disproportionately represented in programs sponsored by grocery stores, drugstores and department stores. Previous Luxury Institute research has shown that Sephora, American Express and Amazon are the top three favorite rewards programs among affluent consumers.Very few respondents say that they belong to a luxury brand rewards program. The main perceived benefits of luxury brands’ loyalty programs are special offers and rewards, earning and redeeming points, and free goods and services. Free gifts carry more importance among women, shoppers under 50, and those with net worth less than $1 million.Satisfaction with existing loyalty programs is high and most high-income shoppers say that they have had positive experiences with their memberships. The vast majority of shoppers report that loyalty programs exert a strong influence over purchasing decisions.

http://www.retailcustomerexperience.com/article/217915/Report-Even-the-wealthy-love-loyalty-programs

August 14, 2013

Successful Rewards Programs Prove That Even Wealthy Shoppers Like Freebies And Special Gifts

(NEW YORK) August 14, 2013 – In a new survey of affluent consumers by the Luxury Institute, wealthy shoppers earning at least $150,000 a year share detailed observations and evaluations of various loyalty and rewards programs, and offer suggestions for improvements to existing frequent shopper initiatives.

Overall, 72% of wealthy consumers participate in some kind of loyalty program, with the most popular ones connected to credit cards, airlines, hotels and grocery stores. Men are significantly more likely to be members of airline and hotel rewards programs, while women are disproportionately represented in programs sponsored by grocery stores, drugstores and department stores. Previous Luxury Institute research has shown that Sephora, American Express and Amazon are the top three favorite rewards programs among affluent consumers.

Very few respondents say that they belong to a luxury brand rewards program. The main perceived benefits of luxury brands’ loyalty programs are special offers and rewards, earning and redeeming points, and free goods and services.  Free gifts carry more importance among women, shoppers under 50, and those with net worth less than $1 million.

Satisfaction with existing loyalty programs is high and most high-income shoppers say that they have had positive experiences with their memberships.  The vast majority of shoppers report that loyalty programs exert a strong influence over purchasing decisions.

“Loyalty Programs combined seamlessly with one-to-one customer relationship building can be highly effective in driving conversion and retention while making data collection easier,” says Luxury Institute CEO Milton Pedraza.

About Luxury Institute (www.LuxuryInstitute.com) The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

May 5, 2013

9 apps for millionaires

No need to ask Jeeves, just whip out your smartphone

By Kelli B. Grant
MarketWatch
May 4, 2013

You’re wealthy and you don’t want to wait out a flight delay? There’s an app for that. BlackJet lets members book a seat on a private jet via their smartphone. Although the app is free, the service sets travelers back $2,500 for an annual membership, plus the cost of the flight; roughly $3,500 for a one-way jaunt from New York to San Francisco.

Sure, it’s not likely to appeal to everyone (read: most anyone), but apps for the 1% have become a hot market. According to a 2012 survey from marketing firm Luxury Institute, 64% of wealthy consumers view luxury brands more favorably if they have their own app. (Most are just window-shopping: Only about 13% of the affluent have purchased a luxury product or service via their phone.) “The best luxury apps come from branded applications,” says Brad Spirrison, the managing editor for review site Appolicious. It’s common to find fashion houses’ look books, high-end hotels’ recommendations for local amenities and other value-added features that any fan might use. But some, like BlackJet and these eight, are really made for rich customers.

Click the link to read the entire article:
http://www.marketwatch.com/story/9-apps-for-the-super-rich-2013-05-02

May 4, 2013

75pc of affluent consumers would buy luxury brand’s mainstream extension: Luxury Institute

By Tricia Carr
Luxury Daily
May 3, 2013

Most affluent consumers will continue to purchase from a luxury brand that offers a mainstream line, according to a new report from the Luxury Institute.

The quarterly Wealth Report polled wealthy consumers on their perception of luxury and mainstream brands and 24 percent of respondents said that damage to a luxury brand’s image or reputation is a risk when entering the mass market. The report also uncovered shopping habits of wealthy consumers such as the likelihood of making a purchase in-store and online is about equal among respondents.

“One thing for sure is that consumers, regardless of what price point they’re paying, expect great quality from luxury brands,” said Milton Pedraza, CEO of the Luxury Institute, New York.

“Millennials expect great quality and boomers expect great quality, regardless if they are buying a luxury brand or mainstream brand,” he said.

Luxury Institute surveyed wealthy consumers with annual household income of at least $150,000 for the Quarter 2 Wealth Report.

Going mainstream
The Wealth Report found that wealthy consumers are open to mainstream brand extensions from luxury marketers.

Eighty percent of respondents said they would buy goods or services from a mainstream offshoot of a luxury brand and 75 percent said they would buy a luxury brand’s mainstream line.

Eighty-four percent of women and 78 percent of men would continue to purchase from a luxury brand that has a mainstream extension.

Meanwhile, 88 percent of female respondents and 79 percent of male respondents would continue to buy from a mainstream brand that offered an up-market line.

If a luxury brand were to launch a mainstream line, 28 percent of respondents reported being skeptical about consumer acceptance.

Also, 24 percent of respondents believe that damage to the luxury brand’s image or reputation is a risk and 20 percent said quality concerns.

Mainstream lines are doable for luxury marketers because consumers will accept them, but the level of quality and brand DNA should still be in the products.

“You do need to differentiate your brand offerings with quality, with design, with craftsmanship and with pricing,” Mr. Pedraza said.

When asked what differentiates luxury from mainstream, 60 percent of respondents said quality. Among this portion are many respondents on the higher end of wealth and income.

Fifty-five percent said that price is a differentiator between luxury and mainstream. Many who chose price earn less than $200,000 per year and have a net worth less than $1 million.

Additionally, 48 percent said craftsmanship is a differentiator between luxury and mainstream, 47 percent said prestige and 38 percent said design.

Craftsmanship was chosen more often by older respondents.

“The standards have gotten so high,” Mr. Pedraza said. “They expect quality in both, but the quality of a luxury brand has to be dramatically higher than mainstream.”

Shop till they drop
The Wealth Report also found that new technologies drive store traffic instead of keeping consumers away from bricks-and-mortar.

Seventy-eight percent of respondents said that they made a purchase in-store in the past year and 77 percent made a purchase online.

Fifty-seven percent of respondents made purchase decisions based on information they gathered while shopping, but 58 percent gathered their information online via desktop.

But ultimately digital could be considered the most effective channel to trigger purchases since 69 percent of respondents made a purchase on the Web based on information they found online.

Luckily, far less respondents, or 25 percent, participate in showrooming – buying online after gathering information in-store.

“As a retailer, it should be about a seamless relationship with your customer,” Mr. Pedraza said. “Stop looking at it as channels, but relationship-building between the channels that you use and they use.

“Consumers will become seamless in how they engage brands across channels and the word ‘channel’ will become a useless term,” he said.

http://www.luxurydaily.com/75pc-of-affluent-consumers-would-buy-luxury-brands-mainstream-extension-luxury-institute/

April 29, 2013

Now made in China: Taste

5 Things Big in Beijing, Headed for Buffalo

By Quentin Fottrell
SmartMoney
April 28, 2013

Despite the ubiquitous “Made in China” label on everything from clothing to toys, China has been slow to export its own products and culture. Most Americans couldn’t name a single Chinese brand, a survey released this month found. Only 6% of could think of one, according to international marketing firm HD Trade Services. Some respondents mistakenly identified Japanese brands like Honda, Sony and Toyota as Chinese. Indeed, Chinese companies often sells products under non-Chinese names. Volvo Car, for instance, is owned by China’s Zhejiang Geely Holding Group.

“Branding was an alien concept in old China,” says Stanley Kwong, managing director of China Business Programs at the School of Management of University of San Francisco. “China had been making products for companies like Wal-Mart and Apple, but has not developed many brands.” It’s been easier for China to make a product than build a brand, experts say. Popular Chinese cosmetic brand Herborist is labeled “Made in Shanghai,” for instance, and the box for Apple’s iPhone — although made in China — is labeled “Designed by Apple in California.”

Click the link to read the entire article which includes several quotes from Milton Pedraza, CEO of Luxury Institute: http://www.marketwatch.com/story/how-chinese-tastes-are-reshaping-american-malls-2013-04-26

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