Luxury Institute News

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.”


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 or contact The Lilian Raji Agency at or (646) 789-4427.

August 29, 2013

Retail loyalty programs add tiers to reward big spenders

By Kelli Grant
August 28, 2013

Taking a page from airline programs, more retailers are adding elite levels with extra perks to their loyalty packages. But shoppers may find membership nearly as pricey as a first-class airline ticket.

In July, Sephora relaunched its Beauty Insider program, adding a reward level with free shipping, early access to new products and sales as well as VIP event invites for shoppers who spend $1,000 or more in a year. Around the same time, flash-sale site introduced its Gilt Insider Program, awarding shoppers five points per dollar spent and weekly bonuses for interacting with the brand. Tiers with extra benefits such as exclusive sales and a VIP customer service line kick in at the 5,000-, 10,000- and 25,000-point thresholds.

“To make it fair we crafted a program that rewarded engagement, i.e. site visitation and social interaction, in addition to purchasing, so that members could advance up tiers as they earned points,” said Elizabeth Francis,’s chief marketing officer.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:

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 ( 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, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.