Luxury Institute News

May 16, 2013

U.S. 2 Percenters Trade Down With Post-Recession Angst

By Cotten Timberlake
Bloomberg
May 15, 2013

Jennifer Prentice, a medical-equipment saleswoman in Minneapolis, once had no qualms about dropping $600 or more for Gucci purses. Now she spends $300 for Coach Inc. bags and is filling in her Burberry wardrobe with pieces from j.-crew.

“The things we went through over the last couple of years definitely have an impact on what I am doing,” Prentice, 45, said in an interview. “I tend to be less frivolous now.”

While good times keep rolling for the super-wealthy, many Americans at the bottom end of the privileged group with incomes of $250,000 or more are thinking twice. These “two-percenters,” unnerved by the most recent recession, are trading down to less-expensive offerings from Coach Inc. and Ralph Lauren Corp. (RL) rather than pricier goods from Prada SpA (1913) and Giorgio Armani SpA. Even with the stock and real estate markets rebounding, they’re not draining their wealth again, and the shift may prove challenging for the highest-priced brands that can no longer lean on credit card-fueled aspirational customers.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://www.bloomberg.com/news/2013-05-15/u-s-2-percenters-trade-down-with-post-recession-angst.html

May 31, 2009

Sub-Zero Keeps Its Cool in a Value-Obsessed Economy

Michele Bedard of Sub-Zero Wolf, who is also a Luxury Institute client, shares her thoughts on how consumer insights drive the company’s marketing.

Marketing VP Says Consumers Now Seek ‘Luxuries With Substance’

by Beth Snyder Bulik
Published: May 25, 2009

YORK, Pa. (AdAge.com) — Think you’re having a tough time pushing product right now? Try marketing a $12,500 refrigerator.

That’s what Michele Bedard is tasked with. As VP-marketing at Sub-Zero Wolf, maker of high-end Sub-Zero refrigerators and Wolf cooking appliances, her responsibility is not only developing brand, media and marketing strategy in the midst of a severe recession, but doing so for products that cost anywhere from $1,600 — for under-counter, smaller refrigerators — to upwards of $12,000 — for its specialty Pro-48 model, with stainless-steel interior.

But despite the seemingly near-impossible charge, Ms. Bedard is unfazed. And while luxury goods have been one of the worst casualties of this recession — sales dropped by double digits at the end of last year, and Bain & Co. recently predicted as much as a 20% drop in sales of luxury goods for the first half of this year — the company continues to market and advertise. Ms. Bedard would not disclose the company’s marketing budget, but said that while it has shifted money from traditional media to more direct, CRM and digital efforts, the company has not cut its budget. 

“There’s a good, firm belief at this company that marketing is really driving sales,” she said.

Consumer insights drive the company’s marketing. Sub-Zero Wolf relies on extensive market research from product owners, as well as kitchen designers, architects and retailers who plan for and sell their products, to design new products for the residential market. Sending a value message is key, she said.

“It’s all about building terrifically designed products with great quality throughout,” she said.

Ms. Bedard, 48, came to the family-owned, Madison, Wis., company eight years ago with a background that includes brand-managing stints at Volkswagen and Energizer.

At Sub-Zero, she reports directly to President-CEO Jim Bakke, grandson of founder Westye Bakke. Ms. Bedard said his long view of the company, as well as the close-knit, nimble staff, is what’s guiding the company through this time.

Ad Age: Give us the CliffsNotes on the category. How would you characterize it?

Ms. Bedard: It’s a huge category with major brands that we all know — Whirlpool, Samsung and the other big guys. Sub-Zero is definitely in the niche, in the high end. Sometimes we’re called the luxury appliance category. And in the last 15 years, that category has become more crowded because of the growth in the marketplace.

Ad Age: How do you deal with that added competition coming into a territory you really owned?

Ms. Bedard: We need to make sure we look ahead, not behind, and don’t spend too much time looking at who’s producing me-too products and strategies. Just give our audience what they need and ask for.

Ad Age: Sub-Zero, by any measure, is an aggressive marketer. What’s the thinking about marketing inside the company? Do you report to the CEO? Is there a straight line to the top?

Ms. Bedard: Yes, I report to the CEO. We value the consumer, and we feel the consumer is very wise and they know what they want. Our target is homeowners who have really high standards of performance and design. They really cherish their home, and they have a passion for good-quality products that will give them fresh and delicious foods and wine. … We also target a very important group of influencers: the architects, the designers, the remodelers, the interior decorators.

Ad Age: What functions fall under marketing at Sub-Zero?

Ms. Bedard: It’s global marketing, brand communications and everything else. And we’re very involved in product development. Product development is really at the core of the company, so the product engineers and the marketers are involved in making sure we come out with really terrific products.

Ad Age: When does marketing get involved with a new product?

Ms. Bedard: Right from the beginning we try to provide as much market insight as we can. We seek a lot of input from all our different audiences of consumer and owners. We also value the input of our retailers, our distributors and all those designers who specify our products to make sure that we come up with the right products.

Ad Age: Have you reallocated media spending because of the economy or because the web is more important to today’s consumer?

Ms. Bedard: The role for more traditional media is there. Magazines [such as Elle Decor, House Beautiful and Saveur] and TV [shows such as HGTV's "Divine Design" and "Spice Up My Kitchen"] are really great ways to increase brand awareness and brand preference in our category. If you’ve ever remodeled a kitchen, everybody starts a kitchen project with a binder and ripping pages out of a magazine to really help develop the dream that they have. Online is really to engage our audience and tell the story.

Ad Age: How tough is it to own two high-end brands in this economy?

Ms. Bedard: This company has been around a long time, and in 66 years, we’ve seen downturns before, so it’s really about taking the long view. Our brands are more relevant now. People want to make sure that what they invest in is worth every single penny. … The collapse of the project business and the high inventory of homes certainly has affected us, but there is a lot of remodeling going on as well. Things are starting to pick up, and we know that good kitchen designers are still busy.

Ad Age: Have you changed your messaging at all to focus on value or particular features?

Ms. Bedard: Consumers are wanting to make smart purchases, and we’ve known for several years now that flaunting and ostentatious spending were out. That’s no news to us. Our advertising and marketing strategy is really trying to take advantage of those trends. The recession has made this more universal. [It is more about] luxuries with substance.

Ad Age: What happens if, when the recession ends, it turns out there is a permanent change in the market and your target audience. How do you then regrow a consumer base?

Ms. Bedard: The home will continue to be a very important place to invest. Consumers want to stay at home, entertain at home, and create many great environments to create great moments with family and friends. The kitchen especially will be important. Along with that, consumers want to spend money on something that will be a long-lasting value.

Ad Age: What’s the thinking behind Sub-Zero’s digital and social-media strategy?

Ms. Bedard: Our content addresses everything associated with creating a kitchen but also with their personal passions like wine and cooking. We have a lot of videos that show consumers how to be inspired by Wolf, for instance. We’ve put those on YouTube. … We have chefs on staff, and they help us with product training, product development, and they just happen to be great on camera, and that helps bring our product alive. … We just started a Facebook page, and so far we have lots of fans — consumers and designers uploading photos of their kitchens with genuine love for our product. It’s important to be genuine and [offer] relevant content.

http://adage.com/cmostrategy/article?article_id=136817

April 10, 2009

News Release: High Net-Worth Consumers Rank the “Best of the Best” Luxury Home Appliances and Bathroom Fixtures Brands

NEW YORK, NY–(Marketwire – April 9, 2009) – The Luxury Institute reported today the top-rated luxury Home Appliances and luxury Bathroom Fixtures categories in the 2009 Luxury Brand Status Index (LBSI) survey, which identifies the top brands that exhibit true luxury in these two essential living categories based solely on the unbiased ratings of wealthy consumers.

Which luxury home appliances brands deliver the best combination of quality, exclusivity, customer experience and peer prestige? High net-worth consumers rated Wolf, Viking and Sub-Zero the “Best of the Best” among the 20 brands that were rated. In the bath fixtures category, Hansgrohe, Showhouse by Moen and Franke were rated the top three among 16 brands.

The LBSI asks high net-worth consumers to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special across the entire experience and Being Consumed by People Who Are Admired and Respected.

The “Best of the Best” are: (LBSI score out of 10)

   –  Home Appliances
        -  Wolf-7.86
        -  Viking-7.66
        -  Sub-Zero-7.64

  –  Bathroom Fixtures
        -  Hansgrohe-7.77
        -  Showhouse by Moen-7.35
        -  Franke-7.31

“As high net-worth consumers demand maximum value for the luxury they consume, our independent and objective ratings are the only source that is based solely on the voice of high net-worth consumers, using unbiased panels and independent analytical firms to run and tabulate the results. These top-rated brands deliver luxury, and consumers appreciate it,” said Milton Pedraza, CEO of the Luxury Institute.

“Luxury requires a reinvention based on radical innovation of design, quality, craftsmanship and especially service, all delivered to a client who demands to know why he, or she, is paying a significant premium for commoditized goods and services. Luxury needs to reinvent the values that drive optimal customer experience to a new level of performance that high net-worth consumers will rate as true luxury. The reality is that, despite what pundits say, the success rules of luxury will soon be re-written by the radically creative luxury innovators, and the winners will be determined only by unbiased consumer ratings, not luxury pundits.”

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the prestige of leading brands among wealthy Americans. A national sample of 1,208 wealthy American consumers, with an average income of $345,000 and average net-worth of $3.2 million, was surveyed online. Survey results are weighted to match demographic and net-worth profiles of the same audience according to the latest Survey of Consumer Finances from The Federal Reserve.

About the Luxury Institute (www.LuxuryInstitute.com)

The Luxury Institute is the uniquely independent and impartial ratings and research institution that is the trusted and respected voice of the high net-worth consumer. The Institute provides a portfolio of proprietary publications and research and consulting services that guides and educates high net-worth individuals and the companies that cater to them on leading edge trends, high net-worth consumer rankings and ratings of luxury brands, and best practices. The Luxury Institute also operates the LuxuryBoard.com (www.LuxuryBoard.com), the world’s first global, membership-based online community for luxury goods and services executives, professionals and entrepreneurs.

http://www.marketwire.com/press-release/The-Luxury-Institute-972785.html