Luxury Institute News

March 17, 2014

Wall Street Shares Wealth, for Better or Worse

By: Martha C. White
NBC News
March 15, 2014

The $26.7 billion in bonuses that Wall Street hauled in last year will help fill city and state tax coffers, and certainly boost retailers when bankers sport Patek Phillipe wristwatches and slip into Maseratis. But all that green is a double-edged sword for New York City.

Wall Street bonuses grew by 15 percent in 2013, to an average of $164,530, according to the New York State Comptroller’s office. Milton Pedraza, CEO of research firm the Luxury Institute, estimated that Wall Streeters spend between half and three-quarters of their bonuses, then save or invest the rest, and about half the amount they spend is funneled into the local economy.

Because they spend an incredible amount of money in their jobs, “I think that spills over in their personal life,” said David Friedman, president of research and consulting company Wealth-X.

Click the link to read the entire article: http://www.nbcnews.com/business/economy/wall-street-shares-wealth-better-or-worse-n53071

February 28, 2014

Buying into bling

By Daina Lawrence
Special to The Globe and Mail
February 27, 2014

Affluent individuals around the world bucked the depressed market norms of the last few years and managed to keep the luxury goods market bustling by investing in alternatives such as art, wine and supercars.

Companies such as Hermès SA, Michael Kors Holdings Ltd. and LVMH Moët Hennessy Louis Vuitton SA are gaining new customers daily, with 10 million new buyers wading into the market each year.

Many of these companies have given good news to shareholders recently, including luxury goods dynamo Michael Kors – known for its footwear, watches and clothing – whose shares soared 17.3 per cent to $89.91 (U.S.) in early February, after the company’s report of higher-than-expected profits.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://www.theglobeandmail.com/globe-investor/investment-ideas/buying-into-bling/article17132730/

February 21, 2014

Lamborghini gains top employer award, continues improvement efforts

By Joe McCarthy
Luxury Daily
February 21, 2013

Italian automaker Lamborghini is continuing efforts to expand its work force and improve the labor environment following its reception of the Top Employers Italia 2014 Certification.

After a year-long evaluation process, the Top Employers Institute awarded Lamborghini the award for its “excellent workplace environments and advanced policies for human resource management.” Recognition as a generous employer may endear the brand to new consumers who appreciate sound business models.

“It’s an award much like quality certification that they had to work for,” said Charles Hughes, founder of Brand Rules, Snowmass, CO. “They really put you through the hoops. It shows an effort and an interest.

“Teams that keep winning awards in all different places feel very good about themselves,” he said.

“Also, if you are working at Lamborghini and you know that this car is someone’s dream, you want to believe that you’re part of that dream, not part of a sweatshop, and that changes everyone’s attitude about working there.”

Mr. Hughes is not affiliated with Lamborghini, but agreed to comment as an industry expert.

Lamborghini did not respond by press deadline.

Sound model
The institute looked at five criteria during its evaluation: salary policies, working conditions and benefits, training and professional growth, career opportunities and corporate culture.

Lamborghini has built a welfare system that encompasses employee life both inside and outside the work environment to ensure well-being and motivation.

Attractive salaries and increases linked to tangible measures are available. An apprenticeship program helps to guide citizens into the workforce with compensation that exceeds Italian requirements.

The institute commended the brand’s training practices that continue to develop individual skill with culminating programs and international job rotation.

Labor unions receive respect and engage in “transparent” dialogue with management, according to the award statement.

Some welfare programs include health insurance, free check-ups and vaccinations and special terms at local nursery schools. Employees are given special access to sports facilities, businesses and cultural activities and discounts on VW Group vehicles. New parents are also provided with extensive paid leave.

Food service at the headquarters meets dietary restrictions and sources local fruit and vegetables.

The brand was the first Italian company to receive the Italian president’s award during the National Forum on Health and Safety in the Workplace.

Work stations are regularly updated to meet safety and health standards and new technologies for preventing risks have been incorporated.

The automaker has hired 300 employees since 2011 to reach a total of 1,029 at its Sant’Agata Bolognese headquarters. The majority of the posts have been in the industrial and research and development fields and 30 percent of new hires during this period have been women.

Additional hires will be made this years as the brand gears itself for human resource investment.

From the ground up
Other luxury brands have shown a commitment to elevating employee satisfaction and productivity.

For instance, LVMH Moët Hennessy Louis Vuitton looked to better serve its Mandarin-speaking consumers traveling abroad with a new training program for Chinese Americans.

The French conglomerate teamed up with Parsons the New School for Design and the Chinese-American Planning Council to design a program to teach recently immigrated Chinese Americans luxury retail skills, which includes an internship at a LVMH brand store. Through this program, LVMH will be able to connect with Chinese tourists in their native language and deliver enhanced customer service.

Also, Rolls-Royce Motor Cars opened up its annual apprenticeship program to welcome a new group of aspiring craftsmen and women.

Selected candidates will work alongside employees skilled in leather, wood, paint, engineering and assembly roles beginning August 2014. The brand’s ability to replenish its apprenticeship program acts as a tangible verification of its strong sales numbers and paints the automaker in a favorable light amid a still straggling economy.

Lamborghini’s employment award affirms the quality of its employee culture, and may also appeal to consumers abroad who investigate the roots of what they purchase.

“Today consumers are not just looking for products, but also for great corporate social responsibility and the credentials that drive it,” said Milton Pedraza, CEO of Luxury Institute, New York.

“In a country like Italy where employees are generally treated great, the award is a big deal,” he said. “It’s a big deal to consumers around the world and particularly in the United States and Europe, where they really believe in corporate social responsibility.

“As emerging market consumers become more sophisticated and demanding, they will view this reward as extremely important while making purchasing decisions. Employees are also your customers, so they have to be treated as the brand would treat clients.”

http://www.luxurydaily.com/lamborghini-gains-top-employer-award-continues-improvement-efforts/

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/

August 23, 2013

Biggest risk of partnerships is brand dilution: Luxury Institute

By Erin Shea
Luxury Daily
August 22, 2013

Collaborations can sometimes be risky for luxury brands, and half of affluent shoppers say that the biggest risk for a luxury partnership is the potential damage to the brand’s image or reputation, according to the latest survey from the Luxury Institute.

Overall the study found that most affluent shoppers enjoy brand partnerships, even with the risk. However, luxury marketers should pair up with brands that have the same goals and mindset when seeking partnerships.

“Nearly half of wealthy consumers think that long-term collaborations are most effective for luxury brands,” said Meera Raja, director at the Luxury Institute, New York.

“Luxury brands should utilize partnerships not just to showcase their strengths, but also to create unique and innovative experience for consumers,” she said.

Luxury Institute surveyed consumers with a household income of at least $150,000 about the appeal and impact of brand partnerships.

Pairing up
The survey found that in addition to partnerships being the biggest risk for a brand, affluent consumers also thought that partnerships could be beneficial if done correctly.

Affluent consumers ranked joint advertising, products, events and sponsorships as the most effective types of brand collaborations.

Aston Martin partnered with Jaeger-LeCoultre to create a watch collection.

Also, consumers reported that partnerships with hotels, travel brands, fashion labels and airlines are the most fruitful.

Women are more likely to be interested in fashion, jewelry and beauty partnerships, while men seem to enjoy automotive partnerships more.

Shoppers who are older than 50 are interested in airline and cruise partnerships.

Affluent shoppers also said that they would like to see luxury collaborations between a number of brands including: Michael Kors and Apple, Chanel and Air France, and Lexus and The Ritz-Carlton.

Furthermore, affluent shoppers are not turned off by luxury brands partnering with mainstream brands. Those surveyed said they would like to see Starwood Hotels and Resorts and Bed Bath & Beyond, Gucci and Coca-Cola, and others.

Many luxury brands have engaged in partnerships with other luxury brands with similar statuses as to not hurt their brands.

For instance, spirits brand Johnnie Walker eyed affluent men through a partnership with Alfred Dunhill to create a limited-edition gift set that likely extended the reach of both brands.

The Johnnie Walker Blue Label limited edition collection by Alfred Dunhill is a collection of British-inspired gifts in addition to a designer bottle. The partnership helped both brands solidify their position in the luxury industry and as well as their reputation as men’s lifestyle brands.

Additionally, high-end smartphone manufacturer Vertu continues its six-year partnership with Italian automaker Ferrari with the release of a limited-edition Android smartphone inspired by the automaker’s design features.

The limited-edition Vertu Ti Ferrari smartphone is the latest in Vertu’s smartphone collaboration with Ferrari. By designing the smartphone to resemble the vehicle, the phone will likely appeal to a wider group of consumers (see story).

Luxury brands can gain additional exposure and attract new customers through partnerships with other luxury marketers.

“There are still many benefits of partnerships, but luxury brands must really focus on relevant opportunities with companies that share the same values,” Ms. Raja said.

http://www.luxurydaily.com/biggest-risk-of-partnerships-is-brand-dilution-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

April 12, 2013

Bentley’s showrooms, Flying Spur propelled Q1 units sold 25pc

By Erin Shea
Luxury Daily
April 12, 2013

British automaker Bentley Motors reported a 25 percent increase in units sold during the first quarter of 2013 due to the release of the Flying Spur and eight new dealerships.

The automaker announced that global deliveries to customers in the first quarter of 2013 increased by 25 percent to a total of 2,212 vehicles, compared to 2012’s first quarter sale of 1,759 vehicles. Bentley’s unique position in the luxury auto market could also explain why its sales increased.

“As high-end as they are, these Bentley vehicles are understated and they are for everyday use,” said Milton Pedraza, CEO of the Luxury Institute, New York. “I do think that putting out new vehicles has been fabulous [for Bentley], but it is because the cars are everyday cars.”

“They are not showy,” he said. “They are high-performance cars that can be used everyday.”

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

Bentley did not respond by press deadline.

Securing a position
In addition to selling more vehicles, Bentley introduced a new vehicle to its lineup and opened new dealerships in the first quarter.

The automaker did a three-city tour for the launch of the Flying Spur in the United States.

Bentley partnered with American Express Publishing’s Departures magazine to host a series of three “One Night Only” events in the U.S., the first of which took place March 26 in New York. Other cities include Miami and Los Angeles.

Furthermore, the automaker’s sales were likely increased by the price range of vehicles that put it in an ideal spot in the luxury auto market.

“Bentley brought down the price [of a vehicle] from ridiculous to high value,” Mr. Pedraza said. “That combination of eye candy, high performance and everyday use makes them successful.”

“They are smart cars,” he said. “They are sensible, but also extremely addictive and that is a wonderful combination.”

Staying strong
Many luxury automakers experienced an increase in profits last year.

Automakers such as BMW, Mercedes-Benz, Audi, Lexus, Porsche, Bentley Motors and Rolls-Royce Motor Cars reported above-average sales for 2012.

This was partly due to marketing campaigns as well as an attractive buying economy for affluent consumers, experts said.

Also, these sales records likely resulted from strong branding efforts and signal an increase in competition for attention.

In addition to its growth in sales, Bentley noted that the U.S. remains its largest market.

During the first quarter, 632 Bentley vehicles were delivered to customers in North and South America, more than any other region.

Since the bounce back of the U.S. economy, affluent consumers are now ready to confidently spend again. This attitude helps high-end automakers such as Bentley.

“The U.S. economy is so resilient that it continues to be the best market for luxury goods and services,” Mr. Pedraza said.

“We have such a large critical mass of wealthy people,” he said. “We have more multi-billionaires than anywhere in the world and they are confident.”

http://www.luxurydaily.com/bentley%E2%80%99s-new-vehicle-showrooms-boost-sales-25pc-in-q1/

Auto consumer mindset changing dramatically

Ford exec says buyers want cheaper, well-equipped mobile technology platforms that sip fuel

By Keith Morgan
Vancouver Sun
April 11, 2013

Ford and Lincoln global marketing executive vice-president Jim Farley  recently delivered the keynote address to the 2013 New York International Auto  Show. Today, we publish extracts from his speech which offered a view on the  role the recession has played in shaping a new consumer outlook.

While the recent recession has fundamentally reshaped the automotive industry  over the past few years, the real game changer may come from a new  post-recession consumer mindset, demographic shifts and how automakers respond,  says Farley.

Click the link to read the entire article which includes findings from a recent Luxury Institute survey: http://www.vancouversun.com/cars/Auto+consumer+mindset+changing+dramatically/8230977/story.html

January 10, 2013

Audi, Lexus And BMW Triumph As Leading High-End Auto Brands By Wealthy U.S. Drivers

(NEW YORK) – U.S. luxury automobile consumers rank Audi highest in the 2013 Luxury Consumer Experience (LCEI) survey conducted by the independent and objective New York-based Luxury Institute.  LCEI scores (1-10) are averages of wealthy respondents’ ratings across ten areas of consideration, including evaluations of the vehicles they own or lease, their dealership experience, and their overall brand buying and ownership experience.

In addition to earning the highest LCEI score (8.36) of the ten brands surveyed, Audi ranks first for the consistently superior design and quality materials of its cars.  In addition, Audi’s dealership staff is recognized for being the most trustworthy and knowledgeable.  Audi also leads other carmakers in terms of future repeat purchase intent, with 96% of respondents saying they would consider buying or leasing an Audi again based on their experience with the brand.

Lexus ranks closely behind Audi with an overall score of 8.34, based largely on the dealership experience and its positive representation of the brand.  The Japanese automaker earns top honors for superior sales and service experiences, respectful dealership personnel, and long term relationship building.  BMW (8.27) and Mercedes-Benz (8.06) rank third and fourth, respectively.

“Wealthy consumers’ perceptions of brand experience encompass everything from the physical quality of the car to interactions with the sales and service departments at dealerships,” says Luxury Institute CEO Milton Pedraza. “Especially at the high-end, luxury automakers must be aware of how people and products combine to affect a brand’s reputation.”

Survey participants reported $2.4 million average net worth and $283,000 average income.

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.

January 7, 2013

Audi Rated Top Luxury Automotive Brand in 2013 Luxury Customer Experience Index

Brad Stertz
Audi of America Communications
January 4, 2013

HERNDON, Va. – Audi today announced that it received the top overall ranking in the 2013 Luxury Customer Experience Index (LCEI), conducted by the independent and objective Luxury Institute. The LCEI is based on data collected from affluent customers who were asked to evaluate 10 different aspects of ownership and customer experience of the luxury automotive brands they have recently used on a 0-10 scale. Among the 10 brands evaluated, Audi received the highest overall score of 8.36, recognized by customers for its consistently superior design and quality materials, and trustworthiness and knowledge of dealership staff.

“We are very pleased to have been ranked first overall in The Luxury Customer Experience Index, and we are delighted to hear that nearly all Audi customers surveyed said they would recommend Audi to others and would purchase or lease an Audi again,” said Jeri Ward, Audi of America Director of Customer Experience. “Audi and our dealer partners are continuously striving to delight our current and future Audi owners through customer experiences that exceed their expectations, and the results of the Index prove we are making significant gains.”

In 2011, Audi created the Customer Experience Team, a new division within the U.S. organization, led by Jeri Ward, which focuses on strategy and programs for improving customer experience and loyalty across the company.

The LCEI is based on a nationwide in-depth survey of 1,234 luxury automobile owners, conducted in November 2012. Respondents – ages 21 and older and with a minimum gross annual income of $150,000 – evaluated levels of respect, knowledge and trust of dealership staff, dealership sales experience and service experience after purchase, among other factors.

ABOUT AUDI
Audi of America, Inc. and its U.S. dealers offer a full line of German-engineered luxury vehicles. AUDI AG is among the most successful luxury automotive brands globally. Audi was a top-performing luxury brand in Europe during 2011, and broke all-time company sales records in the U.S. Through 2016, AUDI AG will invest about $17 billion on new products and technologies. Visit www.audiusa.com or www.audiusanews.com for more information regarding Audi vehicle and business issues.

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

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