Luxury Institute News

August 30, 2009

Jaguar hopes to roar again

Posted in Automobiles

by Andrew Tangel/For The Star-Ledger
Friday August 28, 2009, 5:41 PM

Next year, a sleek new Jaguar, starting at $72,500, is set to roll out into showrooms on the heels of one of the worst economic downturns since the Great Depression.

Even though the economy has shed millions of jobs and financial markets have lost much of their value, Mahwah-based Jaguar Land Rover North America is betting well-heeled car buyers will embrace the 2010 Jaguar XJ.

Luxury car sales have slumped in recent months. Jaguar, for example, sold 1,394 cars in July 2008, but only 783 cars were sold last month (although the company attributes the decline in part to strategy).

“Even the best, the most luxurious brands have been hit hard,” said James Hutton, a professor of marketing and communications at Fairleigh Dickinson University in Teaneck and Madison.

Consumers have been spending considerably less on luxury items overall this year, according to a report by the New York consulting firm Bain & Co., which has predicted luxury goods sales would fall by 10 percent. Among luxury items, Bain has forecast apparel would slide the most, followed by jewelry, watches, leather goods, shoes and accessories.

Still, there is hope for a rebound. Bain also predicts the market for luxury goods will again reach 2007 levels by 2012.

After sales of BMWs fell 28 percent in May from a year earlier, the pace of the decline slowed the next month, with a 20 percent drop in June, compared with the same month the previous year.

Luxury automobile sellers “are seeing a bottom. They think the worst has past,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based consumer-research firm.

Marketing luxury cars successfully in an economic downturn is possible with the right pitch to the right people, Hutton said.

“Success breeds success,” he said. “Right now, especially, people want to know that this person is still successful, still stable through a down economic period. The (companies) that seem to be succeeding are the ones that are very creative about not destroying the brand but still offering better value in a recession.”

Jaguar attributes its sales decline to the nationwide drop-off in consumer spending, but also to a strategic shift toward reducing sales volume and increasing profits from more “exclusive” inventory aimed at high net-worth buyers looking for more value in luxury items.

“We have exclusive volume, at the end of the day. We don’t have thousands of cars sitting out in a port somewhere,” said Paul Faletti, vice president of marketing for Jaguar North America.

The company predicts the new XJ’s features — such as a nearly all-glass roof, high-definition touchscreen display and a lighter body of recycled aluminum — will add value in the eyes of customers, even while the 2010 XJ’s starting MSRP is about $5,000 higher than the basic 2009 XJ’s price tag.

“They’re not going to give up luxury in most cases,” Faletti said.

Jaguar, owned by the India-based conglomerate Tata Motors, has been altering its cars’ designs, and has reportedly been attracting a younger demographic. For at least one model, the average new Jaguar buyer is 50 years old, whereas the average Jaguar owner is 60, Faletti said.

Dennis Squitieri, managing director of the Bergen Jaguar in Paramus, said his dealership on Route 17 has seen a noticeable increase in interest and sales in recent months, especially compared with late 2008.

Last September, after the financial and labor markets tumbled into a tailspin following the collapse of the investment bank Lehman Brothers Holdings, Jaguar sales dropped, Squitieri said.

“In September, they probably wouldn’t have wanted to flaunt” high net worth with a luxury-car purchase, Squitieri said.

Recently, however, Squitieri senses different sentiment from prospective car buyers.

“The economy is going to get better,” he said. “People are going to feel like they have permission to go ahead and buy luxury items.”
Andrew Tangel is a reporter for The Record. Bloomberg News contributed to this report.

http://www.nj.com/business/index.ssf/2009/08/jaguar_hopes_to_roar_again.html

August 20, 2009

Thick Fashion Magazines Are So Last Year

Posted in Fashion,Marketing

Once-Hefty September Editions Lose Ads as Apparel Marketers Cut Back and Experiment More Online

By Emily Steel
August 17, 2009 WSJ.com

“They’ve been stuck in the Victorian Age, and the Industrial Age, for some time. Times were good for the last two years, and the marketers were fighting the need to go online,” says Milton Pedraza, chief executive of the Luxury Institute, a New York consumer-research firm. “Now, it’s an absolute necessity.”

Below are some excerps from a WSJ.com article from which the above quote resides:

Fashion magazines’ September issues are usually nice and fat, bursting with new looks for cold weather. This year, some are almost as skinny as the models inside.

Behind the relatively svelte issues are newly frugal fashion advertisers, slashing their budgets in the recession and experimenting with putting more ad dollars to use on the Web.

High-end fashion brands such as Louis Vuitton, Gucci, Emporio Armani, Dolce & Gabbana and Prada are still buying ads in the glossy pages of Condé Nast’s Vogue and W, Hachette Filipacchi’s Elle, Time Warner’s InStyle and Hearst’s Harper’s Bazaar. But most of the September issues, which started showing up on newsstands last week, are almost a third slimmer than last year’s batch.

Data from WPP’s ad tracking firm TNS Media Intelligence show a significant uptick in the ad spending that fashion marketers are devoting to the Web. Louis Vuitton North America more than doubled its digital ad spending in 2008 to $286,000, from $107,000 in 2007, TNS reports. Diane von Furstenberg boosted its Web spending from nothing to $43,000 last year.

To read the full article, click below (subscription needed)

http://online.wsj.com/article/SB125046605103135399.html?mg=com-wsj

August 10, 2009

Luxury Interactive NY09 – A few presentation highlights

Posted in Luxury Market

Our CEO, Milton Pedraza spoke at the recent Luxury Interactive Conference in NY by WBR. Below is a great article by Harry Chipkin who gives a synopsis of several speaker presentations.

Ring Out the Old, Ring In the New: Regroup, Reinvent, or…POOF!
By Harvey Chipkin

Luxury Interactive’s June 2009 Conference in NYC heard speakers from across the luxury brand spectrum talk about how it’s no longer business as usual – but time to regroup and  reinvent in order to rebound. One example: Ritz-Carlton lets employees take care of guest problems – even if it costs $2,000. Another: Montage CEO All A- Twitter.

This year, in the midst of a luxury letdown, speakers shared ideas on coping and curing.  Following are highlights.

Luxury Institute’s Milton Pedraza Offers New Rules for Old Luxury Marketing
He began with how luxury operators have been doing business – and then how they should be doing it. 
 –Customers must be welcomed and nourished – not met with arrogance and snobbishness.
 –  A price premium has to be earned, not imposed
 –Traditional luxury marketing (and that should now include internet) should be aimed at generating word of mouth and referrals (for more, visit www.LuxuryInstitute.com

Ritz-Carlton Reinvents Service Delivery-John Timmerman
John Timmerman, corporate vice president-operations for Ritz-Carlton, gave a brief overview of how his company reinvented its “service delivery” in recent years after its guest satisfaction levels had “plateaued.” He recalled the challenge as: “How do you blow the dust off the lion?” (the lion being part of Ritz-Carlton’s logo.)

Among his points:
–A “dichotomy” of customers has evolved – with the traditional formality-loving customers – and jean/tee shirt wearers; the trick was to please both. One solution, as suggested by a staffer: “Treat each customer as they see themselves.”

–Part of the service delivery change was to empower employees to incur up to $2,000 in expenses to deal with a customer problem.

Montage CEO Fuerstman Speaks Up for Twitter and Tweet
Alan Fuerstman, who founded and is CEO of the highly successful Montage resort in Laguna Beach and the new Montage in Beverly Hills started using the Twitter social network a month ago and is a convert. He posts daily and has found “opportunities for one to one communication very powerful.”  He said he will even plug competitive hotels to keep things non-commercial. As he points out, “One of my tweets might be picked up by someone who has 3000 Twitter followers so it can get really viral.”

Luxury Marketing Council’s Greg Furman Raises Eyebrows with: “Focus on your best customers and that means the ones with the most to spend. The aspirational customer is gone – maybe forever.”

http://www.luxurytravel360.com/ResourceCenter/IssuesInsights/RingOuttheOldRingIntheNewRegroupReinventor…POOF.html