The Find: Got a luxury product to sell in this tough economic climate? Forget targeting aspirational teens or expanding in the UAE and get busy pampering your most loyal customers.- The Source: A panel discussion at a recent Wharton School marketing conference featured in Knowledge@Wharton.
The Takeaway: The wheels of fashion turn in luxury marketing as much as in footwear, ushering in the new and making old ideas passé. So what’s out according to a recent conference? “Targeting aspirational 16-year-olds and expanding rapidly into the new money hubs of Russia or the United Arab Emirates.” Those teen shopaholics may still be covetous in the coming months. The problem is it’s less likely they’ll have much disposable income to spend, and cutting prices to lure them back carries risks according to Brad Farrell, skincare brand manager for L’Oréal Paris: “We don’t want to see huge price cuts… because you don’t want to tarnish your brand.”
Think newly minted millionaires in Russia will buoy sales? Think again, says Alexandra Gillespie, of FLR Group. She warns against “focusing too much on the luxury sector in emerging markets” as they are also likely to be affected by the downturn. Instead, the experts recommend a back to basics approach. Luxury brands’ core customer base, the truly wealthy, may cut back some, but even in the toughest times will not completely eliminate luxury purchases.
According to Randy Kabat, executive vice president of marketing and advertising for Prada USA, “roughly 50% of the firm’s sales come from just 5% of its customers.” How do you keep this segment loyal? One option is customization. “Fashion firms are likely to focus now on pampering their best and most loyal consumers, using computer technology to increasingly customize upscale products that will be designed or tailored especially to their needs. The success of individualized luxury goods… is a development that could keep a customer repeatedly coming back for more,” concludes Knowledge@Wharton.
The Question: Do any of these tips apply to mid-market brands as well - is Gucci entirely different from the Gap?
