December 12, 2012
The majority of affluent consumers are looking to purchase long-lasting, high-quality items from luxury brands over items that could enhance their status, according to a new survey by the Luxury Institute in partnership with Ford's newly rebranded Lincoln Motor Company.
The survey also found that craftsmanship and materials used are the most-influential factors for luxury purchases. In addition, luxury marketers can differentiate their products through services provided after a transaction since affluent consumers agree that this can be as important as the product itself.
“The fundamentals of luxury are alive and well,” said Milton Pedraza, CEO of the Luxury Institute, New York.
“That human element is becoming even more prominent and more important,” he said. “And it is far more important in luxury.
“Marketers should learn to differentiate their products by differentiating how their people out-behave the competition's and how they create relationships with customers.”
The Luxury Institute’s new survey was conducted with 1,216 affluent U.S. consumers in cooperation with Lincoln. The half-male, half-female sample included consumers over the age of 21 with a minimum gross annual income of $150,000 and who owned or leased at least one luxury vehicle.
Quality seal
The survey found that craftsmanship, materials and customer experience drive luxury spending and justify premium pricing.
Eighty-six percent of respondents said that superior craftsmanship is a deciding factor in purchasing luxury items. Also, 84 percent said that superior materials influence their purchasing behavior.
In fact, some luxury marketers are pushing these product qualities lately.
For instance, department store chain Saks Fifth Avenue partnered with American Express Publishing’s Departures magazine to raise awareness for its hand-tailored fall menswear collections and bring to light the craftsmanship behind each piece through an advertorial and event in Bal Harbour, FL (see story).
The Artisans advertorial
Also, London-based retailer Harrods hosted two events during which guests interacted with an artisan from Ralph Lauren’s Italy-based factory and learned about the craftsmanship behind the label’s Ricky Bag (see story).
Overall, more than 90 percent of respondents said that purchasing a long-lasting, high-quality product is more important than buying a luxury product to enhance their status.
The majority of those surveyed said that they enjoy their luxury purchases discreetly rather than show off their items, but approximately half of the respondents said that they rely on user reviews and recommendations from family and close friends to influence their spend on luxury.
At your service
Furthermore, a third factor in luxury spending is service.
Seventy-six percent of respondents agreed that "superior customer experience both during and after the sale” influences their spend on luxury.
In addition, the survey results showed a growing global interest in U.S. luxury brand icons. These include lifestyle label Michael Kors and jeweler Tiffany & Co.
“Luxury tends to be a foreign affair, but at the same time, we see a lot of brands in the luxury sector emerging in the United States,” Mr. Pedraza said. “Brands such as Tiffany and Michael Kors are coming up in the world dramatically.”
As a result, U.S. brands are becoming more influential on a global scale. They should take this opportunity to maintain their customer base and target prospective customers through service.
Humanistic components are becoming even more important for these luxury brands, per Mr. Pedraza.
“With a lot of brands, there is no follow-up after the transaction,” Mr. Pedraza said. “It becomes a transactional business.
“Now, there is a demand from the customer for a relationship with the brand where they have those tangible elements such as expertise and trust,” he said.
Final Take
Tricia Carr, editorial assistant on Luxury Daily, New York
Share your thoughts. Click here
