Is your luxury product tomorrow’s commodity?

By Beau Fraser

While there have always been fads in luxury — remember the giant bird feathers on Victorian ladies’ hats? — most luxury goods have had a permanence to them that made their status and value predictable. That is changing — fast.

What starts now as a rare luxury for the wealthy slips quickly into an affluent commodity.

Food for thought
Think about luxury cars. A generation ago, few families owned one. In September, 10 percent of vehicle sales in the United States were luxury cars and SUVs.

Thirty years ago, the Ford Country Squire wagon was the upscale family car of choice. Today, in affluent neighborhoods, housewives in Porsche Cayennes duel with BMW X5s and Cadillac Escalades for parking spaces at the grocery store.

Impressive houses, with sprawling entry halls, giant kitchens and master suites — once rare outside places like Buckhead and Greenwich — sprout like mushrooms after rain in exurban towns around the nation.

Do not even ask how fast granite went from Architectural Digest to Home Depot. Forbes magazine estimates that we have spent as much on kitchen granite over the past 15 years as we spent on the entire first Gulf War.

The commoditization of luxury is not just confined to real estate and durable goods. Think about food.

You can get brie, smoked salmon and truffle oil at most supermarkets.

Dining out, which the 1950s family did only a few times a year, is now a weekly occurrence.

Some affluent couples eat out – or get restaurant takeout – every other day. You wonder why they bother with the granite.

And when did “designer” become a euphemism for “brand name”?

Can there be any pretense to exclusivity when designer stores and outlets are everywhere, and when designers sell their names to Kmart and J.C. Penney?

Even travel has lost its luster.

As late as the 1970s, only the wealthy went anywhere by plane for fun. Enter cheap airfares and frequent flyer miles, and everyone got the travel bug.

In 2010, just coming out of the Great Recession, Americans logged a walloping 1.5 billion leisure person trips by plane.

Rich ideas
While there has been an increase in affluent household wealth over the past 30 years – the top 5 percent had incomes of $95,000 in 1970 versus $155,000 in 2000 – median per capita income for the country as a whole has remained unchanged.

It is our expectations as a society that have led us to act as if we should all have and do — regardless of income — what was once reserved for the rich.

Some call it affluenza, others the democratization of luxury. Regardless, the exclusive is now open, the rare commonplace.

Must luxury marketing follow suit, promoting a more democratic image? Or is the answer to fight hard to reverse the trend, portraying products and services in an ever-more- rarefied fashion?

We say neither.

As a moving target, luxury requires nimble response, not more formulaic tactics.

If you are a luxury marketer, consider these alternatives:

1. As luxury products and services become commoditized, the rational can play a larger role — buyers want and need to make smart choices.

Try relying little less on the emotional appeal — it may open the door, but a logical argument may be needed to close the sale.

Or consider a position that is fact-rich — “better engineered,” “durable” and “safer” are easier to support with facts than more abstract, highly emotional positionings.

2. If you are a small player, move away from the mainstream.

Identify a narrow target and precisely position yourself to meet that group’s needs.

You may look and feel quite different from other mainstream luxuries, but that is good — you will look and feel like your target customers.

3. In a world of look-alike choices, nothing says luxury better than custom made or custom fit.

If there is a custom element to your service, or the way you finish your products, a bespoke story is a great way to distinguish yourself.

4. A languid lunch on the Piazza Navona? Manhattan at night from a Park Avenue penthouse? OK, we have all seen those scenes a few billion times.

One way to stand out from the crowd is to use a unique setting or circumstance.

If your products are aimed at the truly affluent, you are talking to a sophisticated audience.

Because they have read, traveled and experienced a lot, this audience has an acute appreciation for the uncommon, the interesting and the authentic.

5. The only situation where the phrase “precious commodity” is not an oxymoron is when it is used to describe time.

None of us have enough of it. The things that really matter — time with kids, milestone events, a moment of real peace with someone you love—are truly rare.

Consider putting your products in the context of cherished times, facilitating them, appreciating them, celebrating them.

6. If all else fails, do not forget the back story.

Commodities are mass produced by faceless automatons in large companies. Luxuries are lovingly crafted by master artisans, one at a time.

Chances are, there is a story to your product — a great story: who makes it, the process they go through, where it is made — and that story has value. It gives your product distinction.

LUXURIES MAY BE moving towards commoditization, but the luxury buyer is moving in the opposite direction — to greater diversity.

Next time we will talk about different affluent buyer types: what makes each of them unique, how to reach them and how to motivate them.

Beau Fraser is New York-based president of ad agency The Gate Worldwide. Reach him at beau.fraser@thegateworldwide.com.