Lifestyle marketing may be key to luxury retail
With so much turmoil in the luxury marketplace, luxury retailers' CMOs need to adopt updated strategies to maintain and build market share, according to Richard Baker of Premium Knowledge Group, which has recently developed a platform to develop information-based brand marketing programmes.
Marketers of goods and services for high-net-worth households (i.e. the top 2% of income or 1% of assets) have historically operated on the instinct of their founders or designers. But as the economy presents new challenges, as competition increases, and as more competitors become publicly owned, reliable information and systematic decision making processes have become a necessity.
One approach, according to Baker, is 'Lifestyle Marketing', which is a strategy appealing to the pattern of underlying values (personal drivers) and tangible benefits (brand attributes) that make up each particular Lifestyle segment.
Lifestyle Marketing involves several steps, many of which may need to be revisited repeatedly during a campaign. They include:
- Define the lifestyle of the target consumer According to Baker, lifestyle can be a better tool (statistically speaking) for the segmentation of affluent consumers than anything else (except perhaps gender). The company's own research suggests that lifestyle is more likely to be able predict what affluent people will do (and why) than age, income, education, zip code, and other common demographics.
Targeting a defined lifestyle rather than a specific demographic should therefore be able to provide a more detailed definition of the best prospects, how many there are, why they buy, and other specific details about how to reach them.
- Project the desired results Lifestyle segments are statistically projectable upon the affluent consumer population, especially for the hard-to-measure top 5%. If a brand has a goal of achieving a certain share of market at a certain price point, it can break that overall goal into smaller shares of specific lifestyle segments.
This allows the development of more accurate marketing budgets, projection of marketing ROI, and other metrics. It also forms the basis for making clearer decisions about advertising, communications, distribution, channel support, and the other tactics in the marketing mix.
- Positioning Consumers in specific lifestyle segments have clear priorities regarding which values and personal drivers they are most interested in satisfying (often referred to by luxury marketers as consumer "passions"). As a result, a luxury brand can simply compare alternative positioning within each lifestyle segment to determine which of the highest priority drivers it can be most competitive and successful in satisfying. For example, Lexus focuses on satisfying the personal drivers associated with "practical" and "avoiding social discomfort", whereas BMW competes on drivers such as "makes me feel good" and "performs as intended".
The company has published its findings on Lifestyle Marketing techniques on its web site - click here.