Video: Let's Talk Luxury
Merriam Webster defines luxury as something adding to pleasure or comfort that’s not absolutely necessary. The Mindshare North America team recently did some research into the world of luxury brands and consumers, because we wanted to know what makes people choose a more expensive item -- like a hotel suite costing $50,000 per night -- and what the takeaways are for marketers. Our research included an online survey with 2,000 consumers across the country and in-person focus groups with luxury buyers, on top of other behavioral data and partnering with Yale psychologist Paul Bloom.
Lesson No. 1: Luxury consumers pay a premium for joyous sensory experiences. Luster, symmetry, taste and scent all make customers happy, and they are willing to pay more for that joy.
Lesson No. 2: People will pay more to reduce effort. While you have as many hours in a day as Beyoncé, you likely don’t have a staff to handle all of your essential tasks, like making it to the office reasonably on time or finally picking up your dry cleaning that has been there for God knows how long. Time is precious, and products or services that give a person time back is seen as worth it.
Lesson No. 3: We attach value to scarcity. If you walk past a plate full of cookies you may be able to pass, but if you walk past a plate with one or two cookies remaining, chances are you’re going to eat one. Scientists call this the scarcity effect. So don’t worry, it has nothing to do with your willpower.
Lesson No. 4: We pay for heritage: The history and reputation of an item or place. A watch owned by Paul Newman (the Paul Newman Daytona) sold at auction for a record-breaking $17.75 million. The previous owner of this watch, and the story behind it, make all the difference.
Lesson No. 5: People will pay more to fit in with their peers. Keeping up with the Joneses is very much a real thing that influences customers to purchase brands that are popular in their area, like a style of car or particular handbag. When there is less pressure to compete for resources, a new form of striving appears, called Competitive Altruism, where people try and outcompete one another when it comes to generosity.
For marketers of luxury products, it is important to shift your strategies to keep up with what customers value. Finding ways to create and communicate things like scarcity, quality and heritage will be crucial for the success of products in this sector -- because if your competition beats you to it, a rose by any other name will be as sweet.
For more information on our luxury marketing report, including an in-depth look at consumer profiles, and to get the latest in Adaptive Marketing, visit Mindshareintheloop.com.
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