We can be somewhat thankful that October turned out to be a mild one, with double-figure day...
It’s an interesting time for the luxury market. The age profile of buyers is shifting while the traditional channels used to reach relevant audiences, print and television, are in decline. Add to this how you sensitively market during a cost-of-living crisis, and you sense shifting sands all around you.
Getting to know the new luxury audience
Every brand should do their own research into their own individual audience. But, as a place to start, it’s important to tune in to the latest sector research to see which way audiences are heading.
As per a recent study, produced by Boston Consulting Group (BCG) and Altagamma, millennials represent about 32% of spending in the personal luxury market – but by 2025 they’re expected to make up 50% of the total market. This is the reason American Express are so keen on marketing ‘experiences’ – they identified that this age group care more about fun times, be it travel or a concert, than owning a luxury item. Amex’s CEO, Stephen Squeri, on how they are acquiring younger customers:
“The reality is, is that we've expanded our value propositions. Our value proposition speak to millennials because millennials are looking for experiences, they're looking for access, they're looking to live their lives. And the pandemic, you know, while slowed them down maybe last year, they were the first ones that came out.”
But while millennials may soon be the most important customer base for luxury brands, companies need to be mindful of not overlooking their core and next-generation consumers.
Baby Boomers (1946-1964) are not to be underestimated in the luxury goods market, holding the majority of wealth in the UK, yet only taking up 5% of marketing spend.
Meanwhile, Gen Z (1997-2012) are starting to embrace luxury, with these High-Earners-Not-Rich-Yet (HENRYs) making the most of ‘shop now, pay later’ platforms like Klarna.
Klarna reports that Gen Z and millennials are already more likely to purchase a luxury item than their elders (Baby Boomers and Gen X).
Utilising customer journey
The customer journey for luxury products is typically longer than it is for other goods. This affords advertisers with ample space and time to properly tell their brand heritage stories; connecting with audiences on a deeper emotional level, dialling up the aspirational elements of their products.
To be successful in carrying consumers all the way through to conversion, luxury brands need to constantly provide inspiration and value via the channels their audience trust.
Maximising the digital opportunity
Luxury brands have traditionally been reluctant to fully utilise digital channels, believing their place is advertising their high-end, aspirational products in high-quality print titles – and there’s obviously still some success to be found in offline channels.
But, as per a report by McKinsey, digital now influences at least 45% of all luxury product sales. So there’s a strong argument for much of the offline marketing budget to be switched online, all while experimenting with ways to give customers special treatment.
Special doesn’t necessarily mean over the top. Engaging assets like interactive images and online consultations give a sense of luxury compared to other forms of marketing, and can be easily incorporated into long-form content that tells a story. Plus, these kinds of assets are perfect for allowing consumers to dream and visualise themselves with your product.
Being seen in the right places
While many in the luxury space have moved on from print, environment is argually more important than ever in the online world where brand safety is still a hot topic. Branded content hosted on preminum publishers and within quality editorial allows brands to achive reach and impact without the risk.
