In 2013, the American Marketing Association changed the definition of marketing. It went from the old 4Ps definition which most of us practicing marketers were drilled in: Product, Price, Promotion, Placement, to a new one based upon the idea of value:
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Judging from the sorry state of business today – the closing of 100 Macy’s stores as the most recent example – most marketers never got the “memo,” or if they did, they gave lip service to it, but kept on doing marketing the way they always have done it.
Today’s marketers must answer to a higher calling, one that truly reflects the changing mindset, expectations and needs of customers. This is even more important for marketers aiming at the luxury market, as its target affluent customers are on the cutting-edge in the search for value and meaning in the consumer goods and services they purchase.
A case in point: luxury brands continue to believe that the way to market is by creating “aspiration” for the brand – the hope or ambition that acquiring the brand will enable the consumer to achieve some special status or position.
But I’ve got news for those brands: Aspirational marketing may work for some people, but not those who can actually afford what the luxe brands are selling. The affluent consumers already have plenty of status and position. They don’t need any brand to give it to them.
Luxury marketing needs to evolve from its focus on”aspiration” to one of “inspiration.” It’s about inspiring the affluent to see how the brand is meaningful and delivers a measurable value that enhances their lifestyle.
This presentation customized for each audience will tell them how to evolve from the 4Ps to the 4E’s marketing model. It will present the conceptual framework for that evolution, as well as be filled with case studies that illustrate each concept.
Marketing Luxury in a Brand New Style
Education and training aside, one reason we cling to the old 4Ps of marketing is its simplicity. Following that model for simplicity, Ogilvy & Mather’s Brian Fetherstonhaugh has proposed a new formula, the 4Es: Experience, Everyplace, Exchange, and Evangelism. The secret is to use these 4E ideas to communicate and deliver meaningful value to the customer.
Luxury brands, and the customers they serve, are at the pinnacle of the consumer hierarchy. Marketing strategies and tactics based on the 4Ps make a clear statement that the brand is outmoded, old-fashioned, and worse, for the masses. To sell to the contemporary affluents, luxury marketers need to use the 4Es.
- Experiences replaces Product
This need to turn the products you sell into experiences for the customer is a top priority for luxury goods marketers. We’ve all hear about the experiential economy, but what does that really mean?
For example, Boston Consulting Group and Altagamma reported that in 2018 the luxury market reached €920 billion (~$1 trillion), of which €330 billion (~$370 billion) was in personal luxury goods and €590 billion (~$660 billion) was for experiential luxury, such as dining, hotels, cruise/resorts, wine and spirits, design furniture, lighting, cars, boats and smartphones/tablets.
By 2025, the global luxury market is predicted to top €1.3 trillion (~$1.5 trillion), with experiential luxury growing about 5%, far faster than personal luxury at 3%, with accessories and the highly-experiential cosmetics category expected to gain the most from 2018-2025.
In that context, it is easy to market a luxury brand when it’s an experience, like dining, travel or spas. But what about all the luxury goods brands. How do they turn their products into an experience for the customer? Yes, customer service is important, but it takes more than that. It takes turning the acutal product into an experience.
Brands that understand this new experiential dimension in the marketing formula include Stitch Fix and Trunk Club, both of which put a personal stylist to work to select complete outfits according to the woman’s or man’s style profile and deliver care packages to try on in the privacy and comfort of one’s home.
Or Laudi Vidni which involves the customer in the creation of their personal handbag, specifying the style, leather, lining and do-dads to create their own personal design.
Or Project Gravitas which started with a simple idea, giving women the perfect LBD (little black dress) designed to enhance her own body shape, with the added confidence of a shapewear lining so that she always looks her best.
All these brands turn the chore of shopping and buying into a personal experience for the customer. And they can do it thanks to the Internet, because they have also mastered the next E: Everyplace.
- Place becomes Everyplace
The concept of Everyplace includes the idea of allowing customers to engage with brands on their own terms, through their own paths to purchase, whether it be online, in store, at home or by phone. Many luxury brands have given into this idea of Everyplace by selling their goods online, but they’ve done it kicking and screaming, rather than embracing the opportunity to make their Everyplace meaningful and memorable.
And it doesn’t have to be only via the Internet, with its many different platforms (mobile, tablet, computer) to support. It can be taking the customer experience directly to the customer, face-to-face, person-to-person.
For example, custom-menswear brand J. Hilburn employs over 3,000 stylists across the country to meet with the customer to do personal fittings and give fashion advice to select the right style and fabrication to suit the man and his lifestyle.
Or Lincoln Motor Cars, which offers its clients pickup-and-delivery service whenever their cars need repairs. And this is offered across all its brands and through every Lincoln dealer. It is all part of “The Lincoln Way” of delivering services and experiences to its customers; in other words, Lincoln has evolved into the 4Es way of marketing.
- Price is Exchange
Retail thought-leader Robin Lewis has bemoaned the race to the bottom caused by retailers’ reliance on price as driver for engagement. Without doubt, price still matters, even among the affluent with discretion to spend. But for the highest potential customers, the absolute price takes a back seat to value, as they are perfectly willing, and able, to pay when real value is there.
Exchange involves more than money in the till; it is the entire value experience a customer derives through the process of engaging with the brand. Part of the exchange can be respect for the customer’s time, which is at a real premium among the affluent. It can be special insider knowledge or know-how that helps customers navigate their lives. MAC cosmetics expertly delivers expertise through makeup lessons and professional application.
Or a pay-it-forward gift of something meaningful that is passed along, as Toms gives a pair of shoes to children in need for every pair of shoes bought, Warby Parker’s ‘buy-a-pair/give-a-pair’ eyeglass offer or FEED bags which gives meals to the hungry in exchange for each bag sold.
Or it can be as simple as a meaningful thank you that makes the customer feel appreciated. Beekman 1802, the company founded by the Beekman Boys Brent Ridge and Josh Kilmer-Purcell, greets its Facebook followers every morning with a beautiful picture, often with several of the Beekman farm. It’s a personal way of saying thank you to their “neighbors,” what the company calls its customers. Engagement becomes a no-brainer.
- Promotion is Evangelism
By making the brand experience meaningful and the exchange valuable, brands can tap the potential of its customers to evangelize the brand. While luxury brands are wedded to the idea of traditional paid advertising and celebrity endorsements, creating individual brand evangelists that will spread the word about the brand is the highest mark of engagement and the ultimate in the new expression of marketing promotion. It’s activated through content marketing, social media, traditional public relations, influencer blog posts, and through good, old-fashioned word-of-mouth marketing.
That WOM is profoundly effective goes without question. In survey after survey of B2C and B2B companies, word-of-mouth is ranked among the most important marketing strategies. The Word of Mouth Marketing Association puts numbers on its impact: WOM drives 13 percent of sales, two-thirds of which is offline talking and sharing and only one-third social media driven. But for success, it takes a planning and organizational commitment, not leaving it up to chance.
Apple is one of the most effective brands in turning its customers into Evangelists. Outdoor brand Patagoniacemented its engagement with its brand loyalists in its “Don’t Buy This Jacket” advertisement that encouraged its customers to think responsibly before buying new products. It underscored the brand’s core value of quality and lifelong performance. It was such a remarkable program, it succeeded in positive buzz with a lot of people talking.
Beekman 1802’s daily exchange of life on the farm invites their neighbors into Josh and Brent’s lives. And these good neighbors pass those inspiring photos along, not in any strong-armed way to market Beekman 1802, but simply because the pictures are so remarkably beautiful. Brent and Josh reject the ‘lifestyle brand’ label, in favor of being a “living brand.” And so the story of the Beekman 1802 brand is alive and well.
Answer Luxury Marketing’s Higher Calling
The time is now to answer to marketing’s higher calling by evolving from the 4Ps to the 4Es approach. It takes more than just a shift in tactics; it requires a complete reset of how you look at your customers and the ways you engage them. Essential to the process is to talk with customers in a personal way and engage them in a discussion about how they view the brand and ways they want to participate with them. This is the raw ‘material’ from which real insights can lead to marketing innovation.
Help for Luxury Marketers
Today’s affluent consumer is looking for a more understated expression of style, not the arm candy that ultra-expensive bags represent. They crave luxury in a brand new style. Rather than conspicuous consumption and status symbols that proclaim one’s wealth, the affluent are embracing brands that give them bragging rights to how smart a shopper he or she is.
There is a new kind of conspicuous consumption today required in a political environment that is demonizing the cultural elites, income inequality and the excesses of the 1%. Rather than conspicuous consumption and status symbols that proclaim one’s wealth, the affluent are embracing brands that give them bragging rights to how smart a shopper he or she is.
For example, this past season’s ‘It’ coat embraced by the wealthy wasn’t one from a tony Madison Avenue furrier, but the Uniqlo Ultra-Lite Down Jacket which sold for less than $70. This jacket is cool and chic in an anti-status, smart-shopper way.
This presentation by Pamela Danziger, Unity Marketing, delves into the psychology and spending preferences of today’s luxury shopper, who is very different in mindset than yesterday’s.