Paradox of Luxury Marketing
Centuries have witnessed a consistent definition of luxury – a product made from the finest material, limited availability with exorbitant pricing, conspicuous quality, and quintessence of resplendence! Traditionally, these luxuries have been carrying a brand identity that conveys elitism and exclusivity besides imparting a long-lasting brand heritage.
The products that resonate with the definition of luxury are still existing. However, the way the consumers of these luxuries perceive them has undergone significant changes. Similar changes have been witnessed in the field of marketing luxury products/ services, which has put the CMO’s in a dilemma of ‘luxury paradoxes.’
The digital marketing wave has hit the luxury brands industry. However, unlike other industries, the intensity of the wave differed considerably. This was due to various factors such as:
1. A fall from grace – Luxury products have added expectations of quality from the consumer’s side. These products must be the best in class and provide a splendid user experience to the consumers. Since a lot is at stake for these luxury brands, switching to a complete online medium for their sales was never an acceptable change. One faulty product delivery could cost them the reputation that they have gained over decades.
2. Limited customer base online – In order to sell the products, both supply and demand factors of the online medium must be considered. The streamlining to the supply is indeed in the hands of the brand, but the limitation of online demand is prevalent ever after years. Affluent consumers, who are the target customer segment for luxury brands, have not adapted to online platforms. Therefore, reaching out to them for sales or engagement is a challenge that is hard to overcome.
3. Customer Intelligence – Shifting to online medium opens up a plethora of opportunities via leveraging big data and analytics. However, the slow adoption of the digital world has left the limited scope of data analysis, which further limits the extraction of learnings that have the potential to benefit in the future.
4. Bridging the gap between online and store experience – It is believed that affluent consumers do not buy a product, but they pay the premium to buy an experience. Every purchase they make contributes to defining their personality to the outside world. Due to this, online platforms have never been the first choice for shopping as they are discouraged by the personal touch and ambiance that is missing for online platforms, unlike in-store platforms.
Despite the limitations, the black swan pandemic situation has open new doors to opportunities for a successful switch to the online medium. Brands have come up with new marketing strategies that support restoring the delicate balance of salience, exclusivity, heritage, and relevance of luxury. Perhaps, it is the decade of redefining future luxe.
Increase in Online sales
Global lockdown situations have paved the way for online platforms that have supported in continuing the sale of goods and/or services to consumers. Luxury brands have leveraged the opportunity as well by switching to online portals and redefine their sales strategy with the changing times instead of suffering in silos. A startling fact states that the shift from brick and mortar stores to ‘store-less’ shopping accelerated by 500% during the pandemic. Some brands have gone a notch above by using hyper-personalization to preserve the brand authenticity even in the online medium.
Global change in consumer trends
COVID-19 made the consumers realize the consequences of individual actions on society. Thus, a recent trend of shifting towards sustainable means of running businesses has caught the attention of the masses. Consumers have evidently adopted brands that care about the environment, employees, and consumers together.
Luxury brands that have begun to embrace the change to redefine luxury have resorted to more inclusive ways of running the business, have ascertained their chances of powering through these uncertain times, and emerge stronger than competitors for the future. Perhaps, these unprecedented times might prove to be the harbinger of the change that will be apparent soon! All these factors also give rise to a new trend of expanding the definition of luxury to suit the changing times while understanding and adapting to the consumer needs.