Luxury Brands Must Adopt Information-Based Marketing

Marketers of goods and services for high-net-worth households (top 2% income, 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 leading competitors become publicly owned, reliable information and systematic decision-making processes are required.

One approach is lifestyle marketing, the strategy of appealing to the pattern of underlying values (personal drivers) and tangible benefits (attributes) that create harmony in a target lifestyle segment. The lifestyle marketing process involves a series of nine steps, which are summarized here.

Defining the Lifestyle of the Target Consumer
Lifestyle is a better tool statistically for segmenting affluent consumers than everything except gender. It is more likely than age, income, education, zip code, etc., to predict what affluent people will do and why. Targeting a lifestyle rather than a demographic provides a more detailed definition of the best prospect, how many, why they buy and specifics about how to reach them.

Project the desired results
Lifestyle segments are statistically projectable to the affluent U.S. population, especially 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 into shares of specific lifestyle segments. This step allows the development of budgets, projecting marketing ROI, etc., to form the basis for making decisions about advertising, communications, distribution, channel support, and the other tactics in the marketing mix.

Positioning
Lifestyle segments have clear priorities regarding which values (personal drivers) they are interested in satisfying. Some luxury brands refer to priorities as “passions.” A brand can compare alternative positioning within a lifestyle segment to determine which of the high priority drivers (passions) it can be most competitive and successful in satisfying. For example, Lexus focused on satisfying the personal drivers associated with “practical” and “avoiding social discomfort” whereas BMW competes on “makes me feel good” and “performs as intended.”

Product and service differentiators
After deciding on the personal drivers, the marketer must decide which tangible product and service attributes provide proof that the needs will be satisfied. Again, the importance of these attributes varies by lifestyle. This step would be very important in marketing any activity, such as travel, which has a culture aspect. For example, each lifestyle places a different priority regarding the relative importance of culturally related activities when traveling.

Developing an integrated multi-channel strategy
Today most consumers, even the most affluent, shop multiple channels. But luxury brands are often tentative about developing multi-channel strategies. There is a concern that marketing in the more direct channels (catalog, Internet, direct sales, etc.) will create confusion or lower the perceived prestige of the brand.

Word of mouth
Recommendations from peers and family are the greatest influence on all lifestyles. The principle communication question then is how to create positive word of mouth. The answer varies by lifestyle with some more influenced by publicity and editorial than by advertising.

Relationship building
Many premium brands are already shifting more money into “non-traditional modes that emphasize creating links with many aspects of an affluent consumer’s life. For example, with non-profit organizations the affluent cares about. Involvement with these organizations (we call is social networking) creates access and intimacy.

Personalization
Lifestyle marketing provides real personalization in direct marketing. Customers in a Zip+4 do not have the same motives for consumption (We say Zip is worth zilch: birds of a feather do not flock together). Marketers need a database which identifies the lifestyle of each individual household in the most affluent areas to target messages to the personal drivers and preferred attribute of each recipient.

Alignment
Finally after a lifestyle marketing strategy is developed, the marketer can check to ensure that there is alignment of all elements in the marketing process. Only a research-based framework can guide decisions at each step of the marketing process.

Richard Baker ([email protected])is founder and CEO of Premium Knowledge Group.