July 18, 2008
WHAT ARE THE NEW LUXURY DIMENSIONS
Marco Bevolo is Director at Philips Design. He joined Philips Design in 1999, assuming responsibility for the cultural trend research program. He was instrumental in the creation of CultureScan, an ongoing trend forecasting research project investigating cultures and aesthetics at regional and global level.
Mr. Bevolo’s work has been published in ‘The Art of Advertising’ and ‘Nuova Enciclopedia della Comunicazione’, the Design Management Review of Boston. His opinions on cultural futures, trends and branding have also appeared in Axis, Repubblica, ViewPoint, Der Spiegel, AdMap, Contagious and WGSN. He has lectured at the Domus Academy of Milan, Temasek Polytechnic of Singapore, the Pasadena Art Center College of Design, and was module coordinator of the Master of Arts in Design Management at INHOLLAND in Rotterdam.
As part of representing Philips Design he is regularly invited as speaker and chairman by various event and conference organizations worldwide.
In 2006 he was nominated for ‘Best Conference Paper’ of ESOMAR, New York.
He is Advisory board member of: Authentic Luxury Foundation (London); Eventica Global Luxury Forum (2008); Caramundo (Amsterdam / Rio de Janeiro); Platform 21, the international center for design, fashion and creation (Amsterdam, The Netherlands); Design Management Institute (USA); Association of Professional Futurists – APF (USA); ESOMAR (The Netherlands).
Dear Marco, thank you very much for sharing your point of view!
1. The consumers (their habits, buying behavior, aspirations, preferences and attitude) have changed nowadays. Upon you how the luxury consumers’ profile is evolving? What are the major trends for the future?
For the purpose of our editorial research in the context of the Wharton School Publishing book “Premium by Design”, Howard Moskowitz, Alex Gofman and myself created a quali-quantitative framework to capture the future dynamics of this market, from thought leaders vision to actual common people’s statistic response. The outcome of this comprehensive study is multifaceted: after all, luxury is part of culture, and we are facing times of macro-cultural change both at regional and global level. These could be some among the key trends we identified:
- sustainability: as the work of Prof. Jem Bendell for WWF’s “Deeper Luxury” shows, there is a deep need for a sustainable “revolution” in the ways luxury brands operate. This is not purely a corporate strategy agenda item: this is a rising demand from worldwide audiences;
- design leadership: we expect a transfer of multidisciplinary processes and insights from mature design operations, those working at strategic level on brands and in companies, to the craftsmanship-driven galaxy of luxury design masters: the relatively recent appointment of innovation directors at classic luxury brands like Hermes or Moet Hennessy is a clear step in such direction;
- residual value: in the age of discount outlet retail, the ability of a luxury artifact to retain value over time, possibly becoming a vintage item or even a collector’s object, will make the difference between who’s in luxury, and who’s not. This is a dynamic that companies should definitely study and eventually stimulate in their own design and marketing strategies – difficult as alchemy, however feasible and definitely more and more crucial.
2. New segment of mass-class of wealthy consumers has formed. How the luxury concept has been redefined to meet the needs of this new target?
This is actually the core of our book, “Premium by Design”, and this is also where luxury brands find their own best opportunity and worst threat at the same time. For luxury brands, to cash in and downgrade by licensing and going mass is an immediate to quick sales in great volumes. This, in turn, translates into the risk of vulgarization, dilution and ultimately destruction of the actual brand equity – the one and only real asset of a luxury enterprise. For luxury brands, the fine management of the balance between volumes and charisma is ultimately up to the managerial talent at the top. Different is the case of a mass company that aims to reach the high end spot of the market, where margins are wider and image is higher. Our extensive survey of experts and opinion leaders in the luxury field resulted in a specific tool, the High End Proposition Charter, and then in the framework leading to Rule Developing Experimentation tools to segment and shape the market potential for the latter case.
3. Is still the price playing the major role in defining one good as luxury? What is the place of the premium brand image?
Price is a key factor to determine access, hence exclusivity. And exclusivity is indeed one of the 20 “defining factors” that will constitute the future evolution of high end, according to our qualitative future research. On the other hand, price itself is not “the” only parameter: we found out that five dimensions are what is necessary to capture the nature of tomorrow’s high end experience: authenticity and value, design and experience, innovation and leadership, marketing communication and distribution, and sustainability and simplicity. Not only these dimensions do need to co-exist, but it takes the sophistication of Rule Developing Experimentation and its statistic precision to define the different mix region per region, that will determine the ultimate “high end appeal”. From design viewpoint, the adoption of multidisciplinary, multicultural approaches -like what at Philips Design we call: High Design- seems to be the necessary next step, to ensure that the brand image is always attuned to future human desires and unspoken needs of people.
4. Usually the luxury brands provide the feeling of prestige, self-realization, self-esteem, status, success, prosperity. It this always the case or there are other reasons to buy premium goods/services? Why do you think people are searching for “high end” (or luxury) products?
People look indeed for what gives them a feeling of self-esteem, and luxury artifacts historically are designed to do so. Point is, the definition of luxury will change over time, and it is already changing – after all, what used to be luxury in the Middle Ages is plain everyday implicit commodity today, like hot water or meat on the table! So, the real question to ask is: what will make people feel worthy and important in the future? The answer to this crucial question lies in the way societies will evolve, and it will entail a great deal of change from today’s luxury -driven by objects- to tomorrow’s worlds of experience, design and sustainability.
5. A new phenomenon of “trading up and trading down” of premium brands has been observed. How could you explain it? What factors has provoked its appearance?
Indeed, there has been, in the last years, a migration- or better, we should say, an ambition- toward the high end. From companies’ side, this is where margins are healthy, and value generation is rewarded both at financial and at brand equity level. For people, it is simply all about either a drive towards a better quality of life, both at symbolic or at experiential levels. More than getting deep into socio-cultural explanations, I believe it is important to state that the mechanisms of trading up, a definition first coined by Michael J. Silverstein, are indeed complex, but not impossible to master. Howard Moskowitz and Alex Gofman managed to plug their statistics science into the future and design driven approach that Stefano Marzano and myself contributed to “Premium by Design”, resulting in a comprehensive High End Toolbox to help entrepreneurs and managers to unlock the power of high end opportunities.
6. How important is the emotional branding to the luxury goods/services? How the consumer’s loyalty to the “high-end” brands will evolve with the years?
Emotions are essential to tomorrow’s value generation and perception – this is where the difference between ordinary good and branded artifacts of seduction is drawn! Loyalty is and will increasingly be a mere reflection of such emotional bond. Ultimately, it is all about what makes people feel unique, or at least privileged and valued more than ever. It is a very sophisticated game – we do believe that the methodology behind our book unveiled its fundamental mechanisms, for all readers to benefit from the intrinsic opportunities of tomorrow’s high end.
Tags: brand, brand image, concept, design, high-end, loyalty, luxury, marketing, mix, perception, premium goods, prestige, self-esteem, simplicity, strategy, sustainability
Posted in Luxury marketing