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The dichotomy of performance
The luxury industry and its iconic brands continue to present a curious puzzle for us. How can some of the most esteemed, expensive, and quality brands fail to form emotional connections with their customers? We will explore this dichotomy in detail and try to uncover the reasons behind this phenomenon and identify new opportunities for these brands.
We begin by defining some parameters and dispelling some theories.
Notwithstanding, the most intimate brands are also some of the best performing. In general, luxury brands are experiencing moderate growth (3 – 4 percent per year) as well as greater heterogeneity of performance among brands in all product categories, from personal luxury goods to high-end wine and experiential luxury goods.1 So how do we reconcile the fact that next to airline and travel brands, the worst-performing brands are those in the luxury category? This article will break it down.
Luxury ranks fourteenth out of fifteen industries, with an average Brand Intimacy Quotient of 18.7, well below the cross-industry average of 31.0. Indulgence, which is related to moments of pampering and gratification, is the most prominent archetype in the luxury category with Tiffany’s being the top performer. Rolex ranks #1 in the industry and is the top brand among men, users over thirty-five, and those with annual incomes of $100,000 or more. Chanel is the top luxury brand among women, and millennials favor Gucci. Tiffany’s is the number one brand for users with incomes under $100,000. Chanel and Tiffany’s have improved their positions in the luxury industry since last year, while Land Rover and Hermès have fallen in the rankings.
Most well-performing industries and brands have higher archetype scores and generally score strongly in more than one archetype category. Often, scoring well in multiple archetypes results in a power signature and a unique character for the brand. Other than indulgence, the luxury category fails to create any other characteristics related to the bonds it forms with consumers.
Examination of the stages performance of luxury brands reveals that it fares the worst out of all fifteen industries surveyed in the first two stages of brand intimacy (sharing and bonding). It ranks next to the worst in the fusing stage, the highest level of brand intimacy. This is important because it demonstrates that users do not feel any significant connection or commitment to these brands. Reciprocity and trust are also lacking.
To dimension this poor performance, consider that, on average, only 8 percent of luxury brand users are in one of the three stages of brand intimacy: sharing, bonding, and fusing. Compare this with the 33 percent rate of brand intimacy in the media and entertainment industry, the top-ranking brand category. We wanted to understand better why consumers do not these iconic brands don’t emotionally connect with these iconic luxury brands users. Here are possible a range of theories on as to why.
One perspective is that luxury brands are truly unique—they defy traditional marketing parameters. In fact, they work hard to contradict conventional approaches.
Perhaps this is best summarized in the “The Twenty-Four Anti-Laws of Marketing” for luxury brands.2 Listed below are sixteen of the twenty-four laws that seem most applicable to our point.
1. Forget about positioning; luxury is not comparative.
3. Do not pander to your customers’ wishes.
4. Keep non-enthusiasts out.
5. Do not respond to rising demand.
7. Make it difficult for clients to buy.
8. Protect clients from non-clients, the big from the small.
9. The role of advertising is not to sell.
11. The presumed price should always seem higher than the actual price.
12. Luxury sets the price; price does not set luxury.
13. Raise your prices as time goes on in order to increase demand.
14. Keep raising the average price of the product range.
15. Do not sell.
17. Cultivate closeness to the arts for initiate.
21. Do not look for consensus.
23. Do not look for cost reduction.
24. Do not sell openly on the Internet.
It is hard to take these laws too seriously; however, you can certainly see some truth in the spirit behind many of them. Luxury brands often use more clandestine or whisper marketing tactics. This can come off as aloof or apathetic. These brands are intentionally creating a rarefied presence, and this further isolates them.
Other reasons why luxury brands perform poorly regarding building emotional bonds may be related to the economy. Today’s culture has a more frugal orientation, and affordable brands appeal to these consumers. Netflix, while an indulgence, is considered affordable by most consumers today. Relatedly, there may be some guilt and discomfort in admitting that you have an emotional connection with a luxury brand. Further, it may seem counter to the brand’s cool, off-putting demeanor, as detailed in the Anti-Laws of Marketing.
While most leading brands work to create frictionless, personalized, and digitally enabled experiences, luxury brands tend to avoid or opt out of these experiences to protect and maintain their current status. On a positive note, while the overall pool of “intimate” luxury customers appears to be shrinking, those users who remain appear to use their products more frequently, see them as important parts of their life, and are willing to pay more for them. In addition, some luxury brands of late have created dynamic partnerships, established new product categories, or attracted new customers using hip-hop and/or skateboard culture in an attempt to gain relevance with younger audiences.
Luxury brands may be fast approaching a precipice. Millennials are valuing experiences over things; Gen Z audiences are further challenging norms with their digital native, ecofriendly, and ethically aware lifestyles.3 To compete in a shrinking market, luxury brand companies need to think about the emotional connections their products have with their customers just as much as the products and places they will align with their brand or offerings.
Beyond indulgence, luxury brands can foster strong associations with archetypes, particularly that of identity (reflecting an aspirational image or admired values and beliefs that resonate deeply). This would help them build stronger ties to the ethos of their brand without sacrificing the brand’s equity. For older, legacy brands that have endured for decades or longer, the nostalgia archetype is another powerful potential.
Factoring the customer more into the brand’s tactics and campaigns would also build stronger degrees of intensity and deepen emotional bonds. Demonstrating greater reciprocity or personalization may enhance the sharing stage of brand intimacy with users. For customers that are more committed to their brand, finding new ways to leverage or reward their desired behavior could create more emotional connections and decrease the aloofness factor.
The rules of how luxury brands are built may have run their course. Whether they subscribe to the anti-marketing principles or some subset of them, demographic and technological market changes are going to require new approaches. With demand in emerging markets softening, luxury brands will need to fight harder to maintain growth. The best place to start is a renewed focus on how consumers feel. Luxury brands have endured for as long as brands have existed, and there is no doubt there will always be a role for the bespoke or luxurious. However, to thrive and resonate in the future, luxury brand marketing teams need to move beyond the rarified or the sensual connections and begin to mine deeper for new emotional connections to their consumers.
Read our detailed methodology here, and review the sources cited in this article here.
Check out our annual study and rankings of intimate brands. Visit our most recent rankings of intimate famous figures—BFF. Our Amazon best-selling book is available at all your favorite booksellers. Additionally, MBLM offers Custom Dashboards providing extensive data for brands included in its annual Brand Intimacy Study. To learn more about our Agency, Lab, and Platform, visit mblm.com.
Register for our webinar to learn patterns, insights, and findings from the Luxury industry here.
Read one of the largest reports on brands based on emotion and see how strong bonds are created.
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Read the results of our BFF study to find out which celebrities have built the strongest emotional bonds with Americans.