Luxury Shoppers: Power, Performance, and Popularity - HBR

by Diana Derval

Luxury shoppers are more diverse than assumed: some wear a luxury brand to show off, others only fancy highly coveted items. And 64 brands, including Dyson, Lancôme, and Apple, that generated 13 million euros in pre-sales way before the official start of Singles’ Day in China – that reached record sales of 35 billion euros in 24h – understood it very well.

Facing the following challenges, luxury brands and selective retail managers sometimes struggle:

- Why do some luxury shoppers find some products appealing while others consider them useless?

- How come only a portion of luxury shoppers is influenced by celebrities?

- What about trends and mimetism in the world of luxury? 

The importance of purchasing motivation

If status-seeking is linked to the number of DRD2/DRD3 dopamine receptors present in the body, luxury clients display differentiated behavior and preferences based on their deep motivation: performance, power, or popularity.

Luxury shoppers motivated by performance pay more attention to products’ features than to brand themselves. Their favor will go to engineering jewels, such as Jaeger-Lecoultre watches, or the latest bladeless Dyson fan. These clients couldn’t care less about celebrities’ endorsements – for each item the proof is in the pudding and their review can make or break a brand.

Luxury shoppers motivated by power are driving the luxury industry and like to be associated with big wheels. Fond of rare and expensive products, no heel is high enough and no material is precious enough, hence a predilection for Louboutin or Hermès.

Luxury shoppers motivated by popularity do not need to dominate but they like to belong to a group. These clients, who constitute a non-negligible part of the gifting customers in the luxury industry, will follow the pack – whether the trend is around Gucci accessories or Michael Kors handbags.

With Louboutin, Michael Kors, and Jaeger-Lecoultre cases, we will see how these purchasing drivers are the key to identifying luxury shoppers’ profiles and clients du luxe and exceed their expectations.

Power can be measured in inches

Let’s consider high heels. Today a symbol of “executive women”, high heels have originally been created for men. 300 years ago, Persian knights designed this shoe shape for a better horse-riding stability. As all things coming from Persia were trending at that time, Louis XIV and his royal court were eager to wear the “It” shoes. This quickly turned into a heel-measuring contest, so that Louis XIV had to put it to an end by declaring he would be the only one allowed to wear red heels. The Louboutins were almost born. Synonymous with power, high heels were adopted by women starting 1630. 

To confer a certain power, brand codes have to be visible. We can think of Louboutin’s red soles, of Montblanc pens’ white logo, or of its replacement the apple logo on golden iPhones. On top of being distinct, they have to be unique and possibly easy to protect. Louboutin got into trouble with the law in a case against Saint-Laurent. The subject of dispute? The Pantone No. 18-1663 TP red color also known as “Chinese red” annexed by the shoe brand. A European court ruled a color should not belong to a brand before rolling back. Who cares, the brand achieves an impressive 800,000 pairs of shoes manufactured per year – the detailed results are not disclosed as Christian Louboutin is an independent and privately held company– an exception in the luxury sphere.

Office popularity

So far, luxury taste has widely benefited European brands. But this was to reckon without Michael Kors. The American designer, star of Project Runway, and happy new owner of Versace and Jimmy Choo, created the most popular luxury handbag in the history of handbags. Let’s keep in mind for the historical anecdote that handbags’ main competitors are pockets. With a slightly jet-set positioning and muses like Bella Hadid, the brand with golden colors is acclaimed for its quality bags and high-tech yet classical watches (secretly manufactured by the Fossil brand). The latest collection is devoted to the glamourous and sparkly sliding sports.

Michael Kors is the typical office worker’s handbag, and, similarly to compatriot Kate Spade, the fashion house convinced the middle class from Paris to Shanghai with reliable – the workshop supplying Michael Kors is also working for Prada – colorful, and, even better, affordable items.

Performance and other complications

Objectively, since time is displayed on smartphones, there is no need for a wristwatch. Except of course, if there are complications. In addition to being the perfect business present, a watch is for some synonymous with performance. Recommended by airline and racing pilots, watch brands vie to win the ultimate benchmark: space conquest. Between Omega that immortalized the moonwalk with its limited Moonwalker edition and Tag Heuer associating with Tesla and Space X to conquer Mars, watches and their complications fascinate.

Complications are the added-value of luxury watches. They range from a chronometer to grand complications like a tachymeter, a tourbillon that improves the sense of gravity, to lunar cycle management – in order to always spot the auspicious time for a haircut. With over 400 patents behind their belt, Jaeger- Lecoultre, who designed both the smallest and the thinnest mechanical watch, has been admired since 1833 for being a true watchmaker – providing the technology behind brands like Vacheron, IWC, Patek Philippe, or Audemars Piguet. One of the reasons why Richemont added the Swiss maison, synonymous with performance, to its luxury brands portfolio. 

Here some strategies to exceed expectations for each type of luxury shopper:

- Luxury shoppers motivated by performance respond to product features more than to brands. It is important to be able to demonstrate technological superiority, for instance by manufacturing for other main players like in the Jaeger-Lecoultre case, or by managing prowess in extreme conditions, in space conquest, Formula 1, or e-sports mode. Sportswear brand Under Armor just scored points by co-creating Virgin Galactic spacecrew outfits.

- Luxury shoppers motivated by power love strong brands, with unique and visible codes. Challenge is to keep the brand exclusive even when it becomes successful, and it comes often down to a selective distribution, with boutiques, VIP corners, or dedicated pop-up stores like in the Louboutin case. Some brands like designer for Bollywood stars Roberto Cavalli go even the extra mile by making its latest collections available to prestigious hotel Raffles Dubaï guests directly in their suite.

- Luxury shoppers motivated by popularity love to belong, to be part of a group, of a trend. It is critical for brands who target them to always propose affordable accessories and to collaborate with hot influenceurs following the footsteps of Michael Kors. Biggest competition comes from celebrities launching their own brand, like Hadid Eyewear by the Hadid sisters or Kylie Cosmetics by Kylie Jenner from the Kardashians, as they already have the popularity.

Decoding luxury clients is a matter of identifying their motivation. Through their codes and strategies, luxury brands will attract more certain types of clients. A same skiing jacket can be promoted with a pitch about its performance by extreme cold temperatures, about the noble materials that enter in its composition, or about the latest Netflix series where the jacket is featured, depending on the type of luxury shopper targeted. 

Source:

Derval D. Designing Luxury Brands: The Science of Pleasing Customers’ Senses. Springer, 2018. 

This article has originally been published on Harvard Business Review France website.