Most marketing executives have been trained in "Mass Marketing"; "Class Marketing" has only recently been added to higher educational curriculum.  Lorre White is one of the first to specialize in this area of niche marketing.  www.WhiteLightConsulting.net

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No doubt like its readers, Condé Nast is reeling.  Media columnists have been going to town detailing the daily layoffs at various titles with hints of more to come.  Below is an excerpt from an Advertising Age article I found of interest:

"Why didn't Condé try harder to save Gourmet, perhaps by changing its business model? Maybe it could have hiked the subscription price -- each issue only brought Condé revenue of $1.18, the circulation expert Jack Hanrahan pointed out -- and reduced circulation to become more like Cook's Illustrated, which doesn't accept advertising. That would have gotten around the conflict with Condé sibling Bon Appétit, something the company cited in closing Gourmet.

Other publishers have reaped millions of dollars through licensing their brands, but Mr. Newhouse wants his employees focused on keeping the magazines great. Higher subscription rates might improve circulation profitability, alternately, but Condé prefers to attract advertisers with big subscriber bases paying not very much.

"It'd be one thing if they killed 10 magazines and said, 'We have this amazing vision for the future and we're putting this money behind this," the former publisher added. "But you get the sense that this money goes toward shoring up some of the others."

The company's circulation strategy is common around the industry. But the challenges have spurred some titles to try raising subscription prices in a bid for better circulation returns and a more-defined audience. Condé doesn't seem to be considering that route.

"I'm kind of surprised that they're not talking at all about increasing subscription prices," said an executive at a major marketer that frequently works with Condé. "They're a company talking about luxury, but they're out there giving their subscriptions away, and their revenue model doesn't work any more. You can't ask advertisers to cover the costs. That's why they missed out on the increased spending this year from packaged foods who aren't willing to pay the premium to be in that environment."

Doug Gollan
Elite Traveler

White Light Consulting is an international marketing consulting company for companies needing to reach the Ultra High Net Worth or what is called the "Class Affluent". www.WhiteLightConsulting.net

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According to today's Wall Street Journal, "The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery."

The continued difficult outlook means luxury brands are going to have continued difficulty generating sales from the Mass Affluent and a new report from Unity Marketing endorses that thesis.

Titled "A Study of the 'New Normal' Luxury Consumer Market After the Recession," the report is based upon 2,049 Mass Affluent luxury consumers (average income $196,974).  Think consumers similar to readers of Robb Report and Departures, or even a level above W, Town & Country, Condé Nast Traveler and the like.

According to the report, among the key findings that signal a profound and lasting change in the attitudes of affluent consumers regarding their luxury lifestyles:

"For most affluents, luxury is best enjoyed as an occasional pleasure, rather than part of one's everyday life experience, as 80 percent of those surveyed agreed, 'I've been lucky to enjoy certain luxuries in my life, but luxury is not a part of my lifestyle.'"

Significantly a cultural shift is taking place among the Mass Affluent away from
luxury indulgence toward a more conscious, careful consumer mindset.  The end result will be people unlikely to pay such high prices again for luxury, as half of those surveyed agreed, "Even after the economy improves, people aren't going to go back to buying luxury like they used to."

Doug Gollan
Elite Traveler

Private Jet Travel Shows Year-Over-Year Growth

Report from IHT Techno Luxury Berlin

In a period when luxury has supposedly gone brown bag for consumers who are still partaking (Net-A-Porter CEO Natalie Massenet says the company now sends out unbranded packages), and conspicuous consumption is so yesterday, an all-star cast from the luxury goods industry came to the German capital and spent most of the time talking about how they can use technology to literally open their trench coat to the masses. In fact, Burberry, represented by Creative Director Christopher Bailey, told delegates how a website dedicated to its famous raincoat (artofthetrench.com) had quickly gathered over 700,000 fans on Facebook.
 
Under the theme Techno Luxury, The International Herald Tribune Fashion Editor Suzy Menkes held her annual conclave of industry elite discussing both how technology is impacting the manufacturing and creative process as well as communication.
 
Most of what the several hundred delegates at The Ritz-Carlton heard is that when it comes to exposing themselves, luxury brands are years behind the auto and gaming industries in terms of web communications.  With the sober exception of Alain Dominique Perrin, Executive Director of Richemont (Cartier, Van Cleef, Vacheron Constantin, IWC, Dunhill, etc.) which can trace history for many of its brands hundreds of years back, it was clear that although late to the show, luxury brands intend to have a front row seat when it comes to using the Internet to communicate. 
 
In fact, in a slide that would have sent S.I. Newhouse to the phones to call back McKinsey (which just completed a massive business review of Conde Nast and the closing of four titles on a single day), Gucci Creative Director Frida Giannini began her presentation with a slide that showed her Age 12 to 24 women's/girls target spends 94 percent of their media time either on the web or television (split evenly) vs. only 6 percent flipping through fashion magazines or newspapers.  The research from web booster Forrester Research was a stern warning that media that can't prove its audience's worth through Net Worth, Household Income and Luxury Spending is probably headed for a listing on Magazine Death Pool, a web site that tracks publications with deadly diseases (See Item 3 for New Household Income Reports for fashion titles).
 
Giannini noted the personal perils of web marketing in that at any one time there were four fake "Frida Giannini" profiles on Facebook, many with updates that resembled some of her normal routines such as "taking my dogs to the beach."
 
That said, the Gucci Creative Director reeled off a laundry list of web initiatives designed to create a stronger bond with fans, including a behind the scenes video of Rihanna and Frida going through The Tattoo Heart Collection and recommendations for where to go for various cities, be it shopping or a restaurant tied to Google maps.  Among her Twitter entries was "See video from Frida's trip to New York." 
 
Giannini, like many others, sees the web as a great opportunity to "make people understand what's behind the brand" noting 80 percent of its handbags are still made by hand. Interestingly, for her own personal consumption a still-under-40 Giannini told the audience she prefers glossy magazines.
 
While Natalie Massenet, Founder and Chairman of Net-A-Porter.com bravely predicted a future world where most shopping will take place "at her desk, mobile phone, hotel room or bedroom," Menkes spoke of "the fun of shopping," saying a recent trip on a cold British Fall day to the luxury Westfield Mall revealed "a whole mini-world of people having fun and enjoying life." 
 
So where does the future of luxury cross with technology?  Energetic Burberry designer Christopher Bailey noted that for himself and CEO Angela Ahrendts, "technology is something we do (as opposed to) remember to do."  He noted if "fashion is something that should make you dream," the ability to add video to give more life and tell a deeper behind an ad campaign shoot can be used "to build more of a story behind the clothes."
 
Getting feedback from consumers:  When the company used Harry Potter star Emma Watson as its current model, he was able to see via Burberry's Facebook page that her appeal was much broader and global than he had expected. "It makes you think in different ways as you are directing an ad campaign," he told the audience.
 
Business of luxury author Uche Okonkwo, Founder of Luxe Corp., chastised luxury brands for "following not leading" consumers on the web.  She said, "Last year it was Myspace, next year something else" and that "everybody jumps on a trend...without core objectives."
 
She noted how brands that have spent fortunes on image and strict rules of engagement in the real world have "me too text communication" on Twitter.
 
Countering the web euphoria, Dominique Perrin of Richemont called for a more measured view giving an example of how his company in the early 1990s pulled its impressive brands out of the massive Basel Watch & Jewelry Fair and created its own "invitation only exclusive" show Salon Haute Horlogerie (SIHH) so its brands weren't "mixed with the cats and dogs."  The outgoing CEO was recently quoted as saying he would like Richemont to tighten its distribution to create more exclusive.
 
Echoing Okokwo's call to focus on the customer, Perrin said "a true luxury timepiece makes its owner part of the maison.  Technology is merely another element that includes history, style and craftsmanship.  For 300 years technology has confronted the watch industry," he noted. 
 
Can something be exclusive and open to the world on the web?  Independent watchmaker Max Busser, Founder and CEO of MB&F, told the audience that for small players the web is a game changer.  "We wouldn't be here otherwise," he claimed, saying the Internet has given him and companies like his the ability to communicate directly to the customer, and enable customers to come to his site and endorse the brand, a notable feat when your product routinely sells in the six figure range.
 
On the practical side, Tomas Meier, Creative Director of Bottega Veneta spoke about how laser cutting of leather made it possible for artisans to then hand weave the strips together, still making each item unique to a particular craftsman.
 
Getting Targeted:  Perry Oosting, the CEO of Vertu talked about providing customized content for its elite owners. 
 
What's next?  Okonkwo clearly laid out the challenge that the leaders of what's next in fashion need to be more innovative in how they communicate with customers.  Or as Dominique Perrin note, the web is only one tool, so the challenge is for luxury companies to do a better job targeting their best and Next Gen customers with a sound strategy.


Doug Gollan
Elite Traveler

The iBEANi cap, with built in MP3 and iPod speakers, works with most MP3 players and all iPods all the time. Black knit with braided ties (which can be removed), you can dress it up, or dress it down, but either way you’ll keep the powder out of your ears on trail and off trail.

Merging technology and fashion, the Aeiral7 Sound Disk Beanie has built-in, ultra slim sound disks over your ears for delivering, crisp, clear sound that will take you from the streets to the mountain.

The warm, knit beanie promises “big sound in a small package” when paired with your iPhone or other supporting mobile device. It also comes with a standard 3.5mm jack and adapters.  It comes in 6 colors.

Coming up quickly on December 29, the Kurland International Polo Test Match, between South Africa and England, kicks off the start of the season. Think champagne, sun hats and intense action on horseback in the height of the South African summer

Handmade

Made by craftsmen rather
than machines and typically of superior quality.  Many luxury brands retain a tradition of making their products by hand instead of succumbing to the labor-reducing benefits of automation. Although they may take longer to produce, handmade goods come with a promise of quality and the tangible output of skills that have been passed down and refined over generations. Such goods may display minor idiosyncrasies or even blemishes but this is merely an unavoidable, and often reassuring, side effect of the production process.

Heritage

Customs and culture passed down from previous generations.  For luxury brands, heritage is about the knowledge, customs and culture that were acquired during their past. Heritage therefore encapsulates the life story of the brand, a tradition that imbues it with a sense of community internally, while adding to its perceived status and appeal externally.

LEXICON

The vocabulary of a person, language, or branch of knowledge.

ORIGIN early 17th century: modern Latin, from Greek lexikon (biblion) ‘(book) of words,’ from lexis ‘word.’  “The search for the mot juste is not a pedantic fad but a vital necessity. Words are our precision tools. Imprecision engenders ambiguity and hours are wasted in removing verbal misunderstandings before the argument of substance can begin.”

Anonymous Civil Servant

Luxury Branding www.luxury-branding.com

If you are in town for Art Basel Week, feel free to drop by Thurs & Fri. anytime between 7-11pm to hear Frozen Music Ensemble turn SoBe Institute of the Arts into a kaleidoscope of sound. They are located right next door to ArtBasel (Convention Center), along the canal between the botanical gardens and the beach installation.

http://archive.constantcontact.com/fs075/1101455496480/archive/1102859681746.html