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The luxury industry is hard to get established in. It also requires precision perfect marketing and top class products. However luxury brands have high levels of customer loyalty, higher than average markups, and tend to be resistant to dips in the economy.
In the 2013 recession, luxury sales were relatively undiminished. With the global economy entering potentially rocky times, and a post-Brexit focus on exports, brands that exploit the luxury market may be better placed to profit in the coming years. People tighten their belts when money is scarce, but everybody needs a treat now and again. What’s more, with overseas shoppers hitting the UK high streets, many companies will be looking to exploit the increased tourist spending that a cheap pound can bring.
Whilst Brexit may be bad news for some British luxury brands, such as Burberry (who make their products in Europe), those who are truly home grown will not have to worry about rising import or production costs.
Luxury brands can exploit emerging wealthy markets
If your business model is based on exporting, you may want to target the world’s big spenders. The drop in sterling will mean that, even with a hefty markup, UK prices will be attractive to overseas shoppers. 78% of products produced by the British luxury sector, which contributes 32m to the UK economy, are exported, with many companies trading on the prestige of stereotypical ‘Britishness’.
Luxury can be local
You don’t have to export to far flung corners of the world to do a luxury rebrand. In fact, you don’t even need to make products. Beauty salons, bars and B&Bs can easily give themselves a high-end rebrand with some clever marketing.
Different markets perceive luxury in different ways
What ‘luxury’ means will depend on your target audience. Younger people tend to be more interested in ethics and craftmanship, whilst older markets prefers classic style and elegance.
Luxury brands do marketing differently
According to Vince Bastein, co-author of ‘The Luxury Strategy’, a luxury marketing strategy:
‘aims at creating the highest brand value and pricing power by leveraging all intangible elements of singularity- i.e. time, heritage, country of origin, craftsmanship, man-made, small series, prestigious clients’
Bastein states that luxury brands do not ‘sell’, they do not compete and they do not pander to the customer. All of this is pretty much the opposite of what most businesses do.
Managing to do this whilst still – well – marketing, isn’t easy. It will take a deep understanding of how to appeal to customers emotions, and how to create a sense of prestige.
1. Share luxury images on social media
Social media can be the perfect place to develop your luxury branding strategy. Share stylish, elegant images to let your followers know that you’re a high end brand, catering to a discerning clientèle.
2. Add an air of exclusivity
A good way to do this without affecting core sales is to add ultra-special limited editions, extra services for important customers, or one off events, to your product mix. Hairdressers could launch VIP ‘cut and cocktail’ evenings, whilst jewellers could make small runs of pieces made with more expensive materials.
3. Adjust your pricing
A luxury product should have an associated price point, otherwise it’s not luxury! Whilst you don’t want to rip customers off, or leave them disappointed, luxury goods (such as designer perfume) tend to have relatively high markups. In fact, in the 1950s, champagne house Krug re-established itself by increasing it’s prices from $19 to $100 a bottle.
4. Attention to detail
The luxury experience begins the moment a customer lands on your website or walks through your door. Every touchpoint that a customer has with your brand should help to establish your luxury image. This means that great attention to detail is needed for every step of the process, and customer service must be flawless.
5. Use stories
Luxury brands are often dependent on heritage and mythology. Whilst that might seem like a bit of a stretch, it’s not impossible for a small business. Start with telling your customers how you got into business, talk about your suppliers, your processes. Show customers the effort and skill that goes on behind the scenes. This article is a great resource on storytelling in marketing.
Have you repositioned your business as a luxury company? Let us know on Twitter @switchmybiz.
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