Many keep a grim outlook towards 2016. Behind this pessimism is the prediction of economic slowdown due to a number of external factors, for instance China’s slowing economic performance whilst Indonesia stays dependent on it, continuous downward trend in world commodity prices, including several other factors. Grasping this, brand managers must also prepare a suitable marketing strategy for next year’s economic slowdown.
BVLGARI Indonesia Country Operations Manager Karen Steffi Halim stated that in a difficult economic condition, luxury brand managers must redefine their strategy. “A luxury goods producer’s main weapon is neither setting up new stores every year nor attempting e-commerce exploration, but redefining the business in which they operate. Luxury brand managers should know precisely how to apply the new art of persuasion,” warned Karen at the CMO Chat forum, themed “Luxury Brands in the Midst of Economic Downturn: Re-Discovering the Fine Art Seduction”, hosted by BINUS BUSINESS SCHOOL (BBS), Tuesday (15/12) at Joseph Wibowo Center (JWC), Senayan Campus.
For background information, Karen remarked that the growth in luxury goods market has significantly changed in terms of supply and demand in recent decades. Luxury goods products was made to meet the needs of a small group of people who had the privilege, but now luxury goods are available for more consumers.
The prime market for luxury goods has also significantly shifted to Asia due to its luxury market’s exponential growth over the last decade. “Despite financial crisis, sales growth between 2007 and 2008 summed up to 5%, wherein US market grew 1%, Europe 7%, whereas Asia grew 17%,” explained Karen, therefore defining luxury as the ability to live beyond death and create a lasting legacy.
Indonesia itself, according to Karen, sees significant increase in the number of middle and upper class consumers during the last five years amid rising price of primary goods due to rising regional minimum wage rates, industrial electricity tariff, LPG and fuel prices. The upper class, being a dominant consumer of luxury goods, could retain their high income, resulting in increased purchasing power in recent years despite economic slowdown. Consumers’ “literacy” towards international luxury brands keeps improving as they wear the products to differentiate themselves from others. “This trend helped boost luxury goods’ value in Indonesia,” said Karen, who earned her MBA in BINUS BUSINESS SCHOOL’s (BBS) Management programme.
Consequently, how do we apply the new art of persuading upper class consumers? Karen suggested that, firstly, the brand managers must be part of the middle and upper class lifestyle (be part of the it lifestyle). “The brand should be a way of life and surround target consumers with 360 degrees luxury experience,” said Karen.
Secondly, be a friend or family for the consumer, not the brand. Redefine your relationship with clients and consumers by way of making them part of the brand management world. “With wealthy heritage and historical value, most of luxury brands have the value added that brings consumers in and make them feel like part of the brand itself. It can also be a means of free advertising that creates a loyal customers,” said Karen.
Thirdly, create, instead of manage, expectations. Exposure through advertisement full of attractive and evocative product imagery pleases upper class consumers. It entices them too into buying activity. Pleasant experiences for this type of consumer should be made exceeding their expectations. “Whether or not they make transactions with the store, each client must leave the store impressed and happy. They may not buy today, but they will come back in the future and buy our products if we can make them happy and impressed on each and every occasion when meeting them,” said Karen.
Fourthly, be always on top of customers’ perceptions. However, to communicate and represent luxury goods well, over-exposure must be avoided. “Too much exposure, including one in social media, is contrary to the principle of personal touch. Therefore, it’s important to develop personalized CRM activities,” suggested Karen.
Fifthly, be a storyteller. Luxury goods are manifestation of craft and result of high artistry, having high quality, combined with culture that emphasizes excellence in workmanship. Luxury goods manufacturers must ensure that product quality is associated with luxury brand. Hundreds of years old history empower luxury brands with the ability to arouse a desire for quality luxury products, both in loyal customers as well as new buyers. “Within a luxury brand, lies a myriad of symbols, associations, traditions, and historical legacy, favourable for establishing the meaning of luxury around a culture’s wealth. It is prime to tell and spread this wealth to potential consumers,” concluded Karen.
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