When the economy went south in late 2007, it initially impacted the lower-income demographics. As the downturn widened, it dragged down the middle class and crept toward the upper levels just a few months later. Those of us who make a living in the luxury sector fooled ourselves into believing that the brands we touch would not be affected because the folks with large amounts of disposable income would still want to spend it, even in a shrinking economy.
As we all now know, consumer spending crashed at all levels. Retailers and marketers spun their wheels for two years waiting and hoping and praying that consumer confidence would rebound and consumer desire would drive spending.
More wishful thinking.
And so the discounting began. Luxury brands that panicked started dropping prices and adding offers, and discounts, and deals. And it continues today.
There is a right way and a wrong way to go that route. Luxury marketers that are being driven by their CFOs to increase sales volume need to practice restraint. Discounts and offers must be cleverly wrapped and positioned so that the affluent consumer target can appreciate the opportunity to purchase a high-end product or service at a “special” price, while still being assured that their demanding standards are being met.
But, if they believe that the offer is driven by desperation, they will shun it. They are not interested in spending their money on a purchase that is lesser in quality than it once was or should be. They would like to get a deal, but will not risk being disappointed.
Even more importantly, the affluent consumer wants an experience that he believes is limited to only affluent consumers. That means he does not want to be lying on a lounge chair at a five-star resort next to the Griswolds from National Lampoon’s Vacation.
If the luxury marketer presents their product as being accessible to consumers at all demographic levels, they will drive the affluent consumer away — for good. Because once the luxury brand’s shiny image is tarnished, it is only a short time away from rusting into oblivion.
Marketers of luxury brands, beware. Your brands — and your jobs – are on the line. If you believe in them, defend them.