- Luxury markets are difficult to break into for newer brands but offer so much opportunity that those who can withstand the risk can turn extraordinary profits.
- Brands that are willing to make long-term investments in the quality of their products and the level of service they offer stand a much greater chance of surviving long term.
- To tap into such a competitive market, a brand must be successful at not only selling products but also marketing a particular lifestyle.
Even though the luxury markets may seem difficult to break into, they present excellent opportunities to earn high profit margins on your products or services. When you're selling luxury products and services, you can make more on each sale.
Just as important is the fact that luxury markets can be lucrative, even during recessions. During the Great Recession, several luxury brands, including Hermes and Louis Vuitton, saw their brand value increase significantly while other stores went out of business.
The marketing strategies that work on regular customers won't necessarily be effective with luxury audiences, though. Here's how your luxury brand can win over high-end customers.
Don't compete on price
Most consumers who purchase luxury products still care about price, but it isn't their primary concern. They're willing to spend more if they feel that the product is worth it. You'll get more customers if you focus on demonstrating the value of your product instead of competing on price.
Another problem with going for lower prices is that this can backfire and leave consumers with the impression that your products are of lower quality. If your luxury product is priced lower than all your competitors' goods, consumers are more likely to wonder what's wrong with yours.
It's common for people to associate higher prices with higher quality, and vice versa, especially if you emphasize quality in your marketing campaigns. By making quality a focal point and setting your prices to match, consumers will associate high quality with your brand. Once that happens, high-end customers won't have a problem paying a premium for your products.
Focus on the exclusivity factor
Although quality is one big reason consumers choose luxury products, they also desire the exclusivity factor. They want something that not just anyone has. The everyday consumer is fine with mass-produced products, but the high-end customer definitely isn't.
The way you focus on your brand's exclusivity factor depends in part on your products. Choosing materials of the highest quality is always a good way to separate your brand from the rest. You may also release small quantities of your product lines or limited-edition products, which ensures that only a small number of interested customers can get those items.
High-end brands begin with their discerning customers in mind. They aren't afraid to alienate consumers who don't fit the bill. Don't be afraid to provide a service that not everyone can afford, because not everyone is your audience anyway.
This may seem counterintuitive to making sales, but, remember, you're playing the long game here. In the short term, you may be giving up potential sales by only releasing smaller numbers of your products. But it will pay off as consumers see your brand as something exclusive and unique. They'll know they need to purchase products they want immediately, because they may not have the opportunity later.
Use the right marketing channels
Not only do you need to market your luxury products correctly, but you also need to know where those high-end customers hang out. You can't blast out a marketing campaign to everyone and expect results, but most people either won't be interested in your products or won't have the disposable income to afford them. And if you advertise everywhere, it takes away that exclusivity factor.
Magazines and websites that focus on luxury topics and finance are excellent choices for reaching high-end customers. You could run pay-per-click (PPC) ads or sponsored posts on these sites.
Influencer marketing is also a common choice among luxury brands. Seventy-three percent of luxury brands use it, compared to 54 % of non-luxury brands. When people see their favorite influencers using your products, it builds your brand's image.
Building a luxury brand is unique in that it's not all about getting as many sales as possible. It's just as important to develop your brand's image so consumers associate it with quality and exclusivity, and are open to paying more. The way you market your business will play a key role in the image it has and the customers it attracts.
How to position yourself as a luxury brand
Location
The location of your business is crucial if you want to market your brand to high-end consumers. There is a reason why you can walk down 5th Avenue in New York City and see a luxury store on every block, while in other parts of the city you won't find any. This is because successful luxury brands understand that you have to get in front of your clientele and project a certain level of success. You're selling a lifestyle as much as you're selling actual products and the location of your business must be cohesive with that lifestyle.
A study on luxury consumption published by the University of Sarajevo found that consumers perceive quality as a major determinant of a brand's viability in the market. They also reported that the luxury market, in particular, is one that has seen continued growth since the 1960s despite varying economic conditions worldwide.
Quality
The simple answer is to invest in quality across all sectors of your business. This doesn't mean overpay for materials or services. It means putting in the investment to ensure that your entire business is up to the highest par. Luxury consumers expect a certain level of sophistication and detail in their products. They are willing to compensate you handsomely for your efforts, but only if you've put in the work.
People are willing to pay for quality, but that quality must be consistent. If the products are great, but the customer service is terrible, your business is going to suffer. The goal is to cultivate an experience for your clients. This means a holistic approach to maintaining exceptional service across all aspects of the consumer journey.
Referrals and customization
Referrals will be a major part of your marketing as a luxury brand so it's worthwhile to invest the money to ensure customer satisfaction.
One tip for strengthening customer retention is to allow for customization. If your products feel overly mass produced, it will negatively affect your brand perception. One way to avoid this stigma is to allow your customers to tailor products to meet their individual tastes. This will set you apart from the competition and help develop the buyer loyalty you need to succeed in a competitive, high-end market.