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Luxury’s Long Tail

Thanks largely to the deluxe-uccinos at Starbucks and the Michael Graves teapot at Target, it’s now an article of faith that luxury is within reach of nearly every man, woman and child. But it also raises an enduring question: When a luxury item becomes as common as the newspaper on your doorstep, is it still a luxury item? Or, as Susan M. Gianinno, chairman and CEO of Publicis USA wrote in Advertising Age: “The new question is whether, over time, the new democratization of luxury represents an opportunity or a death knell for luxury brands.”

Thanks largely to the deluxe-uccinos at Starbucks and the Michael Graves teapot at Target, it’s now an article of faith that luxury is within reach of nearly every man, woman and child. But it also raises an enduring question: When a luxury item becomes as common as the newspaper on your doorstep, is it still a luxury item? Or, as Susan M. Gianinno, chairman and CEO of Publicis USA wrote in Advertising Age: “The new question is whether, over time, the new democratization of luxury represents an opportunity or a death knell for luxury brands.”

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The notion of luxury branding on a mass-marketing basis; or “new luxury” as some have termed it, certainly is working for traditional luxury brands like Ritz-Carlton as well as less likely prospects such as Whirlpool, with its deluxe, designer color, front-loading Neptune model line. Such brands succeed not just because they sell high quality products (for which consumers pay a premium), but also because they tap into what consumers want as much as what they need.

Most of all, they’re unmistakable emblems of what economist Thorstein Veblen called “Conspicuous Consumption,” a.k.a, the $6 venti iced caffe latte that wouldn’t be worth the grounds used to make it if we didn’t drink it from that logo-emblazoned cup.

It does seem, though, that when luxury marketing enters the mainstream it risks losing the properties that made it “luxury” to begin with.

Krispy Kreme doughnuts jump to mind. Inherently, the product had the cache of a luxury item (at least in terms of its calories); the ultra-moment of indulgence being when the neon “hot” sign lit up in the window, indicating fresh doughnuts. But now, the brand may be heading into Entenmanns supermarket doughnuts territory. K.K. is becoming a commodity so ordinary, you may just find it next to the antifreeze at your local Citgo.

What Krispy Kreme has forfeited is the exclusivity that used to give it that luxury aura. And aura is the operative word because, really, exclusivity is a kind of halo not necessarily easy to bottle and sell.

Exclusivity can mean not only that a brand is priced out of the reach of some, but also that it escapes the understanding of most; something BMW’s Chris Bangle is learning the hard way. The carmaker’s chief designer has prided himself on creating a look that only the most discerning motorist might appreciate. The problem is that a good chunk of BMW’s faithful are being alienated by his over-ambitious and sometimes clumsy designs (what Beamer die-hards call the “bustle-butt” trunks of some new models, for example), pushing him back to the drawing board.

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Chris Bangle does deserve credit for daring;and for his understanding that true luxury is more than just price, quality, and bling. It’s also about individuality to the point of obscurity. Pure luxury isn’t meant to appeal to the masses; in fact, contrary to Veblen’s theory, it may be more desirable if most people don’t even know the luxury exists.

Take The Scorcher;a bicycle USA Today described as “a Mona Lisa with spokes.” Crafted to look like the kind of racing bikes the Wright Brothers designed before they moved on to flying machines. Only 100 were ever made, so Scorchers are now pretty pricey ($975 at the time of manufacture back in 1993, they now go $3,000 on eBay). So hard-to-get is the Scorcher that even Scot Nichol, its designer, couldn’t score one. He does understand, though, what the bike means to those who do. “When you ride a Scorcher,” he says, “you join a special club nobody knows exists. The Scorcher lives deep in your soul. It’s a pure cycling experience and nothing else.”

In a similar vein, Ben Serotta, founder of Serotta Bikes, has built a luxury bicycle business based on customizing the product down to the individual consumer, reports USA Today. Serotta’s bikes, which sell for more than ten grand, are handcrafted and use high quality materials. And, says Serotta, they take “up to 40 man-hours to build — more than a Mercedes-Benz.” But these aren’t the reasons the bikes cost so much. It’s Serotta goes a step beyond by customizing each bike to the psychology, physiology, and biography of its rider. As he explains, “The best bike isn’t best unless it’s the best bike for the person we’re building it for.” Serotta admits his philosophy may not be the best business strategy: “It’s not the short path to huge success,” he says, noting that his meticulous approach limits production to just 12 bicycles per day.

Just 12 bikes a day. Ben Serotta most definitely did not attend the Starbucks school of “new luxury” marketing. When you look at things Ben’s way, the future of luxury marketing takes on an entirely different dimension; micro-niche rather than mass market. In some categories, the collective power of these niche markets might eventually amount to more in the way of sales and profits than do traditional mass markets.

Chris Anderson, in a now-famous Wired magazine essay called “The Long Tail,” described this aggregation of a series of micro markets into a different kind of mass market (he charted the phenomenon in a way that puts mass market on one end and micro market down at the other, giving the look of a long tail, hence the name). The phenomenon is far from limited to luxury goods. In fact, his primary case in point is Amazon and its sales of niche books and CDs. But his theory does dovetail with key principles of luxury marketing; especially exclusivity and individuality, or simply the idea that future marketing will be more “micro” than “mass.”

In the hospitality industry, for example, developer Ira Drukier is applying a set of rather narrow consumer insights to create a different kind of luxury hotel. As reported in The New York Times, Ira’s idea is that there’s a market in Manhattan for a hotel with small rooms; and even shared bathrooms and bunkbeds; so long as it’s equipped with wi-fi, iPod docking stations, and flat-screen TVs.

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Drukier figures that if the rooms are clean, neat and wired, he’ll attract young travelers whose only option at $125 a night is not nearly as, well, luxurious. “You can find hotels in the city that offer bunks for $89 a night, but the rooms are scary,” says Drukier. He also expects to attract Europeans, for whom big rooms and private baths aren’t essential. Point is, he’s applying the principles of luxury to hone in on his target audience.

In the beauty-care category, Fast Company reports that Lush Cosmetics tightens bonds with its most passionate customers by offering up limited-edition “personal batches” of discontinued products online. As Simon Nicholls, Lush Web site manager, notes, “Only 300 people around the world will have these products.” Oh, we happy few!

And in apparel, the cross between “luxury” and the “Long Tail” manifests itself in the advent of limited-edition T-shirts you can’t find at say, Target, or even your local vintage-apparel boutique. Some people are willing to pay a premium for these shirts, because, as one boutique owner told The New York Times, “People like the idea that there’s only one, that it’s their own style.”

It’s enough to make one wonder about the future of luxury brands like Tiffany’s, which recently opened a store at the foot of Main Street in tony, Westport, Connecticut. The new ice castle is just a Hummer skid away from Pottery Barn, Sunglass Hut, and Banana Republic.

So how is Westport Tiffany’s doing? Who knows, but it sure looks kind of empty much of the time. Now, it could be that the burly security guards scare people away. Or it might be that in an affluent community like Westport, the sophisticates are buying their baubles somewhere less commonplace… meaning much smaller, more exclusive… more luxurious.

In other words, keep an eye on that Long Tail. When it whips around it could smack your brand right in the family jewels.

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