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Please do touch the goods - and then make a speech about them!
So long as people equate ‘feeling good’ with owning something that is really special, there will always be a market for luxury items. Consumers may purchase fewer luxury goods during a downturn, but they do not tend to give up on them altogether. While luxury items are ‘want’ based rather than ‘need’ based, with so much economic misery around people are probably in search of that ‘feel good’ factor more than ever.
Ritson (in Marketing, 3 December) points out that some luxury houses have reduced their prices to stimulate sales during the recession. Such discounting, it seems, is particularly prevalent in the USA, where demand has declined the most and the strong dollar has given retailers extra leeway to cut the prices of imported goods. But discounting can actually undermine the cachet of luxury brands and hurt sales, which is why luxury drinks group Rémy Cointreau remains committed to global price increases this year.
Luxury firms that rule out price cuts can safely adopt other strategies to boost their sales. They may not bear fruit in the short term, but they could help to position these companies for when economic conditions improve. First, they can target markets such as Russia, China and India, which may eventually offer better growth prospects than the more mature markets of Europe and the USA.
Secondly, they can discreetly begin to manufacture at least some of their products in lower-cost countries. In the globalized economy, quality principles can as easily be practised in Beijing as Birmingham, Seoul as Stuttgart, so there need be no sacrifice of standards by such a move.
Luxury brands can also begin to sell their products in smaller sizes to appeal to slightly wider markets. L’Oréal, for example, is already selling fragrances in miniature bottles.
Through case studies of Hotel Chocolat and Grey Goose Vodka, Clegg (in Marketing Week, 4 December) demonstrates how to encourage people to purchase luxury brands without appearing pushy or desperate. The author says that creating a membership club can be a good way to market luxury without sacrificing all pretence to exclusivity. Advertising to social networks can achieve a similar effect.
Research by Argo, Dahl and Morales published in Journal of Marketing Research, December 2008, meanwhile, suggests a more unconventional route by which luxury-goods firms may be able to increase sales – by having attractive people touch the very goods that prospective purchasers may wish to buy.
Although customers like to touch products before they buy them, they do not normally like others to do so. A well-thumbed orange or cucumber is likely to remain on the supermarket shelf long after its pristine equivalent has been sold. However, tests involving students from a north American university reveal that consumers do tend to favour products that have previously been touched by a highly attractive member of the opposite sex.
Other research highlights another possible sales tactic for luxury-goods firms. Liu (in Journal of Consumer Research, December 2008) points out that when consumers are interrupted in the course of decision making, they seem more likely to buy a high-price, high-quality product.
The solution, then, is clear. Hire plenty of good looking people to behave like shoppers, and get them to touch as many luxury items as possible while simultaneously interrupting every other potential purchaser in the building. Could be an unconventional idea for unconventional times perhaps?