The market for beauty, spirits and fashion continues to grow impressively, and change rapidly via the impact of e-commerce and social media. Given these dynamics, PRS IN VIVO recently conducted several studies to improve understanding of the shopping experience across luxury categories.
Behavioural economics and the “luxury mindset”: marketers have the tendency to think in terms of shopper profiles such as demographics and psychographics and perhaps retail channels or trip missions. But in our experience, it is more helpful to start with the mindset that people bring to their purchases. Specifically, we can begin with a relatively universal, foundational insight that luxury shopping is less habitual, and far more emotional and experiential, than shopping for packaged goods or grocery products.
Whether splurging on himself or herself, or buying a gift, the prestige shopper is typically less focused on rational considerations, such as features, benefits, price and value, and is more driven by less tangible elements, which often centre on emotion and social context.
One important best practice is to root marketing efforts in a true understanding of the physical and digital shopping experience
Clearly, this luxury mindset presents an opportunity to persuade shoppers via branding, packaging and in-store experience. However, it also requires an understanding of the irrational, often subconscious factors that impact decision-making. These “drivers of influence” are rooted in behavioural economics research and they are particularly powerful in this shopping context.
For example, we’ve continually observed the power of “scarcity bias”. Whether it is Japanese whiskey or French perfume, whenever specific products are presented as “limited editions” demand soars. People are somewhat irrationally drawn towards items that may soon be unavailable.
We’ve also noted the power of “anchoring” and “framing”. In categories that are shopped infrequently, many people don’t have a normal price point, a point of reference or anchor firmly in mind. Thus, the manner in which choices are framed can significantly impact their perceptions and selections.
Semiotics of luxury: the primary semiotic or symbolic cues associated with luxury or prestige products are well established. These design strategies include unique colours, shapes and structures, which often convey elegance; special techniques and finishes, which speak to multiple senses and are tactile or olfactive; and design simplicity, which typically translates to style and sophistication.
These symbolic cues are generally effective in connecting with consumers on an emotional and experiential level. However, these approaches are also ubiquitous. They have become a cost of entry, which makes it quite challenging to apply these cues in a truly differentiated way.
Enormous resources and creative thought have been applied to this challenge. And in fact, many brands have succeeded in creating truly distinctive, recognisable and “ownable” identities such as Tiffany Blue, Grey Goose’s unique bottle and MAC’s bold appearance.
Yet by focusing on brand identity, marketers often sacrifice shopability. Luxury packaging often errs on the side of visual consistency, which leads to shelves of very similar-looking packs, with minimal claims or copy to differentiate them. This is problematic in more complex categories such as skincare, in which there’s a need to convey specific product features, benefits and usage situations. And across all categories, uniformity makes it difficult to drive trade-up. If all of the packs look equally elegant and sophisticated, why should I pay £20 more for this one?
What can luxury brands do to help ensure packaging and retail success? We can’t offer simple answers or common formulas. However, one important best practice is to root marketing efforts in a true understanding of the physical and digital shopping experience. And this understanding must be grounded in observation, because there is often a gap between what luxury shoppers say and what they do.
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