Leveraging the Luxury Experience Economy
This post was written by the Upward Home team.
The Experience Economy
For luxury brands, business as usual is just not enough in today’s economy. Consumers expect premium quality, but now they want more. Some economists say that we are moving from selling goods and services to selling consumer experiences. That is good news for companies with high-end products. Consumers seeking luxury brands want to engage with them at the experiential level. They aspire to drive a Rolls Royce, carry a Louis Vuitton, show off a Rolex and stay at the Ritz-Carlton. High-end home brands can leverage this shift to an experience economy to their distinct advantage.
Transitioning to an Experience Economy
In a 1998 article in the Harvard Business Review, B. Joseph Pine and James H. Gilmore assert that just as we have outgrown our agrarian and industrial economies, we are now transitioning from a service economy to what they termed the experience economy. From 1981 to 2012 concert ticket prices rose an amazing 400%, demonstrating that consumers are now spending more on doing things than buying things. As a high-end home brand, you have the perfect opportunity to engage the customer at the experiential level and charge not only for your products but for memorable events and experiences related to your products. The challenge is to stage experiences that sell.
The Allure of Luxury
Given the purchasing power of affluent consumers and the fact that high-end brands command the lion’s share of profits across the board, it is a fundamental strategic business decision to build premium brands. A Deloitte Global survey found that spending on luxury products remains robust even in a slow economic environment. While mass brands identify their target audience and push products toward the consumer, companies with luxury brands know that for them the opposite is true. Consumers are attracted to luxury products. As a high-end brand, you can create a mystique that lures a select group of targeted customers. Affluent consumers strive to belong, and you can reward your long-term customers for their loyalty while reinforcing your customer relationships.
There is no doubt that a strong brand message is an effective marketing tool, especially for luxury products. With branding, you can establish yourself in the mind of the consumer and position your company in the marketplace. A consistent brand message is your promise to the consumer that is conveyed through logos and taglines as well as proprietary colors, fonts and graphics. As a luxury company you can move beyond branding to leverage the experience economy, just as Apple does. Today’s brick and mortar stores are more about engaging, entertaining and educating through consumer interaction.
Luxury brands deliver high quality and function, and they also convey symbolic and experiential value. Your customers are attracted to your products because they buy into your philosophy and your story. Like branding, myths must be consistent across all stores and marketing materials. The legend associated with your high-end home brand attracts consumers who appreciate what you have to offer.