The Premium of Value: Pricing and Promoting Luxury to the New Consumer
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The Premium of Value: Pricing and Promoting Luxury to the New Consumer, by Tom Jacobson, Ray Florio and Tiago Salvador
A Reflection
The primary message the authors are sending to the reader consists of the shifts in the behavior of buyers and retailers in the luxury sector. The largest changes seen in the 2010 holiday shopping season (since the recession began) is in the age and comfort with technology the buyers now have. The shift to a younger, more tech savvy purchaser changed the luxury equation. It is no longer only about the brand and the image. Price sensitivity plays a significant role depending on the channel.
The primary audience for this message is the luxury retailer who find their target market has changed; who is the target market and what are their spending habits? Luxury retailers have had the same type of buyer for many years and have focused their attention on this sectors needs. However, the sector changed unexpectedly and now serves a much younger generation that has grown up on the Internet and has a new set of expectations. Retailers find it difficult to fit these new needs to into their sophisticated marketing strategy without cutting their own throats. Image and branding are their strong suit, their value. The new market is equally concerned with value (read: lower price) and image. Not knowing how to adapt to the new market can be hazardous to a luxury retailers bottom line.
The authors provide evidence of the changes in the target market while identifying five key success factors to manage this new market. For example, competitive price intelligence (understanding the pricing landscape) has been a key advantage for companies to maintain a consistent brand image, improve customer satisfaction, increase volume and increase profits. They continue to explain, with specific examples, how online presence, enhanced channel strategies, price sensitivity, and performance measurement can help the luxury retailer find their way with new market.
The authors concluded the article by advising retailers to have the right tools to serve a younger generation that is different than what they are used to serving. These young shoppers have grown up with technology and know how to search for the best quality and value for each dollar spent. The authors added that luxury retailers can still provide high quality products to their customers while maintaining the same image by learning from different retail segments who passed through similar situations.
The authors conveyed the message well and engaged the reader in a smooth way, while providing efficient details. They explained the situation the luxury retailers face in the current market and how they are squeezed between satisfying a younger generations needs and making profit while maintaining their prestigious image. After enlightening the reader to the problems, the