Wednesday, February 18, 2015

The Dilemma of Digital Marketing for Luxury Brands

This article made me think about the difficulty luxury brand marketing managers face when determining their marketing mix. Many luxury brand customers are likely wealthy people over the age of 35 with a positive correlation between age and their status as a luxury brand consumer, so they are more likely to respond  to the old types of marketing channels. The younger generation has a smaller number of luxury good consumers, but they are the future (assuming we ignore all of the doom & gloom articles about the future written by baby boomers moaning about lazy and entitled millenials), and they respond to a whole different set of marketing tools.

This begs the question, “How does a  marketing manager determine their mix?” Customers who have the largest wallet are an easy target and produce immediate results, but focusing on this segment ignores the future. Does the marketing manager necessarily care about penetrating a segment that will pay off in 20-30 years? I would doubt it, since it won’t affect next quarters earnings.  I think this can be observed in the article with the following quote,

“ There were signs of scepticism in the audience over the merits of digital. One question submitted to the panel via the app quickly rose to the top as people voted for it to be discussed: “The return on investment (ROI) is not as big with digital, so why should we invest in digital advertising?”

And I thought the  response was perfect.

“You are building a relationship with people who may continue to use your product for the next 25 years. Those interactions that you have, particularly through social streams that you can get through digital, are super valuable. It would be a shame not to invest in that.”

It’s easy for a consultant on this panel to say the investment in digital is valuable, but it’s another thing for the practitioner to implement that when they are being pressured by management to produce immediate results.

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