How Important Is Differentiation In The Luxury Category?

It has been a few weeks since we last had a guest post on our site. For this reason, it was a pleasure for us to receive the following article from Angelo Ponzi, who is Director at C3Centricity‘s partner PhaseOne. His comments on the luxury industry and how to communicate to potential clients is illustrated with examples from the watch industry.

As a marketer, you know that different audience segments have different needs and motivations for making purchase decisions.  And, regardless of the amount of money your customer has in the bank, the decision process leading up to the purchase of an Omega is longer than the decision to purchase a Timex. 

Br ands selling to the affluent know that their marketing efforts need to be highly persuasive and that they need to differentiate themselves with not only design, quality and craftsmanship, but also price.

Examining a slice of the luxury market — watches — a recent article in WatchTime identified 60 br ands that spent more than $1 million on ads for their watch br ands in 2012, according to Kantar Media.   Rolex (often considered the optimal sign of luxury) topped the list with more than $52 million spent on advertising. And, according to Kantar Media, watch br ands spent more on U.S. advertising in 2012 than ever before.


The multiple reasons for luxury br and purchasing

You and I know, however, that media spend doesn’t necessarily translate to sales or a strong positioning of your br and among consumers the way you intended.  Marketing of a luxury br and is also different than marketing mass br ands.  Luxury br ands need to convince consumers that their br and is worth the extra money.  Consumers of luxury br ands tend to buy for a multitude of reasons, which can include perception and self-worth.  The desire to own luxury br ands could be based on the individual consumer’s need for high quality, exclusivity, craftsmanship, precision, innovation, recognition, status or even envy among their peers. Sticking with the watch category as a point of discussion, while there were huge advertising investments made by br ands to help them tell their stories, how does a luxury br and market itself differently from fashion br ands?  How do these br ands in different watch segments approach their communications so their customers identify with their preferred br and and see that it is a reflection of who they are or hope to be? Based on recent research conducted by PhaseOne among 16 high-end/luxury watch br ands across North America, Europe and Asia, we found that br ands tended to cluster into three segments, both creatively and by price:  Fashion Br ands, Personal Lifestyle Br ands, and Luxury Indulgence.


The three clusters of luxury watch communications

Fashion Br ands (e.g., Swatch, Guess) presented themselves through an expression of trends and style.  In their advertising, Fashion Br ands highlighted the aesthetics of the watch and its role as an accessory.  For br ands that clustered in Personal Lifestyle Br ands (e.g., Raymond Weil, Tissot), they tended to add more specific personal or lifestyle interests in their advertising, such as music and travel, as a way to build a connection with the intended audience.  And the communications by br ands that clustered into the Luxury Indulgence segment (e.g., Rolex, Patek Philippe) tended to focus on quality craftsmanship and design to imply exclusive status and indulgency in opulent luxury. What is of most interest is that a br and’s communication alone does not carve out the niche in which it clustered.  After all, if you take a Fashion br and and produce an ad that contains all of the visual and descriptor cues found in br ands in the Luxury Indulgence segment, it does not make that br and a luxury br and.  What the research confirmed is that price also plays a significant role and that not only did these 16 watch br ands cluster based on their br and attributes and personality, but on price as well.


The essential questions for positioning

Therefore, regardless of if you’re a Luxury, Lifestyle or Fashion br and looking to reinforce your current positioning or to move up or down into a new segment, you need to make sure you ask yourselves the right questions prior to making a significant investment.  Consider these as a starter:

#1 Determine the cluster in which you currently compete or want to compete.

#2. Conduct an analysis of each competitor’s communication in order to determine how they use visuals and/or text to reinforce their position.  What “cluster” cues are they using to reinforce their positioning?

#3. Determine what br and attributes you and your competitors currently own.

#4. Determine the br and attributes you would like to own.

#5. Develop a br and positioning by breaking down the rational and emotional aspects of your br and that you would like your consumer to reflect:

    • Rational:

i.     What does the product do for me?

ii.     How would I describe the product?

    • Emotional:

i.     How the br and makes me look?

ii.     How does the br and make me feel?

 #6. Test your concepts before rolling out your creative campaign to minimise your risk and ensure your messages are persuasive and clearly resonate with your target audience.

Keep in mind that br ands in a cluttered market struggle the most to clearly differentiate themselves, therefore consumers tend to select br ands they are familiar with or believe are the leaders.  Having a significant point of differentiation, especially in the luxury category, is key to becoming a category leader. To see the findings of PhaseOne’s study on luxury advertising, click to download the whitepaper, “Luxury Advertising: Is now the time to break the mould?

If you would like some more ideas on how to improve your own communications, check out our website:

Need help in taking your communications to the next level, or in better engaging with your customers? Let's discuss how we can help you catalyze your customer centricity; contact us here today.

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Is your Br and Worth Paying More for?

This week’s guest post is from C3Centricity partner PhaseOne. Terry Villines, their senior vice-president shares some of the learnings from analysing the marketing communications of thous ands of premium br ands. Whether you work in the Luxury Industry or not, wouldn’t you like your br and to be worth more?

Every product category has at least one – a br and that costs more than the competitors; a br and that, even though it costs more, is successful at building the business; a br and that has been successful at convincing their target that they have a premium offering and are worth the extra cost.

For example, Rolex is clearly seen as a more premium br and than Timex or Fossil, and consumers are willing to pay more money for a Rolex even though all of these br ands provide those who wear them with accurate time. 

How are br ands ableto convince audiences that they are worth paying more for – regardless of category?

PhaseOne has mined over 1,000 pieces of marketing communications to identify guiding principles for establishing a premium positioning.  The key is to:

“Credibly promise that consumers will get more of what they want most from the product, promising more benefit than competing br ands”

Six specific types of benefits were found among the messages PhaseOne analyzed.  The inclusion of these benefits was associated with strong Premium Positioning.

#1.  Product innovation – your br and brings an enhanced benefit or a new benefit to the category.

#2. Human Worth Factor –  by tapping into the target’s self-esteem, a br and communicates how  the target is worthy of the more costly br and – “I’m worth it / You’re worth it”

#3.  Unique Production Process – the way in which the product is made results in delivery of a more significant benefit.

#4. Premium imagery – associating the br and with other things that are also premium in nature.

#5. Higher performance than competing br ands.

#6. Endorsement by a credible authority.

Interestingly, some of those things that we have readily accepted as contributing to Premiumness did not prove to be effective:

  • Claiming superiority alone does not confer Premiumness.  Positioning a br and as superior does not equate to the br and being worth more.
  • Having an abundance of features or advantages does not make a product worth more.  Features and advantages may contribute to a Premium Positioning, but they are not sufficient to establish the positioning on their own.
  • Marketing messages that contain breakthrough creative elements and premium production techniques do not translate into Premium Positioning.  Such techniques can reinforce a Premium Positioning, but they cannot create it.

We’re confident that these benefits can be tapped for virtually any product / service category.  Yet, it is likely that the weighting / emphasis given to them will vary.  For example, in a just completed study of the advertising for 16 Luxury watch br ands, PhaseOne found most messages cluster into only 3 of the benefit clusters:

  1. Premium Imagery – br ands focus on the visual aesthetics and the watches role as a fashion accessory
  2. Human Worth Factor – br ands add a layer of specific personal or lifestyle interests to suggest for whom the br and is most appropriate
  3. Unique Production Process – br and communications emphasis that the watch is made of high quality materials with precise craftsmanship.

How do you see br ands in your category successfully convincing their customers that they are worth paying more for whether it be durable goods (auto to washing machines), packaged goods (confections to sodas) or services (Insurance to Dentistry)?

If you would like help from C3Centricity on improving the positioning or communications of your own Luxury br and, then please contact us, we know we can help. For more on br and positioning, please check our website:

Do you yourself work on a Premium br and or perhaps you did in the past? Were you using another type of benefit that didn’t work? Then please share your experience here. Of course, you can also share what worked too, if you are feeling really generous! We would love to hear from you.

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