This is an online version of my working paper dealing with luxury marketing in
Japan. It is updated on a regular basis. The online version includes
interactive elements and comments not included in the print version.
Before the economic bubble in the 1980s, luxury companies were defining their
customers predominantly by income level. Their numbers were therefore fixed to
a small elite and business could not be expanded beyond this scope without the
danger of losing exclusivity. With the commodification of luxury and rising
mass affluence, a change in the perception of the term occurred.
I will distinguish two different forms of premium marketing. The first is rich
marketing which considers strategies to target individuals with high net worth
(HNWIs) or a very high income, who are able to uphold a luxurious lifestyle in
all aspects, including an upper class social life (consumer level 3 in figure
2.1). The other term is luxury marketing, defined by Takahashi (2005) as
strategies to target customers of luxury companies, whether they might be rich,
mass affluent, or simply middle-class consumers who are trading-up (levels 1-3
in figure 2.1). Thus, rich marketing is a part of luxury marketing. Due to the
appearance of the new rich, the way luxury marketing has to be performed in
Japan has changed.
The problem about changed consumer attitudes from a marketing perspective is the
higher immunity of the discerning and highly sophisticated opinion leaders
against traditional marketing channels and mass media. Especially HNWIs do not
want to be targeted by direct push-approaches. To get access to rich customers
in general, and specifically their opinion leaders, pull-approaches have to be
employed to create a relationship based on trust ....
The higher the wealth level, the higher is the average marketing exclusivity of
the marketing environment and the media necessary to gain access to the
individual customer. The problem in luxury marketing is how to reach the higher
levels of marketing exclusivity, as these tend to vary depending on cultural
context, are linked to specific networks, and are not directly accessible.
In a study by the Nomura Research Institute, as of 2006, the wealthy class in
Japan with financial assets worth 100 million Yen or more consists of
approximately 865,000 households. But these HNWIs (high net worth individuals)
are not necessarily the most interesting customers for premium companies. Not
all people who maintain luxurious consumer lifestyles have large investments or
other wealth-producing assets. So while a high income or high net worth enables
luxury spending, more important is a certain personal and cultural
predisposition to it.
The analysis will differentiate between [consumer level 1] people who buy products
of a luxury company and therefore qualify as luxury consumers but do not have
the assets or income to qualify them for a rich lifestyle, [consumer level 2]
people exhibiting a high salary that enables them luxury consumption in certain
categories, but not all, and [consumer level 3] people encompassing both HNWIs
and people with an extraordinary income, qualifying them for an active premium
consumption lifestyle
By excluding customers from accessing special services, by limiting the audience
and offering preferred treatment within a specially created marketing
environment, the image of mass marketing is transformed into one-to-one
marketing.
The most exclusive marketing environments, are the conversations between
consumers, or word of mouth. In order to make full use of this marketing
approach, an environment has to be created where people with higher marketing
exclusivity can meet and exchange information ...
Well before the consumer reaches the store there's a whole army of images that
causes a customer to already have a definitive perception about the brand,
which is no longer simply a logo or an icon. Brands are conversations, the
totality of perceptions about a product, service, or business. Companies are
finally realizing that “the most powerful selling takes place not marketer to consumer but consumer to
consumer”. Word of mouth marketing is defined by Nyilasy (2006) as interpersonal
communication about a commercial topic with the communicators not perceived to
be commercially motivated. Researchers found support for the hypothesis that
word of mouth is stronger than advertising or other marketing communication
fors. It has a positive influence on brand awareness, brand evaluations, and
purchase intentions. Further, it is a naturally occurring behavior of consumers
that can be monitored, influenced, and accelerated. In HNWI circles, word of
mouth plays an especially strong role ....
The commodification of luxury has left the upper class frustrated, realizing
that their old status markers have lost part of their appeal. Therefore
marketing to this social elite has to take into account their desire to feel
special, to feel exclusive, and to be separated from the crowd of mass luxury
consumers. .... The key lies in entering the social networks of HNWIs. By
accessing opinion leaders specific to their own product category luxury
companies can become more sensitive to future trends and faster than the
competitors to react to social changes. Communication with the most important
customers can prove to be an invaluable tool for customer segmentation,
profiling, networking, and “influencing the patronage behavior of dozens, hundreds, even thousands of
affluent prospects” (Stanley 1993: 1) ...
The reference list covers only the sources cited in the paper. For a complete
list of references used in my research, please refer to the References section in this webpage. The references include interactive links to online
sources as well as links to articles in journals and books in amazon or other
online bookstores.