true luxury

True luxury: inclusivity vs exclusivity

I've just come across a series of thought-provoking posts on springwise. Their common theme is brands trying to build loyalty with online tools. Whereas some of them do it in a democratic and "inclusive" way, others opt for "exclusivity". Let's see how this might result in their brand positioning. One article describes a hotel in NYC which has set up an online forum for its guests. The Pod Hotel offers budget accommodation for young travelers, and the forum is a brilliant solution to help them connect to each other in real life, and have fun together in NYC. It clearly addresses the pain particularly of those who travel alone and don't know anybody in New York City.

Snapshot of Pod's online forum for registered guests

This is a brilliant idea, and The Pod Hotel is surely on the good track of creating some valuable loyalty with this simple online solution.  My advice is that it should definitely do a bit more to make this feature known on its website. As it stands now, the site fails to communicate it. I don't know if it's a planned move or not. If yes, I suppose that the reason might be that the hotel works at capacity most of the time, in which case the forum is only there to trigger repeat visits rather than recruit first-time customers.

Another idea featured on the same site is an online social network launched by the airline KLM. The online network is not targeted at all KLM's customers, but only frequent flyers.

For the moment, KLM has set up two online communities -- one for China, and another one for Africa. Essentially, the main target is entrepreneurs who all share the same challenges working in emerging markets.  They can discuss issues of common interest and network online, which triggers encounters offline.

KLM even organizes offline networking events for the online community members both in China and throughout Africa.  KLM says that its online social community is "exclusive" and by invitation only.  My guess is that this exclusivity is tied to KLM's reward program which actually makes sense.

Think of it: the more you fly, the more chances you get to meet like-minded entrepreneurs. And the better you should get rewarded by an airline company for your loyalty.  So, this kind of "exclusivity" achieves both goals -- it rewards frequent flyers whilst giving them a possibility to socialize.

A snapshot of KLM's online community for frequent flyers

I also want to address another kind of "exclusivity" which rarely does anything good if a brand seeks positioning in the luxury or affordable luxury segments.

I've come across many brands, especially various online shops, which try to create an aura of exclusivity out of .... well, pretty much nothing.  I find it amusing when some freshly launched site writes  me to become their member "by invitation only"and start shopping there.

In this respect, the example mentioned on springwise is Claseo, a recently launched "luxury" label. Unfortunately, it's not possible to have any idea about how luxurious its designs are because you can't enter their site. The reason is that the site is "exclusive" and by invitation only.

Snapshot of the invitation-only site of Claseo

I think it's counterproductive to seek positioning as a luxury brand through such self-limiting "exclusivity".  Whereas this might be feasible in instances when brand equity is already at its peak, this move is rarely a good solution for a start-up.  This is particularly true for web start-ups.  Building a user base is of ultimate importance for them, and certainly a key to creating a strong brand.  I have written and spoken about this on several occasions.

Looking at three examples above, the "inclusivity" of the budget hotel in New York in fact makes it truly exclusive. By solving the real need of its customers -- a simple human desire to socialize -- the hotel succeeds in occupying a very lucrative segment of affordable luxury.  The same refers to KLM's online social network for frequent flyers, which helps entrepreneurs connect and socialize in real life.

Funky brands are smart because they understand what true luxury is, and although it may sound counter-intuitive, in many cases being inclusive and democratic, rather than "exclusive", is what really helps build a great brand!

Anders Wall, CEO of Biomega, talks about city biking as a new luxury

The MN bike by Biomega

Having talked about square wheels in the previous interview featuring a Swiss watch brand Maurice Lacroix, today our focus is on round wheels -- a Danish brand of bikes called Biomega. Launched in 1998 by an industrial designer Jens Martin Skibsted, Biomega is a company that has been building its brand through a rigorous strategy of brand partnerships. Through co-operation with PUMA and such world-famous designers as Marc Newson, Ross Lovegrove and Karim Rachid, as well with its bikes featuring in permanent collections of art museums, the brand of Biomega has occupied a very interesting niche on the bike market: a stylish, funky and functional luxury item for use in the city. Today I am happy to host Anders Wall, CEO of Biomega who shares his views on city bikes and funky brands.

Anders Wall

SCHMOOZY FOX: Anders, the name Biomega sounds a bit like it could be a brand of healthy food or vitamins. Could you tell me the story behind the brand name?

Anders Wall: Indeed, some people also think that there is something “bio” about it. But in reality, the name was conceived as “bi omega” which visually would look like this ΩΩ. Two letters "omega" put together do look like a bike.  Later on the name took a life of its own, and there’s no such association in customers’ minds.

SCHMOOZY FOX: Did Biomega follow a strategy of brand partnerships and co-operation with famous designers right from the beginning?

Anders Wall: Jens Martin Skibsted, the founder of Biomega, has designed most of the bike models. But indeed, Biomega was set to build its brand through partnerships with such famous designers as Marc Newson early on.

SCHMOOZY FOX: What’s the brand philosophy of Biomega? How are you reinventing the wheel?

The Boston bike

Anders Wall: We think that a bicycle is often portrayed as a product consisting of many spare parts, rather than a complete whole. The “spare part” brand discourse is very typical to most bike brands, and it’s very rare that they address the values and needs of consumers other than technical performance. For Biomega, a bike is based on the concepts of integration, drivability, durability and visibility. By integration, we mean that a bike is one whole that can bring a lot of aesthetic value to the owner. By drivability, we mean that a bike should be easy to drive, fast in acceleration and quick in braking. Durability refers to the fact that our bikes will last. All of these qualities are important to keep in mind when a new model of Biomega bike is conceived and designed. And finally, visibility means that our bikes must make both the product and the user noticeable. Our products stand out in the crowd, and so does the person who's using the bike!

SCHMOOZY FOX: Why do you refer to Biomega bikes as New Luxury?

Anders Wall: Bikes and biking as a process in general is hardly ever associated with luxury. Biomega does add luxury to bikes, primarily through superior design. What’s important is that Biomega bikes are meant to be used only in the city. Through their ease of use and funky design they in fact compete with cars! In this sense, owning an astonishing bike with luxurious design as opposed to having to sit in traffic jams becomes a true luxury.

SCHMOOZY FOX: How much does it cost to own such an object of new luxury?

Anders Wall: The majority of our bikes cost around 1.200-1.500 Euro. Our special models like the MN is more expensive (prices start at around 3.500 Euro). Our most exclusive bike, a carbon version of the MN with special components, is sold at the price at 6.500 Euro. Our bikes are distributed through design stores,  as well as selected bicycle stores.

SCHMOOZY FOX: Besides co-operation with famous designers, Biomega also went into brand partnerships. Could you speak about Biomega’s partnership with Puma?

Anders Wall: We have worked on a brand partnership with Puma for five years now. The brand partnership was based on the Biomega model Boston, which was created in special versions for the Puma brand stores around the world. These Puma versions carried both the Puma and the Biomega logo, and were unique in colors. Last year, our partnership was taken further and we are now a licensee of Puma. In the coming months we will introduce a new range of Puma bicycles – 5 models in total – which have been designed and produced by Biomega. Where the previous bikes were only sold in Puma brand stores, the new range will be sold through bike stores all over the world and online. This is a very exiting new business for both Puma and Biomega.

SCHMOOZY FOX: To what extent do you think Biomega can be called a Funky Brand?

Anders Wall, CEO of Biomega

Anders Wall (smiling): I think that SCHMOOZY FOX’s definition of funky brands is very much in line with Biomega’s philosophy. We are small (there are only 6 employees at Biomega!) but a very agile company. We think we have created a great company culture and built the business through a very rigorous brand strategy right from the start. The funky aspects are certainly seen by the final customer, but only few people realize that behind this there’s a lot of very meticulous business and brand strategy work done within the company! We’re also outward rather than inward-looking, and through our brand partnerships we have achieved a global reach.

SCHMOOZY FOX: Do you bike to the office?

Anders Wall: I live outside of Copenhagen, and actually take a train every day. But once I am in the city, I of course bike! I own several models of Biomega, including the MN model. After all, apart from being a CEO, I am also Biomega’s brand ambassador, and I very much enjoy it!

SCHMOOZY FOX: Thank you, Anders!

How funky brands can be profitable

D&Gperfume In one of my previous entries, called Funky Brands Defined, I published a list of attributes shared by most Funky Brands™.

An important one is the fact that they are not driven by innovative and creative ideas alone, but are or have the potential to be profitable. This, of course, requires a good deal of  business development and brand building work done.

In today's post, I want to talk about how your brand can benefit and become profitable from mass luxury brand positioning.

Mass luxury (often referred to as affordable luxury or new luxury) brand management essentially combines characteristics of building brands that have the luxury and exclusivity appeal, with techniques that can lead to relatively high sales volumes.

My marketing professor at ESSEC (a Paris-based business school famous for its luxury marketing program) was a former Armani guy. He certainly knew a lot about sustaining those "old luxury" brands like Chanel and Gucci (and Armani, of course). But he was nevertheless fascinated how some innovative companies managed to combine classical Kotler marketing with  the know-how of luxury brand management by building extremely funky brands in the mass luxury segment.

Some of these brands were created completely from scratch (for example, Coach and Victoria's Secret in the US, Agent Provocateur in the UK, and a Dutch brand Marlies Dekkers whose founder spoke in an interview on this blog), and others were born under the umbrella of already existing "true luxury" brands (for instance, Armani Exchange as a modest brother of the brand Giorgio Armani).  Over the past decade or so, many brands were launched to satisfy a desire for a better lifestyle expressed by wealthier middle class eager to splash out on previously unaccessible items.

So, what can you learn from mass luxury brands in order to make your brand profitable? You'll be surprised how many potentially funky start-ups fail just because they are disconnected from their potential customers. So, the most important rule of thumb is that you gotta get to know your consumers, their lifestyles and their desires as much as you can.

Stop for a moment doing this tedious market segmentation based on geographical location, age and gender. This stuff tells you nothing about your consumer's deep emotional needs and desires. Unless you've understood what emotional connections they can make with the products you sell, you'll be wasting your time.

Besides that, keep in mind the following factors which, in my view, may trigger consumers' interest in purchasing your funky mass luxury goods or services:

  • The lifestyle factor: Whereas splashing out on a single Gucci outfit is an extremely rare occasion for most people, and buying a Lamborghini is simply out of the question, a sizable market out there still wants to have a luxurious lifestyle. "Luxurious" can mean different things for different customers, and the trick is to find your loyal segment for whom your product will be a luxury. The right combination of such items as furniture, consumer electronics, food and drink, beauty products and fashion can do wonders and make our lifestyles luxurious and enjoyable. Not every item in your customer's home has to be of super funky design and great quality, but make sure your brand can end up on your customers shelves!
  • The self-worth factor: people appreciate goods and services that can contribute to their enjoyment of life (e.g. high quality perfumed candles, a meal at a gastronomic restaurant, or a visit to a spa) and feeling of self-worth. Do you know what contributes to the feeling of self-worth within your customer segment? If not, the first step towards making profits is to find that out fast and act on it.
  • The funky factor: people like standing out from the crowd, and making a statement about who they are. They often express themselves through the clothes they wear, or items they use (computers, phones, cars).  If your customers have created emotional connections with the products you sell, and even made them part of their personal brand, you've for sure kept the funky factor in mind successfully! Again, if you know how the attributes of your brand can enhance the funky factor of your customers, you've certainly moved forward towards a beefed up bottom line.

Mass luxury is the most profitable segment of many markets because attractive margins can be combined with sales volume. But the challenge is, mass luxury brands do not sell themselves . They are driven by hard-to-define factors like fashion, word-of-mouth, and constantly evolving preferences of your customers. If you've managed to apply a rigorous framework to identify these factors, and closely monitor them, you'll certainly be on the path towards making sizable profits and building funky brands.

Finally, a good article on the subject that I can recommend is "Luxury for the Masses" by Michael J. Silverstein and Neil Fiske, published in Harvard Business Review in April 2003. Have fun learning the tricks of the funky brand trade!