MBA Luxury Brand Management

MBA Luxury Brand Management
Class of 2016-2017

Monday, May 9, 2016

Food for thought: Luxury Beyond Product – A report from The New York Times International Luxury Conference Day 2

By Sara Lau and Johannes Ader, MBA in International Luxury Brand Management 2015-2016

As a short change of scene from our field trip to Milan and Florence (more about this soon), we had the chance to represent ESSEC at the second day of The New York Times International Luxury Conference, held at Versailles, Paris. This year’s subject was “Luxury Beyond Product.” The conference brought together a diverse range of leaders in their respective fields and an audience of industry professionals to discuss and share their take on the matter. Thanks to the extraordinary group of speakers, it was an exciting conference that inspired us to think deeply about the most critical challenges and opportunities in luxury today.

The subject of “luxury beyond product” is not unheard of in the luxury industry. Customers today, and perhaps more importantly, customers of tomorrow do not simply want to purchase a product. Rather, they demand to buy into a brand or culture that connects with them across channels and shares a sense of identification. Emotional, authentic relationships are key to customers, going beyond the product.

In one of the sessions, titled “Connecting to the Edge,” Laurent Potdevin, C.E.O. of Lululemon Athletica, Inc., explained how his company introduces “Effortless loyalty,” a contemporary strategy to engage with customers beyond products without introducing a traditional loyalty concept, such as rewards, membership, etc.

Each Lululemon store cooperates with partners such as community centers and local yoga studios to offer classes and activities, linking customers to the brand through curated experiences. Potdevin described how most of these co-operations are not necessarily contractually fixed, but rather, based on trust between brand and partners. Within Lululemon, managers are asked to spend only 3 days per week at the store and during the rest of the time, to go out and establish or extend relationships with local like-minded spaces where customers go. Given the hype around the brand and the dedicated followers of Lululemon, the strategy seems to be working. Potdevin was supported by Liam Casey, founder & C.E.O. of PCH, who described the journey of customers in three steps, which starts from interest, to purchase, to experience. Through innovative concepts, such as Lululemon’s community engagement, the experience component (the most crucial) converts customers’ interest to loyalty and generates turnover by continuous purchasing of dedicated followers.

Introducing his take on “Luxury beyond product”, John Demsey, executive group president of The Estée Lauder Companies, Inc., shared some interesting insight into the strategic positioning of make-up leader MAC Cosmetics. Through the brand’s continuous engagement with diverse subcultures, MAC has nurtured its distinctive character over years and through its consistency in DNA, fostered a sense of authenticity amongst its customers and fans. Again, beyond its products, MAC stands for something that the consumers believe in and aim to be part of, by buying into it.

Throughout all sessions that day, various speakers shared their take on the matter with us. Maureen Mullen, co-founder & head of research of L2 Inc., introduced us to the strategy of Anastasia Beverly Hills, a vastly engaging cosmetic brand that is still unknown to some in the luxury industry, but one to learn from.  This remarkable cosmetics brand is the unchallenged No.1 leader amongst beauty-accounts on Instagram in terms of numbers of followers. The brand does not necessarily outdo its competitors with a particular extraordinary approaches, but rather through its frequency of posts and dedication to its audience. The brand fosters personal relationships with followers through user-generated content, including re-gramming and tagging followers.

In her closing remarks, Vanessa Friedman, fashion director of The New York Times and conference host, encouraged the audience to be brave and to be passionate about what they do. We felt that her remarks were spot on and a great conclusion of what has been shared throughout the day. Brands need to create emotional relationships with their customers and followers. Besides traditional push-content, audiences want to be part of their brands. Relationships are based on emotions and authenticity. Going beyond product excellence, if brands can create emotion and authenticity through engaging messages, platforms and experiences, they will be set for the future – ahead of many competitors.