LUXURY H O W G E N E R A T I O N Y W I L L I M P A C T T H E F U T U R E O F

Caroline E. Miller

March 13, 2014

Shared Values

Table 2.4.1

Generational shared values & related unavoidable experiences

Birth Dates Defining World Events Key Technologies

Early

Boomers 1946-1954 Nuclear Prolif./Cold War, Korean War, Vietnam War Air travel (jets)

Late Boomers 1955-1965 Space Race, JFK Assassination, Vietnam War (The Draft) Television

Gen X 1965-1979 MLK & RFK Assassination, Civil Rights, Watergate, Oil Embargo CNN, cell phones

Gen Y 1980-2000 Berlin Wall Falls/USSR Ends, AIDS, Globalism, '9-11' Internet, iPhones

Gen Z 2001-2014 War on Terror, Great Recession, China Rise, Cyber-attacks Data mining, iPads

Trans-generational Belief Matrix

Table 2.4.2

Generational Beliefs: Instrinsically & Extrinsically Based

Societal Characterizations Social Views Psychological Profile

Baby

Boomers "Greatest", "Had it all" Optimism, work ethic Self-obsessed

Late Boomers "I'm OK, I'm OK" Cynical, self help Repressed, stuck

Gen X "Lost", "Why me?", dropouts Skeptical, cautious, unfocused Anxious, withdrawn

Gen Y

"Me", lazy, instant

gratification

Connected, Facebook, debt =

OK

Narcissistic,

addicted

Gen Z Diverse, most tech savvy Sophisticated, shaped by media Still maturing

“MY SCREWED, CODDLED, SELF-ABSORBED, MOCKED, SURPRISINGLY RESILIENT

GENERATION.”

WHO IS GEN Y?

- Noreen Malone Living off of

parents

$24K in Student Loans

Struggling to find a job

HOW CAN THEY AFFORD LUXURY!?

Figure 1. Yolo. http://sd.keepcalm-o-matic.co.uk/i/keep-calm-and-yolo-675.png Figure 2. Just Do It. http://madamephoto.com/wp-content/uploads/2011/07/JUST-DO-IT.jpg

Only 1 of the top 5 spending

categories for gen y is a non-discretionary

expense:

Car insurance

Figure 3. Chanel Purses. http://iwantbigcloset.tumblr.com/post/16583138407

LUXURY HAS CHANGED

“Luxury has changed significantly in the past

few years, becoming

more personal, more intimate, more value-

focused, and more Tech-savvy. Looking ahead, Gen Y will lead these and other trends in luxury…”

- Dr. stephen kraus

Figure 4. Monopoly Board. http://imghumour.com/assets/Uploads/You-can-tell-tha-Monopoly-is-an-old-game.jpg

The Making of Hermès Leather Gloves http://www.youtube.com/watch?v=WK0yjgiUyRU

• Accept things as they are

PERCEPTION OF VALUE

• DEMAND PREMIUM PRICE POINTS BE JUSTIFIEd (QUALITY,

CRAFTSMANSHIP) • WANT TO KNOW WHERE PRODUCT

WAS MADE, WHO MADE IT

Luxury = expensive + exclusive

• Luxury is a Status Symbol

• Trophy

representing the lifestyle they worked so hard to earn.

• “I CAN AND YOU CAN’T”

THE BABY BOOMER

LUXURY CONSUMER

Democratization of Luxury luxury goods are now increasingly available to

most, if not all, consumers (Okonkwo, U., 2007, p. 69).

Masstige the merger between ‘mass’ and ‘prestige’ markets

(Okonkwo, U., 2007).

Zarafication Global market deterioration characterized by low-end market competitors creating a dominant low price & benefit position that expands low-end market share, thereby eroding the luxury

market domain. (Okonkwo, 2007, p. xv).

LUXURY: NO LONGER

A STATUS SYMBOL

Accessible Luxury

Post-Materialist Era

Mix & Match (Fast Fashion/

Luxury Collaboration)

Reprinted from Luxury Online by U. Okonkwo (2010) p. 260

THE NEW RENTAL

RETAIL MODEL We recognize that in todays

economy shared consumption is the ideal way to address consumer

demands. - Greg Pippo, CEO

EVEN JUSTIN

BIEBER OPTS FOR

RENTAL LUXURY

Collaboration between luxury &

mass-fashion brands

Mass-Fashion becomes Mass-

Premium-Fashion

For the first time in the history of luxury, mass-

fashion competes with luxury

LUXURY MEETS

MASS-FASHION

THE NEW CONSUMER GROUP:

LUXURY MASS CLASS

Xhiliaration dress $24.99

Louis vuitton Purse $3,000.00

Chanel sunglasses $399.00

• The New Wealthy Middle Class

• Trade down in some categories so they can

trade up to acquire luxury goods

• MIX & MATCH CONSUMERS

HOW DO ‘OLD WORLD’

LUXURY BRANDS STAY

RELEVANT WITH GEN Y?

“Luxury brands that want to

continue to reach the highest

income customers need to

reach out to slightly less

affluent Millennials today.”

- Pam Danziger, Putting the Luxe

Back in Luxury

SUIT SUPPLY • Sell well-designed men’s

suits beginning under $500

and going up to $2000 for

made-to-measure

• Highly trained associates

and in-store tailors take care

of alterations while customer

waits

• Positioned to serve their

customers needs today and

in the future

Why won’t the newly-promoted HENRY’s shop elsewhere when

his salary increases?

Research shows shoppers are creatures of habit.

LUXURY VENDING

MACHINES

CHANEL Pop-Up Shop in London’s Convent Garden • Entrance Products for Less

Affluent Consumers

• GEN Y LOVES INSTANT

GRATIFICATION!

MARY J. BLIGE MY LIFE

FRAGRANCE

THE NEW MEANING OF

PERSONALIZED CUSTOMER

SERVICE

THE NEW ERA OF

POST-MATERIALSM

Old Luxury

Consumer Values

• Money & Status

• Running Faster

• Debauchery

New Luxury

Consumer Values

• Culture & Spirituality

• Slowing Down

• Work &

Craftsmanship

MEANINGFUL CONSUMPTION New Holistic Norm & The 4-P’s

Danziger, P (2012)

NUDIE JEANS CO. Embraces 3 R’s of Environmentalism

REPAIR IN-STORE GLOBAL REPAIR SHOP

REUSE JEANS THAT DON’T SELL ARE CUT INTO STRIPS AND TURNED INTO DENIM RUGS

RECYCLE GIVES OLD SAMPLES

TO YOUNG DESIGNERS

“Post-Materialism”:

An Invitation to An Experience

Louis Vuitton City Guides Coco Chanel Portrait

3 Tectonic Shifts in the Gen Y Marketing World

Mega-trends:

1. Global fast fashion: exclusivity Zarafication

2. Democratization: the lower price “bridge” to “masstige”

3. Social media marketing: “you’re in, or you’re out!”

Dubois (2013)

Evolving Consumer Constructs: Ego Gratification

Emotional

How the product engages the consumer emotionally

Functional

How the product performs

Technical

Differences in features, design or materials

NEW: Luxury Ladder of Benefits (Silverstein et al, 2013)

OLD: Maslow’s Pyramid of Needs (Maslow, 1943)

Miller Gen Y Luxury Survey: Design Principles

Layers of a Questionnaire

Objectives

Questions Words Layout/Format

General

Principl

Specific

Principle

Respondent

Orientation

after Gendall (1998)

Miller Gen Y Luxury Survey: Elements & Question Types

• Basic Demographics – establishing the sample characteristics (i.e., age, gender, income)

• Fixed-alternative – few & clear-cut answers to multiple choice questions (i.e., car ownership, housing, credit-worthiness, etc.)

• Open-ended – respondents can express his/her answer from pre-selected choice (i.e., ranking of personal fears & causes, influences, limitations, etc.)

• Projective – more vague questions or stimuli that attempt to project the respondent’s attitudes (i.e. positivity/negativity, in-securities, feelings, well-being, etc.)

• Behavioral – to assess market size/share; ownership, purchasing patterns & behavioral patterns; future trends

• Attitudinal – to assess opinions, self-image, perceptions (real or not), shared views (with other buyers), needs satisfied by buying, etc.

• Classificatory – for market segmentation across companies/brands; according to size, type of business, and geographic location.

B2B International (2013)

Miller Gen Y Luxury Survey: Domains & Demographics

• Demographics: 8 Questions (1-8)

• Shared Values/Experiences: 12 Questions (9-11, 14, 21-22, 30, 32-35, 37)

• Psychological Susceptibility: 13 Questions (24-29, 36, 38-43)

• Financial Capacity/Access: 10 Questions (12-13, 15-20, 23, 31)

• Gen Y ‘Older’ (Ages 25-34): born between 1980-1995

• Gen Y ‘Younger’ (Ages 18-24): born between 1990-1996

• Gen X (Ages 35-44): born between 1970-1979

• ‘Late’ Baby Boomers (Ages 45-54); born between 1960-1969

• Baby Boomers (Ages 55-74): born between 1940-1959

• ‘Greatest’ Generation (Ages ≥ 75): born before 1940

https://www.surveymonkey.com/s/Millerthesis

IN CONCLUSION • Luxury brands needs to look

beyond targeting only the

ultra-affluent demographic, &

reach out to HENRY’s & The

Luxury Mass Class

• By knowing these

consumers luxury brands

can better develop successful

& properly focused marketing

strategies

• Using a well-designed survey

of relevant customer beliefs,

views & values is the most

powerful way for luxury

brands to better “know” their

potential customers.

IN CONCLUSION • The results of a well-

informed market survey of potential (& past) luxury brand customers can be used to segment the market for subgroup analysis of the key factors contributing to luxury purchasing patterns & preferences.

• The Gen Y data captured in this survey will demonstrate the differential expression of the 3 key premises compared to other cohorts

IN CONCLUSION • The predictive value

of the “Miller Gen Y

Luxury” survey for

future luxury market

trending among Gen

Y is the subject of

ongoing research.

Thank You!