How can luxury brands tap into the potential of emerging markets and new segments of luxury consumers?

Luxury brands may reach new customers in emerging markets by learning about what those people enjoy and want. They can establish friends with local businesses, offer unique items that reflect the local culture, and connect with people via the internet. They may need to make goods that are less expensive at times so that more people can buy them. Luxury businesses might also collaborate with local celebrities to help spread the word. It is critical to be respectful and polite to the people in these new places, as well as to study their rules and be decent citizens. This allows luxury businesses to make new friends and succeed in new markets.

Market research can provide valuable insights on the rapidly changing patterns of consumption of luxury. Social listening is also great way to understand the changing sentiments of the luxury consumer. In addition, understanding how to use the vast amount of data created to understand about new patterns of emerging demographics and groups. Consumption patters of luxury are highly segmented by different demographics. Understanding these segment, can help to understand how to achieve product market fit as well as message market fit for communications.

Luxury brands can tap into emerging markets and new segments by first understanding local cultures and preferences. This involves market research and leveraging local influencers to build brand credibility. Offering tailored products that resonate with local tastes and values is crucial. Brands should also invest in digital platforms and e-commerce to reach tech-savvy consumers. Providing exceptional customer service and exclusive experiences will help establish strong connections and foster brand loyalty in these new markets.

Several emerging markets have great growth potential, according to consultancy Bain & Company, India, South Korea, Singapore. The key point is for the brand to understand how consumers in the country they are seeking to enter behave, what the culture is like there, and what they take into consideration when purchasing a luxury product. Another relevant point to consider is are the biggest consumers of luxury locals or visitors? Understanding the culture and behavior of the luxury consumer is essential for the brand to make decisions.

In order to truly understand your customers, you really need to speak with your customers. Utilize all the data points you would normally use and then actually talk to 100 luxury consumers. Segment the customers by net worth (if possible). An ultra high net worth consumer is going to have very different behaviors than a high net worth consumer. Ask open ended questions.

There are strategic foresight and consumer trend consultancies in the market, including The Future Laboratory, for example, who have developed a methodology as well as the global network of industrial, cultural and regional insiders to discover fundamental changes inducing micro- and finally leading to macrotrends. Leveraging these insights, companies can identify upcoming changes in existing communities as well as emerging new cultural communities early on. However, for developing a profound understanding and, even more important, for growing trust and a brand’s reputation it is key to engage in conversations and in co-creation processes, rather than just studying these audiences.

Luxury consumers have high expectations and standards when it comes to the products and services they purchase. Offer quality and exclusivity and express how your luxury product can enrich lives with experiences, emotions, stories, and meanings that resonate with your customer persona and who they want to be.

Work with experts in the space. Segment your audience by net worth. A high net worth (HNW) likely has very different needs then an ultra high net worth consumer. Know your audience. Understand the emotional triggers as to why people consume luxury items. Some of these emotions are deeply rooted in need for self worth, self actualization and social acceptance.

Conduct in-depth research to understand cultural nuances, preferences, and what defines luxury within that specific market. This could involve incorporating local design elements, collaborating with local artisans, and offering products or services tailored to local traditions or celebrations. The new generation of luxury consumers prioritizes experiences and social responsibility alongside traditional hallmarks like quality and craftsmanship. Luxury brands can create a unique value proposition by offering experiences that align with their brand story. This could involve hosting exclusive events, offering educational workshops on sustainable practices, or crafting limited-edition collections made with recycled materials.

Stepping into emerging markets isn't about reinventing the wheel—it's about shining a light on why it was crafted in the first place. For established luxury brands, the allure lies in their heritage and the desire of new consumers to join this exclusive tribe. It's about belonging to a story that's already being told with elegance and grace. For newcomers, the focus shifts to carving out a niche with market-specific offerings or events that speak directly to local tastes and values. Remember, whether entering new territories or reinforcing positions in existing ones, the key is to connect deeply, making every consumer feel like part of your brand's ongoing legacy. It's not about selling a product; it's about inviting them into a tradition.

Tapping into the potential of emerging markets and new segments of luxury consumers requires luxury brands to adapt to local contexts and cultures thoughtfully and strategically. Understanding and respecting local culture is crucial. Brands should consider cultural nuances in their marketing, product design, and customer service. This may involve adapting products to suit local tastes or celebrating local traditions and festivals through special collections or marketing campaigns. Develop marketing strategies that resonate with local audiences. This could mean using local languages in advertising, engaging local celebrities or influencers as brand ambassadors, and creating campaigns that reflect the everyday lives of local populace.

Listen to Dr. Christian Kurtzke. I've seen over and over brands entering "fast paced markets" with a short term strategy to drive sales. They insert a small team and start selling. They are not in the fabric of the community in which they serve. You have to earn trust and respect. This is not done by parachuting in. This is not a short term sales strategy, it needs to a long term strategic narrative for the company. Your plan then becomes focused on being a part of the community vs selling x to consumers.

Adapting your brand can be difficult if you stray too far from your brand DNA, OR if you are simply too stuck in the culture of your headquarters. Luxury requires a strong brand universe, but it can be translated through local cultures. One excellent way to do this is to see how your brand is being used or interpreted by subcultures within this target market. Consider how the local art world views your brand. Reach out to local taste makers and local brands that can prove complimentary as collaborators. Listening to your customers in the region via social media, sales staff, and customer behaviors give you a strong insight into how adaptation and innovation can be born with your company's DNA still firmly underneath.

Before entering a new market, conduct thorough research on the local culture, traditions, and values. This includes understanding religious beliefs, social norms, and historical context that could influence consumer behavior and preferences. Provide your team with cultural sensitivity training. This helps employees understand the nuances of different cultures and avoid unintentional offenses in marketing, customer service, and product design. This is one of the projects we work on at our consulting firm.

When trying to target Gen Z, it is important to understand the fundamentals that drive them, where they are and what they value in a brand. Some examples include: 1. Digital-first focus: Platforms like TikTok, Snapchat; e.g., Gucci’s virtual sneakers. 2. Collaborations: Strategic partnerships with their loved brands and influencers; e.g., Louis Vuitton x Supreme. 3. Sustainability: Ethical practices and eco-conscious initiatives, e.g., Armani’s fur-free policy. 4. Immersive experiences: AR shopping and digital interactivity, e.g., Farfetch’s AR tech. 5. Authenticity: Real engagement and value alignment; Gen Z prefers brands that reflect their values.

You can create vertical and horizontal brand extensions to harness new segments of customers and to diversify profitability. Vertically: I talk to many luxury founders who are apprehensive about creating a down scaled product because the lower price point might dilute their brand image. This strategy isn't one size fits all, but when developed and marketed correctly, can produce strong numbers. Horizontally: Venture into a new category that can enhance the storytelling of the brand. A great way to test this is to establish brand partnerships (e.g. limited edition items/experiences) and review the data.

"Luxury" is high in ambiguity. A high net worth individual may see having a collection of luxury handbags as the standard, whereas a "luxury" purchase for a gen z may be something completely different. I recall buying my first "luxury" item. It was a watch. It was less than $500 usd, however at the time it was more money then I was comfortable spending on me. As my career grew (and income), I slowly moved up the ladder in terms of watch purchases. I am still loyal to the brands that targeted me early in my watch buying journey and they have benefited from increasingly expensive purchases over the years. Don't be afraid to go down market and experiment. Build a loyal fan base. Stay close as your fan bases disposable income grows.

Une belle manière d'innover, est selon mes observations, que les marques de Luxe intègrent complètement le potentiel du marché de la seconde main dans leur stratégie. On le constate, de plus en plus de personnes choisissent la seconde main pour faire leurs premières acquisitions d'articles de Luxe. C'est un potentiel à ne pas sous estimé car les acheteurs de seconde main Luxe sont les futurs clients pour des articles neufs ! Il y a même un double avantage, car ces acheteurs de Luxe d'occasion sont déjà convaincu par la marque et ses produits, la conversion se fera d'autant plus facilement et naturellement.

Engaging with new and emerging segments are critical to luxury brand's growth. Baby Boomers currently represent 20-30% of the luxury market with Gen X with 30-40%. By 2025 Millennials are projected to be 45% of the luxury market and by 2035 Gen Z is expected to be at least 40%. If you are not building the brand dream for new markets, you lose momentum to drive demand into the next generation. Consider the changing value systems of emerging luxury classes like HENRYs (High Earners Not Rich Yet) who value authenticity and equality. To effectively market to HENRYs, focus on creating authentic connections, highlighting quality and sustainability, offering personalized experiences, and leveraging digital platforms for engagement.

Influencer marketing is your friend. There are plenty of examples of luxury brands partnering and collaborating with influencers to create highly relevant, authentic and engaging content. Gucci and Francis Bourgeois: trainspotting campaign. Mugler and Aleali May collab on Alien Perfume campaign Prada and Lil Nas X on Linea Rossa collection.

I love Dior's strategy - the brand created engaging social content that showcases values, stories, and products. Dior uses IG and YouTube for live-streaming fashion shows and BTS content to create a sense of exclusivity and connection with their fans. They also use IG Stories and TikTok to enhance customer service and foster loyalty.

"Have a clear set of KPI's based on reality. You are not going to go viral and chances are if you do, it is for the wrong reason. Keep it simple: SMART: specific, measurable, achievable, relevant, and time-bound. Utilize tools to measure each and every word, image, placement, channel, platform.

Analyze data to see what works and iterate constantly! Collect customer feedback to improve satisfaction and loyalty. Test new ideas to keep your brand fresh and relevant.