In an article published in this weekend’s Wall Street Journal here (subscription may be required), it’s reported that Spanish leather goods brand Loewe has introduced a leather version of an ordinary brown grocery bag for about $1,045. The bag is designed by Stuart Vevers – known previously for his handbag creations that transformed the staid British brand Mulberry into a ‘hot creative label.”
While the article mostly talks about the upscale handbag market – reaching new heights in 2006; falling (as most everything else in the luxury goods market) during the 2008 economic crisis; and now facing the challenges of growing again in 2010 and beyond – much can also be learned about the marketing strategies of these luxury items.
In a time when big advertising budgets are a rarity, Loewe is banking on what it calls “a word-of-mouth” strategy. But the reality of their strategy is slightly different – instead, it seems that Loewe is following the tired and well-used strategy of putting the bags into the hands of celebrities. Angelina Jole, Jennifer Lopez and Madonna have all been spotted with these bags and Loewe is hoping that their ‘informal’ endorsements will boost consumer demand for these high-priced luxury goods.
If Loewe really wants to create a true ‘word-of-mouth strategy’ they should change tactics to get these handbags into the hands of their real buyers. Not just any buyers, but buyers who will be so excited about these bags, that they will tell everyone they know. Find a small, but influential group of buyers – again, not your average buyer or your typical fan – these are folks on the fringes who are driven by passion and collaboration. Evangelists drive successful word-of-mouth marketing strategies, and Loewe needs invest their advertising resources into finding these people and getting the product in their hands.
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Here’s the takeaway: Evangelists, not celebrities drive successful word-of-mouth marketing strategies. If Loewe can find these people, they hit the jackpot. On the other hand, if they continue to follow the tired strategy of product placement in the hands of a few celebrities, sales will disappoint and profits will languish.