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.
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.
I totally agree that empowering evangelists, not celebrities, is the better way to go…well..in general that is.
Problem with that here is – if you gave a $1,000 leather brown bag to every day buyers, they will quickly realize that it’s a $1,000 leather paper bag. In this instance, I don’t see the value in the product at all…from any perspective. To me, the ONLY way this product would succeed is through informal celebrity endorsement.
If you have a truly valuable product, then go to the real buyers/evangelists and skip the celebrity focus.
D
Hi Patrick: I think Chip Heath and Dan Heath talked about this idea in their book, Made to Stick. There are some cases when celebrity spokespeople are effective promoting products and services, and some cases when they aren’t.
Stephen Strasburg will sell way more baseball equipment in the DC area than the 2010 MVP for the Reston Little League (or me, for that matter). On the other hand, in a B2B sales scenario, the “everyperson” (John/Joan Q. Public), can be more effective selling a CRM software application, because in the mind of the buyer, if John was successful with XYZ Software, he can be, too.
Back to the $1,000 leather shopping bag. Although I’ve never been motivated to buy one, I think that it would take a celebrity to sell them. I doubt that my wife would be inspired to buy one because her colleague or friend just bought one. At least I hope not!
Danny and Andrew,
While celebrity endorsements will always have a role in the marketing of luxury goods, it has diminished with the advent of digital networks and word-of-mouth marketing. Luxury brands are growing confidence in their immersion of social media marketing including social networking sites like Facebook and Twitter. I think this trend will continue at the expense of the one-time celebrity placements.
As for the $1,000 ‘grocery-bag’ leather look-alike, while we may not be targeted buyers, I suspect that the bag will look good next to the $15,000 Patek Phillippe watch while driving the Aston Martin V8 Vantage.
Thanks for reading and taking the time to comment.
PS – You know the luxury goods pricing joke…how do you sell a $1,000 ‘grocery-bag’ leather look-alike handbag?
Answer: Place it next to the $5,000 leather bag. Everything looks inexpensive by comparison.
Patrick Lefler
The Spruance Group
Site: http://www.spruancegroup.com
Blog: http://www.spruancegroup.com/blog
Newsletter: http://www.spruancequarterly.com
I think that it is way too impractical to have a leather grocery bags. After all, the current grocery bags that we have is recyclable so there is no need for us to make another product. Very impractical since the economy is not that stable yet. There’s a lot of things that is more important to buy than that of leather grocery bag.