the future of the luxury market gerd leonhard @ luxury interactive london march 17 2009

★ twitter.com/gleonhard★ www.mediafuturist.com

We are all struggling with...

Broadband Culture

Broadband Culture

Juggling Rivers of Information & Media

The global economic fabric has changed

Many trusted old business

models seem to have

suddenly stopped working

Things have dramatically changedWe are entering a creative, social and collaborative eraMany of us are more concerned with global issues such

as Energy & EnvironmentMany of us are increasingly more concerned with

Self-Fulfillment

The Switch from Closed to Open: Software

The switch from Closed to Open: News Media

The switch from Closed to Open: Elsewhere

Decentralization vs Destination

Microsoft / Windows Google

MTV Youtube

Tower Records / HMV Spotify / Last.fm

Traditional Telecoms SkypeCable TV Internet TV / IPTV

Centralized >>> Decentralized

Media Consumption Trends

0%

25%

50%

75%

100%

2008 2009 2010 2012 2015

Percentage of Revenues from Digital Services *my own estimates

Music Video Games Books Mags & Print

In Media, no doubt...

From

To

Meaning

Control TrustOpenness

New Economic Trend-Tags• Believe Economy (perception rules)

• Trust Economy

• Attention Economy

• Experience Economy

• Attraction Economy

Luxury (re)-defined•In economics, a luxury good is a good for which demand

increases more than proportionally as income rises, in contrast to a "necessity good", for which demand increases less than proportionally as income rises.

•Another market characteristic of luxury goods is their very high sensitivity to economic upturns and downturns, high profit margins as well as prices, and very tightly controlled brands.

•Conspicuous consumption: the lavish spending on goods and services acquired mainly for the purpose of displaying income or wealth...a means of attaining or maintaining social status.

Potential Future Luxury Items

Was Is Will Be5

50

100100

50

10

TimeChoices

A trend? Luxury for myselfPlain and demonstrative extravagance

may no longer be the main goal

Real Privacy becomes a luxury

Personal transformation is becoming

more important than extroverted

presentation

Looking at this Future, I would like to ask:•Will Luxury still really be something that

is ‘not a necessity’?•Will the primary purpose of Luxury

products and services still be to display income or wealth?

•Will Luxury brands still be able to maintain tight control over everything, and prosper at the same time?

Leading luxury brands are Icons

<>The Internet creates... a

leveled playing field.

In your business, how important is

A table of...challenges

Product Centric Innovation User-Centric Innovation

Extreme Control over Brand Shared, Open Brand

Exclusivity Inclusive Specialness

Retail Stores Retail Spaces (RL, Web)

Was Maybe?

Luxury brands have their own ecosystemshad

A tough question for Luxury Brands

Exclusion drives value

Inclusion drives value

Music Industry Learnings

Comparing the the Music Industry and the Luxury Business

• Strong emphasis on ‘creative genius’

• Strong emphasis on controlling every step of the process, supply chains & distribution

• ‘We know what’s best’, top-down approach

• Iconic status of products, and the brand itself

Reviewing the assumptions...

Eight of ten purchases are emotionally driven.

Multi-sensory Environment?

Luxury is an Experience - so how could this happen Online?

Yes... Touch!

And

Source: MetheMedia.com

Can Luxury’s aura of conviction and exclusivity be preserved on the Web?

•Probably: Yes - if you put the same care into your web presence than you put into your products.

•How about exclusive web communities with exclusive memberships?

•How about exclusive content?

How about...

LuxuryTubeLuxury.fmLuxuryPeopleLuxuryOS?

Remember?“To bring our customers into our world, to convince them via the product.”

Analysts estimate that online luxury revenues account for below 5% of total global sales.

Source: WSJ

94 % of the ultra affluent in the United States regularly buy products online

Source: 2008 Unity Marketing study

Exclusivity... Online?

Let’s talk about

Instruments of Growth...

Some ideas on Brands 2.0

A brand is no longer a static ‘thing’A brand is connected, living entity (i.e. part of an ecosystem)Brands are questioned entities, andIncreasingly transparent... andSoon, so much harder to control

In the near future, a brand's equity may well not rely on how well it is controlled, but on how well it is shared...?

New kinds of Brand Narratives...

Social media

Social Media is becoming... CRM

Social Media is just a component of

Social Business

Information > ConversationInterruption > EngagementAnnoyance > Entertainment

This is an Ad > This is Content“Great products that have marketing

embedded in them” (J. Hicks, CPB)

“Great products that have marketing

embedded in them” (J. Hicks, CPB)

Some 2009 Advertising Trends

•Mobile Advertising will explode•Twitter will enter advertising•RSS & feeds will finally go mainstream•Podcasts (audio & video) keep increasing in reach•Word of mouth / mouse will continue to increase in importance, and so will UGC as a key driver

•Display advertising will continue to decrease, spending on Search (Social!) will grow dramatically

The Future is not about Technology...

Emerging Cultural Practices

The $$ always follow the Habit-Shifts

Track and really understand the key Habit-Shifts and you’ll find the new revenue opportunities

What remains crucial:

being real i.e. authentic, validated and certified

Summary

★email me at gerd@mediafuturist.com

★twitter.com/gleonhard★facebook: gleonhard

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Thanks for listening!