Generation of Luxury
The disruptive capabilities of Millennials are most prominently displayed in their taste in “luxury”. For Baby Boomer and, to a minutely lesser extent, Generation X, designer logos were considered the ultimate luxury status symbol. However, luxury items only convey status as long as there is a universally mutual understanding that the item is a symbol as such. For example, a Rolex is only a Rolex if there is a universal understanding that this watch is incredibly unattainable and high quality. But Millennials are changing this language of social symbolism by redefining luxury.
Millennials prefer experience over the product. Their priority is not owning more material statements of success and luxury, but to acquire new experiences. These moments of luxury help them define their personality, life, and taste.
From luxury accessories, apparel, to automobiles, traditional high-end brands are seeing a decline in brand equity among Millennials. Baby Boomers and Gen X regard luxury brands similarly across categories. They view vehicles and accessories as Mass Market/Leadership, and view apparel as high in the New and Fatigue quadrants. But all three luxury categories experience a dramatic drop in primarily Brand Strength among Millennials.
Looking closer at a single category, we find that luxury fashion brands cluster closer and closer to the Fatigue and Unfocused quadrant as we progress through the generations. Examining the brand equity of Michael Kors, we can see that the brand sits in the Leadership region for Baby Boomers and Gen X, but falls to the edge of the Mass Market region, becoming commoditized and fatigued.
Turning to the pillars, the pattern suggests that the driver for the brand’s decline in equity is falling differentiation. Among Boomers and Gen X, Michael Kors is highly differentiated, but among Millennials, differentiation is significantly lower. Differentiation the engine of the brand train, as it is responsible for premium pricing, increasing loyalty, and stronger word of mouth. This analysis suggests that among Millennials, brand loyalty and premium pricing power is diminished, and that Millennial consumers are less likely to consider Michael Kors to be able to meet future user needs and attract their attention.
However, not all luxury brands experience the same fall in brand equity among Millennials. For example, Bulgari’s equity has improved tremendously from Boomer to Gen X to Millennials. Among Baby Boomers, Bulgari sits in the New/Unfocused quadrant, whereas among Millennials, Bulgari is on the cusp of Leadership.
Bulgari has capitalized on Millennial’s preference of enriching experiences over material ownership in their campaign, Roman Treasures, launched at the end of 2015. Centered on a microsite, Bulgari’s campaign allows its customers to virtually travel to Rome and explore the city’s iconic sights by way of a jewelry scavenger hunt and 360-degree graphics.
Additionally, not all luxury brands shift in brand equity among the three generations. Tesla demonstrates its strong equity by maintaining leadership positioning across generations. The brand is able to break away from the category and resist the commoditizing trend experienced by other car brands.
Only a year ago, the average Tesla Model S owner lived in California and earned more than $100,000 a year, but today, the brand has a much more diverse customer base. Tesla falls under the traditional definitions of luxury, conveying status and success, while also standing for sustainability, advanced technology, and now, affordability – traits that appeal to Millennials. Analysis released by Tesla found that Millennials are leasing vehicles at higher rates than the overall car-buying population, opting for more luxurious, tech-forward cars than they could otherwise afford to buy. Recently, Tesla began selling traded-in versions of its all-electric Model S on its website, allowing the brand to migrate into different age and earning demographics while maintaining its core customer base.
Millennials view traditional luxury products as expensive indulgences inconsistent with their desire to live in a modest and sustainable way. But this doesn’t mean Millennials aren’t luxury shoppers. In fact, the opposite is true. Millennials’ penchant for discovering new brands, high-quality goods and company’s heritage make them natural luxury consumers. But these goods are no longer restricted to jewelry and handbags. Now these products include higher-price farm-to-table foods and craft products, as well as investments in experience, such as travel, exercising, etc. To navigate the changing terrain of luxury, brands must focus on emphasizing their brand’s unique personality, delivering value beyond the product itself.