“There is a tendency to think of ‘the wealthy’ in any country as a group of identical individuals,” explains Marc Cohen, one of two founding directors of Ledbury Research. “We think this over-simplification is dangerous for brands,” he continues. “Knowledge about the wealthy in fast-growing markets is hard to come by, so tends to be based on anecdote or generalisation.”
The London start-up launched in 2002 precisely to combat such misunderstandings and provide market research to companies that market and sell to high net worth consumers. On the eve of its 10th anniversary, the firm oversees research hubs in USA, Asia, Middle East and mainland Europe, sharing consumer insights with brands such as Louis Vuitton, Aston Martin, Rolls Royce, Harrods, Tiffany & Co and Ralph Lauren.
Today Ledbury provides a suite of both bespoke and off-the-shelf reports and services, spanning primary consumer research, industry research and secondary research. Perhaps of most interest to luxury executives, is the bi-annual release of The Luxury Market Insight Report, designed to be a single, timely and comprehensive source of insight, revealing the key facts, trends, developments and forecasts across the global luxury goods industries.
As the firm looks to celebrate its 10th Anniversary, we spoke with Marc about the relevance of market research and insights, in our dynamic and rapidly evolving luxury landscape.
“ Luxury brands increasingly move beyond close relationships with small groups, to more strategic and business oriented operations ”
Tell us some more about the concept of Ledbury Research and some of the opportunities/gaps in the market that you identified when launching…
We recognised that luxury brands and prestige firms need market research and feedback from their customers and prospects, as all businesses in every other industry sector do, and yet luxury brands were only being served by very generalist agencies.
These mass-market focused providers were great at reporting on the broad population, but did not have the specialist skills to find or properly understand the top few percent of wealthy consumers globally.
How are luxury brands using wealth insights and market research data to better reach and serve consumers?
Over the past decade we’ve noticed luxury brands increasingly move beyond an approach that simply relies on a first-class product and a close relationship with a small set of customers, towards a more strategic and business-oriented approach.
This has not only resulted in a general increase in the relevance and value of research to the sector, but it has also resulted in a considerable increase in the number of senior luxury marketers who have been recruited from FMCG backgrounds. These individuals are used to accessing data and insight at every stage of the marketing cycle, from advertising testing, to brand tracking, and competitor monitoring and now continue to require it in this sector.
Luxury brands have also globalised rapidly over the past decade, in particular with the strength of emerging economies latterly. Market research has played a vital role for many in helping senior marketing and branding teams understand this entirely new customer base, in countries and regions that the brand has had no prior experience in marketing and selling to.
“ Emerging market strength, a concerted digital push and an increasing desire for brand control are current key strategic themes ”
One of your flagship publications is the Luxury Market Insight deck. Published bi-annually it includes an overview of luxury hotspots, consumer sentiment, strategic themes and the outlook of major CEOs.
What were the driving factors in the launch of this publication?
The luxury market is represented by a wide range of participants in an equally diverse set of sectors. The aim of the report is to be a single comprehensive source of insight for all the latest key trends, strategic themes, headline numbers, and company activity; relevant to all market participants who want to keep ahead of the leading practices.
Where are the current luxury hotspots?
The most recent research highlights exciting pockets in South East Asia (Vietnam, Thailand and Philippines) as well as Latin America (Chile and Brazil).
Luxury continues to experience positive growth, but how do consumers currently feel about spending?
The industry may be growing, but the report highlights a mixed consumer outlook. Global sentiment has been positive, but this masks diverging regional outlook. Perhaps contrary to generally received wisdom, sentiment is on the rise in the US and falling in Asia.
What are some of the key strategic themes identified in the latest report?
Analysing the activity of the 40-50 leading global luxury brands, there are a number of strategic themes that are now widely established, including Asian and other Emerging Market Strength, a concerted Digital Push, the recovery in the US and an increasing desire for Brand Control. New themes that have more recently emerged include Male Luxury and Customisation.
Overall, do you feel the luxury industry is moving more positively or negatively when compared to the last edition?
In addition to a mixed consumer picture (see above), the picture from senior management is also uncertain. Our Luxury CEO Outlook Index is falling for the first time, so we’d expect a tougher 2012 than many imagined at the beginning of the year.
Excerpts from the recently released Luxury Market Insight Report
You also publish Wealth Segments, which are entirely qualitative reports that identify various types of consumers in various emerging markets.
What makes Wealth Segments different from other consumer research?
There is a tendency to think of “the wealthy” in any country as a group of identical individuals: we think this over-simplification is dangerous for brands. At the same time, we wanted to find a way of allowing readers to see the power of segmentation using market research. Wealth Segments are also qualitative, which allows real depth and rich-ness of insight, which we have found luxury brands are hungry for, as much of the research that exists on emerging markets is limited to just numbers and basic statistics.
Why focus on emerging markets?
Knowledge about the wealthy in fast-growing markets is hard to come by, so tends to be based on anecdote or generalisation. Given our experience in geographies like China, Russia, the Middle East and India, we think these reports allow the readers to build a deep understanding of the subtleties to “new wealth” in these exciting countries.
What’s the most recent country covered, and what did you find?
We recently released China and Russia Wealth Segments: despite sharing a border they are two very different places. We identified seven distinct personalities in these two countries.
At one extreme we have the Guanxi Connectors in China, whose wealth is inextricably linked to their network of contacts and whose luxury spend is large, but can’t be too overt in case it upsets their finely poised political network.
At the other end, we have the Capital Heirs in Russia – the next generation who are extremely well educated, but nervous about how they build the wealth that they are about to be handed by their parents
Where is next?
We’re just finishing the interviews for our Wealth Segments in India – itself a fascinating market which is being, perhaps unfairly, over-shadowed by China at the moment, but not for long.
“ There is a tendency to think of “the wealthy” in any country as a group of identical individuals, a dangerous over-simplification for brands ”
How will market research services be impacted by the increasingly rich data luxury brands are able to capture through their online activities?
Online retailing, marketing and advertising is of course powerful in that it allows tracking and ROI measurement in ways impossible through traditional channels. However, this data is limited to reporting on “what” has happened and not “why”, and the latter will always be the domain of a trained and experienced researcher, to read and interpret the verbal and non-verbal responses of interviewees.
Market research is also conducted with structure and careful administration – for example, ensuring that all the participants in the research meet carefully prescribed demographic and attitudinal profiles. Online data is gathered with very limited or zero ability for the luxury brand to understand from whom it has been gathered.
Particularly in affluent research, this distinction is very fundamental – it is essential to be directed by customers who are of the right wealth level and the right profile (which can be achieved through good quality research) rather than by one-off customers or mass-market consumers who may be generating a lot of the “data” but very little of the sales.
“ We will continue to see experimentation with brand extension as luxury operators look beyond core offerings ”
Finally, what are some key wealth/UHNW trends that you believe will unravel in the luxury space in the next decade?
The next decade will be truly fascinating for the luxury sector (and business at large). But the following we expect to see develop in the coming years, though are not by any means comprehensive:
We will continue to see experimentation with brand extension – both successfully and not so – as luxury operators look beyond their core offering. The split between the luxury mega-brands and the niche operators will grow wider and more distinct. Brands will continue to struggle to adapt to new sources of luxury consumers.
We also believe that markets such as India and Brazil will successfully export domestic luxury brands. A number of emerging markets will find wealth growth unsustainable, likely leading to social unrest and unease with luxury purchasing. And finally, luxury brands will be forced to take sustainability and corporate responsibility much more seriously.
To further investigate insights by Ledbury Research on Luxury Society, we invite you to explore the related materials as follows: