Under the Influence with Terry O'Reilly - Luxury Advertising

Episode Date: July 15, 2022

Luxury Marketing is a category that is completely different from traditional brand marketing – because it is in the business of selling fantasy. We’ll look at the top 10 most powerful luxury brands in the world and we’ll delve deep into our collective psyches to examine why we all desire expensive products in our lives -and what that really says about our inner selves. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling.

Subscribe now, and don't miss a single beat. Due to popular demand, we've dug very, very deep into our archives and are pleased to announce the re-release of episodes from the last season of The Age of Persuasion. And we've remastered them to fit our Under the Influence format. Here is an episode from 2011. This is an apostrophe podcast production. You're so king in it. Scores of it in an instant.

Your teeth look whiter than noon, noon, noon You're not you when you're hungry You're a good man with all teeth You're under the influence with Terry O'Reilly. Tibet is known as the highest region in the world. With an average elevation of 4,900 meters, it is sometimes referred to as the roof of the world. In the 1930s, legendary advertising creative director James Webb Young

found himself on the border of Tibet, walking through a street market. As he looked at all the various wares the merchants were offering, something suddenly caught his eye. It was the most beautiful, colorful, hand-embroidered bedspread.

The trader who was selling it caught the sparkle in Young's eye. He waved him over and draped the stunning fabric across his arms. As Young's fingers ran over the fine material and its intricate design, the trader told Young all about the bedspread. It had been made for the bed of an Indian princess. But there had been a war in his country. Her castle had been raided, the bedspread was stolen,

and somehow, over the years and over the miles, it had found its way to this street bazaar that morning. James Webb Young paid a small fortune for that luxurious bedspread that day. But you see what happened there, don't you? Young didn't pay for the bedspread. He paid for the story. And here's the other interesting thing to note. James Webb Young was a top New York creative director.

He should have been immune to that pitch. But he was completely enamored by it. Proving that while a luxury item must be of superior quality, its most important feature is emotional. There's no doubt about it.

Luxury items offer us something regular products cannot. Come with me on a carriage ride of the world's top luxury brands. I want to show you how the luxury market has grown to become a $300 billion category, why the marketing of luxury products is so very different from regular brands, and why we are compelled to buy them. That expensive watch on your wrist may keep good time,

but the real magic is how it makes you feel. You're under the influence. Luxury is the opposite of necessity. The need for both is an interesting aspect of human nature, and it's one that has evolved over time. Not that long ago, people would only buy what they needed to survive – food, shelter, and practical rugged clothing. But beginning in the 19th century,

a new category took on a larger importance in the world. That category was luxury goods. The word luxury comes from the Latin word luxus, meaning excess or sinful indulgence. Hmm, Lexus anyone? In many ways, luxury marketing was born in the 1800s. It was an era that profoundly changed the world through invention and discovery. Huge advances in medicine happened as well, which led to explosive population growth. Europe's population doubled in the 19th century to 400 million, and numerous cities

surpassed populations of a million or more for the first time. It was also the century of the Industrial Revolution, which created new socioeconomic groups, ranging from the dirt poor to the bourgeoisie to the industrial titans. One of the distinguishing factors between the classes was the acquisition of luxury goods

to signify wealth and social status. It should come as no surprise then to discover that six of the top ten luxury brands in the world today were born in that era. As of this writing, according to Business Week's annual Top Ten World's Most Powerful Luxury Brands ranking, the number one luxury brand is Louis Vuitton. Founded in 1854, Louis Vuitton was an apprentice trunk maker, or luggage craftsman. He became so good at designing leather trunks that Napoleon III of France appointed Viton

as the official luggage maker to his wife, the Empress. From that success,itton built an empire. Today, the brand is valued at $17.78 billion, and it owns dozens of other luxury brands such as Givenchy, Donna Karan, and De Beers. Number two is Hermès, valued today at $8.4 billion. Started in 1837, founder Thierry Hermès began by creating leather harnesses and bridles for, you guessed it, the carriage trade. Number three on the list is Gucci, founded in 1921 in Florence, Italy. Number four is Chanel,

founded in 1909 by Coco Chanel, who used to be a singer in French cafes. Number five on the list is Hennessy, the famous French cognac house. Founded in 1765, it sells over 50 million bottles of cognac a year worldwide, commanding a market share of over 40%. Who knew? Number six is Rolex, the single largest luxury watch brand in the world, founded in 1905. Number seven is Moet & Chandon, which was founded in 1743 and is one of the world's

largest champagne companies, producing over 26 million bottles annually. Number 8 is Cartier, founded in 1847. The famous jeweler and watchmaker now has over 200 stores in 125 countries. Number 9 is Fendi, the Italian high fashion brand founded in Rome in 1925. And number 10 is the famous Tiffany & Company. Founded in New York, Tiffany's began life as a stationary and fancy goods emporium, but soon specialized in diamonds.

The famous blue Tiffany box has set many hearts aflutter and is trademarked as Pantone Color No. 1837, named for the year Tiffany's was founded. And of course, the store is famously linked to the film Breakfast at Tiffany's. Most traditional products in the world today are marketed to solve a problem, to get out those nasty stains, relieve that Excedrin headache number five,

or to keep you warm while using a blanket with arms. Not so in the world of luxury marketing. To begin with, luxury is a category unto itself. Whereas sneaker brands compete with other shoes in the sneaker category, and kitchen stoves compete with other kitchen stoves, the luxury category is unique. As the CEO of Rolex once proclaimed, why do I need to know how the watch market is doing? I'm in the business of luxury. It's a very telling statement. Luxury marketing exists on a very different plane than classical marketing. For starters, it is the dream business.

Because it exists to create and fulfill fantasies, luxury brands cannot rely on research studies or focus groups like regular brands. Instead, luxury marketers must create a vision of the future that propels their customers to a place they could not have imagined themselves. Remember the famous Chanel No. 5 television commercials we've spoken of in the past? They painted a picture of extreme wealth and exclusivity and the odd, illicit love triangle. I am made of blue sky and golden light. Ridley Scott directed a sensual ad for Chanel No. 5 back in 1979. It is considered a classic commercial. In the opening scene, we see a stunning mansion

through the manicured trees of an estate. Then, a beautiful woman sheds a robe and sits by a beautiful swimming pool. I am made of blue sky and golden light. A young man suddenly appears and dives into the pool. And I will feel this way forever. He swims over to her, climbs out of the pool, and disappears.

Then a voice, belonging to actor John Huston, says, Share the fantasy. Chanel No. 5. Nobody had presented a sensual dreamscape like that before in advertising. And that tagline said it all. Luxury brands are sold on fantasy. Take a quick flip through the first 60 pages of any issue of Vanity Fair. Most of the advertisers are luxury brands.

Look at the imagery. Does any of it resemble your life in any shape or form? Answer? No. These are extreme fantasy stories. But those stories are very complicated. As luxury expert Adam Stagliano notes, the story of a luxury brand must satisfy the emotions, reason, aesthetics, memory, and deliver extreme pleasure all at the same time. Contrast this to the relative simplicity of beer advertising, where the task is to simply convey crisp, clean, and refreshing.

Less is never more in luxury marketing. A luxury customer can never be made to feel they know the whole story, whereas a regular brand yearns for that familiarity. The precious mystique of a luxury product is maintained by constantly creating new fantasies that surprise and shock. In the world of luxury, a product must be made with the best materials, but the price of that product has very little to do with the cost of the raw goods. While price sends out a powerful signal, the luxury pricing equation is really based on how the product quenches a fantasy

and takes us to a place outside our day-to-day existence. Therefore, the purchase of luxury items says very interesting things about human nature. Essentially, regular products make you feel good, but luxury brands make you feel special. And feeling special has different ways of manifesting itself. One is privately, or inconspicuous consumption. The luxurious brand of soap you have in the bath, enjoyed by you and you alone. You love the quality,

the ingredients, the sensory benefits. The experience is a reward. The extremely wealthy love the sensory benefits as well, but don't see luxury as a reward. They see accumulating the finer things in life as a matter of taste and privilege. And while they buy large homes and yachts, they don't do it to impress strangers as a rule.

As most high-end real estate agents will tell you, most multi-million dollar purchases are done discreetly. They know what they want, rarely haggle price, and are patient in the hunt. Then there is conspicuous consumption. A term coined, by the way, in 1899. This is when the purchase

is meant strictly to impress others. That delicious display of outdoing friends or strangers. It's a vivid, outward expression of achievement, power, status, and influence. Deeply rooted in self-esteem. Some say money is a way to keep score. Pair this with the tactile feeling that the sumptuous luxury craftsmanship gives you,

and you have the dual pleasure principle, superior quality and outward expression. A subset of conspicuous consumption is the concept of knock-off goods. People buy knock-off coach purses, for example, purely to impress strangers. That secondary feeling of owning a quality luxury item is absent because the owner knows it isn't real. But another more interesting element of luxury goods is the concept of exclusivity, having what others do not. While this can be driven by snobbishness, it is often fueled by a need for individualism and personal expression. American Express has long positioned itself as the exclusive card.

Membership has its privileges. To apply, call 1-800-THE-CARD. Yes, membership has its privileges. There are gold and platinum cards, but American Express also has its mysterious black card. Not much is known about it, as so few are invited to have it. There's a one-time $5,000 initiation fee, an annual fee of $2,500,

and it's said that you have to charge a quarter of a million dollars or more per year to qualify. There is still another aspect to luxury goods. High-end items provide a way for people to feel like insiders. They like to buy premium whiskey, for example, because they have friends who will value and appreciate the whiskey when they serve it. But what it all comes down to is our need, our deep desire, to feel distinct and uncommon. That's different from just treating yourself. You can buy a nice Gap shirt,

but that purchase is about looking good and fitting in. Luxury purchases are all about standing out. But what if you're an exclusive luxury brand and a big market with money is hovering just below you. There is a great aspirational quality to luxury goods, which fuels a desire to reach up. But lately, some luxury brands have begun to attract a new market by reaching down.

Ralph Lauren sells expensive clothes at Saks Fifth Avenue, but also has a much more affordable line at less expensive stores. Saks Fifth Avenue also realized

that the low end of luxury is where the real money is. So they've opened stores in smaller markets like Indianapolis, Indiana and Richmond, Virginia. Mercedes changed their strategy from one of exclusivity to inclusiveness. Their thinking is that rather than eliminate a Mercedes from a potential customer, why not offer a more moderately priced one to build a lifetime of brand loyalty? As luxury expert Pamela Danziger points out, Mercedes has designed classes of cars to meet

you at nearly every price point at every stage of your life. A C-Class when you're 30 years old, an E-Class when you're 40, an S-Class when you're 50, and back to a C-Class when you retire. See if you can recognize the voiceover in this Mercedes spot. You rise to every occasion with intent, with vision. You create the bonds of family. You move with determination, grasp what you need. You choose your communities, your safe spaces. You drive toward the essential. Your ride, your choices, your chosen family.

Mercedes-Benz, the best or nothing. Ten points if you identified John Hamm from Mad Men as the narrator. One of my favorite luxury marketing stories began in the late 60s and went on to run for 30 years. In 1969, ad execs Jane Trehe and Peter Rogers landed a little-known client called the Great Lakes Mink Association. It was an affiliation of about 400 ranchers who produced 30,000 black mink coats annually. The acronym for the Great Lakes Mink Association was GLMA. The first thing Trehi did was to coin a brand new word from that acronym,

Black Glamour, black for the color of the mink, and glamour, which sounded like the acronym GLMA, which also sounded like the acronym G-L-M-A, which also sounded like Glamour. With that new word, she created a brand where none had existed before. Her idea was to create a campaign comprised of stunning portraits of celebrities wearing the furs. Trehi had just two rules for the campaign. One, the celebrities must be legends. And two, they must be so famous that no mention of their name would be necessary.

Trehi also created a very unusual headline for the campaign. It was simply, What Becomes a Legend Most? It was simply what becomes a legend most. The campaign success also rested on one other element. The photography had to be incredible. So they hired famous photographer Richard Avedon. It was decided each celebrity would be offered the same payment, a Richard Avedon portrait and an $8,000 mink coat of their choice.

As Peter Rogers relates in his book about the campaign, they made the first offer to Lauren Bacall. The agency crossed their fingers and held their breath. Then magically, Bacall accepted. Not even celebrities can resist the temptation of luxury. The shoot went wonderfully. But when Bacall saw her photograph a few weeks later, she wasn't happy. All the lines on her face had been delicately airbrushed out.

I worked hard for every one of those wrinkles, she thundered. You may remember seeing this incredible black glamour campaign in the pages of magazines like Vogue, Harper's Bazaar, Town & Country, and The New Yorker. Striking black and white images of the biggest celebrities of the era. Diana Ross, Lena Horne, Shirley MacLaine, Raquel Welsh, Faye Dunaway. Within two years of the launch, Black Glamour was considered the most prestigious black mink in the world, an extraordinary success considering it had started from a point of almost zero awareness. The campaign became so admired, so famous, that stars wanted to be in it.

The stories of the shoots were as fascinating as the stars. Marlena Dietrich, for example, turned down the first 25 mink coats the agency sent over to her. While photographing Barbara Stanwyck, nothing seemed to work. Avedon was frustrated. So was Stanwyck. At one point, she spun around and uttered the F-bomb. At that precise moment, Avedon clicked. Later, while looking at proofs, Peter Rogers wanted to go with that shot. Avedon said Stanwyck would never go for it.

So Rogers went to her with two options. He said, you can look like your average Hollywood star, or you can look like Barbara Stanwyck. She looked at the frozen profanity shot in his right hand and just said, run it. When they contracted Judy Garland, she was living in Boston at the time. So Rogers phoned around Manhattan to make hotel arrangements for her. No one would accept the reservation. Garland was notorious for destroying hotel rooms.

Finally, they found one hotel who would take her. When they drove Garland to the hotel, the desk clerk suddenly claimed there was no reservation in her name. Apparently, management had sudden second thoughts about having her. Rogers demanded the hotel honor the reservation, so the hotel demanded that Rogers take full responsibility for the room,

which he did. When he went to get Garland for the shoot the next morning, he opened the hotel room door and couldn't believe what he saw. Vodka bottles all over the place, torn curtains, the carpet was completely soaked, feathers were everywhere. She had completely trashed the room. With over 30 years of incredible images, this black glamour campaign comprises maybe the most illustrious

list of names ever brought together for commercial purposes. There is a marketing theory that prestige can only be transferred by association, that one element has to lend its prestige to another in advertising. Celebrities are prestige delivery mechanisms. They lent their prestige to Black Glamour, and Black Glamour therefore became a prestigious luxury brand. The Black Glamour campaign was finally halted in the late 90s due to one simple problem.

A lack of legends. The reasons we buy luxury products are a fascinating study in human nature. Much of it deeply rooted in our self-worth and our desire to touch a world outside our daily existence. Some people buy luxury items because they are wealthy. Some buy luxury goods because they want to treat themselves. And some buy knockoffs to impress strangers. Marketing luxury products has a very different strategy than traditional products. Most ordinary products are sold on a problem-solution basis.

Luxury items, on the other hand, are sold on an aspirational fantasy basis. Luxury implies exclusivity. And exclusivity is a very small elite club and many people want in. Even though luxury marketing is very different from traditional marketing, it's interesting to note that it's still based on the same fundamental insight that has underpinned Madison Avenue for over 150 years. That we are all really two people.

The person we are and the person we want to be. The dreams that luxury marketing weaves are aimed squarely at the second person. When you're under the influence. I'm Terry O'Reilly. This episode was recorded in the Terrastream Mobile Recording Studio. Producer, Debbie O'Reilly.

Sound Engineer, Jeff Devine. Under the influence theme by Ari Posner and Ian Lefevre. Music in this podcast provided by APM Music. If you enjoyed this episode, you might also like Billion Dollar Brands, Season 2, Episode 10. You'll find it in our archives wherever you listen to podcasts. See you next time. Fun fact. In 1984, the cover of a Joan Rivers comedy album parodied the Black Llama ads.

The title was What Becomes a Semi-Legend Most?