When I hear people in the industry talking about luxury consumers, they tend to speak in hushed tones of reverence. Luxury consumers, it would seem, are gods who walk among us. As a rule, they have impeccable taste and truly understand and appreciate top quality. Due to the stresses of their lifestyle, they must be pampered. Quite understandably, they demand -- and frankly, deserve -- the best of everything.

If you serve the wealthy, it will not hurt your business one bit if you believe this. But Guy Salter has put luxury buyers under the microscope, and while he may not recommend that you stop treating them like gods, he has a slightly different take on why luxury consumers consume luxury.

Salter has tried to crack what he calls the luxury code, to map what it is that drives the impulse to acquire luxury goods. And he concludes that, by and large, travel industry marketers have it wrong.

As deputy chairman of the Walpole Group, a British nonprofit funded by makers of luxury consumer goods, Salter commissioned a study to examine the DNA of luxury. The goal of the study was to identify the ingredients of luxury -- rarity, cool and celebrity, for instance -- and see if they could be carefully engineered to help his patrons sell more luxury goods. He presented his findings at the International Luxury Travel Market in Cannes, France, last week.

Salter showed that, in one way or another, luxury is about appealing to some rather superficial -- or, as he put it, superficial, but important -- desires.

The study discovered that some people buy a luxury item or service because it demonstrates to others that the buyer understands quality. Alternately, it may make buyers feel good inside when they purchase a new luxury item because they prove to themselves that they understand quality.

With others, buying is motivated by a powerful desire to show off. They want their peers to know that they can afford items that cost a lot of money.

After the presentation (this summary does not do it justice) Salter detailed to me why he believes that the travel industry has it wrong: At luxury conferences, people gravitate to sexy stories, like $10,000 rooms. But what drives luxury is the mass market -- for instance, the [nonwealthy] consumer buying her first luxury-label handbag.

Think carefully about that handbag. When she buys it, she wants to say, I understand enough about this luxury bag to want to buy it. The industry needs to build brands in ways that mass-market consumers can understand them and buy them. You become more fragile and at risk if you cater only to the top end.

The trick about making money on luxury is to produce something that people pay higher margins for and buy a lot of. Ritz-Carlton and Four Season are known brands, but an 18-year-old girl cant talk knowledgeably about them, like she can a luxury handbag. And how can she show her consumption of travel brands to others? Thats the challenge.

I think Saltons point about a consumers need to understand, and show off, luxury travel is right on the money. But perhaps travel actually does differ from other forms of luxury in that the importance of service occurs on a different scale in luxury travel than with other luxury consumer goods.

Salton did speak about the importance of service in a luxury retail environment. But in travel, the sales process is only the beginning, not the end, of an emphasis on service. Good service over an extended period is not only difficult to pull off, it does not necessarily produce especially good margins.

Though Saltons challenge to put luxury brands within reach of the masses is interesting, true luxury travel may simply be too expensive to replicate en masse. Perhaps hes correct that the reasons one buys a luxury experience are ultimately superficial, but its hard to imagine how, for instance, an 18-year-old can be made to understand, and acquire, a week at Cap Juluca. In fact, its easier to imagine that the gods walk among us and must be appeased.


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