Luxury brands adopting varied strategies

12 June 2009

NEW YORK: Luxury brands owners including Hermès and LMVH are adopting a range of different communications strategies as they adapt to the recession, but some premium properties remain doubtful about the merits of advertising.

While Hermès is planning to increase its total marketing spend by 10% this year, to around €100 million ($141m; £85m), just one third of this budget will be allocated to advertising.

The rest will be directed to "shop windows, exhibitions, and private public relations operations," such as inviting select customers to the launch of new stores, the company's ceo, Patrick Thomas, said.

"We don't believe so much in advertising to explain the particularity of Hermès," he added, but instead want "to communicate one-to-one and not mass communication."

While online currently contributes around 1% of Hermès' total sales, this figure is increasing by around 50% a year, and as such the luxury firm will also seek to increase its profile on web-based retail portals.

LMVH, the world's biggest luxury goods group by sales, has also boosted its online activity, including launching a viral video for its Christian Dior fragrance brand.

Baglioni, the luxury hotels group, similarly regards the internet as an "efficient" advertising tool, according to vice president channel Guido Polito, who said it is "the best way to reach the biggest number of people in the cheapest way."

However, Chopard, which sells high-end watches and jewellery, has reduced the amount it spends on marketing to 8% of sales, compared with the previous level of 12%.

It prefers to hold events such as "exclusive dinners" than use media, and ceo Jean-Marc Jacot said its customers seem to prefer this strategy, as they often say "please don't advertise."

Data sourced from Reuters; additional content by WARC staff