Laurence Bernstein

Laurence Bernstein has a diverse background of unrelated skills and activities, culminating in his current focus on making companies and products grow by understanding and delivering meaningful experiences to people. In an odd way he calls this brand consulting, and he accomplishes it through the auspices of the company he founded 9 years ago, BC3. Most of the magic happens as a result of finding new ways to understand how people integrate the product in their lives, combining this with what is known about the product, the cultural and social context and the dreams and visions of the clients, and then praying that something will somehow crystallise from the ether. This is called Rainmaking: not making the rain fall, but making the conditions right so it wants to fall!

Laurence is a graduate of Cornell University and is a member of the Cornell University Trustee Council, and the Cornell Arts Committee. He has worked for major hotel brands, advertising agencies and was managing partner at RPM, one of Toronto's most innovative and successful clubs. His world view has been honed by stints living in the UK, US, Germany and, of course, being born and raised in South Africa.

"Practically speaking, I like to take the highest road in approaching any client: how do we really make a difference to the client's business. Too often clients ask for and receive solutions that make incremental changes in what the they do, how they do it and, therefore, what success looks like. I am, mostly interested in paradigm-shifting changes.

"Other than the above, I confess to being a closet computer geek and obsessive news junkie."

The Nature of Luxury

Marketers today are increasingly focusing on the “luxury” market, as if it were an identifiable, affluent orgasm that spews money on high design and extravagance. While this may be the behavior of some affluent consumers, it is a very limited view of what luxury is and where it belongs. Luxury is any excess of anything that is not necessary but enhances the experience of life (i.e. is not negative), and therefore luxury can be the lynch pin of marketing strategies across all economic segments.

What is luxury and why does the answer matter?
The second part of the question is easy to answer: it matters because luxury adds value to any proposition, and hence an important component of just about any business. But what it is, is somewhat more complicated.

I Googled "definition of luxury", which returned 330,000 entries. After reading the top 175,230 entries, I realized that the subject needed to be revisited in a more useful way. Having spent twenty years understanding consumers and how they relate to the world around them, especially the stuff they buy, use and experience, I have developed a universal definition of "luxury" and hence a way of applying the idea of luxury at almost every level of experience of almost any product in almost any category.

To understand this a little better, let's examine some of the myths of luxury. But first, the underlying fallacy of the modern approach to luxury marketing.

Underlying fallacy
Most discussions about luxury end up being discussions about luxury things -- when Isadore Sharp of Four Seasons defines luxury he is defining "luxury experiences," and generally from the perspective of hotels (more on this later). It is important to understand that the word "luxury" derives from the Latin "luxus", which means "excess". The adjective, which is what we generally define (very often in narrow contexts), simply describes the object as "in excess" -- a luxury brand, then, would be a brand that (to give the marketers their due) promises excess.

Fifteen years ago, I introduced the notion of luxury as "waste." Again, simply put, luxury is anything that is not necessary, and anything that is necessary is not luxury. This helps explain why a hot bath to relax in the evening after a tiring day is a luxury, while a hot bath to get clean in the morning is not a luxury. Similarly, time is seen as the greatest luxury when we have extra time available to do something that is not essential, but it is certainly not a luxury when we have extra time because we are kept waiting at the dentist.

The most significant point, of course, is that in this definition of luxury we see that the object itself is not, in most cases, luxury or luxurious, but the way it is experienced may (or may not) be luxurious. As we know, one man's stale coffee is another man's added value in a no-frills hotel.

One of the most important implications of this is that the customer has to know that what he or she is experiencing is "luxury", which is by no means always the case. This is where design, merchandising and service cues play a vital role.

Now for the myths.

Myth #1: Luxury is expensive
The case of the hot bath makes this point as well as can be made. Time, too, is not expensive, it's free, except when it's priceless.

Besides which, what is expensive? A night in the Ty Warner Penthouse suite at the Four Seasons in New York runs around $35,000; however, it is little more than half the cost of The Royal Penthouse Suite at the President Wilson Hotel, Geneva ($65,000). Does this mean that the bargain basement suite at the Four Seasons is only half the luxury of the President Wilson Hotel? You get my point!

Myth #2: Luxury is the best of whatever
Luis Mogollon*, Director of Development, Quivira Los Cabos, defines luxury as
"…the best that life has to offer…" For sure this rules out the Four Seasons New York. On that subject, Isadore Sharp is quoted as defining luxury as "Luxury, by definition, means something that appears to be the best of whatever it represents."* This is of course unfortunate for a luxury hotel chain unless their hotels can always be the most everything, everywhere. Which they can’t. Did Rolls Royce cease being “luxury” when the Maybach came on to the market? On a more prosaic note, is a 320 thread count sheet any less "luxury" because there are 380 thread count sheets available? Clearly not -- it may not be the most luxurious, but it is still as luxurious as it was before they learned to twirl threads into one another to increase thread count.

Myth #3: Luxury is style and comfort
Tod Hevers*, publisher of Home and Design Magazine, perhaps not surprisingly, uses this definition (although he adds a neat, pithy, catchy twist: “Luxury is style and comfort, priced accordingly. Extravagance is style and comfort, cost be damned.”).

A comfortable style may be luxury (excessive and excessively expensive), but the same attribute can be applied to a style that is anything but comfortable (whatever you say about a Lamborghini, comfortable it's not but luxury it is).

Myth #4: Luxury is exclusive, not available to everybody
No. Hot water is available to most people in North America and time is available to everybody in, as it turns out, on a day-by-day-basis, equal quantities. Sometimes time is a luxury for some people; for most people most of the time this is actually not the case.

Myth #5: Luxury is making your dreams come true, with which we will lump, luxury is making memories
In a weird way, this is not a myth (after all, it's hard to make the case that making your dreams come true is necessary, so in a sense it fits the definition of waste = luxury). But it is only one of many luxuries, so making your dreams come true, like staying in a really expensive hotel is a luxury for some people. The two may be interlinked for some and not for others (if my dream is to stay at a luxury hotel, then yes; if I want the wasteful comfort and high end service of a luxury hotel to make my business trip more fun, then they are not).

Myth #6: Luxury is prestige
No, it's not. Some luxury things have an element of prestige, but this does not mean that luxury is prestige. Prestige is prestige, and it is not always a luxury (email me at bernstein@proteanstrategies.com and I'll explain this to you -- it's too long to get into here)

There are many other myths, but we'll skip them to get to the point: how can this progressive understanding of luxury help your business?

And finally, the helpful tips

Helpful tip #1:
There is in all probabilities a way of viewing whatever it is you are marketing, as having some luxury component. This does not mean you must view it this way (some products sell better because they are entirely functional without any frills). However, if you're are trying to increase margin, or preemptively differentiate your product or service, this idea may be the insight you have been looking for.

Helpful tip #2
By understanding what your customers (guests, whatever) consider necessary and what they consider waste (excess) will enable you to: frame your advertising to appeal to the value-added emotional mindset (or not, depending on your strategy); determine what you can eliminate to cut costs in tough times and, most importantly, determine a price-value relationship that returns the value of the luxury in the offering.

As a simple example: somebody staying at a three star hotel may have to pay $20 for breakfast in addition to their room. Based on their budget, this may be too much of a luxury (waste of money), and they will buy coffee and a muffin on their way to their first appointment. But, the hotel next door, the two star hotel, serves free breakfast. To this traveler, the two star hotel provides a luxury! The two star can entice away the guest by talking about luxury that costs less. So, the three star hotel aggressively competes by dropping their rates, but, no matter how far they drop their rates, they will also have to give away the free breakfast or be considered too expensive. (In fact, the best strategy for the three star hotel would be to add a complimentary breakfast rather than drop their rates; and the best strategy for the two star hotel would be to discount, forcing the three star hotel to react and eventually go bust)

Helpful tip #3
If you are already selling luxury stuff, an understanding of what is necessary and what is waste, and how this fits into the lives of the customers, will inform go-to-market strategies.
In some cases the "waste" is the extrinsic prestige which the branded product bestows on the owner (Luis Vuitton luggage); in other cases it is the intrinsic sense of accomplishment (Kiton suits which have no external badge). The "luxury" of each of these is entirely different, and in many cases will appeal to very different people (the Kiton purchaser would consider LV luggage to be an extravagant, showy, waste of money and the LV buyer would never see the point of a $7,000 blazer that nobody knows costs $7,000).

Helpful tip #4
Read the original paper on which this blog is based by clicking on this link or going to http://tinyurl.com/proteanluxury1

90% of new products are not going to make it to the third year in the marketplace...

...and yet we still rely on consumer research techniques that were designed by statisticians in the 1950s. I'm not a psychiatrist, but it seems to be that there is something vaguely neurotic about an industry that continues to do the same thing, at great expense, knowing full well the outcome will have a 90% probability of being wrong. Innovation needs a fundamentally new and different approach.

Why does the traditional statistics based research not work?

I think the problem has more to do with the real lives of people in a world that is much less predictable than it once was. In the case of a high frequency CPG, let’s say toothpaste, it is almost impossible for someone to accurately predict how they will react when they are in the store buying toothpaste, unless they are rigidly brand-apathetic (that is, they always use the same brand no matter what, which is generally because it is easier to stay with what they are doing than try to figure out all the other alternatives).

For instance, a respondent might say in anticipation of buying toothpaste (in a research or interview or any other setting – even in-store) that he definitely will or is somewhat or very likely to buy a new product, even if it costs ten cents more. However, when I am actually in the process of buying the product, my actual decision will be based on a number of unanticipatable variables: how much money do I have in my pocket, how full is my basket and how much have I already spent, am I feeling frugal today, is the toothpaste only for me or is it for the family, what other brands are on sale, and so on.

Clearly people’s projection of buying behavior, which we call buying intent, is necessarily unreliable. In a simpler world, when brands behaved in an orderly fashion and consumers lived in a rigidly budgeted, regulated world, this may have been different.

What is the alternative?

Simply put, people’s predictions of amalgamated behavior is likely to be much more accurate than their prediction of their own behavior. This is at the heart of the economic principle captured in James Surowieki’s book, The Wisdom of Crowds.

ProteanPrediction Collective Wisdom Engine is a proprietary process that integrates this theory into a very practical market-ready system. As a component of any innovation development strategy it can be used to guide development teams in incremental steps, rather than quantum (and very expensive, but very risky) leaps.

The Collective Wisdom Engine is particularly powerful when used as a mechanism to involve the entire organization in the process. I am not sure there is any proof positive, but it makes sense that the collective wisdom of the people who work with the product and brand on a daily basis is likely to be more interesting than the collective wisdom of a random or specific external crowd (although, not necessarily more accurate). It can also be accomplished at a fraction of the costs of traditional, research based methodologies.

Enough! Please stop! No more! I can't stand it!

There are times when there is no possibility of being constructive when writing about the absurdities inflicted on an innocent world by others in our field. There are even times when, as honest proponents of our business, we have no choice but to call it like it is. And this, Ladies and Gentlemen, is one of those times. (By the way, stop me if you've heard this one!)

I am referring to the Province of Alberta rebranding project -- the one (I am not sure whether it is for tourism or just for the sake of doing it) which has as its tag line: "Alberta. Freedom to Create. Spirit to Achieve". Normally, as those who know me would expect, I would let a slogan as completely mysterious and meaningless and nonsensical as this pass with barely a snide comment. But this isn't normally.

Seems the marketers in Alberta (or whoever is responsible for this) took the "Freedom to Create" part literally, and "created" a beach and coastline for the province in order to make a point in an ad. Yes, I kid you not. They used a scene from a beach in Northumberland as the image in an advertisement. More than just the beach, they also used the image of two English girls romping on the beach.

Not surprisingly, they were caught out in the blogosphere, and this is where the fun really starts. It turns out that the image, over which the Alberta logo and the tag line appear written large, is not meant to depict Alberta -- it is meant to be a visual depiction of Albertans' concern for the future of the world (this according to Olga Guthrie of Alberta's public affairs bureau). It is likely that the intent of the campaign may be to counter the idea that Alberta's oil sands extraction process is an economic depiction of Albertans' lack of concern for the future of the world. If that is the case, then wouldn't the fact that they could not find a pristine example of concern-for-the-world in their own backyard, rather prove the critics right?

Apparently not. The Prime Minister's head of media relations (sorry, but what the hell is the Prime Minister involved in this for?), helpfully points out that, "There's no attempt to mislead here. The picture used just fitted the mood and tone of what we (we? we?) were trying to do." Obviously, whatever Alberta is trying to do, is something they can't do, if they can't find a picture to fit the mood and tone of whatever it is, in Alberta. Whatever happened to authenticity?

The little English girls, too, were not meant to deceive -- they are meant to be British girls because (implicitly) only English girls are suitable "symbols of the future." (Olga again).

If you don't believe me, here is a link to a PDF of the article in The Guardian Weekly.

Need I say more? Have we achieved absolutely nothing in the marketing world? Has everything we've been trying to do and say really been so tediously boring that it is totally ignored? I am desolate, disappointed and going to Mexico!

Experiential Branding and the Consumer Experience Myth

In the same way that we cannot create brands, we cannot create experiences. Definitively experience is intrinsic. I create the experience in my own mind, made of components delivered from the external world filtered through and overlaid on my personal sensory perceptions, emotional memory and value set; and I understood in the context of my own personal history and the environment in which I live.

As marketers or brand merchants, all we can do is deliver the components that trigger the experiences. Realistically, the same set of experience components delivered to a group of people who share similar sensory perceptions, emotional drivers, personal histories and living environments, will trigger effectively similar experiences in each one of these people. This is the objective of experiential segmentation.

Experiential branding is the discipline of understanding and defining brands in terms of the way they are experienced, in order to differentiate them in the most powerful dimension: relevance (nothing is more relevant than an experience).

With a an empathetic understanding of our customers needs, we can determine what combination of external experience components we need to deliver, in order to trigger a delightful experience.

If this understanding is the platform on which the company builds everything it does, with the single minded focus on the way in which it wants to be experienced, we can safely say that:

The experience is the brand is the business

Experiential marketing is (or should be) the way in which experiential branding is communicated outside of the actual product or service interaction. Experiential marketing tries, or should try, to replicate the “experience of the brand so that the customer will momentarily "get the feeling" and through this be persuaded to buy the product or service.

All too often this important view of the customer satisfaction process is thought of, in the case of experiential marketing as nothing more than a way of getting people to pay attention or notice you. And in the case of experiential branding as paying lip-service to the idea that “we sell experiences, not products.”

Experiential branding and marketing are tightly interwoven into a single marketing whole for successful brands such as Apple, Abercrombie and Fitch, Southwest Airways, etc.

How can your brand interweave these concepts?

Virtue Brands: Some Thoughts

I recently received an email from a no-doubt well-meaning colleague, in which she included the top 100 Virtue Brands – the most social brands of 2008 as determined by their share of voice in social media. Apple and IPod feature prominently (see below). I wondered if there was any relationship between the “Social Media Index” (SMI) and the health of the brand.

The following self-explanatory commentary is entirely specious and proves, as far as I can tell, absolutely nothing. But it was sort of fun putting together. (Source: Google)

1. iPhone
iPhones were up 88 percent to 4.3M sold.
If you're keeping track, that means Apple's now sold well over 10M iPhone 3Gs on top of beating its goal of 10M total iPhones in 2008

2. CNN
Primaries Help CNN's Profits Double
Welcome | Logout. Log In | Sign Up. The Huffington Post February 1, 2009.

3. Apple
Apple Reports Strong Quarter Despite Economy - NYTimes.com

4. Disney
Disney profits plunges 32pc in last quarter - Telegraph

5. Xbox
Microsoft's Xbox division turns a profit (again!) - Xbox 360

6. Starbucks
Starbucks profit falls 97% on fewer customers and rising costs ...

7. iPod
Apple quadruples quarterly profit thanks to iPod
Pod music players around the world ... 13 Feb, 2009

8. MTV
MTV and Paramount in massive profit slump | News | TechRadar UK

9. Sony
Sony quarterly profit falls 95% - International Herald Tribune
29 Jan 2009

10. Dell
Dell Earnings - Dell Profit Falls but Beats Forecasts; Shares Jump ...

11. Microsoft
Microsoft expected to cut jobs as profit weakens | Technology...
21 Jan 2009

12. Ford
Ford's profits plummet $8.8bn

13. Nintendo
Nintendo slashes profit forecast as Wii sales slide | Business ...
29 Jan 2009

14. Target
Target profit falls nearly 41 percent
Target Corp on Tuesday reported its sixth consecutive drop in quarterly profit

15. PlayStation
The PlayStation 3 is making a profit - Gamezine.co.uk
5 Feb 2009 ... Evidence now points towards Sony making a profit on every PlayStation 3 sold

On a more serious note, however, the problem with the list of “Virtue Brands” is that most, if not all, of the brands with the highest SMI are brands intrinsic to the use of Social Media. In other words, a lot of the interactions about these brands would have to do with in-situ usage of the brand (Have you downloaded this tune from itunes onto your ipod?”, or “I saw the report on CNN,”) rather than actual social interaction (“I think iPod is wonderful and you’re a dweeb if you don’t have one,” or “CNN is changing their editorial slant and I think you should boycott the leftist, pinko, whatnots!”

Those brands that do not fit this category (e.g. Disney or Sony or Target) are all in serious trouble.

Coincidence? I think.....