Luxury Marketing Strategies: Today's Generation

Tempo di lettura: 6 minuti

Grandma, would you mind lending me the Kelly bag?

There's something fascinating about the way luxury intersects with the financial markets. 

The staggering $30 billion aggregate market cap loss suffered by the industry in May (BOF, Luxury Stocks Lose $30 Billion in One Day on Demand Fears) and the more recent Richemont's 5% decline (BOF, Richemont Drops on Signs Luxury Demand Falling in US, China) captivate us more than the ups and downs of, say, the car market, both new and pre-owned, fixed income, or the now struggling commercial real estate.

It's easier to relate to tangible objects like a watch, a pen, or a belt, and for the fortunate few, to collections of such items. Even the financial abstraction, the stock market value of those possessions, holds an allure that is just unthinkable for any other “regular” metrics such as the ones tracking numbers on Manhattan skyscrapers office vacancies.

Anytime we encounter numerical entities that go beyond our grasp, LVMH becomes the first European company to hit $500bn market value, FT -can you really make sense of 500 billion..?-  whether they're in the green or red, our eyes widen, and we instinctively touch our watches—or any other magical talismans we happen to have - that now come alive with a financial prowess we never really bothered to consider in its magnitude. It's as if we're saying, "That's me!"

I too am part of that world, of those large numbers that, unlike “regular” stock indices, we can touch and “experience” firsthand via their precious worldly embodiment.

Luxury marketing strategies: Marco Gianni

Luxury Marketing and Luxury Sagas

Anytime we step into the grand luxury stores, better said, "luxury cathedrals," we do not just proceed to “buy stuff” but we rather embark on an actual “pilgrimage”. 

There, we are greeted by prophet-like sales reps solemnly spreading the word of different “creeds”. 

They invite us to enter a realm that transcends the confines of physical space. The experience elevates us, making us feel, right there and then, true protagonists, active participants in luxury sagas we can read of in pink financial papers and glossy magazines or watch on Netflix. 

While we contemplate watches, discussing dials, and nonchalantly “dropping” archaic references with a grin of complacency that will boost our ego for the next two weeks we do feel empowered, changed, just better overall, merely at the thought of acquiring our next little, or big, treasure. Value, just as expenditure, is always a relative measure. 

Luxury has the ability to create a positive emotional vortex even between a “soulless” entity such as a “stock/share” and its perceived value. 

Mr. LVMH's analysis on the subject is spot on, as one would expect: “I'm going to disappoint you, but desirability is proportional to value," he said. "LVMH shares are also a luxury product”. (Will the extraordinary boom in luxury goods ever end? FT)

Luxury marketing for gen z: Marco Gianni

Mr. Arnault offers us a perspective often overlooked in the broad evaluations of luxury stocks. These stocks also fall in that plethora of peripheral symbolism upon which the luxury mystique is built. 

But, at a closer look, that line of thought is not all that exotic, not to be relegated to the confines of discussion debating frivolous, almost immoral, topics such as precious silk and refined, hand-applied embroidery. 

"A car is nothing other than a thousand mechanical parts and rational decision in search of a single emotion that makes them attractive and sellable"

(Kumar Galhotra, Head of Ford Motor North America)

So long to the financial artifice of the Homo Economicus and labor value theory. 

Make way, finally, for the Homo Symbolicus on the central stage of international finance. He’s been knocking on the door since 1955: “The consumer is not as functionality oriented as he used to be — if he ever really was.' (Symbols for Sale, S.J. Levy, Harvard Business Review, March-April 1955).

Homo Symbolicus: Luxury for today's market

The luxury market and its financial projections are the quintessential embodiment of Van Mises's economic theory: drawing a separation between an actual, objective value and a subjective and personally perceived one makes no sense. 

Marketing and innovative thinking: 
 Rory Sutherland (Alchemy)

All contextual and so-called ancillary values contribute to the overall value-creation process. 

Not sure? Try and have a 3-star meal while standing on a sidewalk kiosk. It does not taste that good. (Rory Sutherland, Ted talk Athens, Perspective is everything).   

In a post-capitalist, post-Fordist, and even post-Tomfordist economy—characterized by abundance and immediate access to anything, anywhere, at any time at the click of a button—the consumer's preference is the key economic driver, the only one that can give actual meaning and relevance to the labor theory of value.

Only a car that is sold to and driven by a human has value. The ones laying in outdoor parking lots do not. Those are just assembled mechanics and electronics. A car that is not driven is not a car. It’s a mere economic potentiality. 

Given the monetary interests (translation: consulting) that gravitate around that immense body of work that posits the atomized, perfectly informed, and coldly value-maximizing individual at its core, it is not a wonder that the “all-encompassing and all knowing-multi-colored-chart and infinite-spreadsheet-approach”  is still dominant and also believed by ever more quizzed buyers that are convinced to have no other choice since…everybody is, still, doing it.

But the reality is dawning. Charts no longer do. (Our volatile age defies spreadsheet strategy, G. Tett, FT)

Words, when worthy of this name, cut to the chase in a much more pragmatic, intuitive way projecting an animated image, in lively sound and colors that we can immediately relate to as we experienced it in our “real” lives.

Luxury and sacrifice by Marco Gianni: example Damodaran and Ferrari

"Grandma, can you lend me the Kelly bag?" perfectly encapsulates the spirit of our time. 

Luxury Boom: new marketing goals

The image, majestically coined by Rana Foroohar on the pages of the Financial Times (Luxury boom shows the staying power of the ultra-rich), of a young woman asking her grandmother the permission to borrow the iconic Kelly bag perfectly captures the exceptional essence of luxury and of our times in general. 

Luxury has never operated on the post-rationalization logic permeating the now, not surprisingly, much troubled "value" segment. Instead, it has always targeted something far more elusive, undefinable, unquantifiable, and infinitely more strategic and important—a mindset passed down through generations.

As Daniel Langer, one of the leading experts in the field, puts it (In Luxury, Mindset Is All That Matters, Jing Daily), it is only that intangible asset, that mental approach, much before any strategic elaboration, that can preserve luxury within the realm of dreams, a realm so cherished and yet so inaccessible by all the value creation “rationalists”, the “reductionist Newtonians” as Rory Sutherland puts it (Alchemy, The Magic of Original Thinking in a World of Mind-Numbing Conformity, Rory Sutherland).

The industry news constantly bombards us with headlines about executive changes (Kering tries to fix Gucci with management overhaul; FT) and alliances and strategic acquisitions by major players to ensure the efficiency and sustainability of value chains (Italian Fashion Groups Set Aside Rivalries to Preserve 'Made in Italy'; BOF). These are all valid endeavors that warrant pursuit and implementation.

However, the risk of solely relying on what can be quantified, explained, aggregated, maximized, and reported with apparent objectivity as the ultimate strategic horizon is the most perilous path one can take. 

Luxury marketing strategies: Marco Gianni

The correctness and logic of the decision-making process alone do not guarantee ensuring strategic soundness. All aggregate data analysis is useless if an emotion is not sparked. 

If luxury is losing ground, as it seems, it means it is not creating real, meaningful value. So, it is not luxury by default. Today's economic challenge, at large, is not to just create perfectly functioning objects but object-cause of desire. Lacan “nailed it” and so did, in 1901, W.R. Leach in his seminal work The Land of Desire: “Without desire, a market can never truly thrive”. 

So, dear grandma, could you please lend me the Kelly bag?

Marco Gianni Esq.

Head of strategy at 

True Luxury is Never "Comfortable"

Tempo di lettura: 7 minuti

LUXURY MARKETING STRATEGY - Professor Aswath Damodaran is one of the greatest names in corporate finance, an absolute luminary in the field of financial valuation strategy.

Read more: True Luxury is Never "Comfortable"

He is active on the stages of the world's most prestigious university classrooms, and capable of single-handedly influencing the stock valuations of the largest multinationals.

In his numerous talks, Prof. Damodaran often cites the "Ferrari" case as one of the highest expressions of what Dr. Daniel Langer, a global authority in the luxury market and consultant for Ferrari among others, defines as ALV, Added Luxury Value – that nonlinear value creation ability that only luxury possesses.

Dr. Marco Gianni, representative of Dr. Langer for the Italian market, elaborates on the topic in this article with a cross-cutting view of the financial-business analysis approach expressed by Professor Damodaran, as presented in his talk at the CFA Association Switzerland.

The Ferrari brand stands out among all other automotive companies for a profitability that does not belong to the car market. 

Ferrari is not an automotive company

The explanation? Ferrari is not an automotive company and should not be valued as such. 

Words have tremendous power, rarely adequately considered, in constructing the proper mental framework to evaluate a company's economic development space. 

If one considers Uber as a car-sharing company, it will move and compete in a market worth about $100 billion, but if, instead, it is qualified as a "logistics" enterprise, the reference market will be worth $300 billion. 

Luxury marketing strategy and sacrifice by Marco Gianni: example Damodaran and Ferrari

The acquisition of new market share will have a different impact depending on whether it occurs in the former rather than the latter economic space. 

The purchase of a Ferrari offers none of the practicalities and functionalities of a normal car and surpasses the "discomfort" or driving difficulties of even other high-level sports brands like Porsche or Aston Martin. 

The purchase of a Ferrari is, as Damodaran says, the purchase of a ticket to a super-exclusive club, totally "impermeable" to any macroeconomic movement, well insulated from all those factors that affect or afflict ordinary mortals or even those not so common who can afford only a Maserati Ghibli. 

Read this for more insight on Luxury Marketing Strategy

Luxury: Ticket to a super-exclusive club

Luxury marketing strategy and sacrifice by Marco Gianni: example Damodaran and Ferrari

The quintessential luxury trait of a Ferrari is revealed by the longevity of the brand, understood as complete emancipation and prior renunciation even of that mode of use distinctive of every mechanical construct composed of 4 wheels and an engine: the act of driving. 

A Ferrari can simply exist for it own sake. The reason it exists is completely intrinsic and self-sufficient. 

No functionality is required except in a potentiality that may never materialize or may only happen once a year, thus trespassing into another realm, that of ritual, procession, and celebration. 

Never just simple "driving". 

So, the behavior of the Professor's neighbor who is "content" to drive around the block once a year and then leave his “red-one” well-guarded in a secure garage doesn't seem all that extravagant. 

Knowing that the Ferrari is parked in a hyper-security garage is all he needs to rationalize the expense. 

Paying for state-of-the-art electronic security or armed guards that protect it is not perceived as an additional cost but as a satisfaction-generating factor: it's like keeping the sacred flame of a modern vestal virgin alive. 

Luxury: A satisfaction-generating factor

The Professor's narrative captures the very essence, the differentiating value of a Ferrari, as an embodiment of the concept of luxury that, in my view, cannot rely "solely" on scarcity. 

The reference to the "Ghibli case," the accessible luxury model from Maserati, is perfectly centered as an inevitable trade-off between expanding market share and declining profitability. 

This is due to both increased production costs and the loss of brand value in terms of "exclusivity and uniqueness". 

Now, my assertion is that even if Maserati, or any other high-end sports car brand, were to limit and reduce the quantity of their production to imitate Ferrari, they would never achieve the net profitability of 18% attained by the prancing horse. 

Luxury marketing strategy and sacrifice by Marco Gianni: example Damodaran and Ferrari

The secret of the Ferrari brand lies at a deeper psychological level, well beyond the awareness of participating in one of the most exclusive clubs in the world. 

Out of pure curiosity, one notes that the most exclusive club in the world is that of combat jet pilots who have pressed the "eject" button of their supersonic aircraft. And that cannot just be a freak occurrence.

Luxury Marketing Strategy: the real cost

Every authentic luxury item entails a level of sacrifice that cannot be confined to the economic sphere. 

The rigorous criteria for purchasing and the willingness to submit to the "Ferrari House Code of Conduct" which does not shy away from expressing the most blatant "reprimands" for famous and wealthy clients like Justin Bieber, Floyd Mayweather, and even one of the untouchable Kardashians, are those "soft" factors that delineate a very clear and precise boundary between those who belong and those who do not. 

Accepting any form of limitation on the use of an asset of which exclusive ownership has been acquired is the greatest "marker" of the brand's value as an expression of a true cosmos of well-defined values. 

Luxury marketing strategy and sacrifice by Marco Gianni: example Damodaran and Ferrari

So, money alone is not enough. 

There is no defying the laws of financial gravity without a true and complete commitment to a code of values that all devotes abide by. 

Non-compliant behavior would be the greatest value destroyer. An unacceptable risk. 

But even this analysis does not provide the true "key" unlocking the “magic” of the brand. 

My assertion is that the day Ferrari starts producing efficient, flawless, reliable cars like Porsche, it will lose market share. It will just be another sports car. Fast, expensive, but still a car that falls within the realm of "usability," perhaps with excessive functionalities, but not nearly as exotic and “wild” as only a Ferrari can be. A Porsche, after all, is made to be driven, even for grocery shopping. 

The luxurious waste of Ferrari, on the other hand, lies in the fact that the car is not perfect! Because that's how it's intended! It's not perfect, stable, or reliable at all, given its price tag! 

And precisely this is a source of PRIDE! 

"…Hear, my lord," said Goneril. "Why do you need twenty, ten, or five people to look after you in a house where twice the number are ordered to serve you?" "Why do you need even one?" said Regan. "Oh, don't argue about necessity! Even our meanest beggars have things they can do without. If you don't give a man more than he needs, his life won't be any better than an animal's. You're a lady. If you dress only to keep warm, then there wouldn't be any need for the beautiful fashionable clothes you wear, which barely keep you warm. But true need..." 
Shakespeare (King Lear, Act II, Scene IV) has captured it perfectly. 

No true luxury exists without true excess, which guarantees complete emancipation from anything even remotely oriented towards functionality or subject even to the most imaginative and exaggerated attempts at rationalization. 

A Ferrari cannot be rationalized. It makes no sense from any logical perspective. The essence of Ferrari is to challenge logic in a very unique way, all its own. 

Marketing Strategy: challenge logic in a very unique way

To realize itself, to fulfill the buyer, a Ferrari cannot simply be purchased. It must be "mastered" to enter that club that is not comprised of "mere" Ferrari owners, but of true Ferraristas. 

The difference is as subtle as it is profound. The Ferrarista is knowledgeable about all things Ferrari. He converses with Ferrari mechanics at the dealership with familiarity, frowns down with satisfaction and inexplicable joy in the face of problems that should never arise. 

This is the quintessence of luxury: the ability to transform a flaw into an exclusive feature to be appreciated, understood, and confronted, only by those who are “in the know”. 

These are the distinguishing marks of exclusivity and membership, triggering a positive economic response for the brand by generating a desire that extends far beyond the initial level of admission – owning the car – to continuously progress with the need to increase and demonstrate one's status and position as a true Ferrarista through the purchase of more Ferraris, participation in events and competitions, and so on. This is the pinnacle of an unstoppable Customer Lifetime Value (CLV). 

Luxury and sacrifice by Marco Gianni: example Damodaran and Ferrari

To translate all this into an economic narrative that paves a smooth path to financial sustainability, Ferrari not only needs to avoid diluting its value through increased production but also must ensure the ongoing creation of true Ferraristas. 

These are the individuals who don't fret over the fact that the technology on the car dashboard hasn't improved a bit in the last ten years. It's like using an iPhone 6. A leap back in time. 

So, how can new Ferraristas be cultivated and not become scarce? Ferrari must invest deeply in areas beyond the automotive/racing/engine world. This is part of the luxury marketing strategy.

The foray into fashion is a clear sign of this awareness. Gaming must also be incorporated on a grand scale, with extended and immersive reality, placements in films, possibly art fairs, sponsorship of a female Ferrari racing team, and any other endeavor that will oversee Ferrari's social relevance as a creator of meaning outside its characteristic industrial perimeter. 

Luxury must be permeated by a so distinct and unique a "meaning" that today can no longer be guaranteed by the past or by ordinary and "discounted" efforts like racing or the construction of a new Ferrari Park or a necessary renovation of the Ferrari Museum in Modena. 

"In a world of physical abundance, it's a lack of meaning that can kill you."
(V. Frankl, Man's Search for Meaning). 

The Ferrarista knows they can go from 0 to 100 in 4 seconds if they wished; the exceptional is within reach; the Ferrarista is the pilot who can eject the seat from a supersonic plane. 

Luxury: The exceptional is within reach

It will all revolve around the continuous creation of meaning that can give even an inert Ferrari in your garage a sense. It's about keeping the flame alive, never letting it extinguish under the threat of capital punishment. 

This is not just about a simple community but about true "communion," one that makes you adhere to the norm even when "no one is watching." 

It's the belief that forgives imperfection because true value is much higher. This is the challenge, and it's by no means a small undertaking, not even for Ferrari. 

Dr. Marco Gianni, Esq., Luxury Marketing Strategy Specialist

Arrogance Doesn't Pay Off

Tempo di lettura: 2 minuti

In the luxury industry, brand storytelling not only plays a fundamental role in the commercial success of products but is an integral component of the brand itself. The absence of a carefully crafted narrative centered around the customer, one that values and celebrates their uniqueness, not only leads to market share loss and missed profits but, in today's context, renders the product nothing short of "defective," inadequate for the times, and indicative of an attitude that can only be described as "arrogant."

The narrative of luxury brands and Gen Z: what changes

If arrogance or even a simple sense of "flat-out superiority" had any validity in the market, they have long lost their relevance, especially when it comes to the demographic classification known as "Gen Z." This generation has unequivocally ushered in a new operational switch favoring what has been brilliantly summarized as "barefoot luxury". This economic model allows for no forms of self-referential ostentation, not even by the most renowned luxury brands globally.

"Gen Z" is perhaps one of the most widely used and abused terms in the industry and beyond. If the frequency of its mention were proportional to the actual study and business analysis conducted in relation to this new "social" class, even before considering it as a market force, the business world would undoubtedly have a greater awareness of the epochal change it is facing. 

The economic impact of Gen Z

Unfortunately, the reality for economic operators does not confirm the equation between the mention of "Gen Z" and a genuine understanding, most likely due to the continued underestimation of its economic impact. Many brands, not yet considering Gen Z as their own customers, fail to grasp or willingly refuse to comprehend the urgent need for adaptation.

This lack of responsiveness puts them at a significant strategic disadvantage compared to those who have rationalized the "systemic" importance of this change. Daniel Langer, one of the leading industry experts, succinctly captures this notion in his latest editorial on the Jing Daily portal:

"Many managers underestimate the purchasing power of this generation, which is the wealthiest ever to enter the luxury market, especially in China. Gen Z expects the largest transfer of wealth ever. Therefore, brands that are not yet ready for this generation will pay a high price in the near future."

La comprensione del potenziale del digitale

Another critical element, particularly in the Italian landscape, is the acquisition of a true awareness of the importance of the "digital" realm. It is still seen, used, and undervalued as a mere "immaterial" extension of physical retail stores when it should possess its own narrative, emotional, and commercial distinctiveness.

This limited view of technology usage, despite its increasingly qualified, immersive, and emotional points of contact encapsulated in the term "ER" (extended reality), will prove particularly detrimental. The Generation Z, who expect to be actively engaged and surprised in every brand interaction, finds the digital touchpoint crucial. It constructs 90% of the brand's perceived value and subsequent purchasing preferences.


Creating value today means, above all, generating content that becomes a true cultural capital benefiting a new segment of customers. These customers are not interested; in fact, they detest self-celebration and self-referential narratives. 

Tradition, history, and technical abilities of a brand become increasingly irrelevant unless they create and then transfer precise and "actionable" values to this fragmented, sophisticated, and multifaceted universe known as Generation Z.