Winning in aspirational markets đź‘‘

Jan 19, 2023 8:03 PM

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Aspirational markets are not a zero-sum game.

Consumers compare aspirational products with experiences, access, socializing, spirituality, charitable work or self-actualization: a concert can be equally desirable as a bottle of vintage bourbon as a pair of rare sneakers. This makes aspirational brands all part of the single market and interchangeable in terms of value in the eyes of their buyers. Differentiation in this compressed aspirational market is even more important knowing that, in order to survive and grow, a company needs to be part of consumers’ initial consideration set. Consumers’ initial consideration set is the set of brands that first come to mind when consumers are looking to buy something. If it makes it into initial consideration, a brand is two times more likely to be purchased than a company that is considered later in the decision journey. This trend only gets amplified with the market share growth.

To win in aspirational markets, brands need to: a) have a clear identity and the strategy of conveying it, b) a clear idea on what kind of growth model they want to pursue and c) keep innovating in value.

Having a clear identity and the strategy to convey it means to decide first whether a brand plays in the world of tangibles, intangibles or both (like La Prairie, which has a high-end beauty product line and a high-end Swiss spa retreat). If a brand is rooted in the domain of tangibles, like luxury fashion, high-end furniture or fine jewelry, it has to decide the scale of its identity’s appeal. Is it for connoisseurs or for everyone who can afford it? Is it largely invisible and meant for private consumption or is it meant to be a visible signal of social distance? The same object, like a yacht or a luxury car, serves both purposes. On the other hand, meditation or spiritual work are both intangible and meant to be truly private. The micro and the macro are combined in the form of personalization at scale: Swiss detox clinics are available to anyone who can pay, yet still have the aura of exceptionally private, white glove service. Micro and macro are also combined in an invite-only visit to a chateaux or a private brand club. A private club membership also merges the tangible and the intangible, as money stops being point of entry and social and cultural status take precedence.

These are all brand identity decisions. A selected combination of tangibles and intangibles, micro and macro shapes who a brand is, who is it for, and what and how it communicates. It also sets a brand on a specific growth trajectory.

Having a clear idea of a growth model that an aspirational brand wants to pursue defines its value architecture and how the value is harnessed and turned into profit (through products, services, experiences, partnerships, collaborations, memberships, subscriptions, community).

Value innovation becomes easier once there’s clarity on whether a brand creates, distributes, and captures tangible or intangible value, and does it play in the macro or micro space. Value innovation is rooted in the brand growth path. This path can be adding more customers, making the offering more valuable to existing customers and/or tailoring the offering to consumers’ niche tastes.

Aspirational brands offer something that consumers want to pay premium for. In order to grow, they have to keep redefining what that is. This constant value innovation is achieved by creating a new market (e.g. at-home fine chocolate tasting or virtual art tours), creating a new use scenario (e.g. micro-farming subscriptions, membership travel) or by growing the market in value, not in volume (e.g. collaborations, collectibles). To keep playing in the aspirational economy, a brand’s price/benefits curve needs to be shared by the majority of buyers.

Here are some examples.

Macro/External. This is the domain of Big Luxury. It includes luxury fashion, big art fairs, superyachts, private planes or fine jewelry. Here’s the maximum brand exposure meets the maximum brand visibility. This domain is commercial and, in order to hide it, Big Luxury invests in museum exhibitions, opens celebrity architects-designed stores and works with artists and K-pop groups alike. Bernard Arnault rules this land.

Micro/External. This is the domain of collecting and collectibles. Examples are rare wines, art and antiques, gold dumbbells, invite-only events, monogrammed Burberry ponchos and limited edition luxury/streetwear collaborations. A $65,000 Bowmore Whisky with a legitimate Aston Martin DB5 piston belongs here, as does the $30,000 Yoyoi Kusama’s-designed Veuve Clicquot La Grande Dame, available upon request to select VIP clients. Products come in limited quantities, are rare and create social distance.

Macro/Internal. This is the domain of experiences: detox clinics, private safaris, members-only travel, luxury meal kits, restaurant-grade unique produce boxes, sustainable indoor microfarms, virtual visits to the Louvre, charitable work, altruism and sustainability. Social distance is less visible, but it becomes apparent the moment a person starts talking about how they spent their weekend.

Micro/Internal. This is the domain of wokeness and connoisseurship. It includes things like a monthly subscription to feminist literature, a selection of music curated by the coolest taste-makers alive and the unofficial and secret city guides. It’s the world of deep cuts, insider knowledge, and taste connoisseurs. It’s also the territory of Linda Lancaster, energy medicine, colonics and psychedelics.

The top two quadrants are faithfully covered by FT’s How to Spend It. The lower right quadrant can be found in Highsnobiety and Hypebeast, and the lower left quadrant is the kingdom of GOOP gift guides. Tyler Brûlé is out there in the galaxy far, far away.

In the episode 12 of The Business of Aspiration, I spoke with Nigel Majakari of furniture company ca'lyah. In it own words, the company "brings together renowned international designers with traditional craftspeople in a conscious interplay of modern production methods and long-held craft traditions to create original, finely crafted furniture and accessories." Nigel and discussed his role as a conductor that makes the design magic happen, his brand’s growth plans, the meaning of ca’lyah and the inspiration behind giving the traditional craftsmanship a modern design context. Watch our conversation below and follow ca’lyah on Instagram here.

My book came out on October 27th. It’s about what happened to taste, communities, and social influence when the economy shifted from manufacturing things to manufacturing aspiration. It’s also about how this shift changes what we find valuable and worth paying for and how brands should transform their strategies to adapt. You can order from a number of mainstream and independent booksellers listed here.