Luxury Marketing

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Wealthy gen xers have money to burn and have created the newest tier in the luxury market.

Millionaires under 35 represent 6% of the affluent (those with more than $1 million in investable assets), according to a study by Forrester Research.

Led by Silicon Valley millionaires and venture capitalists, fashion industry and entertainment executives, these consumers aren't so easily reached via general marketing, marketers say.

"The affluent young person operates by word-of-mouth," says Larry Greifer, VP-entertainment marketing for liquor marketer Schieffelin & Somerset Co. "When [the consumer has] seen an ad or read about a product in a magazine, it's no longer extremely cool and exclusive. "It means the masses are onto it."

So, some luxury goods marketers are turning to subtler marketing tactics, such as staging invitation-only events targeting celebrity, cultural and business circles where they give away cosmetics and samples of liquor, food and other high-end products to influential people, creating a retail atmosphere of exclusiveness.

$3,000 COGNAC

S&S has marketed several products within the last few years to young luxury seekers, such as Johnnie Walker Blue, which sells for $200 a bottle, and Hennessy Timeless cognac, which goes for $3,000 a bottle. The majority of the marketing for these products is behind the scenes, in one-on-one events for small groups of tastemakers, primarily in Hollywood and Manhattan.

"We have small dinners for young people who are well connected in the entertainment and fashion industries, with the goal of getting our brand mentioned in subtle ways in the culture: in conversations, in restaurants, by chefs and as products artfully placed in films," says Mr. Greifer.

The tactic has been successful so far: sales of Johnnie Walker's most expensive labels, from the Black to the Blue to the Gold, have seen double-digit growth in the last two years, and the company is hatching more, exclusive-distribution liquor brands for 2001.

Remy Amerique is taking a similar underground approach to marketing its new Piper-Heidsieck champagne, which comes dressed in a red leather corset. The $100-a-bottle Champagne Piper Gaultier Corset, dressed by designer Jean Paul Gaultier, is such a hot seller among young, affluent consumers, says Michelle Lawton, category director for wines and champagnes, that the company this fall is launching a companion corset-strapped ice bucket.

Liquor marketers agree the audience for high-end young adults is small, but the payoff is big when a brand acquires a hot cachet with young affluent consumers.

Other than a taste for fine liquor, many affluent Generation Xers also desire fine threads, and upscale retailers are keeping them well dressed.

The influx of young, affluent technology and financial industry executives buying high-end brands such as Ermenegeldo Zegna, Canali, and Dolce & Gabana has forced some high-end apparel stores, such as Kaps the Men's Store chain to "dramatically change" its mix of merchandise, says owner Joel Kapelson.

VERY COOL AND CASUAL

"The guy who's 27 to 38, earns $100,000 to $250,000 or more a year and has no other responsibilities spends a fortune on European-style clothing that's very cool and casual, not traditional, like our core shoppers were until about five years ago," Mr. Kapelson says.

His store markets itself four times a year through a limited-circulation magazine called The Forum, in association with 14 other high-end men's apparel stores. The magazine is distributed through direct mail and in the airport lounges of the Delta Shuttle in Boston, New York and Washington, D.C. to reach affluent young business commuters.

Neuberger Berman, an investment management company, says a fast-growing audience is young high-tech and financial services executives within its Private Asset Management Services area, which requires a minimum $500,000 investment.

The company recently opened its first West Coast office in San Francisco, where it serves young Silicon Valley executives, and advertises in Business 2.0, Fast Company and Red Herring. Its estimated $5 million account is currently in review.

ONE-ON-ONE MARKETING

"We do a lot of marketing through sponsoring certain very upscale cultural and charitable events including art exhibits and music events. We also have a golf tournament, but a lot of our marketing is through one-on-one relationships between our employees and customers, and word-of-mouth among customers," says Andrea Trachtenberg, senior VP-marketing for the company.

When Silicon Valley meets Hollywood, there is upscale combustion, say luxury marketers.

"People with a lot of money in the technology arena are meeting people with taste and influence in the sphere of entertainment," says Mr. Greifer. "Our goal is to be part of this convergence on a grass-roots level through sampling and parties, and therefore become a part of these people's circle of influence."

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