Luxury and Japan appears to be a love affair (to quote Chadha and Husband) that has reached a stage of crisis. Japanese consumers are famous internationally for their immense consumption of luxury goods, especially handbags. Star brands such as Louis Vuitton, Gucci, Hermès and Chanel managed to attain a status as social entities, as part of the Japanese society. The reasons for this phenomenon and the crisis in the luxury market in Japan that went hand in hand with the rise of fast fashion, are complex.
What we want to focus on here is a neglected aspect concerning the marketing strategies of luxury brands. Even though many phenomena in Japan can be attributed to band wagoning, a need to show social status, conformity to group pressure and the fear of standing out, there is another level of attention for these luxury brands, that the consumers themselves are often not aware of consciously.
Brands often respond to shifting market circumstances by trying to micromanage every aspect of the brand. But it is exactly the brands that embrace the market by being as fluid as possible while maintaining a consistent brand identity, that are able to flexibly translate themselves into the Japanese market dynamics.
Luxury marketing in Japan is not solely about attracting customers. It is about winning a complex social game, about creating opportunities and access to gatekeepers, to opinion leaders. As a long-term strategy, luxury brands should direct themselves in achieving a sustained relationship, a conversation, with the consumers within the market place.
The simple fact is that many brands lost touch with their Japanese consumers. Their strategies no longer resonate with what is happening in Japan. Without a narrative that can sustain a conversation in the market place, the tendency was that Japanese consumers took hold of the brands and consumed them in ways that are out of the hands of the brands. Luxury brands in Japan used to be present as a dream, something to aspire to, that was closely integrated into the society and its modes of social stratification. But society changed dramatically and brands started to become painfully aware of the fact that somewhere along the way their own narrative was lost.
It was the construction of the dream that went wrong. The dream was part of Japanese society with its status markers, and not part of the narrative of the brand. European super brands with history and prestige must understand how much of their tradition has been stripped from their brand stories, be it because of the language barrier or the missing need to display sophistication and knowledge about brands in Japan.
Luxury brands exported only the product. Due to this brands lost control over the fate of their brand image in Japan. Brands must start to develop lasting strategies, both online and offline, that can also export the narrative. They must create topics to be discussed within networks, which are then turned into categories by which brands are evaluated (heritage, quality, craftsmanship, country of origin, and production sites). Talking about the story of a brand has to have social relevance within networks.
Luxury brands in Japan should not mellow with age but present their meanings anew, reinterpreting them within a new cultural paradigm. Luxury brands should not have to constantly reinvent themselves, but they certainly should constantly reinterpret themselves.
Our beliefs for a luxury strategy in Japan are summarized below:
1 _ Clear associations Clearly defined associations to social groups are important in Japan. Brands without clearly defined associations to reference groups have trouble bestowing meaning on the products to the consumers. Ambiguous associations bring about confusion and rejection of the brand narrative and create insecurities.
2 _ Legitimacy in the West. In Japan there is still a strong tendency that a purely Japanese face can rarely legitimize a product whose aura is located abroad (compare with W. David Marx, 2007, Race as a Fashion Signifier, http://neomarxisme.com/wdmwordpress/?p=80). Brands can create legitimization through continuing brand advertising in high fashion magazines (Vogue, Elle, Numéro, Souen) while using selective high class advertorials in popular Japanese magazines with half-Japanese models (as Chanel did in Glamorous with Hasegawa Jun in the October 2010 issue).
3 _ Sensual orientation of the Japanese. In the West the hedonism of consumption is not as concrete and sensory oriented. It is more abstract. Brand signs and signals in Japan are manipulated much more loosely and have to be visually compelling.
4 _ Understanding the best customers. The best customers account for a disproportionate amount of the sales, depending on the brand and segment in question. It is then of paramount importance to deepen the relationship with the best customers (CLV, Customer Lifetime Value) and referrers (CRV, Customer Referral Value). Brands must understand and delight them. It is more important to spend significant amount of time with them to obtain first hand insights as opposed to reading standard market reports.
5 _ Create a dream, do not sell. If consumers see a high class luxury brand as a dream (that they develop “akogare”, something to aspire to) as a university student or younger, and then begin to buy into the dream later, then you have started to develop a lasting brand image. Therefore do not advertise to sell, but build a dream, a brand image. Kapferer (2008, The Luxury Strategy) emphasizes this heavily, and it is as true in Japan as it is in Europe. Yet, Japanese marketing departments are often unfamiliar with the concept of branding and see it as a distinct discipline.
6 _ Transgressing life stages. Brands should understand the different dynamics among working women (office ladies or OLs) and students, the transition into adulthood, and later becoming married or a mother. Dreams, or “akogare” should be crafted accordingly transgressing life-stages. Luxury consumption in Japan is about social mobility and communicating the right signals throughout.
7 _ Adult consumption. The self-reflection of OLs is more sophisticated then the students, naturally for they now have adult responsibilities, more serious relationships, and money. Working women want to limit their choices, discard certain behaviors as being inappropriate to their new life as judged by themselves and society at large, and of course in their social network. Their brand choices become more realistic and practically oriented.
8 _ Create narratives to fill a lack of dreams. Working ladies and moms do not spend as much time socializing as students do. Consequently many working women’s lives seem to lack narratives that fulfill them. There is an unoccupied space waiting to be filled by a high quality narrative, a narrative that sells a dream, an “akogare”.
9 _ Engage, do not pamper. Luxury brands must engage luxury consumers, but not pamper them. The strategy is to create exclusivity, a dream, then reign with charisma and intimacy. Do not do as your customer wishes, but know how they feel and think. Then guide and inspire them. The famous quote by Henry Ford: “If I had asked people what they wanted, they would have said faster horses.” is often cited by marketing officials to question the usefulness of marketing reports and consumer insights. This is a grave mistake in our opinion. Simple put, marketing luxury products has little to do with constructing cars 100 years ago, and marketing seasonally changing taste is more complex than this. Knowing what people want does not in one instance imply that you do what they tell you.
10 _ Be creative and intimate. Japanese are fast at becoming tired of any approach. Get an intimate feel for the networks, achieve a closeness with your customers through informal channels and keep your finger on the pulse of Japanese consumer trends. One brand update every few years is not enough, you must continuously feed your brand with information from relevant networks. Recreate the brand in a fresh way.
The HNWI travel report takes a deep look on how HNWIs (富裕層) in Japan travel, and at their images of hotel brands. This report offers a different perspective on HNWIs and their travel behavior in Japan. The difference lies in the amount of detail, its relevance and closeness to the consumer group analyzed, and in the way to access this information. Through continuous interaction with Japanese millionaires over the course of over 10 years, we acquired access to their networks and permanent exposure to trends and changes in their consumer behaviour and mind-sets. 
