Market for Self-Actualization:
The Ultimate Luxury
When all your physical needs are satisfied and you have everything you possibly could want or need, what's next? That is the ultimate challenge for the luxury marketer today. Our society is so wealthy, that even the poorest in our society partake in luxury. Where else in the world would you find those at the bottom of the income chain owning cars, color television sets, VCR/DVDs, air conditioning, and other 'luxurious' necessities of 21st century life?
First the rich do it, then everybody else!
The natural evolution of all luxury concepts is from class to mass. In other words, luxury is first adopted by the affluent and wealthy, then inevitably it is translated and reinterpreted down to the mass market. So today's luxuries become tomorrow's necessities. As luxury marketers, we have to stay out in front of the luxury consumers, discovering new and different ways to give expression to the luxury consumers' desires. New technology creates new luxury needs and business opportunities, such as plasma televisions, enhanced PDA's and digital photography equipment. Changes in fashion, too, are a way to continually reinvent luxury, so today colored diamonds are hot. But to assure the greatest long term success luxury marketers need to connect with the luxury consumers' inner emotional lives and create new products and services to meet those needs. For today's luxury consumer with an excess of things, achieving self-actualization, as defined by Abraham Maslow's hierarchy of needs, is the ultimate expression of their most compelling luxury desires.
Maslow's hierarchy of needs
From "things" to "experiences" expresses self-actualization needs
Luxury consumers express self-actualization needs as they turn from a pursuit of materialism to a yearning for new experiences. Unity's research in the luxury market has found that when consumers buy luxury things, they are in reality buying those things to achieve a feeling or to enhance an experience. Luxury product marketers need to study how the products they sell further an emotional experience for the consumer. This, then, become the focus of luxury marketing, giving new meaning to the phrase "experiential marketing." Experience marketing is infusing all product development, marketing and sales efforts with the feeling that the product promises to convey to the customer. Rather than stressing product features in advertising, such as the exquisite craftsmanship and finest quality materials, advertising must communicate the feeling that the product will inspire in the consumers. To this end luxury goods marketers should copy lessons from the service-provider's marketing handbook. Luxury goods need to be sold, advertised and promoted like luxury services.
Luxury consumers express desire for experiences
LOHAS seek self-actualization
Marketing luxury goods as a means toward self-actualization requires a new way of thinking about our business and our customers. For example, the market for home decor products gets an entirely new experiential thrust through the Feng Shui discipline. With Feng Shui, home decorating is not about simple esthetics anymore. Rather than creating beautiful rooms, Feng Shui aims to create harmonizing environments that are emotionally healing.
Another example of marketing self-actualization is encompassed in the new lifestyle concept described as "LOHAS," an acronym for "Lifestyles Of Health and Sustainability." In a recent New York Times article, the LOHAS market was described as "consumers who worry about the environment, want products to be produced in a sustainable way and spend money to advance what they see as their personal development and potential." Comprising an estimated 68 million Americans and a market of $230 billion, the consumers that respond to the LOHAS' marketing message reportedly prefer to buy from companies that share their values and are willing to pay more for products and services that are made to minimize harm to the environment or society.
The LOHAS Journal, published by Natural Business Communications which recently merged with Conscious Media, is the evangelistic arm of this new consumer movement. Natural Business Communications was founded in 1996 by Frank Lampe and Steven Hoffman, who serves as publisher of the LOHAS Journal today. Conscious Media, based in Broomfield, CO, is an independent, privately held multimedia company dedicated to furthering the growth of the LOHAS market and to educating and informing both businesses and consumers about the importance of health and sustainability.
Brad Warkins, president of Conscious Media, explains the goals of Conscious Media, "Through our products and services, we are dedicated to helping build better lives, more socially responsible business practices and a more sustainable world. And now, working with Natural Business Communications, we are better positioned to serve business owners and executives that are pioneering the growth of the LOHAS market." Key markets targeted for LOHAS consumers are natural and organic products, complementary medicine, personal development, socially responsible investing, alternative transportation, renewable energy, green building, recycling and other sustainable products and services.
Gaiam embodies experiential marketing for the Lohas market
New business models are required to effectively target the values-oriented LOHAS market. One of the more intriguing companies targeting this market segment is Bloomfield, CO-based Gaiam, (pronounced "guy-um"). With revenues of $111.4 million, Gaiam is tiny, but the company is powered by a mighty vision and innovative business model that makes it worth studying.
Gaiam describes itself as a "multi-channel lifestyle company to provide choices that allow people to live a more natural and healthy life with respect for the environment." Their vision: "We believe that it is through the simple choices we make every day that we can transform the world in which we live." And their target market: "Our vision was inspired by the growing number of people who make purchasing decisions based on personal values," according to their 2002 annual report.
Gaiam has turned their "content" into different revenue streams from a wide range of products and "experiential services." With a focus on health, wellness and exercise content, they create a wide range of formats, including broadcast, video, DVD, audio programs, books and print media. For example, a new content area is being developed with Dr. James Rouse, a naturopathic physician and natural foods chef who hosts "Fit Kitchen" and "Wellness Wednesday" for NBC News affiliates. Dr. Rouse's content will focus on stress release and health solutions for sleep.
Content is then turned into products that fulfill the target market's LOHAS lifestyle. Besides media products, the company produces mind-body health accessories, relaxation and mediation aids, wellness solutions, natural and organic cotton apparel and home textiles, nontoxic household cleaners and renewable energy solutions. Some 60% of company revenues in 2002 were attributed to the company's proprietary and branded products. Among their hottest products this year are the BalanceBall, an exercise accessory, and Pilates program kits.
A critical element to the Gaiam business model is the company's direct control of distribution, including in-store presentations. The company started as a direct marketing company and today maintains a mailing list of 1.8 million active consumers for their catalogs such as Gaiam Living Arts, which produces yoga videos in addition to selling massage and yoga accessories; natural housewares catalog Gaiam Harmony; and spa accessories collection Gaiam Innerbalance. Their website, Gaiam.com, offers another direct channel to consumers with over 5,000 products featured.
But the key to the company's future is their distribution through 3,500 retail locations with a "store-within-a-store" freestanding display of Gaiam branding and lifestyle-themed products. Key partners in retail distribution include Target, Bed Bath & Beyond, Linens 'N Things, The Sports Authority, Dick's Sporting Goods, Galyan's Sports, Dillards, Marshall Field's, Discovery Channel Stores, Whole Foods Markets, among others.
As Gaiam extends its reach into the mainstream consumer market from the fringes, they are partnering with companies that share their LOHAS vision. The W Hotels chain is working with Gaiam to create new Wellness Rooms, a new take on the hotel fitness center, which offer Gaiam's meditation chair, massage, relaxation and yoga practice. Fairmont Hotels and Resorts is another Gaiam hospitality partner.
Gaiam's LOHAS market segments
Self-actualization opportunities for luxury marketers
The opportunities for luxury marketers to target their consumers' self-actualization needs extends beyond Lohas, exotic eastern philosophies and new-age theories. We need to think about new ways to turn our luxury brands into an experience for our customers ... to touch them emotionally and experientially through the delivery and performance of our luxury goods. We need to view our product offerings through a new lens, to see beyond the physical manifestation of our goods to the metaphysical meaning that our goods embody for the consumer. For our companies to grow in this new consumer culture powered by a desire for self-actualization, we need bigger ideas than simply creating the next fashion trend or new jewelry design. We must connect our luxury products with our consumers' values in a meaningful, experientially focused way. Gaiam's business model is a good one to study as they innovate creative ways to market self-actualization experientially.
About Pam Danziger & Unity Marketing
Found in 1992, Unity Marketing (www.unitymarketingonline.com) is a marketing research and consulting firm that helps companies apply the concept of emotional marketing to corporate branding and marketing initiatives. Using its "why people buy" research strategy, Pam Danziger, company founder, president and author of Why People Buy Things They Don't Need (Ithaca, NY: Paramount Market Publishing, 2002), uncovers the motivations, desires and emotional needs that drive consumers to buy. This approach turns consumer insights into actionable marketing and brand strategies and gives executives "future vision" to plan the direction of their business. Unity produces market research studies that are essential business planning tools for executives competing in the luxury market, jewelry, art, home furnishing, gifts and collectibles, toys, personal care/cosmetics industries among others. Unity also publishes the Luxury Business and Gifts & Collectibles Business newsletters. Today Pam is at work on her next book, Let Them Eat Cake: Marketing Luxury to the Masses (as well as the Classes).
Originally featured in Luxury Business, Vol 1, Issue 5 July/August 2002