RAPAPORT... When it comes to marketing in general and holiday marketing in particular, there has been a dramatic shift away from product and price and toward emotive, lifestyle marketing. Price remains important for major players whose volume means they can compete on that basis, according to Kate Peterson, principal with Performance Concepts, a consulting company for jewelry retailers. But, she says, even companies such as Zales Jewelers aren’t advertising at a single price, but are expanding the price range — a move that she says effectively takes price out of the equation.
The Diamond Trading Company’s (DTC) Journey Diamond Jewelry and the diamonds as words promotions illustrate this trend toward marketing to consumers’ hearts, rather than to their wallets. The “Dandelions” Journey campaign commercials, first aired during the Emmy awards, are a classic piece of emotive marketing, heavy on emotion-laden images of fragile dandelions floating through the world, with a couple on the beach finally appearing at the end in a romantic scene, culminating in a shot of diamonds.
Retailers are taking the same romantic, sentimental route. Helena Krodel, media liaison, Jewelry Information Center (JIC), points to two giants who aim at very different markets, Tiffany and Zales. “Their commercials and the whole essence behind all their work with the media is very much romance,” she says. Even Zales, with its lower price points, is talking about romance and sentimentality. Zales began holiday commercials early, in October, with an emphasis on romance and sentiment and less of a focus on price.
Ellen Fruchtman, president of Fruchtman Marketing, which specializes in jewelry and other fields, says emotion is a far better business driver than price and product. “You’re never going to win the price war in this business,” she says. “You’re always going to win on the emotional front and relationships.”
’TIS THE SEASONThis is particularly true during the holiday season, a highly sentimental time of year for everyone. The holidays are also the high season for engagements — December is the number one month for getting engaged, according to the Conde Nast Bridal Group — which makes it even more important for the diamond industry. It’s a double whammy. Christmas is the season of love, for giving to those you love, be they mothers, wives or girlfriends. And it’s also the season for popping the question.
At the same time, the number of channels over which retailers can promote has proliferated in the past few years. Twenty years ago, retailers had three major television networks, local radio stations and local and regional newspapers. Now, there are cable news channels, DVR — services like TiVo that allow viewers to record their favorite shows, minus the ads — satellite radio and, of course, the internet.
Communicating with consumers over this increasing number of channels is not just expensive — it’s impossible, according to Fruchtman. And that fact of life has powered what she calls a dramatic shift among her clients to direct mail. “This has been a huge shift for us and I think that, industry-wide, people are going to start to move in that direction,” she says. This does not mean that retailers are abandoning traditional media.
Direct mail is what Fruchtman calls “the ground war.” Broadcast and print provide “air coverage”— important, she says, but “you’re going to win the battle on the ground.”
COMMUNICATION SHIFTSStrategically, however, these traditional media still have value, so retailers are continuing to use radio, television and newspapers. Local and regional newspapers and radio remain popular, according to Krodel. Jewelers are using the web more. But, they’re expanding the media that they use.
Thirty-seven percent of jewelers responding to a JIC survey said that they were “somewhat” or “very likely” to expand their holiday channels this holiday season. There is some geographic variation, with retailers in the Southeast, South and West more likely to expand their marketing channels. And the channels they’re expanding in are channels that facilitate building relationships with customers. That means aiming at narrowly defined audiences by using direct-mail pieces to prior customers or to customers whose lifestyle is consistent with the lifestyle of existing customers.
Jewelers using direct mail have got to send out direct-mail pieces that resonate with the consumers who receive them. And to do that, jewelers are turning to database marketing, in which they get to know their customers’ preferences and lifestyle and send them marketing pieces that are designed to appeal to someone who lives like they do.
“Jewelers are going to have to get smarter,” Fruchtman says. “They have to know their customers, know everything about them and find like-minded customers within their radius and directly target them with a message.” And, says Fruchtman, consumers have to get that message out three to five times — not to the point that it is bothersome, she says, but enough for the message to sink in.
THE LIFESTYLE HOOKThe most sophisticated of these methods is not the old age-based demographic profile — men between 25 and 40 — but rather Consumer Relationship Management (CRM), targeting consumers with similar interests, who pursue the same activities and lifestyle. That means it could be people of a varying number of ages but who read the same upscale magazines, go golfing and enjoy fine food and wine.
Fruchtman, interviewed just before this fall’s elections, compared CRM to the political campaigning. “They know if you read Vanity Fair, you’re probably a Democrat,” she says. “And that’s what we’re doing on the retail front.” Marketers are using profiles to create a picture of certain consumers in order to market effectively to them.
With a burgeoning number of communications channels with overlapping audiences available, CRM gives retailers a way to reach the right customers with the right message. “Instead of linear bands, it’s much more cluster-focused marketing,” says Peterson. Customer relationship marketing programs, such as the E.Piphany CRM software Zale Corporation bought about three years ago, enables this kind of targeted marketing. The more focused the marketing pieces, the higher the return on the dollar invested.
Upscale retailers are using gift cards in their direct mail, according to Fruchtman, because they have a much higher response rate than other direct-mail pieces. “We’re doing an enormous amount of gift cards,” she says. Using customer databases, retailers are essentially thanking their customers with gift cards designed to look like holiday cards. The best customers get a $100 card, the next tier gets a $50 card and the next gets a $25 card. Retailers are also targeting potential customers with gift cards — although with slightly less costly cards. These usually are consumers who have received other mailers from the jewelers and are presumably familiar with them.
Event-based marketing — especially shopping events aimed at men — continues to be effective, according to Fruchtman. She says the idea is to help men shop without fear, so stores offer pizza and beer to help make coming to a jewelry store fun for men — instead of frightening. But Fruchtman says her clients still focus on making an emotional appeal to women, because women, in the end, tell men where to shop.
Percentage of Holiday Marketing Budget Spent on Direct Mail| | West | Midwest | East | South | South East | Nationwide Average |
| No Responce/Don't Know | 20.0% | 14.3% | 25.7% | 8.6% | 20.0% | 11.4% |
| Less than 25% | 12.3% | 26.0% | 34.2% | 11.0% | 11.0% | 5.5% |
| 25% to 50% | 9.8% | 27.5% | 37.3% | 3.9% | 17.6% | 3.9% |
| 51% to 65% | 18.2% | 31.8% | 36.4% | 9.1% | 4.5% | 0.0% |
| More than 75% | 20.0% | 20.0% | 20.0% | 0.0% | 0.0% | 16.7% |
Percentage of Retailers Using Direct Mail| West | Midwest | East | South | South East | Nationwide Average |
| 14.0% | 24.7% | 33.3% | 8.1% | 13.4% | 6.5% |
Source: Jewelry Information Center (JIC) Fall Jewelers Panel
Article from the Rapaport Magazine - December 2006. To subscribe click here.