Hi. In this additional clip we will see what other industries can learn from fashion. In particular, we will focus on the concept of masstige, so how to create a higher perceived value of your product by leveraging some prestige techniques. This may help managers in other industries apply the “fashion treatment” to their product, and therefore to get both higher margins and more loyalty. In a society of widespread well-being, the desire for luxury causes the confines of people who can afford to by an Hermès bag or Gucci moccasin. People are searching for individual gratification in little daily pleasures that are expensive but yet not inaccessible, like having a break with an Illy or Nespresso coffee, or having a daily treatment in a spa or buying a Swarovski charm or a Victoria's Secret bra. This search for a consumption that is more sophisticated than one of the mass market but yet not as expensive nor unreachable to most of people as the one of luxury products gives the room for premiumization of product categories which were once considered undifferentiated. In other words, there is a way for mass market companies to escape the commodity trap, to move the competition away from price and therefore cost, into something that gives the customer a value that is more emotional. Here comes the word, masstige. Masstige is the union between “mass” and “prestige.” It refers to retail categories that include brands and products that have high end and prestigious characteristics especially regarding communication and the in-store experience they are able to create. Together with an affordable price and a diffusion that is more spread in terms of distribution than the one of prestige products Masstige can also be seen as the combination of mass and prestige, two different elements of marketing mixed. Finally, in fashion, masstige refers to the concept of mixing and matching. The fact is that today, in order to give a cool image of ourselves we should combine in our outfit some luxury accessories together with some products that are more affordable. This is not just in order to save money, but somehow it’s to express who we really are, so searching for our own way of interpreting fashion. Let's now explore more in-depth what masstige is. Let's start by referring to the book that introduced this concept first. In their book “Trading Up: The New American Luxury” Michael Silverstein and Neil Fiske spoke about a new market segment that occupied a range between the mass market and premium ones. According to the survey in the U.S. market in the platform of personal care accounts for between 20% and 40% of all sold goods. What is most interesting is it’s growing at an average rate which is twice the that of brands that are not included in the masstige segment. A phenomenon that can help you to better understand what the masstige is, is the development of sophisticated consumption in the food industry. Think about water; think about ice cream; think about chocolate; They used to be pretty undifferentiated products. Thanks to the application of Masstige techniques they've been transformed into something that is commodity chic. So commodities that make a difference in terms of design but as well to the ability of those brands to appeal to different senses. For example when we enter a store selling Godiva chocolate, our attention is caught by very nice visuals, as well as the color, the ribbon of the package, the selling ceremony that reminds us of a luxury store. Magnum Ice Cream has been sold in limited editions, referring to the five senses and the Seven Seas. They have appeal in their advertisement, with all the five senses. Think about the sound when you bite into ice cream. And on many occasions they’ve made references to the glam of fashion for example by using models in their communication. And so on and so forth. So, as you see there is a huge opportunity for creating a new market segment. That gives companies of consumer goods the opportunity to learn and apply the luxury and fashion treatment to their products. This new offer is possible because the customer has changed. Today the customer is much more sophisticated but also open minded, willing to browse from the top to the mass. Therefore there are new consumer consumptions such as the mix and match that I referred to previously, but as well as conspicuous austerity, selective extravagance, and rocketing are taking place. Let’s try to better understand what those funny names mean. Let’s start from “rocketing” which is also called “selective extravagance.” While in the past if one would have observed what people were carrying out in their shopping cart, for example in a department store, food store, or supermarket. The consumption past tense would have been pretty predictable. So some customers would have bought brands. From all over the product categories. While others, because maybe they didn't have the same money, they would have chosen always the promotions, the product labels. Today, every customer is putting together products that are very different. So, maybe we are really passionate. We are fond of olive oil. So we will search for to the most expensive quality regardless of the price. But in the meantime, maybe we will go for the product label on pasta. As an Italian, I would suggest against that, but this was just an example. This phenomenon is called rocketing. That means that the same customer will overspend in some product categories while making savings in others. For most people, this could be a consequence of budget constraints. So we do buy the in bag, and then maybe we make savings on our underwear. This is also true for high net-worth individuals because somehow this diminishes the sense of guilt, so they could over-spend on something they really believe is important. And then they buy in factory outlets or in private sales to compensate for this shopping behavior. So the idea is that more and more customers are extravagant in their selection and because of that they're also more inclined and open to accept that brands that used to belong to different market segments are nowadays also occupying this masstige territory. Let me provide you some examples of how fast-moving consumer goods companies may move into prestige. How they can create this exclusivity factor. The first is to learn a very important lesson from fashion brands. The importance of feeding the press with the right story angle. We want our brand as a space in the magazine in the media to something that is able to catch the attention. To create the wow factor. So, why not create products that are very expensive, maybe nobody will buy. But they are very good in creating this reason to speak about the brand. A very good example is the fantasy brand of Victoria's Secret. Victoria's Secret is, in my view, one of the best example of masstige. It's a brand of underwear, very successful. That is selling products that are good quality. But yet, they are not really, let me say the cutting edge in terms of craftsmanship. But yet it is a brand that has been able to create a very strong emotional engagement. How so? First of all, to the fashion show. Every year, Victoria's Secret organizes a catwalk which is indeed a spectacular show. First of all, you have the best top models of the world attending, and are called Victoria's Angels. So there is already a marketing appeal. And then they invite celebrities like Justin Bieber and Rihanna. So we are all ready to go and really live this great experience. And during this catwalk, very few products are showed. Among them, the most important role is taken by the so-called fantasy bra. A limited edition that is conceived in order to create a lot of buzz. Just to provide you an example. In 2013, the Victoria Secret's royal fantasy bra was valued at $10 million. Now, you will wonder, who's going to buy those very expensive bras? No one. So far it has been reported that only one, and not even the most expensive, it was only $2.5 million, has been sold. We don't know who is the lucky owner but for sure, she will be very beautiful when wearing it. But the point is that thanks to this bra Victoria's Secret has been able to upgrade their perceived position. So when I enter the store I'm not going to spend millions of dollars. On the contrary, Maybe I'm going to spend $20, $5, or $50 but I will feel that I am a princess as the Victoria Angels that I’ve watch in the fashion show. Communication as I said before is the most important driver for bringing mass market into prestige. So practically what can companies do? First of all they can imitate their fashion codes in their communication. If you followed my lecture you will remember that fashion communication is about visual. Is about using top models. Is about creating a lifestyle that is very aspirational. Now top models cache is available to everyone that can pay for their fee. Therefore, it's very common to see that very important models that are the testimonials of luxury have also giving their availability to work for mass market brands. So having Kate Moss in your communication campaign, having Giselle is helping to enhance the perceived value. So simple then this. Then, what mass market companies can do is exploit the concept of limited edition. Luxury is by definition limited because of the scarcity of the raw materials. Because of the hours that, are needed in order to transform these raw materials into a finished product and because of the years of expertise that are needed in order to know how to make the product. But today we are surrounded by limited editions everywhere. The pioneer and, to me, still the best example is H&M. Back in 2004, it launched a limited edition design by Karl Lagerfeld, the designer of Chanel. That limited edition at very affordable prices. So I remember that it went from less than 50 to 150 Euros and was actually distributed only in half of the stores of H & M. So somehow the search for some kind of exclusivity into the accessibility. These collection was are huge success. In Milan it was sold out in a few hours and in the afternoon the same items were available on Ebay and other auction websites for 2, 3, 4 times the price. Now, there is no doubt that this partnership has been very beneficial for H & M. Because it helped to enhance the perceive, perception of the retailers. So, it had the design statement in the corner that otherwise would have been perceived as a copy cat. But why did Karl Lagerfeld go for it? Was this a good or a wrong decision for the Chanel brand? There is a video that was created in order to promote this launch that I absolutely suggest you to watch. Because I still consider this video as the perfect manifesto of the mix and match. In this video you can see people wondering and getting anxious after having heard about this new, of this new collection. It is a very funny parody of the French aristocracy. At the end of the video, a guy starts yelling in a very elegant restaurant and what he says is, Karl, Karl, is it true? And suddenly we see Karl Lagerfeld, with his amazing personality, looking at this man and saying. Of course it is true, but it is cheap, the other guy says. And here Karl Lagerfeld replies, what a depressing world, it's all about taste, if you are cheap, nothing helps. So this is the point today, it's not about the money you spend, but it's about the taste and discernment you have. And somehow to have a limited edition of a fast fashion retailer is even cooler than just buying the designer brand. Because every day I can enter a designer brand store if I have money, and to buy something. But to buy that specific collection I need to know that they will arrive in the store. I need to queue in front of the store. I need to fight with the other crazy women and men in order to get the iconic piece. So, as I was saying, this kind of partnership proved to be extremely beneficial for H&M, that since then have continued with many other very important designer brands. But also somehow helped somehow Chanel increase the cool quotient because the name of Karl Lagerfeld is certainly very famous among people that are connoisseurs in the fashion industry, but probably doesn't say much to younger generations. Or even if they know, they could never enter a Chanel store. So it's a way to start educating them to the Karl Lagerfeld taste. And finally Karl Lagerfeld said that the Chanel company knows very well that H&M customers can buy lipstick. So never forget that even luxury brands sell products that are more accessible. So limited editions by the designers are a way to bring prestige codes into the mass-market through it’s use of top models or the creation of the retail experience. So is that everything in masstige? Are there no boundaries anymore between what is truly prestige and mass market. I don't think so. It is true that mass market companies can leverage on some elements of the marketing mix. Yet, the experience they're going to provide to the customer will never be unique. Why so? First of all because the product cannot be bespoke. You cannot have the best raw materials. You cannot have the best design. You cannot have the made in Italy or made in France, otherwise your price won't be affordable anymore. And then there is the service which makes the difference. When we enter in a fast fashion retailer, yes we may have very catchy windows we have nice displays. But we don't have the same level of assistance and competence and know-how. And as well the same level of attention that we may find in a luxury store. So to conclude I will say that it is possible for other industries, and especially for fast moving consumer goods, to imitate some elements that belong to luxury. But they could play one single instrument they could never play the orchestra altogether at the same time. So if you want to be luxury check that all the elements are speaking about luxury. If you want to be masstige just try to enhance what you are offering to your customer. Always remembering that everyone wants to feel like a prince or a princess.