With everybody talking these days about Apples $600 iPhone, Samsung selling a Prada phone and Porsche Design preparing their $800 Porsche Mobile Handset the question arises where the upscale market for mobile phones is going. Especially for Japan -the home of brand luxury- this is an interesting topic to cover.
Different from other parts of the world Japanese are not used to pay more than 30,000 Yen (~$250) for a new handset no matter how fancy it might be.
The market
The Japanese are well known for their love of luxury goods. Not only wealthy people, but most of the middle class as well, expect that they can and should have luxurious items, even if they are minor ones like a Louis Vuitton wallet or a Prada keychain. For some global brand companies the revenue generated in Japan account for over 70% of their global revenue.
A “luxury guide” lists the top “luxury goods” in Japan:
For example a 6 liter bottle of wine for about 2.4 million yen, a Patek Phillippe watch for 200 million yen, a 15 million yen bonsai, and the like. Electronics are absent from the luxury offerings that do include jewelry, art, antiques, furniture, and hotel stays.
Luxury Electronics
There are high-end electronics available in Japan today. One of the most expensive televisions retail for about 4 Million Yen. Sonys “Qualia” brand stands as a symbol of luxury electronics
Characteristics of Luxury Goods
When observing the types of items that are prized as luxury goods, there are some broad characteristics that can be identified.
Price - Luxury goods must be priced higher than normal goods that serve the same purpose. Example: A mobile phone strap with a gold design that sells for 20,000 yen, an order of magnitude more than normal straps.
Materials and Workmanship – Luxury automobiles always stress the fine materials used for interiors, as well as exceptional fit and finish of their bodies. Luxury furniture, such as Japan’s exquisitely made storage chests and treasured ceramics, are also prized for these characteristics.
Scarcity - Rare items are highly valued. This holds true for antiques, samurai armor, limited runs of designer t-shirts, and services such as stays in exclusive hotels.
Elitism – Going hand in hand with scarcity is the Japanese worship of the elite. An item that associates its owner, correctly or not, with the cultural or financial elite can be a luxury item. So we see middle class teenagers carrying Louis Vuitton handbags to school.
Perceived status (rank) – Also related to elitism is Japan’s fixation on rankings. There are “best 10” lists for everything imaginable, and people pay attention to them. This is one reason Japanese companies have traditionally focused on market share rather than profits. In Japan, if you can become the biggest or most recognized, you have a real advantage.
Purchase Experience – When purchasing a luxury, the setting is extremely important for both products and services. A massage experienced in the privacy of an elegant hotel room is different from one taken at a public bath. The buying experience is an important part of the product. There are, of course, discount sellers for those for whom owning the item is sufficient. But even for them, the existence of extremely luxurious flagship stores for designer goods lends the impression that the consumer shops there.
After purchase care – Sellers of luxury goods are expected to provide exceptional service for the life of the product. The knowledge that if a handle breaks, or a seam comes apart, that the store will gladly fix or replace the item without any embarrassment to the client is very comforting. This implies that the seller has a long-term commitment to the buyer, something that is very highly valued in Japan.
Use Experience – the buyer must get some extra benefit from the experience of using the product. Whether it be the benefit of being seen carrying a Coach suitcase, the tactile joy of a perfect teacup, the touch of a fur coat, or the pampered experience of an exclusive spa, the consumer must feel that using the product is something special.
Mobile Phone Luxury?
Mobile phones can incorporate some luxury characteristics. The price, scarcity, materials, purchase experience and after-purchase service that signal luxury are within some level of control of the manufacturer and seller. Yet there are other aspects that are much more elusive, like elitism.
Talking with consumers about the idea of luxury mobile phones, often revealed a quizzical looks. While the idea seems appealing to them, the concept seems hard to grasp. It looks like they are much more open to the idea of “customizable” luxury than to “out-of-the-box” luxury.
This can also bee seen in the market today. While users spend around 20,000 Yen for a mobile phone they spend much more than that on having their phone designed by nail artists or on buying limited edition colours or straps.
Conclusion
Mobile phones can certainly be made to be expensive, high end, function-packed electronic wonders. But bein perceived as a luxury item is an extra challenge. The products and services that the Japanese view as luxurious tend to have a different, more classic slant than the ultra-modern multi-use image that a handset evokes.
The difficulty of establishing a mobile phone as a luxury item is made even more clear by the fact that no electronics have broken into the world of “luxury products” in Japan so far. There is still a fundamental disconnect between feature-based electronics that will soon be superseded by new, better models and the experience of use of a luxury item, which often has classic styling and may be used for many, many years. Where there seems to be a chance is the field of customizable or special edition phones.
This could either be a special edition, limited design version of a standard phone or a combination of design coves/straps/accessories bundled with the phone. In the last 2 years new design phones and limited edition covers had been introduced in the market but not to a level that can be regarded as “luxurious”.
Japan is the worlds leading luxury market so it will be interesting to see with what concepts companies will come up in the next months. In general the mentioned characteristics of luxury goods will be the rules everybody has to follow.
