Designing for the new luxury market – experience-driven yachting
For most of us, the word “yacht” conjures up images of floating bases of luxury and glamour. However, there’s a huge variety in yacht types, from size and specifications to purpose and price. And with new markets starting to eye these traditional icons of wealth, there’s room to think about what kind of experience yachts need to communicate, and how this experience might differ across cultures and age brackets.
The yachting market, on the whole, is still product rather than customer-oriented. As the double digit growth of the past decades diminishes in the wake of the economic crisis, the industry now needs to look inwards, to renew and refresh its own design approach and methodology, and outwards, to explore new markets and concentrate on entering them successfully. This requires a people-centred approach, which considers yachts not as mere physical products, but as facilitators of an experience. There are also adaptation and localisation challenges. In this article, we look particularly at the opportunities presented by the Asia-Pacific region based on preliminary research into the Korean, Chinese and Indian markets.
In a two part interview, originally published on Canvas8 and now able to be published here, Experientia partner Mark Vanderbeeken and senior industrial designer Luca Troisi discuss how the yachting industry might best adopt a people-centred approach. Luca’s long experience in the transportation industry includes work for luxury yacht-builders (Azimut-Benetti; Ferretti Group) as manufacturing manager in charge of industrialization, new product development and manufacturing.
You can also download our slideshow presentation on luxury and experience in yachting culture, focused on the Asia-pacific market.
Could you give me a clearer definition of what you mean by ‘yacht’ – are we talking superyachts or the marginally more affordable kind? Perhaps this could have an impact in terms of the emotional connection between consumer and product, because often people who buy them aren’t the ones captaining or getting their hands dirty.
We consider a yacht to be any luxury boat that is larger than 36 feet, including motorcruisers, motor yachts, superyachts, etc. The smaller ones are usually bought by middle class people for leisure purposes. This size is very popular in the USA and Scandinavian countries.
Of course, when we talk about the larger yachts, we’re talking about a high-end market, with a very specific kind of user experience. Rather than thinking that people are less likely to engage with a superyacht emotionally because they won’t be doing the actual sailing, we need to think about what the emotional connection becomes in this case. This may well be a group of people who are used to having staff serving them. In some cultures, it is far more common to have serving staff, such as drivers and cooks, in everyday life – it’s not necessarily a defining part of the yachting experience.
Interestingly enough, your point about who gets their hands dirty is highly relevant for marinas. Often it might be the captain of the boat, rather than the owner, who makes the decision about which marina to berth in. This means the marina experience needs to operate on two different levels – the first considers which services and facilities would appeal to the yacht owner, such as restaurants, entertainment, security. The second seeks to understand what the captain and staff are going to be looking for, such as services to assist in docking and proximity to food suppliers.
Is it possible for a global luxury brand to adapt to very different demographics and cultures without fragmenting? How?
When we talk about a global brand, we have to think about the overall brand value proposition and not the individual products. The products need to be designed for local contexts, but fit into the values of the company. So the company has to have a very clear idea of what their brand values are, and then use research to find out how these values are manifested within local cultures.
According to our paradigm of user experience, we feel that in the luxury market – yachting and elsewhere – it’s hard to define a global proposition. A luxury bag has less of an experience behind that, you can sell it everywhere. But a yacht is almost like a house, and of course the experience with a house is so personal and culturally biased you can’t sell the same one everywhere even if you maintain the brand proposition. And this is the mistake that, in our opinion, some of the largest boat builders are making.
It’s true that countries like China, Korea and India desire Western style and products, but they also have a very strong history and culture. So maybe [brands] should try to understand the cultural aspects of owning a boat in these countries – that don’t have a long yachting history – and then conceive a product from scratch, perhaps keeping the style, but changing the concept.
Which new markets should the yachting industry be exploring and why?
Western countries are not saturated yet, but it’s getting harder and harder to sell brand new yachts. On the other hand, while Eastern countries could represent a huge market, wealthier people there do not yet have a strong yacht culture, so it’s very hard to tackle this market.
Take the Asia-Pacific region. It accounts for about 10-15 per cent of worldwide boat sales. And for some motoryacht builders the figure has possibly been as high as 25 per cent. In 2009, while the European and North American markets were shrinking, India and notably China, were still delivering double-digit growth, albeit from a relatively low base. China saw an increase in sales of over 40 per cent in 2009, particularly in the 12-18m (40-60ft) range. And India saw a similar growth, principally in the under 12m (40ft) range. So these seem like immensely promising markets.
However, there are major hurdles to overcome in both these potentially huge territories – principally the lack of berths and maintenance facilities. Infrastructure matters. But an innovative company shouldn’t wait for marina development – when the marinas are built, everyone will be there and the early mover advantage will have disappeared!
We’re currently looking into helping South Korea set up a more advanced and innovative yacht and design industry because they don’t have the historical bias; everything at the moment is based on technology, gadgets and styling, but opportunities exist beyond these three elements. The Korean government, for instance, is investing a lot in marina design. There’s not a lot of innovation in the industry, however. Korea has a very high GDP but they have the lowest level among advanced countries in yachting penetration – despite the fact that they have huge car and container ship industries.
What is different about the consumers in these markets, compared with the West?
Any answer to this question needs to be based on strong field research, and not just the assumptions of a marketer or designer, and that’s one of the most important things in creating a truly user-centred experience. In designing any product for any culture (or group within a culture), a thorough understanding of that group’s context and real life behaviours is essential. There’s no product that simply has universal values and appeal.
To put that into perspective, in China, the concept of luxury relates to the Confucian concept of ‘face’ or personal reputation. There are two aspects to face: mien-tzu and lien. Mien-tzu refers to material prestige and displays of wealth, but lien is about moral standing. So right there, you have a different way of thinking about what values luxury might express for the Chinese market. The Mandarin term for luxury can be translated as ‘show-off goods’, indicating that luxury consumption is currently driven by mien-tzu. But it’s important to know about the idea of lien, and how it impacts the view of luxury products in China.
Having said that, let’s look at some of the differences we do know about, for Arab, Indian and Chinese customers. Let’s start with what they have in common. All three societies are very hierarchical and require clear boundaries between areas designated for the owners and for the crew. All three cultures place great value on business entertainment in order to build relationships. All three cultures prefer to stay out of the sun, traditionally valuing pale skin (India and China in particular do big business in skin whitening creams). There’s also not much of a leisure culture related to the sea; there’s no real leisure boat heritage, despite the fact that all three cultures have a strong naval history.
So, with their current design, open yachts are not going to suit the behaviours and needs of these cultures. Typical Western yacht designs leave little space or opportunity for business entertainment. They don’t usually provide much shade from the sun, because in Western cultures we tend to favour sunbathing and tanned skin. Hull shapes deliver speed, but at the expense of comfort. And the open nature of the layout makes it difficult to keep owners and guests away from crew when it comes to dining and entertainment. So the design needs to be completely rethought if it’s going to appeal to an Eastern market.
What experience should yachting brands be trying to create or communicate?
There is no standard answer to this question, because the value of experiences is that they aren’t ‘standard’. Every industry and every brand should create its own experience. But right now, most yacht brands are concentrating on creating a product, and haven’t yet moved to the idea that they need to create an experience. This mental shift has to occur first.
Increasingly when we talk about luxury products we’re talking about products which set people apart simply by the fact that they can afford to buy them. In the past, brand exclusivity was a strong part of the product’s appeal and the values it represented. But now many luxury brands are starting to broaden their range by producing more affordable products for customers with comparatively lower incomes. This may water down the brand appeal for their high-end customers, who will no longer see it as exclusive. Focusing on the experience is one way to combat this, because experience is always unique to the consumer. It’s one more way to differentiate the product, and to express certain values or aspirations. But a strong part of the value of an experience lies in it being unique.
Why has the yachting industry in particular remained stagnant in its approach? Are any other industries in the same position?
The yacht industry is traditionally pretty conservative and it’s only in the last decade that it’s started to move towards modern techniques in new product development. Actually, even the automotive industry hasn’t made big leaps towards experience design. They are either technology or style-driven industries, highly focused on the technical specifications of the product and on cost reduction. The yachting industry seems to be stuck in a product-oriented paradigm, strongly focused on benchmarking technology and competitors’ products, where research is mostly done at the marketing stage, instead of at concept development stage. Because technological advances in the field are not particularly rapid, progress is very slow and differentiation amongst competitors is pretty low.
When new needs come up, the product doesn’t evolve into new goods, but is enhanced with add-ons. This means that the yacht turns into an over-accessorised villa, where the only differentiation is how many toys and gadgets you add.
What could the yachting industry – and others in a similar position – learn from user experience design?
The objective of experience design is to transform a boat into an ‘experience’, in which the marine environment is obviously key, but far from the whole story. It’s not about whether the yacht has this gadget or that gadget, but about whether it enables and enhances a particular kind of lifestyle and its behaviours, and fulfils particular aspirations and needs. This might just as well be achieved through rarity of the product, or its styling, layout, space allocation, or services. Creating a good experience is about finding the right mix for the individual.
Although it is based around a product or service, the idea of an experience is almost post-materialistic – the focus is not on consumption, but on how products and services can facilitate the creation of something memorable. The encounter is unique, and can be different every time the product or service is used. An experience is something subjective. It’s enabled by the product, but also separate from it. In this sense, an experience is something very durable, that can even outlive a product, and lead to a much stronger emotional connection with the brand.
The commercial advantage of experience is that it is invisible, permeating and memorable. Unlike natural rarity, or limited editions, experience-driven rarity doesn’t contrast with the production volume. Its very uniqueness and individuality means that it can be offered to many people, without reducing its value.
How will creating a more user-centred experience enhance the total experience of the brand?
Putting people first is key. To quote Don Norman, in his book Emotional Design, “Successful products are those which fit gracefully into the requirements of the underlying activity, supporting them in a manner that is understandable to people.” A good example is the mobile phone. The mobile phone industry has learned that customers don’t want to learn to use the technology; they want it to serve their needs. You see people today who have a real emotional connection to particular brands of phone, which goes beyond the function of the phone itself, and taps into the kind of lifestyle they want, and how they identify themselves.
If it seems hard to see the difference, then compare the function of a yacht with the way that it’s actually used. A boat is basically a mobility tool, to go from point A to point B. However, when you look at how people use their yacht, including those that might never even leave the marina, then you can understand that the experience of a yacht is tied to many elements beyond travel, from status to entertainment. If the yachting industry took that idea as their starting point for design, I think we’d see very different concepts emerging.
Let me pose some questions that we could try to answer using experience design:
How can you boost the perceived rarity of your brand?
How can you maintain the highest level of sales?
How can you make customers’ lives easier?
How can you simplify the interaction between customers and your products?
Which yacht features appeal to new market customers and how can you design for them?
How can you extend brand identification after purchase?
How can you transform a product into an experience?
How can you develop a sustainable image without compromising product performance and exclusivity?
How can you expand your sales network?
It’s hard to imagine that we could answer these questions using a traditional technology-driven approach.
You mention several considerations essential in forging new design disciplines (differentiation through service, desire for bespoke, etc.). Could you talk us through these, and their overarching significance?
The considerations that I mentioned are trends that we’ve observed across the entire luxury market, which have strong relevance for yachts.
The first is the democratisation of luxury: it’s no longer just the super-rich who are interested in high-end luxury brands. In response, traditional luxury brands are bringing out more accessible lines, for middle-class customers. This increases sales, but it also reduces the exclusivity. As a consequence, the richest customers are shifting their interest towards artisanal entrepreneurship, and highly customised, bespoke goods. It may sound strange but even in the yacht industry there’s a kind of democratisation. Companies like Princess Line and Sunseeker produce 300 yachts a year – even if that seems a small amount, when you see three identical yachts in a marina you get the sense it’s not exclusive anymore. The boutique yacht builder San Lorenzo builds only 40 or 50 yachts a year but it’s almost impossible to see the same yacht twice.
In this pursuit of something unique, people are looking beyond products and demanding experiences. As products become more affordable or more easily imitated and start to lose their rarity, people are recognising that an experience is unique, and something that can’t be easily imitated. In particular, the services that accompany products can help to enhance this experience and its unique feeling.
Often bespoke, tailor-made products go together with bespoke services, so high-end companies – not just yachts but high-end car makers, are producing ateliers. So instead of selling the product at a traditional dealer they provide services in which the client can help decide how to make the product. So it’s the experience of an end product but also the experience of spending days or months with a designer to achieve the desired result.
Related to this, we’re seeing a move to human-centred design, with an increased focus on the user. Successful products are designed starting from what the users need to do, rather than from what the product can do.
Another consideration is that there are currently new customers who can afford luxury goods, both from developing countries, and from a younger demographic who have the financial resources to purchase things like yachts. These markets have new demands, which need a new approach. We can’t just expect to sell new markets the same old yachts.
A very modern consideration is the increased focus on green and sustainable values. This also impacts the yacht market, as people start to seek products that incorporate sustainable benefits, so that brands can free consumers from their feelings of guilt, ignorance and powerlessness. The new green sensibility raises several problems for the yachting market, where there are no sustainable materials, and the process is highly polluting.
Finally, new and changing communications channels extend traditional interactions with current and future customers – new interfaces, rapid content updates and user-generated content. ‘Boating 2.0’, you might say, will need to take advantage of the new communications channels to get the message out to consumers, particularly dealers and boat shows, which are important first points of contact.
Have you seen any other industries which have successfully managed to shift from a product to consumer-led model, and which might provide a guide for the yachting industry (and others like it) to follow?
I mentioned mobile phones before, which is a good example of a very product-oriented industry suddenly discovering the benefits of people-centred design. Another example I like is Nestle’s Nespresso products. I measure its success in two ways: they sell normal coffee at 60 euro per kilo (this is the price in Italy and I suppose it’s similar in other countries). This is roughly four times more than very good coffee that is sold in Italy for use in the home. Secondly, they are selling flavoured coffee to Italians (and keep in mind that this is a country where the local coffee culture is so strong that chains like Starbucks have little or no presence).
The only explanation for this phenomenon is that they are selling a very appealing experience, rather than a product. The food industry is one of the most advanced implementers of the experience approach. It’s a sphere where we are willing to pay high above the value of the assembled foodstuffs in order to consume it in highly specific ways and contexts.
Image credit: Yaroslov Yakovlev, Luca Troisi