Ads Urge Rich to Buy Now, Save Tax : Marketing: With the new levy on luxury items taking effect Jan. 1, ads for products ranging from liqueurs to Jaguar cars advise quick purchases.
When it comes to saving a buck, the rich really aren’t so different from you and me. Just ask advertisers.
With the excise tax scheduled to take effect Jan 1., companies that sell certain products affected by that tax--ranging from Kahlua liqueur to Jaguar cars--are trumpeting the fact that it’s a lot cheaper to buy now than later.
“It’s a real departure for us to go on the attack like this,” said Mike Cook, public relations manager at Mahwah, N.J.-based Jaguar Cars Inc., which recently unleashed a heavy national print campaign that advises consumers to buy before the additional tax hits. One Jaguar ad says: “Jaguar introduces the pocket veto. Buy a Jaguar before Jan. 1 and pocket the luxury tax.”
A $45,000 Jaguar will cost about $1,500 more after the excise tax is added on Jan. 1. But do the rich give a hoot? “Sure, they do,” said Gordon Riddell, sales manager at Hornburg Jaguar Inc. in Santa Monica. “That’s why they’re in the position to buy Jaguars.”
One of the most controversial elements of the compromise budget that President Bush signed Nov. 5 was the excise tax on certain luxury items and consumer goods. Among other things, consumers will pay excise taxes on jewelry and furs that cost more than $10,000; on cars that cost more than $30,000; on boats with price tags exceeding $100,000, and on airplanes priced higher than $250,000. The tax also affects liquor and cigarettes.
Much like Jaguar, Porsche is also trying to lure customers with the same hook. One Porsche ad that has appeared in the Wall Street Journal features a picture of a Porsche under this headline: “Soon, the next luxury tax will even apply to necessities like this.”
“The word is out,” said Gerald Vernon, sales manager at Max Dial Porsche in Inglewood. “Our customers are pretty astute business people who know there’s going to be a tax hike.”
For a Porsche that costs $50,000, the luxury tax will total $2,000. Vernon said several customers this week told him they were specifically buying now before the tax takes affect.
A Rolls-Royce dealer in San Rafael, Calif., recently joined the fray. That dealer, RAB Motors, recently ran an ad in the Wall Street Journal that notes: “We regret to announce that the economy model Rolls-Royce will be slightly less so after Jan. 1.”
A Rolls-Royce that now costs $157,000 could cost nearly $170,000 after Jan. 1. “Conservative investors really look at this sort of thing,” said JefLoeb, chairman of San Francisco-based Katsin/Loeb & Partners, which created the ad. “They didn’t get to be that rich by wasting money.”
Even the company that imports and markets Kahlua domestically, Maidstone Wine & Spirits Inc., has unleashed a print advertising campaign whose single message to consumers is to buy the liqueur--commonly mixed with coffee or cream--before the tax hike.
In a large headline, Kahlua’s new ad warns: “Tax Hike!” Another Kahlua ad scheduled to break before Christmas will feature this headline: “Tax Evasion?” Underneath will be this explanation--”Yes, it is tax evasion. So let’s do it while it’s still legal.”
The same bottle of Kahlua that now costs $13 will cost about $13.75 after the tax hike. “It’s as if the federal government has forced a sale,” said Rick Sale, vice president at Eisaman, Johns & Laws Advertising, the Los Angeles agency that created the Kahlua campaign.
Before the 1985 excise tax took effect, the company ran a similar campaign that also boosted Kahlua sales. With this campaign, Kahlua hopes to sell up to 100,000 additional cases (12 bottles per case) by the end of the year.
What do marketing experts think of all this?
Some are of mixed mind. “At the end of the year, any time you can give a person another reason to make a purchase decision, why not do it?” said Gary L. Frazier, chairman of the marketing department at USC. But there may be an underlying message in the ads that could also hurt these same advertisers, said Frazier. “They may be saying, ‘You better buy our products now, because after the first of the year, you probably won’t.’ ”
BEAT THE TAX The tax increase effective Jan. 1 would affect these items:
* Furs and jewelry exceeding $10,000
* Cars exceeding $30,000
* Boats exceeding $100,000
* Airplanes exceeding $250,000
* Cigarettes
* Alcoholic beverages
