Principles of Luxury Brand Management?

Luxury brands are very distinct. And yet, even though France, Italy, Germany and the UK and the USA have created famous luxury brands, there is still some confusion over the concepts of luxury and the luxury brand, not to mention the French concept griffe which cannot adequately be translated into English. Naturally everyone is able to sense the differences and to quote a typical example for each of those concepts. However when pressed for an exact definition, most people hesitate to give a straightforward answer.



What is Luxury? The problem with the word ‘luxury’ is that it is at once a concept, a subjective impression and apolemical term, often subjected to moral criticism. Thus, what is luxury for some is just ordinary for others, while some brands are qualified as ‘luxury brands’ by one half of the public opinion; others are simply considered as ‘major brands’ by the other half. Likewise, given the economic crisis, it has become ethically more dubious ‘to like luxury’ or ‘to pursue luxury’. Real luxury brands remain attractive, but the word itself has lost its clout and sparkle because of the economic downturn in industrialized countries. The word ‘luxury’ has falled out of favor a little, a hindrance to market researchers, who wish to measure their customers’ sensitivity to luxury.

In economic terms, luxury objects are those whose price / quality relationship is the highest on the market. By ‘quality’, economists mean ‘what they know how to measure’, i.e. tangible functions. Thus, researchers report defines luxury brands as those which ‘have constantly been able to justify a high price, i.e. significantly higher than the price of products with comparable tangible functions’. This strictly economic definition of the luxury brand does not include the notion of an absolute minimum threshold. What counts, indeed, is not the absolute price, but the price differential between ‘luxury’ products and products with comparable functions. This price differential can vary from ten dollars for a cologne brand to hundreds of thousands of dollars.

What does the luxury concept actually encompass? What are the essential attributes of this category of so-called ‘luxury’ items? Luxury comes from ‘lux’ which means light in Latin. This explains the typical characteristics of so called luxury items. Luxury glitters. The fact that luxury is visible is also essential; luxury must be seen, by the consumer and by others. That is why luxury brands externalize all of their signs, the brand signature must be seen and recognized on the person wearing the brand, and it must be recognizable worldwide. Made to perfection, luxury items stand out and embody certain ideals. Luxury defines beauty it is an art applied to functional items.

Luxury constantly seeks to escape time constraints, by focusing on leisure, or by concealing the effects of time with wigs and face makeup. As for perfume, it also helped to distinguish aristocrats from the common folk. As we can see, it is significant that modern luxury brands have falled for the cosmetics and perfume industry, not to mention the other essential class attributes, clothing and jewels. Etymology is not the only means of deciphering the mystery of the concept of luxury. Sociology and history can also help. Luxury is the natural accompaniment of the ruling classes. It is indeed widely acknowledged that luxury plays a classifying role according to which a restricted group bonds together and distances itself from the rest of society in terms of price and preferences. In this respect, luxury brands are just perpetuating and exemplifying the signs and attitudes of the former aristocracy.

Not many luxury symbols exist, but those that do represent the past privileges of the European aristocracy living a life of leisure, free of all working, money, time or space obligations. Everything is made to conceal mere practical utility, the leather, the polished wood, the hushed engine are multiple details which make them more like a drawing room than a car. In this respect, Ferrari and Porsche are regarded as prestigious sport brands rather than typical examples of luxury. Created by a talented engineer, they certainly convey the mythical quest for speed, but they nonetheless embody above all the basic automobile function, mobility.

Principles of Luxury Management

Researchers have pointed out some of the basic principles of luxury brand management, for instance, the necessity of protecting clients from non-clients, by creating a distance, a no-mix area, or, as economists would put it, entrance barriers for those who are not invited. This is implemented through prices and selective and exclusive distribution, as well as the aesthetic dimension of the products. But for the distinctive sign to work, it must be known by all. Thus paradoxically, luxury brands must be desired by all but consumed only by the happy few.

Loss of control occurs precisely when luxury brands no longer protect their clients from the non-clients. In our open democratic socities, groups are constantly trying to recreate separations of all kinds. The latter do eventually disappear when, for instance, prestigious brands get distributed in hypermarkets. The infinite multiplication of Vuitton bags also hinders the distinctive function of luxury. Likewise, distributed in large quantities, Channel T-Shirts ended up being worn by an excessive number of women, far beyond the initial target.

The modern luxury brand must belong to those who rule the world today. Their reference points are no longer land or castle, but mobility. It is true that excessive practicality can harm the luxury product- in that respect, Seiko and Sony are not luxury brands. Conversely, though, if the products are not practical enough, they gradually start to lag and become obsolete.

Luxury brands cannot just ignore the threat of basic brands which are strictly focused on practicality, by constantly improving the quality of their products, the latter are indeed continually redefining the ever increasing standards of basic quality. However prestigious and potentially attractive Jaguar may have been, it was doomed by its deficiencies both in its engine and in its basic components. By relying too heavily on its symbolic added value, Jaguar actually lost some of its global luxury value and attractiveness. Its legend was no longer leading it, it had been left behind.

Basic brands are meant to democratize progress, thanks to a virtually circular mechanism and to competition. Quality standards are rising all the time, even at the cheapest price possible, thanks to mass production. Being partly freed from price constraints, luxury brands, on the contrary, perpetuate an exceptionally high level of quality. For them, a wide variety of sensations counts just as much as a wide variety of functions.

That is why they use the finest materials for their products and extensively customize them in order to prove how customer focused they are. In doing so, they actually condemn mass production as they make service an integral part of their offer. Anything that is considered optional or added on for normal brands is the norm for luxury brands, because for them what is extra is ordinary. Luxury brands would be wrong, however to think that they are totally safe.

Luxury does not always have to be exorbitant. In the car industry, for instance, technological improvements have made production more flexible, and thus capable of providing greater scope for customization at no extra cost. Therefore, the customization differential is being jeopardized by the cost differential, due to the deliberate differences in the two production processes. Neither the rarity of the object nor the potency of the brand image can alone continue to justify the price differential. As we see, luxury defines the ideal degree of personalization and sublimation of a given object against which the more basic brands can measure themselves.

In turn, the latter challenge luxury by their continuous technical improvements and very competitive pricing. Luxury watches, for instance, were challenged by quartz technology, developed for the mass market, which soon established new standards of precision and reliability and which no mechanical system could possibly meet-within the limits of realistic production costs. Both the economic cost of this quality differential and the negative impact on brand image were all the greater as the renown of luxury watch brands had long been associated with lifetime guarantees.


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