This post draws heavily from the book The Luxury Strategy, Kapferer J.N. and Bastein V. which is one of the few books that have frameworks and models (shown below) for luxury brands.
Your guiding principle while taking any decision on a luxury brand is the original meaning of the word ‘Luxury’ – ‘distance’ (Luxiato, in Latin). This group of buyers want to feel special and ‘away’ from the common. That said, there are a few more aspects to Luxury which can act as guides:
- Different parts of society could have different contexts and perspectives on the strata they look upto and hence different perspectives on luxury.
- More premium is not luxury – It is not about providing more functionality or value to the product and charging a premium, but about creating the aura of owning the product.
- It is about creating a ‘dream’ and not about creating ‘envy’
- It is never about positioning, as positioning is always in comparison to some other brand. Instead, Luxury is always about the superlative and not about the comparative.
- Never, ever, ever, ever mention the price.
Four Concepts of Luxury
Consumers’ different definitions of luxury were analysed to cluster 4 distinct types of communication strategies that have worked. While you may see brands use different concepts over time, there is one method that typically works for them in the long run.
Concept 1 – At the very top of social hierarchy
Typical brands – Rolls Royce, Cartier
Key lever – Hierarchy
Other levers – Prominence of the beauty of the object, Excellence, Uniqueness
These brands try to create an aura of ‘a requisite within royalty’.
Concept 2 – Exalted Creativity
Typical brands – Gucci, Boss
Key lever – Creative Genius (Source Identity)
Other levers – Sensuality
These brands originally start from the house of one creative genius (and their aura is kept alive post their time). The communication is driven by highly sensual, very fashionable, hedonic and stylised visuals, bordering on the field of art.
Concept 3 – Timeless
Typical brands – Porsche, Dunhill, Vuitton
Key lever – Timeless
Other levers – International reputation, Never out of Fashion, Magic / Beauty of the product
This concept is best captured by Patek-Philippe’s famous campaign: “You never actually own a Patek Philippe, You merely look after it for the next generation”. By equating it to a family jewel, the watch is now a pricess masterpiece that stands the test of time.
Concept 4 – Rarity
Typical brands – Mercedes (Till recent years), Chivas
Key lever – Select few
Other levers – Excellence / Beauty / Magic of the product
This is slightly different from the first concept – while Concept 1 pulls you towards the very upper echelons of society – today’s royalty, this concept is more about being a part of a ‘select few’ who appreciate the finer aspects of the product. This is however, a relatively weaker platform as it eventually leads to attributes bringing it closer to ‘premium plus’ => lesser aura => luxury?
The requisites of business models in Luxury
Marketing with ‘The Anti-laws of Marketing’ – Most luxury brand companies would typically fall under the scope of ‘Guerrilla Marketing’ where success typically relies on (i) focusing on a small area to defend, (ii) not competing directly with giants, and (iii) finding unconventional tools that work only for you. You would notice that most of the luxury goods firms that have stood time are closely held, family run firms and not large conglomerates.
You need to constantly think of ways of not doing mass marketing, such as developing the core user group through magazines, exclusive showrooms, lounges, events, etc. Your job is to ensure that everyone dreams about your product before they go to sleep, and not on a particular sales number.
- Marketing is to be driven by ‘active’ media – restricted events, art shows, etc., then followed by Print / PR / collection shows, and then lastly (if not never) by ‘passive’ media – Celeb adverts on TV.
- The more of P/R the better. remember: people do not want to be ‘sold’ a luxury product.
- Remember that you are constantly marketing towards two groups: one – the buyers and two – the dreamers. Both are equally important.
- Never sponsor a participant of an event (boat, horse, in a race), instead sponsor the event ! and continue to be within the same universe of event types.
- Sales person should never be on commission (they should never ‘sell’ remember?)
Price – This is in fact the most important part of Luxury marketing. Critical aspects are:
- Not mentioning the price in communication. Always keep the ‘symbolic value’ higher than the ‘exchange value’ of the product.
- Increasing price recreates ‘distance’
- To no-one in your target group should it be priced such that it is an impulse purchase. It is always to be a planned and deliberated act.
- Destroy unsold stocks after a season, rather than put these stocks up for sale.
Place – Restricted distribution aids the aura of exclusivity in the brand. However, once inside a store, the consumer should feel transported to another universe.
There are two business models which typically operate, shown below
- The first model occurs especially in the ‘creative genious’ route. At the very top of the pyramid model is a Haute couture creation. Made by the genius himself, a masterpiece. As you go down the pyramid you would find lesser exclusivity and more mass pricing. The ‘Griffe’ at the top provides the imagery to the lower slabs of he pyramid, while the latter provide revenue to the business model, thus permitting high marketing costs necessary for the flagship categories. This route is opted by Chanel (ultra expensive bags at the top, with mass priced optics at the bottom), Armani (Haute Couture at the summit, with mass priced bags at the middle, Perfumes at the bottom), Dior, etc.
- In the Galaxy model, many different categories by themselves are explored by the brand. For example, the particular brand would have the most luxurious offerings across fashion, perfumes, watches, accessories, etc. This brings in scale to the entire business operation, permitting high marketing costs for the lead category. Typical examples are Ralph Lauren, Mont Blanc, etc.
Suggested Further Reading: