Marketing luxury is a paradox. Luxury defies econometric models. Though the processes by which consumers acquire and consume luxury remain an enigma, luxury brand names and products are highly visible in the marketplace. This slide deck empirically explores the luxury sector, the status of international luxury brands, and how luxury is branded and sold to consumers.
2. A PRESENTATION ON
THE WORLD OF PRIVILEGE
FOR EDUCATION PURPOSE ONLY
This slide deck was compiled because the notion of luxury is so central to contemporary consumption, but academic and popular
business publications about luxury business, and importantly, luxury branding has been largely conceptual.
3. “Some people think luxury is the
opposite of poverty. It is not.
It is the opposite of vulgarity.”
- Coco Chanel
4. HOW IS THE LUXURY SECTOR DIFFERENT?
Every brand manager is quick to assert that their
business or brand is different from any other, but
those managing luxury brands are possibly the
only ones who are justified to claim such massive
differentiation in their businesses and brands.
5. BRAND
AWARENESS
GAUGE
Luxury brands enjoy very high
brand awareness - both aided
awareness and top-of-the-
mind awareness. Allow me to
explain the high awareness by
taking a luxury and non
luxury brand as an example.
6. REVENUE BY BUSINESS
(millions of Euro)
12/31/2012 12/31/2011
AUTOMOTIVE 38,229 42,710
EQUIPMENT 17,365 16,190
FINANCE COMPANIES 1,910 1,902
ELIMINATIONS -2,128 -2,293
TOTAL 55,376 58,509
7. REVENUE BY BUSINESS
(millions of Euro)
Until
10/31/2012
12/31/2011
DIOR COUTURE 1,003 1,000
WINES/SPIRITS 3,216 3,524
FASHION GOODS 7,977 8,712
PERFUMES/COSMETICS 2,993 3,195
WATCHES/JEWELRY 2,300 1,949
SELECTIVE RETAILING 6,099 6,436
ELIMINATIONS -252 -188
TOTAL 23,336 24,428
8. Though Peugeot is twice bigger than Dior, most
consumers around the world will name Dior before
Peugeot when quizzed. People the world over read
about Dior in magazines, see them on TV and
fashion shows, and want to know more about Dior.
BRAND AWARENESS
9. Most luxury companies are
small- or medium-size
enterprise. You could say the
number of marketing
executives in a P&G or
Unilever will outnumber the
marketing executives in the
total luxury-goods industry.
COMPANY SIZE
10. BRAND PRESENCE
Though small, luxury brands must be
present everywhere in the world. Tourists
must find luxury brands where they travel
even if they purchase them only at home.
11. FLAGSHIP STORES
Countless tourists/visitors and
locals are awed by the iconic
and unabashedly extravagant
luxury flagship stores that
reinforces the brand’s image
in consumers’ minds.
14. Luxury is a term is derived from luxurie
meaning ‘lasciviousness, sinful self-indulgence’
15. Goods not essential to
growth and prosperity
Goods for normal growth of
people and communities
Goods limited in supply, difficult
to procure, and/or very expensive
Goods to maintain life
ADAM SMITH’S
CLASSIFICATION OF GOODS
17. RATIO
N
AL
FU
N
CTIO
N
AL
EM
O
TIO
N
AL
RELATIO
N
AL
Who are you?
What are you?
What about
you and me?
What about you?
Keller, Kevin Lane; Brand Pyramid Model
➡ Very expensive
➡ High brand awareness
➡ Available in flagship
stores
➡ Differentiated product
features (technically
superior)
➡ Very high on quality
➡ Attributes may be
compensated for design
➡ Extravagant designs
➡ Known for unique
craftsmanship
➡ Not known for extensive
product use
➡ Memorable brand
experience
➡ High social approval
➡ High on hedonism
(status, esteem)
➡ Satisfy emotional desire
➡ Status relationship
➡ Status stories
➡ Satisfy role-playing
aspects
➡ Relationship with
symbolic meaning
20. WOMEN’S
FASHION
MEN’S
FASHION
CHILDREN’S
FASHION
JEWELRY WATCHES EYEWEAR BEAUTY HOME SERVICES OTHERS
Armani Privé
Armani Privé
Fine Jewelry
Armani Privé
Fragrances
Armani
Casa
Armani
Hotels and
Resorts
Armani
Samsung TV
Giorgio
Armani
Giorgio
Armani
Armani SPA
GA Jewelry
Giorgio
Armani
Giorgio
Armani
GA Beauty
Armani
Ristorante
GA Samsung
Smart Phone
Armani
Collezioni
Emporio
Armani
Emporio
Armani
Emporio
Armani
Emporio
Armani
EA
Fragrances
EA Caffé
EA Samsung
Mobile Phone
Armani Jeans Armani Jeans
Armani Baby
Armani Junior
Armani Teen
AJ Caffé
Armani Dolci
Armani Fiori
Armani Libri
Armani
Exchange
Armani
Exchange
AX Jewelry
Armani
Exchange
Armani
Exchange
FASTFASHIONLUXURY
21. CONSPICUOUSSUBTLE
Consume for prestige, status, and association with higher class
Consume to dissociate from lower class
$1,300
$700 $180$400
$650$2,000
MASSTIGEPRESTIGE
22. Owing to high
brand awareness
and perceived quality,
consumers confer high social
status and prestige value for
for consuming luxury brands.
Based on consumption of
luxury brands, four
groups of consumers
emerge according
to economic
status and
motivating
force for
status.
24. LOW PURCHASE FREQUENCY
HIGHEXCLUSIVITYLOWEXCLUSIVITY
HIGH PURCHASE FREQUENCY
INACCESSIBLE
LUXURY
ACCESSIBLE
LUXURY
Inaccessible luxury is a
necessity that begins
where necessity ends.
Downward extension of
luxury to make it
accessible for mass.
25. MULTIBRAND SPECIALTY STORES
DUTY-FREE STORES
FLAGSHIP
STORES
ExtenddistributionFollow
customers
intheirtravel
Displayfull
assortment
Poseurs
Patrician,parvenu
A major existing paradox
lies in creating “desire” and
‘exclusivity” of luxury brands on
the classless virtual world.
Versace did not have a website
until 2005; Prada until 2007.
Though luxury industry is known
for creativity, it has been slow on
digital channels. Luxury brands
have since become more
accessible, collaborative, and
experiential. Today, brands
across the luxury spectrum
mediate tension between
exclusivity that protects brand
desirability and the inclusivity
needed to attract new customers
on social media networks.
27. Luxury branding is not about getting a consumer to choose
a luxury brand over the competition. It’s about getting
them to see the brand as the only solution to their desire.
28. LUXURY BRAND
COUNTRY OF
ORIGIN
BRAND VALUE
(2013)
BRAND VALUE
(2012)
Louis Vuitton France $22,719 $25,920
Hermes France $19,129 $19,161
Gucci Italy $12,735 $6,420
Prada Italy $9,454 $5,788
Rolex Switzerland $7,941 $7,171
Chanel France $7,075 $6,677
Cartier France $6,377 $4,843
Burberry England $4,194 $4,090
Fendi Italy $3,636 NA
Coach USA $3,276 NA
TOP TEN LUXURY BRANDS
Evaluation of brand value conducted by Millward Brown in 2012 and 2013
29. Segmenting luxury consumers based on physical
and psychosocial attributes of luxury brands
Hudders, Liselot, “Consumer Meaning Making,” International Journal of Market Research 2013
Rarity
Expensiveness
Uniqueness
Conspicuousness
Exclusivity
Inaccessibility
ExcellentQuality
Craftsmanship
Durability
Refinement
Elegance
Sophistication
Innovativeness
Comfort
Handicraft
Creativity
Psychosocial
attributes
Psychosocial
attributes
Physical
attributes
Expressive dimension Impressive-functional Impressive-emotional
LUXURY BRAND MEANING
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
Expressive segment
Impressive segment
K-means Clustering
Experiential valueFunctional valueSymbolic value
33. 8PsTHE EIGHT CORNERSTONES OF LUXURY BRANDING
Perceivedquality
Paucity
Price
Place
Publicfigure
Pedigree
Presence
PR
34. Quality is not an accident. It is the result
of high intention, high craftsmanship and
aesthetics, sincere effort, and skillful
execution; it represents the wise choice of
many alternatives in the luxury spectrum.1PERCEIVED QUALITY
35. 2
Luxury brands have very short life span.
Also, luxury brands want to maintain the
perception that luxury is scarce. Both
natural paucity and tactical paucity
generate artificial demand and desire.
PAUCITY
36. 3It is not luxury without premium
pricing. Price helps generate the
luxury stature in consumers’ minds. In
order to maintain the perceived value
and quality, price is set higher than the
consumer expectation and willingness.
PRICE
37. Consumers must live luxury from Milan to New York. Luxury
brands are in every major international city taking into
account image-creation (flagship stores) and image-
consumption activities (licensing for secondary products).
Original
Company
Distribution
System
Licensing
Distribution
for Licensees
HOME OVERSEAS
CORE
LICENSED
4PLACE
38. 5Movie stars, musicians, sports personalities,
royal families, TV personalities, fashion
models, and designer themselves garner
attention and impact at special events and
award/fashion shows. This sort of product
placements and subtle endorsements from
celebrities positively affect brand perceptions.
PUBLIC FIGUREHEADS
39. 6History helps in familiarity. Rich ancestry
and tradition wraps the brand with deep
mystique. Mystique is an aura..a
framework of beliefs constructed around
the founder or object, endowing the
person or object with enhanced value and
profound meaning. An ounce of mystique
is worth a pound of performance.
PEDIGREE
40. 7Every customer touchpoint is a moment of
truth heightening the brand experience
and amplifying the aura of luxury.
Aesthetics, craftsmanship, and high art
value is extended not only to the physical
or virtual environment where the brand
retails/e-tails, but to every customer
touchpoint where luxury is experienced.
BRAND PRESENCE
41. 8Public relations is a sophisticated
branding machine that plays a
humungous role in image proliferation
and in influencing public opinion
favorably; fashion shows, celebrity
endorsements at award shows, designer
talk shows build brand relevance and
dialogue with luxury consumers.
PUBLIC RELATIONS
42. Applying brand identity prism to
Chanel to understand the
multiple facets of luxury identity
PHYSIQUE PERSONALITY
RELATIONSHIP CULTURE
REFLECTION IMAGE
Independent,
sensual
woman
Long-lasting
and respectful
Liberation
Modern day
elegant
woman
Liberated
lifestyle
Sophisticated,
progressive,
and daring
Kapferer, Jean-Noel, “Brand Identity Prism”
43. Andrea Semprini extended the
Greimas Square, which helps in
marketers understand luxury
consumption values better.
S1 S2
~S1~S2 S
S
Contrary
Implicatory
Contradictory
S1 positive seme
S2 negative seme
S complex axis (S1+S2)
~S neutral axis (neither S1 nor S2)
46. MULTIPLE CONSTRAINTS TO CREATIVE DEPT.
CREATIVE
Brand
Identity
Direction
Retail and
Wholesale
Merchandising
Dept.
Production
and Sourcing
Dept.
Fashion
Trends
Customer
Evolution
In Europe, luxury sector has the
creative dept. (or designer) as
the fulcrum, and the emphasis
is on creativity, craftsmanship,
and innovation. On the other
side of the Atlantic,
personalization, customization,
customers’ desires and feelings
are central to luxury
businesses. Consequently,
brand management takes a
significant role in the business
of luxury management.
47. SYNTHETIC FLOW CHART OF FACTORS OF LUXURY BRAND SUCCESS
EFFECTIVENESS
RELEVANCEENGAGEMENT
IDENTITY-IMAGEALIGNMENT
COHERENCECONSISTENCY
LUXURY HOUSE
MARCOM
PRODUCT DIST.
PERCEPTIONS
PURCHASE