LUXURY BRAND MANAGEMENT

WHAT IS LUXURY?
The problem with the word ‘luxury’ is that it is at once a concept, a subjective
impression, 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.
 WHAT IS 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.
 DEFINING FACTORS OF LUXURY

Luxury is nonessential. You don’t need a Mont Blanc fountain pen to write. You can do
without it, but you don’t want to. Luxury is desired, not needed. In luxury you are at
your best. It makes you life richer and more worth living.

Luxury is “hard to get”. Its availability is restricted by high price, by small series, by
exclusiveness. If you are allowed at all to try and get it, it demands an effort, a
sacrifice. You cannot ask for the Amex Centurion black card which attests that your
credit is absolutely limitless. You have to be invited.
 THE DEFINITION OF LUXURY BRANDS
The modern understanding of a brand is consumer and identity oriented. Accordingly,
brands are regarded as images in the minds of consumers and other target groups, which
are designed by companies to identify their products.
Luxury brands are highly associated with their core products. This is reflected by the
larger part of the existing definitions of luxury brands, which refer to specific
associations about product characteristics..
The constitutive characteristics of luxury products therefore correspond largely with
those of luxury brands, which leads to the following definition:
Luxury brands are regarded as images in the minds of consumers that
comprise associations about a high level of price, quality, aesthetics, rarity,
extraordinariness and a high degree of non-functional associations.
Any potential luxury brand should be evaluated by the constitutive characteristics
of luxury. These explanations are summarized by the following principles:

 Price: The brand offers products which belong to the most expensive products of their category.
 Quality: The brand offers everlasting top-of-the-line products, which won't be disposed of even
after long utilization or defect, but rather repaired and which often even gain in value over time.
 Aesthetics: The brand behaves like a chic and vain dandy, who would never leave the house in
less than perfect style. Whenever and wherever the brand is seen, it embodies a world of beauty
and elegance.
 Rarity: In contrast to mass-market brands, the brand needs to limit its production and tries not to
disclose its (high) sales numbers. The brand plays hard to get and is not available at all times or
places.
 Extraordinariness: The brand has a mind and style of its own and its products offer a "kick" and
surprise with the "expected unexpected."
 Symbolism: The brand stands for "the best from the best for the best"
 THREE LEVELS OF LUXURY BRANDS
We can distinguish between three lasting levels of luxury. Most luxury brands exist in only one or
two of them, but certain brands manage to co-exist in all (thus maximizing potentials for profit). This is
not a trivial accomplishment. The levels are:

 Signature brands – These are the most expensive brands in their category. They are personal creations, one
of a kind, signed by a highly acclaimed authority or by an artist of supreme status (an outfit created by Tom
Ford, a home designed by Frank Gehry).
 Supreme brands – These are products that are produced in limited series, often hand crafted (a Rolls Royce
Phantom 101EX car, the service at Tiffany & Co., or stay at the Ritz Hotel in Paris).
 High End brands – High quality mass production (from a BeoCenter2 music system by Bang & Olufsen to G
Collection chocolate pieces by Godiva).
 WHY PEOPLE BUY LUXURY BRANDS
People buy luxury brands in order to:

Feel special and apart from the crowd.

Feel superior and privileged.
Feel of value and importance.
Exercise ability and freedom (“I can afford it”, “I can do that”).
Reward themselves for efforts and achievements.
Console one and recuperate from a setback or misfortune.
Signal status and command acknowledgement and respect.
Demonstrate refinement, connoisseurship and /or perfectionism.
Delight the senses, experience pleasant sensations and feelings or create an infrastructure for future favorable experiences.
Participate in a certain group and lifestyle.
Signal affiliation and belonging.
Remind oneself of one’s “real” (aspired?) identity.
Enflame hope and mobilize motivation and energy.
Indulge and pamper oneself, take care of oneself.
Feel loved, taken care of and even spoiled.
Show feelings of gratitude, admiration or great affection.
 PRINCIPLES OF LUXURY BRAND MANAGEMENT.
Relevant products, clear positioning, keen understanding of the target customer, and solid business strategy. But luxury
branding goes far beyond these basics—sometimes even beyond logic. Luxury brands evoke an emotional response

1 Vision sets the tone

Luxury brands command substantial premiums in part because the vision behind them is unique and compelling. The
focused, engaging vision of a creator is key to the longevity of a luxury brand.
Founded in 1910, Italian fashion house Ermenegildo Zegna is now managed by the fourth generation of the Zegna family.
A clear, far-reaching commitment to creating luxury suits from the best natural fibers in existence has enabled the Zegna
brand to stay in vogue for over a century.

2 Rarity and mystery heighten appeal

Mystery, uniqueness, and a sense of discovery enhance consumers’ fascination with elite products and brands, drawing
them deeper into the luxury experience.
 PRINCIPLES OF LUXURY BRAND MANAGEMENT.
3 Obsession generates excellence

Successful people who have built something out of nothing share one trait: They are obsessed with perfection. The precise tick of
a Swiss watch or the finely tuned hum of a German automobile results from the maker’s insatiable quest to achieve the
highest possible level of performance.
Footwear maker Salvatore Ferragamo prides itself on meticulous workmanship, crafting each pair of shoes by hand from
superior materials. Customers can choose among 400 leathers, differing heel styles, lining, stitching, and even eyelets.

4 Origins serve as a touchstone

Luxury brands that remain true to their heritage give consumers a special reason to build a relationship with them. When those
origins have a component of intrigue, they hold even more sway.
Forest Essentials stays close to its Indian roots by working with Ayurvedic physicians, traditional ingredients, and age-old
formulas. Applying new research and technology, it transforms ancient treatments into opulent beauty products for
contemporary women.

5 Emotional intelligence anticipates needs

Impeccable service and personalized attention are among the hallmarks of luxury brands. Frontline staff must bring highly
developed emotional intelligence to understanding customer needs, then fulfilling them to perfection.
The Four Seasons hotel seeks out employees who are motivated to serve and quick to intuitively grasp the needs and desires
of guests, making its clientele feel pampered and personally cared for at every touchpoint.
 PRINCIPLES OF LUXURY BRAND MANAGEMENT
6 Exclusivity ups the ante

Knowing that you belong to a select group adds an extra dimension to the luxury experience. The allure of prestige and distinction
can prove irresistible to affluent customers.
Everything about the recently opened Johnnie Walker House in Beijing whispers exclusivity. Only 200 members are permitted to
enjoy the whisky vaults and private sections of the house, taking the mystique of Scotch to a whole new level.

7 Appearance conveys status

Displays of wealth, once discreet, have changed markedly in recent years. Luxury is more overt, sometimes even paraded, and
luxury brands are increasingly seen as reflecting one’s status in life.
Airbus private jets allow you to travel anywhere in style. Making a statement about social status as you fly, these aircraft not
only provide the finest in furnishings and fittings, they also let everyone know you’ve arrived—in more ways than one.

8 Expense is reassuring

The price tag of an object of desire should announce its worth—even if the cost seems beyond reason. Asking for any less
diminishes its value in the eye of the beholder.
At $100,000, the Zafirro razor makes a man feel like a king in his own bathroom. Only the richest of the rich can afford its iridium
handle, platinum screws, and solid white sapphire blades.
 WHAT DOES THE LUXURY CONCEPT ACTUALLY ENCOMPASS?
Luxury comes from ‘lux’ which means light in Latin. This explains the typical
characteristics of so called luxury items.
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.
 WHAT ARE THE ESSENTIAL ATTRIBUTES OF THIS CATEGORY OF SO-CALLED
‘LUXURY’ ITEMS?
Luxury constantly seeks to escape time constraints, by focusing on leisure. Like for perfume, it also helped to
distinguish aristocrats from the common folk.
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. 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 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.
 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 soceities, 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, Chanel 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.
They 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. Quality standards are rising all the time, even at the
cheapest price possible, thanks to mass production. 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.
 ELEMENTS OF MANAGING LUXURY BRANDS
1. A luxury brand is first and foremost a product and/or service of superior quality (a quality gap from competitors is
recommended but not mandatory).
2. The products and services are not designed and planned according to consumer tastes and expectations, even
though they appeal and cater to sometimes-hidden deep-routed desires. A luxury brand sets its own standards
and does not adhere to fashions. There is an air of leadership to it; it is exceptional, unique, original, artistic-
creative, surprising, and novel (but never peculiar in a ridiculous or potentially repelling manner). It challenges
its consumers (not too harshly) for their discerning taste, sophistication, refinement and dare.
3. A luxury brand’s most important value lies beyond the core product function or practicality.
4. Luxury brands have something extravagant / excessive / redundant and overly generous about them. Something
that is clearly not necessary: the use of unjustifiably expensive materials, performance that is far beyond all
needs and requirements, an exaggerated level of service, …
5. A luxury brand always expresses zealousness for quality, highly held values or even an ideology, a distinctive
culture, together with sense of hedonism, passion for life, and a free spirit. It does that in all the facets of its
being including products / services, 6. management practices, marketing communications.
 ELEMENTS OF MANAGING LUXURY BRANDS
6. A luxury brand will always be linked with the circle of those who “run the world” at that certain period of
time – and with the success symbols of the time.
7. Behind a luxury brand there are often legends of eccentric genius creators, mysterious production
processes, secret formulas, exceptional preparations etc’. Stories like these create mystery. A luxury
brand treats itself very seriously.
8. A luxury brand is never managed in a democratic way, but rather with authority or even with dictatorship,
by a genius creator or by an inspired leader who demonstrates, inside and out, a strong passion for the
product and pedantry for every small detail.
9. A luxury brand must be rare or difficult to reach in some way. The awareness to the brand and the desire
for it sometimes wide-ranged (while the numbers of buyers has to be limited) and other times restricted
to a few that are in-the-know. Even the buyers themselves, must not be inclined / capable to purchase
the luxury brand too often. It is important to remember that the dream feeds the desire. We can never
dream about the accessible.
10. Luxury brand consumers expect to be distinguished from all others, and to be protected from them (the
No-Mix principle). At the same time, they expect a special intimacy between them and the company and
its managers, as well as flexibility regarding rules that are afflicted on others.
JOB EXPECTATIONS FOR LUXURY BRAND MANAGEMENT PROFESSIONALS
Luxury brand management has always been around, though specifically labeling it as a profession has only
become popular in recent decades.
To promote high-end merchandise like designer clothes, handbags, jewelry, furnishings, travel or cars, business
owners have come to rely on professionals who can meet the expectations for the vision of their brand while
promoting it effectively to a targeted customer base.
Bloomburg Business reported in 2009 that luxury goods tend to do well in strong economies, though their
growth can significantly slow compared to mainstream brands when the economy destabilizes. Even so, jobs in
the luxury management field remain strong according to the Bureau of Labor Statistics.
As a result, marketing and MBA programs continue to see competitive interest from candidates to complete
degrees in the field.
ACQUIRING THE RIGHT CREDENTIALS FOR BECOMING A LUXURY BRAND
MANAGER
Breaking into the luxury brand industry requires a blend of appropriate academic work and experience. Most
employers are looking to retain managers who have completed at least a master’s in marketing or business and
who also demonstrate a strong work resume in related fields.
Aside from possessing a good grasp of general marketing, management and production skills, future luxury brand
managers are expected to understand and adapt promotional techniques to suit the goals of luxury brand
businesses. Degree programs typically cover the following topics:
 Consumer psychology
 Luxury grand management
 Fashion marketing and production
 Brand strategies and promotion techniques
 Contemporary fashion trends and future outlooks
 Product innovation and creative marketing platforms