The first article in this series listed the unique ingredients of the true luxury brand: selective ownership, timeless design, a unique brand story and of course, a high price tag.
It’s now time to address a fundamental brand management question: can traditional marketing principles be transferred to the luxury market? Can a luxury brand be managed using the same set of strategies and tactics as an ordinary, or even premium one?
Most of us responsible for brand management in the consumer goods industry are familiar with the classic marketing strategy: a unique and differentiated brand positioning, and a strategy that aims to steal market share from competition.
Do the same principles apply to luxury brands? The simple answer is no. Actually, managing a luxury brand requires taking brand management into the opposite direction.
Let’s take a look at some classic brand management concepts and how they apply to the luxury brand.
Building a strong brand is important in any category, including premium products. In the luxury world, a strong brand is more than important, it is vital.
A consumer who shops for a car starts with identifying the functional and emotional needs: fuel efficiency, seating capacity (2, 5, 7 seaters), design (SUV, sedan, wagon), fun to drive (Subaru vs Hyundai). Once these criteria are established the options are narrowed down to a few brands: Toyota, Honda, Ford…etc. Needs first, brand second.
In the luxury market the brand always comes first. The luxury shopper wants a Ferrari, not a 2 seat vehicle that makes a lot of noise. The luxury brand translates the essence of the product, the heritage, the history, into one’s desire to own it.
Brand positioning is a fundamental concept in consumer brand management. A brand should choose a relevant way to be identified and differentiated in the consumer mind, vis-a-vis its competitors. Consumers use comparative methods to select a product, based on functional and emotional perceptions the brand managed to create in their minds.
The concept of brand positioning in not applicable to the luxury market. As I mentioned earlier, the purchase decision is “superlative”, not “comparative”. Luxury shoppers choose the brand that best reflects who they are, and how they want to be perceived by society. Each luxury brand brings a unique character, an identity that cannot be replicated or compared.
Comparing two luxury brand is like comparing the work of two musicians. Who is a better composer, Mozart or Beethoven? The comparison doesn’t make sense-both artists offered the world great masterpieces.
Classic marketing books teach us that mass production helps companies achieve economies of scale. Brand managers are responsible for identifying relevant consumer needs and trends. Once these needs are identified the company designs and markets a product with those features that could be standardized and mass produced.
In the luxury world, product development is an inside-out process. The product is the unique reflection of the creator’s skills, his/her personality and not the result of consumer feedback. Consumers then will be educated on its characteristics, unique history and merits.
Luxury brands are never mass produced. Rather, many associate luxury to hand made, uniquely personalized to individual taste.
In the consumer goods industry, the goal of the distribution strategy is to get the product into the hands of as many people as possible. Availability is key as consumers are not willing to go out of their way to purchase it.
Purchasing luxury is part of the journey, the experience, the initiation into its cult. A brand that can be seen, touch, experienced (even if only for a limited time, inside the store) looses its luxury status. A brand that is available at every pillar and post is not a luxury brand.
Luxury brands enjoy very selective distribution, usually through the company-owned stores. This channels allows for the brand message to be controlled and communicated properly. The role of distributors is . The preferred method of distribution is company-owned stores, where the message can be properly controlled. This allow the sales person to focus on only one thing: to educate the potential buyers on the privileges that come with owning the brand, and turn them into members of the selective brand club.
The classic pricing strategy in consumer brand management is launching a product at the high enough price to take advantage of its novelty. Once the segment becomes more competitive brand managers often use price incentives to maintain or increase the demand.
Price acts only as a selection tool in the luxury world.
According to Kapferer, “A luxury brand must always be seen to be restoring the gap, re-stratifying, and as such it is acting as a visible agent of meritocracy”.
The higher the price, the better the perceived value. This is very much true in the emerging countries. In China for example, rich clientele see the high prices and a protective barrier from the rest of the society.
Ordinary brands are advertised using a mix of rational and emotional messages that entice clients to consider it. The rational/emotional ratio changes as the brand becomes stronger, in favor of the latter. However, there is always a rational reason to justify a purchase, even with the premium brands: people buy emotionally and justify rationally.
Product functionality is rarely advertised in the world of luxury. Exceptional product quality is a given, even if this is not always true. Many luxury products have flaws. Luxury watches are known to be less accurate at keeping time than ordinary ones. A Ferrari has its fair share of reliability issues.
Graphically, a luxury brand ad makes almost exclusive use of suggestive imagery. The copy is kept to one or two words, if present at all.
Luxury brand management requires going against the classical marketing principles. Many companies that have acquired luxury brands failed to market them successively for this only reason: failing to adapt their strategy to the luxury market.
Ford’s management of the Jaguar and land Rover brands are good examples of applying classic principles to the luxury brand. Both brands ended up being sold at a loss to Tata Motor of India.