Luxury branding is the favorite topic among the readers of this blog. My previous articles on how to manage luxury brands received the most number of shares and some passionate comments and opinions.
Luxury brand management doesn’t receive the coverage it deserves, given the positive dynamics within the segment. According to Bain & Company, the number of consumers who shop for luxury products has tripled since 1995, reaching 330 million in 2013.
Given the limited amount of information on the topic I am very happy to introduce you to another book dedicated to those in charge of managing brands in the luxury segment: “The Management of Luxury-A Practitioner’s Handbook”, published Kogan Page USA in 2014.
Receiving this book was another confirmation of why I enjoy reading the printed editions: its covers have a nice velvety feel, and the choice of font and layout makes for a pleasant read. But, as I would soon discover, not an easy one.
The book is a comprehensive and multi-national collection of perspectives into the management of luxury brands. 50 contributors from 11 countries contributed to probably the most detailed and multifaceted coverage of luxury marketing I have come across.
The topics are grouped into 4 parts: the luxury market, luxury brand strategy, luxury business strategy and luxury responsibility.
Overall the book is very academic in nature and addresses the many questions any firm targeting the luxury consumer should answer: “how to enter a vast and foreign market and how to make an impact while not diluting the brand; how to optimize the retail experience and not sink millions in the process; how not only to sell online but also to be successful in doing so; and how to diversify without overstretching the scope of the firm”.
The level of detail the authors go into to illustrate the various concepts is impressive, and nothing is left to chance. The cases studies used to reinforce the key concepts cover well-known luxury brands such as Dior, Coach, Gucci, Escada and Ferrari, which reinforces the book’s practicality.
And if that wasn’t enough, the long list of notes at the end of each chapter invites the curious reader to further exploration and investigation.
One topic I particularly enjoyed was the one covered in Chapter 3, that explains the motivation behind luxury purchases.
According to the authors, there are five extrinsic (public reasons, called effects) for which people shop for luxury goods:
The Veblen Effect (showing off)-people in this category see luxury as a way to display and seek external validation of their wealth and status.
The Snob Effect-consumers in this category purchasing a luxury item makes them feel good psychologically.
The bandwagon effect- these category of luxury consumers associate luxury goods with belonging to a desired social group, like their wealthy friends, neighbors and other people they want to be associated with.
The hedonic effect—these consumers find personal pleasure in owning luxury goods.
The perfectionism effect-these consumers perceive luxury goods as a reflection of supreme quality, versus ordinary, mass-produced goods.
As I mentioned in the introduction this book is a complex read. Making the most of it requires important time commitment and taking many notes.
“The Management of Luxury” is probably the only book the specialist working in luxury brand management would need to read to feel more prepared to tackle the challenges the luxury market poses, and be able to make more informed decisions.