An article on the NBC News website announces the new 2014 Hyundai Equus, with a price tag of over $70,000:

“At next week’s New York Auto Show, Hyundai will spotlight the 2014 Equus, the mid-cycle update of its premium-luxury sedan. The sedan will compete with high-end makes, such as the Mercedes-Benz S-Class and BMW 7-Series.”

Did you notice the dash between the words “premium” and “luxury”? Has the distinction between “premium” and “luxury” become so insignificant  that it’s almost impossible to quantify?

Can a brand such as Hyundai, that many would equate to “affordability”, suddenly become a player in the premium, or even luxury segment?

I have to admit the line that separates the “luxury” from “premium” has become blurry. Is Volvo a premium, or a luxury vehicle? What about BMW?

Many luxury brands launched “teaser” products, at much more affordable prices,  in order to attract the new, younger clientele.

In Canada for example, the lease offers for the entry level BMW 3 Series are very aggressive: the difference between driving a Toyota and a BMW can be as little as $100/monthly.

Luxury branding requires proper distinction between the terms. Because, as shown in a previous article, luxury brands have to be managed differently then ordinary, and even premium ones.

The chart below summarises the differences between the true luxury and premium brands.




Target Audience

Broad-whoever can justify rationally and financially the added benefits has access to the brand. Narrow-only a small percentage of the general population can afford the brand.


The higher price is justifiable by the extra features versus a regular brand. Greatly exceeds the functional value of the product. Acts as a selection tool that limits the access to the brand.


Broad, a variety of channels can be used simultaneously: corporate stores, independent retailers, online, catalog. Highly selective, and almost exclusively through a corporate-owned channel.


Mass communication. The goal is to inform and create brand preference. Appeals to both ration and emotion. A blend of imagery and sometimes (extensive) copy. Selective communication. The goal is to educate rather than inform.

Product Line

Can be broad-one product for each segment targeted. Very narrow-a flagship product and only few variations.


Mass production. The goal is to produce as profitably as possible. Manufacturing country is not important in purchase decision. Handmade. Method of production is part of the brand myth. Brand should not relocate manufacturing facilities to lower cost countries. Country of manufacture very important in the purchase decision.


Immediate. Customers are not willing to wait. Not urgent. The wait for the product to be built/create/fully matured contributes to the overall luxury experience.

One last note on luxury branding: stretching the brand upwards into the premium segment is common practice (see the Hyundai example above).

Stretching a luxury brand downwards in order to broaden its appeal should be avoided at all costs. The risk of losing its core and profitable customer base greatly offset the short term (financial) benefits.

In the last article in the luxury branding series I will review a brand management book that provides detailed guidelines on how to manage a luxury brand.