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16 August 2011

A question of luxury

   



By Toby Southgate

Defining ‘luxury’ from a brand and communications perspective has always been challenging. Luxury can mean different things to different consumers, in different markets, and at different points in time. Its very nature links luxury most closely to categories like fashion, real estate and electronics, all of which are dynamic and susceptible to rapid change.

But in its most basic form, a luxury product or service has to focus on delivering more than just a need. If a luxury offer serves a ‘want’ – an added level of desire for consumers – it stands a greater chance of commercial success. 

Basic needs as a consumer are actually very few; shelter, clothing, food. But of course, we all like that shelter and clothing and food to be as nice and comfortable as possible. 

You don’t need to spend £800 on a Mulberry handbag, but many consumers will still want to. The motivators may vary - it’s a thing of beauty, crafted to perfection, people will notice it and be envious – but fundamentally, ownership is optional and selective. It is available only to those who find a way to make the purchase. The investment you make personally in satisfying that want for a Mulberry handbag is the very definition of a luxury purchase.

From price to perception

There is a lazy industry perception that luxury and expensive go hand in hand. This simply isn’t the case. A decade ago it was different; it was the Versaces and Guccis leading the market with their big, loud prints and logo driven products. Now designers like Brunello Cucinelli and Diane Von Furstenberg are leading the way with more subtle, crafted, personal products. 

VersaceNineties Versace was epitomised by bold prints and prominent logos

At the other end of the scale you could easily spend £200 on the latest pair of Nike trainers. Or you can spend £30 on a pair of Converse. From a taste and style point of view, people might say that the Converse Classic trainer is a better example of a premium brand. It’s not about price anymore. 

But times are tough and luxury brands need to stay competitive. To what extent does a luxury brand compromise its premium perception by offering value in the form of discounting? You never see ‘SALE’ stickers in the windows of Gucci, even though you might not always pay full price for a Gucci product. Luxury brands must at all costs maintain this perception of value. 

Delivering the luxury experience

Experience plays a huge role in luxury. You are less likely to part with a significant sum of money for that handbag by looking at it on the internet and purchasing it online. You are much more likely to want to make the experience of purchasing that item fairly all-encompassing: going to the store and enjoying the beautiful environment that fits the brand experience perfectly. 

That experience in its own right has a value. What many luxury brand owners have failed to realise is that whilst they want to be on the internet, the internet as a shopping channel has a perception of reduced value. 

The challenge is how to protect its premium price points, whilst engaging with a digital audience, without impacting the price across the range or offering two different prices for the two different audiences.

Breaking the online barrier

As a result of the growth of digital the luxury market has become accessible to a much wider audience. Whilst most luxury brands have websites, few will have a shop online option, as this devalues the brand. 

Sites like Net-A-Porter, eLuxury and Gilt have identified an opportunity here, because they understand that luxury brands couldn’t realistically retail product online without bastardising their high street or retail offering. 

Gilt-manGilt is an online shop for luxury brands based in the United States.

For luxury brands to effectively utilise online they need to remember the importance of exclusivity and experience. This is something that the website Gilt has succeeded in achieving, with its initial selection process before purchase. Brands looking to engage online must learn that the luxury experience begins from the initial interaction. It isn’t access to everyone. It isn’t eBay. 

Safeguarding for the future

Absolut was the default premium vodka brand until a decade ago when brands like Belvedere and Grey Goose took the same liquid, put it in what they perceived to be a more premium style of packaging and dramatically increased the price point. Drop in a hip-hop name check and while the product remains largely constant, perceptions are dramatically different. This just goes to show how easily perception of luxury can be influenced. We’re currently working with Absolut in reclaiming that premium ground and working to rebuild consumer perception of Absolut as a luxury brand.

AbsolutAbsolut vodka is taking steps to restore some of its luxury brand equity

Most importantly, brands must deliver a consistent experience across all channels and touch points for that experience to have integrity with consumers. In our view, this is the best possible operational model for any business – for those operating in a premium or luxury category, or hoping to build that level of perception, it’s an absolute minimum requirement. If the brand experience is inconsistent at any consumer touch point, people will notice, comment, and share their thoughts and criticisms. Controlling the delivery and experience of the brand is absolutely essential in building long-term loyalty and support.

All that is required to insulate your brand against future market changes is a thorough understanding of how your brand can perform in all channels and at all touch points. It is essential to stay ahead of market trends and think about what we call the Brand World; even if you are only deploying that brand in one channel now, the idea has to have integrity across all deliverables if a brand is to hold onto its perception as a ‘luxury’.    

Toby Southgate is UK managing director at The Brand Union.

 

   



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