Economists usually define luxury as something that is rare and hence ‘expensive’. In economics, a luxury item is an asset or good which increases in value more than proportional to personal expenditure, so that total expenses on the item remain a greater percentage of income than that for its use. So, luxury items usually tend to be symbols of wealth. But do all luxuries really make people feel wealthy?
Marketing professionals involved in luxury marketing acknowledge that luxury items are as much about consumers’ perception of ‘worth’ as they are about any other asset. This is because, in most cases, the items are also seen as symbols of power, prestige and influence – hence, luxury items tend to command a higher price (as in the case of brand-name luxury goods). In many ways, then, luxury marketing applies luxury marketing theory to the luxury sector just as much as it does to other markets. Marketing professionals take their role as they do in all marketing domains by looking to identify a target group and crafting a message that will pre-empt potential buyer objections, so as to close a sale at the highest possible emotional level. Just as in any other marketing domain, then, a luxury marketing message needs to be carefully targeted to the right audience to be most effective.
The art of luxury branding has proven over time to be more about creativity and flair than pure function. So it makes sense that luxury brands would seek new ways to position themselves as creative sources of entertainment and unique expressions of wealth. That said, the art of luxury branding does not always translate into innovative and superior product design or sales tactics. So if you are investing in luxury brands, keep in mind that your brand’s selling proposition – whether through the creative genius of your board or sales tactics – is only part of the equation. Successful brands build on a foundation of superior performance, innovation and research, integrated with an understanding of customer preferences and expectations.