Marketing strategies for the luxury sector

Marketing strategies for the luxury sector: while the luxury sector is undergoing profound transformations, the marketing and communication function, which is responsible for conveying values and brand imagery, have had to change their strategies. Luxury marketing, which develops the brand’s messages to support its commercial strategies, has created and deconstructed the practices of bringing together brands and potential consumers, welcoming and internalizing (often with enormous effort) the technological and cultural trends of the outside world.

 

There is not only one luxury: how to recognize it

Luxury is an elusive concept. Jean-Noel Kapferer and Vincent Bastien (The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands, 2012) have broken it down into five specific definitions, which are central to the development of marketing strategies: luxury as an absolute concept, luxury as a relative concept, luxury as an intimate and personal choice, luxury as a business sector, and finally, luxury as a strategy or business model. 

 

  1. Absolute luxury. It evokes lifestyles, objects, and services that are very expensive, very personalized, and almost inaccessible. It functions by recreating a kind of social stratification, especially in countries that cultivate an idea of classless societies (such as China or the United States). Here, it is possession that determines the meaning and pragmatism of consumption, and in this case, marketing is not very incisive, almost inessential.

 

  1. Relative luxury. Luxury for “who,” and not luxury regarding “something.” In this case, it is no longer possible to rationalize motivations with respect to quantifiable KPIs. This definition is linked to the notions of excess, and it’s about pure pleasure and desire. 

 

  1. “My luxury” is a very personal revelation about one’s dreams, something rare, highly emotional, but not inaccessible. It is experiential, it is intimate. 

 

  1. Luxury as a sector refers to the companies that produce goods and experiences specifically for the luxury market. It is, in some countries, represented by an industry group, such as AltaGamma in Italy).  

 

  1. Luxury as a strategy refers to the fact that luxury is a very specific business model. It has specific rules and prescriptions, different from those of fashion or a premium business model. 

 

What is luxury according to marketing: 6 principles to identify it 

The five definitions contained in Kapferer’s and Bastien’s book share a common core, based on six principles. A product and a service are “luxury” if they:

  • assert themselves in a hedonistic, exclusively qualitative sense;
  • are offered at a price far above their material/functional value;
  • are linked to a unique heritage, know-how, and culture, distinctive of a brand;
  • have a deliberately limited and controlled distribution;
  • are accompanied by highly personalized customer care services;
  • represent a social marker, i.e. they are able to convey a sense of privilege.

Other phenomena contribute, by exclusion, to delimit the perimeter of what is luxury: the trivialization of brands, for example. In the article, Do consumers perceive three levels of luxury? A comparison of accessible, intermediate, and inaccessible luxury brands, the authors cite two reasons to explain the scope and defining consequences of the luxury phenomenon. If we place ourselves within a short-term financial perspective, we can see that some luxury brands are increasingly using “mass marketing” practices. The attributes of the brand are managed inconsistently with the brand identity: it is the “masstige” (mass + prestige), luxury in series.  

 

The anti-marketing laws that have made luxury brands great

This confusion around the concept of luxury is a reflection of the supreme confusion that exists between three concepts: exclusive products, expensive products, and luxury products. To try to unravel this undergrowth of classifications, let’s look at a success story where marketing strategies have been radically changed.

In the article “Marketing To A High-End Consumer Using The Luxury Strategy”, Vincent Bastien (Professor of Marketing, HEC Paris) describes how, more than 40 years ago now, a small group of European luxury brands took advantage of globalization to grow beyond their small roster of historical customers. This handful of extremely far-sighted brands understood that in order to position themselves outside the perceived area of “luxury,” the usual marketing strategies would not work. Bastien and his co-author coined the phrase “the anti-laws of marketing” to refer to those “counterintuitive management principles” that allowed brands to win and to exert formidable control over prices and margins. But first, let’s clarify some differences between the strategies that are most often applied in the luxury market.

 

Comparing 3 strategies: luxury, fashion, and premium

In the luxury market, there are three possible strategies: luxury, fashion, and premium. The difference between these strategies is enormous: for fashion and premium strategies, classic marketing styles work quite well. However, when it comes to luxury, you have to rethink the typical marketing strategies. 

 

  1. The luxury strategy aims to create the maximum value for the brand and the full power to determine prices by exploiting all the intangible elements related to the brand identity, such as tradition, country of origin, history of craftsmanship, limited runs related to the scarcity of valuable raw materials, prestigious customers, etc.

 

  1. Fashion strategy is a totally different business model: here time is not decisive; fashion sells by being “fashionable”, i.e. a transitory value, an object of a programmed obsolescence, to borrow a term from high tech. We have discussed how fashion marketing works in a series of posts; you can start from here.

 

  1. The premium strategy is an eminently comparative strategy. It can be summarized as a “pay more, get more” strategy where you must prove to customers that they’re getting the best quality for the price within a given category. 

The luxury strategy is the most efficient and the most effective. It is distinctive of the sector within which it was born and developed and is rarely adopted in other markets. In order to apply it concretely, according to Bastien and Kapferer (2012) it is necessary to apply 24 anti-marketing laws

 

Anti-marketing laws to implement a luxury strategy

  1. Forget about positioning; luxury is not comparative
  2. Does your product have enough flaws to give it soul
  3. Don’t pander to your customers’ wishes
  4. Keep non-enthusiasts out
  5. Don’t respond to rising demand
  6. Dominate the client
  7. Make it difficult for clients to buy
  8. Protect clients from non-clients, the big from the small 
  9. The role of advertising is not to sell
  10. Communicate to those whom you are not targeting
  11. The presumed price should always seem higher than the actual price 
  12. Luxury sets the price; price does not set luxury
  13. Raise your prices as time goes on, in order to increase demand
  14. Keep raising the average price of the product range
  15. Do not sell
  16. Keep stars out of your advertising
  17. Cultivate closeness to the arts for initiative
  18. Do not relocate your factories
  19. Do not hire consultants
  20. Do not test
  21. Do not look for consensus
  22. Do not look after group synergies
  23. Do not look for cost reduction
  24. Do not sell openly on the Internet

For a detailed discussion of each law, we refer to the original text (The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands, by Jean-Noel Kapferer and Vincent Bastien, 2012). In this post, we will examine some of the most important of the 24 laws.

 

Anti-marketing law number 1: Forget about positioning; luxury is not comparative

In consumer marketing, at the heart of every brand strategy is the concept of positioning, the unique selling proposition and the unique and convincing competitive advantage. Each brand must specify its positioning and then convey it through its products, services, price, distribution, and communication. The positioning is the recognition of a gap that creates a preference for a particular brand. Luxury, however, is in no way comparative: it is affirmative and superlative. What counts is to be unique, without having to resort to comparison with a competitor. Luxury is an expression of taste, of a creative identity, that is unique, authentic, non-negotiable, and timeless because it is able to last over time and survive fashion. 

 

Anti-marketing law number 3: Don’t pander to your customers’ wishes

One of the major anti-marketing laws might seem an insult to the teachings of classical theory that prescribe first of all to an orientation and listening centered on the consumer. However, luxury brands follow another logic, which privileges dreams over urgencies and does not bother to respond to problems and needs. Luxury is a “non-need made desirable”: it sells emotions, aspirations, projections (self elevation, pleasure, recognition).  

And luxury must be different. Luxury brands are cultural forces. Luxury is about taste education. This is why it flirts so much with art, avant-garde art. Luxury brands do not aim at being popular (that is to say, liked by everybody today), but instead aim at setting the long lasting standards of taste for tomorrow.” (Vincent Bastien, cited article)

 

Anti-marketing law number 10: Communicate to those whom you are not targeting

Luxury has two aspects: luxury for oneself and luxury for others. Both aspects are essential; the second one involves the unfolding of motivations and interactions with the outside world and emphasizes the inevitability of luxury being “desired”, especially by those who cannot afford it. In traditional marketing, the objective is to optimize return on investment. For this reason, in non-luxury brand advertising the plan focuses on the target consumers. For luxury brands, on the other hand, it is vitally important to spread brand awareness beyond the target group, in a very positive way, through content that inspires awareness, conveys a wealth of meaning, and recreates a distant and prestigious world.

 

Anti-marketing law number 16: Keep stars out of your advertising

Celebrities should be used with caution in the luxury strategy. They cannot function as mere sales agents who invite people to buy and emulate them (if anything, this could be effective in the fashion business model). When used, celebrities should be employed as testimonials and extraordinary people who choose a luxury product for themselves, and, because of their status, that product becomes ordinary.

 

The advent of digital media: a thousand opportunities and some risks

A key aspect of the luxury business model is control. A luxury brand is so demanding about its level of quality that it cannot afford to have vulnerabilities along the value chain and at the same time must create a distance, symbolic rather than physical, in its relationship with customers. From the beginning, digitization (first the internet and then social media) has imposed a different language, based on dialog and proximity: free accessibility for anyone, 365 days a year, 24 hours a day; peer-to-peer communications; disruptive social media presence, dizzying growth of e-commerce, proliferation of touchpoints.

If it is indisputable that luxury has learned to take advantage of the many opportunities offered by the digital revolution, it is equally true that it has done so following an imperative: maintaining the ability to differentiate oneself, moving the threshold of access even further away, continuing to fuel the desire for something that must be felt (rightly or wrongly) as unattainable.