In economics, a luxury item is something that provide good value for money, and as income grows, the good’s cost increases proportionally to its increase in value. So a luxury item like a yacht or a fancy car becomes more valuable the larger the increase in incomes enables it to be. And when incomes grow faster than prices of necessities, goods and services, then some things become necessities and things become luxury items. And then they become things that almost everybody needs, and almost everybody wants.
But what is luxury? Defining luxury can be difficult because there are so many different definitions and classifications. Sometimes luxury is used as an adjectival term to describe a style of dress or a cultural preference, or both. Some luxury goods are considered necessities, but there are also luxury brands, for example wines and cosmetics, that are considered luxuries.
One way of defining luxury is to look at symbols. Luxury symbolises success and power, usually in the business or financial domain. You might think of prestige watches or designer handbags as signs of wealth, but they have often been associated with high-class social status as well. A luxury brand can carry the logo of a country or be associated with a prestigious international university. These symbols can take on a life of their own and become promotional items or physical property, but they are most commonly associated with luxury goods.
Another way of looking at luxury is to look at consumer behavior. People who seek out expensive experiences are not necessarily buying a brand name, but they are buying something more than just a practical item. This could be a brand name but it could also be a philosophy, motivation, or social platform.
Luxury consumers buy on more than price alone. They want a brand they trust implicitly. Many luxury brands offer subscriptions to magazines and newsletters that give detailed reports of their manufacturing process and new releases. Subscribers can gain a deeper insight into how the brand works. Luxury brands realise that exclusivity drives people to spend more. That’s why luxury retailers use subscription offers to draw in subscribers and build their customer base.
Luxury brands are all about conspicuous consumption. Their business strategy is built around their exclusivity. Their latest products have to go above and beyond the competition. Consumers will flock to them because they are different and stand out from the crowd. Luxury retailers realise this and use it to their advantage to attract more customers.
It is important for luxury brands to be relevant. If consumers think they are trying to reach a mythical Other, they will probably be disappointed. Social media has changed the way that many companies approach their brand. If you want true luxury marketing professionals to implement their strategies, you have to be willing to take the social media community by storm and give it what it deserves.
As consumers, we love brands that make us feel good about ourselves and our lifestyle. We want to associate ourselves with the very best of the best and we want others to feel the same way about us. This is the basis of true luxury marketing, drawing in customers and influencing them to spread the word. If luxury brands want to succeed in this highly competitive industry, they need to become relevant – not just in their product but also in their own social and business circles.
The business of luxury brands is no different to any other industry. If you want your business to grow, you have to advertise and spread the word. Just like in any other industry, there are winners and losers in the luxury market. The top brands with the most followers, the most buzz, the most shared images and posts on social media are likely to succeed.
The most successful luxury brands are those that stay true to their values and create a vibrant, social environment around their brands. Consumers want and expect luxury brands that make a difference, that offer a superior product and service and that encourage interaction. That doesn’t mean that luxury goods have to look exactly like every other brand. A true luxury brand will offer unique lines, colours, textures, sizes, shapes and designs. It will not copy or steal designs that are already in the market – this only causes consumers to turn away and potentially lose interest.
Luxury brands work on the premise that the highest quality always comes at a certain price point. They often state that their luxury brands are more expensive than moderately priced brands. Their luxury brand values are not necessarily lower; they simply value quality and authenticity more. High quality products have an emotional value that can influence buying decisions. Therefore high quality brands have a higher perceived value compared to other brands, which in turn, drives the price point of their luxury brands.