Expanding the Brand

Luxury items tend to be overpriced relative to their production costs. In economics, a luxury item is a commodity with high demand that rises more than proportional to income, which means that expenses on the item automatically become a larger percentage of overall income. This occurs because goods and services reach a certain level of demand. When they do, prices rise to meet the demand.


Luxury is an important concept that many consumers confuse with quality or style. Luxury items are those products and services that consumers cannot generally afford by themselves, but would rather purchase than go without. The most common luxury items are automobiles, computers, electronics, designer clothing, and perfumes. The luxury brand strategy then is to create a unique blend of high quality with reasonable cost. Sometimes this involves creating a new niche market that consumers have not explored before. One example is the high-end Swiss watches that are considered luxury items by most consumers in the United States but are actually unaffordable for most Swiss citizens.

The Internet has given the brand’s new ways to get the message of luxury to consumers everywhere. Social media and blogs are some of the new places where brands can connect with customers on a much more personal level. These sites allow brands to pay to have advertising on their pages, which can drive up their reputation and perceived value. For example, if a well-known brand buys a paywall to post reviews of their products, it can drive up the company’s reputation and perceived value. Consumers will pay more attention to these reviews, and the company will pay more money to advertise on the page, bringing more business and potentially more customers.

The combination of high-end technology with exclusivity can also help a luxury brand establish itself as a brand that is out of the mainstream. The success of the luxury brand REO, which is owned by a private equity firm, illustrates how cutting-edge technology can be used as a marketing tool to draw in customers. When using an exclusive ecommerce site, REO provides consumers with a way to access the products of a luxury brand with a minimal investment. This kind of commerce is becoming more common in the luxury industry and can help luxury brands to differentiate themselves from other brands that use mass production techniques and basic distribution channels.

Luxury brands can also work to maintain a distinctive brand personality by investing in social media marketing professionals. Social media allows a luxury product or service to be shared on a personal level by consumers. Influencers in this world range from Hollywood celebrities to regular people. By hiring influencers, luxury brands can set themselves apart from the crowd and increase their appeal to a younger, more tech-savvy generation that isn’t necessarily loyal to one brand over another. This strategy works because younger consumers tend to want immediate gratification when they’re buying something, and if they’re feeling socially pressured into purchasing a brand because of its price point or status (think of the fur coat you bought last winter because it was ‘hotter than normal,’) the trend might not last long.

The rise of social media has also made the Internet more accessible for the general population, meaning that brands can reach more people than they would’ve previously, and sometimes reach them in ways that previous generations of luxury items wouldn’t have been able to do. For example, top-end fashion houses and brands don’t have to rely on high-end travel to reach a broad audience of buyers. They can use email, the Web, and blogs to market their brand. This is great for lower-end brands that don’t necessarily have a store-front, but can still successfully advertise themselves through social media outlets. It is also a great option for luxury brands that aren’t necessarily well known, but want to make their name known to a younger, tech-savvy generation that is open to brands that offer aspirational luxury items at a more affordable price point than the average consumer.

Luxury brands that engage in SEO practices or pay for ads on television are also employing new kinds of marketing strategies to increase their visibility. These strategies can include hiring celebrities to endorse their items, as well as hosting celebrity-owned shows on various channels. These measures are only partly successful, however, as many consumers are simply not looking for designer dresses on a television channel. Other luxury brands, however, see this as an effective way of reaching out to current and future customers.

As the brand name and luxury customer base continue to expand, these brands will likely find ways to push their products and services into new markets. In fact, it is already happening with some of the more popular brands. For example, Gucci recently launched its fashion line in the Chinese market. Many luxury brands have also formed strategic alliances with other high-end retailers, such as Versace, who will produce their clothing under license. While it is clear that these strategies are only going to increase the power of the brand and raise its profit margin, it is equally clear that these tactics will greatly increase the number of customers who buy their products.