The concept of luxury is a relative term since it always depends on the point of view of each person. What may be a luxury for some, may be part of the lives of others. However, when we talk about luxury brands, in general terms we refer to those that have been able to configure themselves from a product/service of the highest quality and exclusivity by price, which on the other hand have focused their essence on unparalleled experiences, creating a very attractive and aspirational perceptive imaginary for the majority of society.

Luxury products are the purest examples of the role that branding plays in the construction of meanings, as their brand and image are often key competitive advantages capable of generating enormous value. This precisely highlights the importance of the brand in an industry that needs to constantly generate value through its tangible, but above all intangible, assets. Let us not forget that luxury is a necessity that begins where the need itself ends.

The “premiumization” of luxury brands is a new reality

In the Western world, where the flaunting of wealth for its own sake has been more questioned, high-net-worth consumers are spending more on luxury brands that can make them feel better in other ways, such as healthier, more efficient, cheaper products, as well as greater social awareness on the part of these brands.

This so-called “premiumization” is a matter of priorities where these 5 trends stand out:

  • A manifest need of the client for individualization and personalization, also incorporating the interest in co-creation.
  • Greater awareness of aspects derived from sustainability, in its dimensions of care for the environment and concern for social aspects.
  • The digitalization of luxury, taking care of on-off coherence with transversal experiences that add value to the customer journey, giving way to technologically advanced solutions.
  • An interest in health and mindfulness, where it’s not just about physical health, but about the unity of body, soul, and spirit.
  • Sharing and reusing, which incorporates the temporary loan of luxury products and second-chance business models; For example, a portal for used or “history” luxury watches.

This paradigm shift also poses a challenge in the management of luxury brands. There has been a considerable evolution from the logo to the brand, i.e. from the identity to the experience. It is not that the brand as an identifying sign has ceased to be important, but that what is relevant is found in the set of factors that define the product as luxury. Today anyone can have an almost perfect counterfeit of a Rolex watch or a Hermès bag, to give a couple of examples. In this sense, some companies such as Louis Vuitton, Michael Kors, Tesla or Audi have begun to reduce the presence of their logos. On the other hand, unique personal experiences also emerge. In the UK, Selfridges department stores have created “personal shopping spaces” that de-emphasize the brand and add value to the moment lived.

5 Keys to Building a Luxury Brand

There is no golden rule for building a luxury brand, but a number of key elements converge in all of them:

  1. Build a very differential positioning

All luxury brands have a differential positioning, what happens is that many of them have been based on the product and it is necessary for them to do so now in the experience.

Bang & Olufsen is excellent for the design of its units, but beyond its excellent technical features, its differentiation comes from the intangible value it has built around its brand.

  1. Identify niche segments

Market segmentation becomes complex here since it must reach a deeper level that reaches much more selective audiences looking for higher added value.

Louis Vuitton demonstrates its passion for art with collaborations with various international artists, behind which is its desire to connect those specific segments that share that same passion.

  1. Emphasizing Emotions

Luxury brands must emphasize the terrain of personal emotions, which transcend the functionality of the product. To do this, techniques such as storytelling, the generation of memorable experiences or exclusivity can be of great help.

The aura of exclusivity that characterizes Hermès is the result of its DNA and desire to remain in the ultra-premium niche, within the reach of a privileged few.

  1. Identity Care

A luxury brand’s identity should reflect its excellence as well as its unique personality, aura and attitude. Customers crave to identify with brands that celebrate their own sophistication with outstanding design and aesthetics.

Tiffany has come to represent the most romantic symbol of love.

  1. Excellent experience

Luxury brands must further reinforce exclusive and exceptional shopping experiences that connect in a relevant way with customers. No luxury brand can neglect the element of service and experience that underpins their product. Few things will devalue the brand faster than having to talk to an automated system instead of a real person, or waiting two weeks to receive a response to a claim.

Dolce & Gabbana opened a “cultural center,” that’s what he calls it, in New York’s Soho. Although you can shop there during the day, the space is first and foremost a luxurious, Instagrammable club for young people.

Conclusion

Luxury has always existed, Stone Age women covered themselves with mollusk shells to indicate their status in the tribe; Perhaps in our day it has not changed so much in its essence. However, as the world evolves and society demands more from brands, the luxury sector has an opportunity on its hands: to go from being a consequence to being a driver of change and taking action.

 

Carlos Puig Falcó
CEO Branward

 

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