Does luxury have a minimum price? An exploratory study into consumers’ psychology of luxury prices

Article (PDF Available)inJournal of Revenue & Pricing Management 13(1) · February 2014with 1,601 Reads
DOI: 10.1057/rpm.2013.34
Cite this publication
Abstract
Consumer studies show that luxury evokes high prices. However, the remarkable growth of this sector is based on its extension to the middle class, with affordable prices. This is a paradox: luxury needs to be expensive, yet grew being accessible. Hence the question: If consumers want to access to luxury, below what price would they consider that it is no more luxury? Is there a minimum price? This research explores how consumers decode luxury prices, how are lower prices compatible with luxury. Strong brands have indeed a larger latitude for accessible pricing than new luxury brands.
Figures - uploaded by Jean-Noël Kapferer
Author content
All content in this area was uploaded by Jean-Noël Kapferer
Content may be subject to copyright.
AUTHOR COPY
Research Article
Does luxury have a minimum price?
An exploratory study into consumers
psychology of luxury prices
Received (in revised form): 13th October 2013
Jean-Noël Kapferer, Cindy Klippert and Lara Leproux
HEC Paris, Jouy-en-Josas, France
Jean-Noël Kapferer is a world renowned expert on brand management. Professor at HEC Paris, he holds the
Pernod-Ricard Research Chair on the Management of Prestige Brands. Co-author of The Luxury Strategy, he
directs executive seminars on luxury strategies in the United States, China, Japan, Korea and so on.
Cindy Klippert and Lara Leproux are HEC graduates and acted as research assistants on this project.
Correspondence: J N Kapferer, HEC Paris, 1 Rue de la Liberation, Jouy en Josas, 78350, France.
ABSTRACT Consumer studies show that luxury evokes high prices. However, the remarkable growth of
this sector is based on its extension to the middle class, with affordable prices. This is a paradox: luxury needs
to be expensive, yet grew being accessible. Hence the question: If consumers want to access to luxury, below
what price would they consider that it is no more luxury? Is there a minimum price? This research explores how
consumers decode luxury prices, how are lower prices compatible with luxury. Strong brands have indeed a
larger latitude for accessible pricing than new luxury brands.
Journal of Revenue and Pricing Management (2014) 13, 211. doi:10.1057/rpm.2013.34;
published online 22 November 2013
Keywords: luxury; price; conspicuous; dilution; status; masstige
THE ELUSIVE LUXURY
DEFINITION
Although luxury shops are everywhere in our
modern cities and online, there is still no con-
sensus about the denition of luxury. In short
luxury refers to rare, hedonic objects and experi-
ences beyond the necessities of life, therefore
affordable mostly to those who have surplus
money. Such denition is subjective: for some
people Ralph Lauren is luxury, for others it is not
rare enough. It is not our purpose to address
this elusive question of denition: looking after
a common one is probably vain for luxury is
arelativeandculturalconcept,uid and changing
(Yeoman, 2011). The word luxus comes from
latin but etymologists disagree as to its root: Is it
excess or standing apart? Luxus has no equivalent
in Japanese nor in Chinese. This is why Japanese
people speak of lugujuri(phonetic adaptation of
lu-xu-ry). They refer not to the concept but to
what they experience in the stores of prestige
brands anywhere in the world.
Another denitional difculty is that people
confuse a concept and aconception.Thus,the
luxury creators the brands emphasize such
facets as exceptional quality, craftsmanship, hand-
made, rarity, noble ingredients, maintaining tra-
dition. The luxury buyers tend to speak of sense
of exclusivity, hedonism,accesstorarequality
and to authenticity and experiences (Yeoman and
©2014MacmillanPublishersLtd.1476-6930 Journal of Revenue and Pricing Management Vol . 13 , 1 , 211
www.palgrave-journals.com/rpm/
AUTHOR COPY
McMahon-Beattie, 2010). Finally the majority,
the non-buyers equate luxury with conspicuous-
ness, excess, waste: they underestimate the pro-
duct, paying no attention to craftsmanship.
A recent research (De Barnier et al, 2012)
factor analyzed three main scales used to mea-
sure luxury (Dubois and Laurent, 1998;
Kapferer, 1998; Vigneron and Johnson, 1999).
They converge but each one measures some
specic factors. Thus, luxury can be identied
by six dimensions:
!a very qualitative hedonistic experience or
product made to last;
!at a price that exceeds what functional values
command;
!tied to heritage, know-how and culture;
!available in restricted and controlled distri-
bution;
!offered with highly personalized services;
!acting as a social stratifyer, giving a sense
of privilege.
As shown by Kapferer and Bastien (2012, p. 47),
these criteria are necessary but their weight
differs according to the sector (service versus
product, automobiles versus clothing and so
on). They capture the two facets of luxury: for
oneself (reward) and for the others (appearance,
sign of power).
PRICE AND LUXURY
Despite the elusive nature of luxury, consumers
and professionals converge on one point: price
is part of that denition. Bain, the expert world
consultancy on luxury, denes it as premium
products sold in premium stores at a premium
price. Kapferer and Bastien (2012) have shown
that luxury is not just more of premium.
Premium goods price needs to be justied by
objective facts about quality. In luxury, quality
is assumed, price does not have to be explained
rationally: it is the price of the intangibles
(history, legend, prestige of the brand). In his
blog, Sheth Godin (17 May 2009) echoes this
key distinction by quoting luxury as being
needlessly expensive. US wine professionals
(Cholette and Castaldi, 2007) classify wines
according to price: popular and medium
(US$7$10), mid-premium ($10$14), ultra-
premium ($14$25), luxury ($25$50) and
super luxury ($50$100). Those wines still more
expensive are called icons. As an icon is a xed
religious gure, this implies that such prices
have no rational basis but a spiritual one.
Recent international consumer studies point
out the key role of price in the categorization of
anything as luxurious (Godey, 2013). Being
expensiveis the rst criterion for qualifying
luxury in Japan, the second in France, the third
in China and Germany. These results are not
surprising. Historically luxury has been the life-
style of the Aristocracy, and later the wealthy
bourgeoisie (Veblen, 1899). The modern evo-
cations of luxury retain from this history feelings
of exclusivity, exceptional quality, craftsman-
ship, uniqueness, noble ingredients, rarity,
hedonism, art and prestige today attached to
those who can afford this life style by their own
success. In fact, in the same study exclusivityis
the N°1 criterion for dening luxury in the
United States, Germany, Italy, the N°3 in Japan.
The rate of growth of the luxury sector since
1995 is remarkable. The personal luxury pro-
ducts market (watches, jewelry, leather goods,
clothing, fragrance and skin care) has grown
from 77 billion in 1995 to 210 billion in 2012
(Bain & Co, 2012). This steady growth has been
possible because luxury has become the ordin-
ary of the extraordinary people and the extra-
ordinary of the ordinary people. Once limited
to High Net Worth Individuals, with more than
a million dollar in cash (CapGemini, 2012)
luxury made the dream accessible to the middle
class and excursionists(Dubois and Laurent,
1995), who buy only once a year for a break.
Most of the luxury buyers are not rich. HBR
article Luxury for the masses(Silverstein and
Fiske, 2005) identify how an accessible new
luxury has allowed the masses to trade up. New
luxury refers to luxury brandsdownward
extensions (Chanel make up or skin care),
to premium goods (Grey Goose vodka or
Callaway Golf clubs) and masstige products
Does luxury have a minimum price?
3©2014MacmillanPublishersLtd.1476-6930 Journal of Revenue and Pricing Management Vol . 13 , 1 , 211
AUTHOR COPY
(Victorias Secret, Ralph Lauren Polo and so
on). In this article we focus on luxury brands.
THE PARADOX AND RESEARCH
QUESTION
At this point we face a contradiction: being
expensive is part of the concept of luxury, yet
the luxury sector has grown partly because it
stopped being out of reach of the many. This
leads to a question: If consumers want to access
to luxury, below what price would they con-
sider that it is no more luxury? This question is
important for managerial purposes: how far
should a brand go in price accessibility if it
wants the product to remain a luxury.
A recent survey (Kapferer and Laurent, 2012)
based on 8370 actual luxury buyers, 21 product
types and 7 countries showed that threshold
prices of luxury had a long tail shape with a
majority of respondents declaring quite low
prices (300 for a pair of shoes, or 450 for a
mens suit). Just as the professional wine classi-
cation where luxurystarts at $25 a bottle!
This above-mentioned survey did not aim at
uncovering what psychological processes did
the interviewees use to determine the price
below which luxury would be absent. This
research aims at it.
Academic literature on luxury rarely talks
about price. When it does, it often refers to
brands not fully perceived as luxury: Yeoman
and Mc-Mahon-Beatties (2006) analysis of
pricing strategies in luxury markets use as
examples Victorias Secret a masstige brand
or of MINI a premium brand. However,
there are exceptions: Amaldoss and Jain (2005)
demonstrated that luxury prices are subject to
externalities effects. People called snobsare
ready to pay more for a product if the effect of
this price increase is to reduce the number of
conformistsalso buying the product. Confor-
mistsare people who buy because they want to
look like aspirational people. If snobs exhibit a
typical Veblen effect (demand grows when
prices increase) conformists follow the classical
law of price elasticity: demand grows when
prices go down. Hence, the success of luxury
trading down. Beckers (1991) analysis of res-
taurantspricing shows that unlike what classical
economy recommends, a successful premium
restaurant should not increase its price to the
point where demand equates supply for there
would be no more waiting list. In luxury
one keeps supply below demand, obstacles to
purchase increase perceived value. Allsopp
(2005) analysis of premium pricing shows how
higher price create desirability: not only as
quality signal, but also as a measure of ones
ability to afford it. Luxury is a way of showing
both to oneself and to others (the two facets of
luxury) that one can pay the price of luxury,
extravagant from a rational standpoint, as a
$1500 Château Latour Bordeaux. For econo-
mists, luxury pricing is discriminatory pricing: it
aims at eliminating consumers who cannot
follow (Groth and McDaniel, 1993).
This literature is mostly focused on the attrac-
tiveness of high prices. Here we address a
symmetrical one. Where does luxury price stops?
Marketing literature on price psychology
(Mazumdar et al, 2005) proposes the concept of
reference price: consumers would estimate that a
product is expensive on the basis of a price
stored in their memory, coming from their last
purchase experiences with the same product
class. However in luxury, unlike FMCG, pur-
chases are infrequent. Also on the Internet,
famous luxury brands restrict the diffusion of
informations about price: one must ask for it.
However, we cannot discard the idea that
through personal inquiry or social media inter-
action, typical prices circulate about the hot
items of the season.
Our research questions are:
!What psychological processes intervene in
dening the minimum price of luxury?
!What is the relative part of tangible and
intangibles in these processes?
!How do price and brands interact in these
processes: can brands trump the price?
!What individual differences play a role in
determining the luxury price threshold?
Kapferer et al
4 © 2014 Macmillan Publishers Ltd. 1476-6930 Journal of Revenue and Pricing Management Vol . 1 3, 1 , 211
AUTHOR COPY
These questions have academic and managerial
relevance. To understand a phenomenon one
should analyze it at its frontiers. To get at the
essence of luxury, identifying the parts which can
be played down and those which are quintessen-
tial, should one study Rolls Royce or borderline
cases? From a managerial perspective, the reality is
that to grow luxury brands will have to recruit
new comers. Analysis of consumersreactions to
luxury lowered prices will be insightful.
To address the research questions, an explora-
tory study was set up, semi-quantitative: 150
questionnaires were sent in March 2013 to
parents, friends and relatives of MBA students at
HEC Paris, an elite school; 110 were received:
66 per cent from female buyers, 67 per cent
between 20 and 30 years old, 54 per cent
declaring annual revenues above 27 000, 34 per
cent above 60 000 and 54 per cent saying they
buy luxury goods two or three times a year.
The questionnaire ran as follows:
!Under what price do you estimate that a ring
is not luxury?
!In your mind, what is the typical price of a
Mauboussin ring/Ralph Lauren shirt? Would
you say it is luxury?
!If Dior decided to reduce their prices on an
item by 50 per cent would it be still luxury?
Why?
!For you, can a very well done counterfeit be
luxury? For instance, a superb copy of L
Vuitton bag sold at 200 instead of 2500?
!Finally what justies for you the high price of
a luxury product?
The products used with the questions varied
according to gender (for instance, rings for
females, watches for men and so on). We used
Mauboussin jeweler and Ralph Lauren as
brands because their luxury status is debated as
shown by IPSOS (2012) World Luxury Survey.
Mauboussin is a historical prestigious jeweler
who to avoid going out of business engaged
a complete turn around and is now selling at
very accessible prices, advertising on TV to
wider audiences. This strategy is worldwide.
We used Hermès and L Vuitton as typical
luxury brands: according to IPSOS, they are
among the most spontaneously quoted luxury
brands in the world.
We also included a follow-up qualitative
part: eight actual luxury buyers were interviewed
in depth in Paris. After discussing their last
luxury purchases, what luxury was for them,
the interviewer addressed the central question
of the minimum price in a given category. Then
we asked the interviewees whether sales and
supersales or Websites selling luxury goods at a
discount price (like Netaporter) were still lux-
ury? The perception of counterfeits was also
checked. Finally, as many luxury brands buy
some of their products from small craftsmen,
would buying directly to the craftsman of
course then at reduced price be qualied as
luxury experience?
RESULTS AND INSIGHTS
As luxury is a cultural notion, we do not claim
that the results are generalizable worldwide.
This is the case for all studies undertaken in
one single country. However, because peoples
understanding of luxury is shaped by luxury
global brands acting worldwide, these results
have external validity.
Price threshold or no mans land?
To identify a minimum price of luxury we
followed two ways: the rst one says under
what price would you say that a ring is not
luxury?and the second at what price would
you say that a (ring) is luxury?. Surprisingly,
these two questions provide quite different
answers: where luxury stops and where it starts
are not the same notions! There is a gap of 853
between these two ways (Table 1).
The higher the price, the higher is the like-
lihood of luxury. This is why new comers in
any luxury market often buy the expensive
items. As they lack the culture, price acts as
diagnostic cue: it signals luxuriousness.
On the other end, brands have a latitude of
acceptation when they decide to create an
Does luxury have a minimum price?
5©2014MacmillanPublishersLtd.1476-6930 Journal of Revenue and Pricing Management Vol . 13 , 1 , 211
AUTHOR COPY
accessible range. Consumers do not have one
threshold price in their mind acting as a guillo-
tine, but two. Below 1983, the luxury status
of a ring is conditional: it will depend on other
factors, one of them being the brand status.
However there is a limit, a lowest point (1130)
where none of these factors can help.
The moderating role of brand status
Tiffany is a famous American jeweler with a
prestigious heritage starting in 1837. In the early
nineties, the brand launched an accessible silver
line at $110. It was a success called Return to
Tiffany, attracting many young people to the
brand. However it hurted the feeling of exclu-
sivity and dream attached to Tiffany. In 2007,
they increased the price from $110 to $175. The
Wall Street Journal wrote Fashion victim: to
refurbish its image, Tiffany risks prots. After
silver took off, jeweler raises prices to discourage
teens.
At $110 did these young buyers perceive it as
luxury? Using Mauboussin present trading
down strategy, we asked what is the typical
price of their rings and if it is luxury? (Table 2).
The perceived average price of a Mauboussin
ring (1213) falls just within the no mans land
identied above. The lower quoted price is
150, the higher 7000. Actually, Mauboussin
rings extend from 400 to 24 000.
Results show no systematic link between
the average price quoted by an interviewee and
his/her perception of such a ring as luxury
or not. Some consumers declare 300 as the
average ring price, yet categorize it as luxury.
Others quote 1000 but say it is not a luxury
ring. For the former, if Mauboussin is a luxury
brand, its typical ring is a luxury ring. The
second ones compare Mauboussin with famous
jewelers, such as Cartier, to deny any luxury
status to Mauboussin even if they said 1000.
This illustrates the power of the brand to trump
the price alone. For those consumers with
no clear idea about Mauboussin, price alone
becomes a diagnostic cue to categorize as
luxury: at 3000 or above it is hard to say that
it is not luxury.
Negative effects of price reductions
on the luxury status of the brand
Fashion brands need to discount their unsold
inventory. As a rule, luxury brands do not
(Kapferer and Bastien, 2012, p. 227). We pre-
sented a situation where Dior, a prototype of
luxury, would reduce their price by 50 per cent
on some products without changing anything in
the product nor in the associated services, then
would it still be luxury? (Table 3).
There is a split half in the answers. What are
the reasons invoked by those who say that this is
still luxury?
!First comes the brand strength. Dior has been
a synonym of luxury for decades. It shaped
what luxury means. Whatever it does remains
luxury. A quote from the interviews is
insightful: Dior products are not luxury
because of their price.The fact that it is
luxury has nothing to do with price. How-
ever, they voice a little restriction: in the
short term, despite the price drop, Dior
remains Dior, therefore luxury. If it would
Table 2: Is Mauboussin typical ring luxury?
Perceived typical price of
a Mauboussin ring
1213 (varying from
150 to 7000)
Is it luxury? YES 60%
Is it luxury? NO 40%
Table 3: Would a 50 per cent price reduction hurt
luxury?
If Dior reduces the price of an item by 50 per
cent it remains luxury
45%
It is no more luxury 55%
Table 1: Luxury minimum price
Below what price would you say
a ring is not luxury?
1130
At what price would you say
a luxury ring starts?
1983
Kapferer et al
6 © 2014 Macmillan Publishers Ltd. 1476-6930 Journal of Revenue and Pricing Management Vol . 1 3, 1 , 211
  • Article
    Full-text available
    RESUMEN Las marcas de lujo se reinventan en sus estrategias de marketing y de negocio para adaptarse y acercarse a los mercados emergentes deseosos de consumir moda de lujo, es por ello que el marketing digital se transforma en una herramienta imprescindible para la comunicación de las marcas de lujo líderes en el mercado con sus públicos más jóvenes. La presente investigación pretende conocer cuáles son las estrategias actuales en marketing digital que están llevando a cabo las marcas del sector de la moda de lujo. Se pretenden identificar los aspectos más relevantes en la comunicación de las marcas para con sus públicos en un entorno virtual, para ello se han utilizado técnicas cualitativas, mediante análisis de contenidos y entrevistas en profundidad. Hemos encontrado que, entre otras, el principio de storytelling es una de las estrategias clave en el marketing digital, este principio lo encontramos en estrategias de video marketing, social media, eventos y exhibiciones abiertas al público, las cuales buscan interactuar con el público y mostrar su historia. PALABRAS CLAVE Estrategias de marketing, redes sociales, bloggers, storytelling, tendencias de marketing, influencers, marcas de moda de lujo ABSTRACT Luxury brands reinvent themselves in their marketing and business strategies to adapt and approach emerging markets eager to consume luxury fashion, which is why digital marketing becomes an essential tool for the communication of luxury brands leaders in the market with their younger audiences. The present research aims to know what are the current strategies in digital marketing that are being carried out by the brands of the luxury fashion sector. The aim is to identify the most relevant aspects in the communication of brands to their audiences in a virtual environment, for which qualitative techniques have been used, through content analysis and in-depth interviews. We have found that, among others, the principle of storytelling is one of the key strategies in digital marketing, this principle is found in video marketing strategies, social media, events and exhibitions open to the public, which seek to interact with the public and show your story.
  • Article
    Price has always had a key role in the luxury fashion market, because high prices are linked to the uniqueness and the prestige of luxury products and brands. Because of this direct contribution of price to the luxury essence, scholars have partially neglected the possible existence of unintuitive and controversial pricing strategies followed by luxury firms. This article deals with this literature gap, particularly analyzing a specific pricing strategy that seems to be in contrast with the nature of luxury pricing: the odd-even price (OEP). With the direct observation of physical and digital store windows of 20 luxury brands, this research investigates the role of OEP in the fashion luxury sector. Particularly, this work examines the relationship between the OEP strategy and the luxury level of fashion brands considering both offline and online channels.
  • Article
    Full-text available
    Price elasticity is a widely used measure of consumers’ willingness or ability to pay for goods and services. This research examines the price elasticity of high-priced brands. We define high-priced brands as those that sell at or above the price point at which consumers begin to consider that product to be luxurious or premium in the category (Kapferer et al., 2014; Sjostrom et al., 2016). More specifically, we use high-priced wine brands as the context for this research. Wine is an ideal product to use because it has a wide price range, and can be purchased for various consumption situations. When prices are high we anticipate that elasticities may no longer function as they do in everyday consumer packaged goods markets. Instead, they might become smaller or possibly even positive if consumers are prepared to pay for the quality they desire. We employ stated choice experiments to investigate how Situational Factors, Consumer Factors and Contextual Factors influence price elasticities for high-priced wine brands in Australia. Results are that price elasticity estimates for the high-priced brands in this study are −1.8 on average. This is lower than the commonly reported figure of −2.6 for brands in general; however, in one part of the experiment respondents chose for a ‘high-importance’ occasion. Smaller price elasticities were found when (1) the perceived importance of the consumption situation was high, (2) among regular high-priced wine buyers, and (3) among brands with a higher initial price position. These results demonstrate that the patterns of price elasticity for high-priced products are mainly similar to that for other FMCG products, but consumers are slightly less responsive.
  • Article
    Purpose: The purpose of this research study is to identify differentiation factors Burgundian wineries use to distinguish their brand, and to determine whether these methods align or conflict with luxury marketing differentiation attributes. Design/methodology/approach: A qualitative methodology of 23 in-depth interviews with various sized wineries, as well as Burgundy market experts, was used. In addition, document analysis of websites and marketing materials was carried out along with a comprehensive review of the luxury marketing literature. Findings: Results show that Burgundian wineries have adopted some, but not all, of the luxury marketing differentiation attributes. Furthermore, there are a series of core tensions in the industry, including disagreement on using luxury marketing strategies. These findings contribute to the theory base in luxury wine marketing by illustrating how general luxury marketing attributes are used for wine brand differentiation. Originality/value: This research is the first of its kind to investigate luxury marketing differentiation practices of Burgundy wineries. The results are relevant for new wineries in Burgundy, as well as those in different regions of the world who desire to emulate, and perhaps come close to achieving, some of the luxury price points that certain Burgundy wine producers achieve. The information is also useful to assist related industries, such as food and spirits, which struggle in implementing luxury marketing strategies.
  • Article
    Full-text available
    Bu çalışmada, lüks ürünlerin satın alma davranışının ‘neden’ esaslı modellenmesi amaçlanmıştır. Önerilen model, Davranışsal Neden Kuramından faydalanarak davranışın belirleyici faktörlerinden algılanan değerler, nedenler, genel güdüler ve davranışsal niyet arasındaki ilişkileri açıklamaya çalışmaktadır. Davranışsal Neden Kuramı, geleneksel davranışsal niyet modellerinden Planlı Davranış Kuramının bir uzantısı olarak gelişmiştir. Yüksek ilgilenim gerektiren ürünlerin söz konusu olduğu lüks tüketimde satın alma davranışının Planlı Davranış Kuramına ‘nedenler’ faktörünün dahil edilerek modellenmesi, davranışın daha iyi açıklanabilmesine imkan sağlamaktadır. Bu çalışmada, Davranışsal Neden Kuramından farklı olarak, algılanan değerlerin genel güdülere etkisinde nedenlerin düzenleyici rol oynadığı önerilmektedir. Bu bağlamda, tüketicilerin lüks ürün satın alma davranışının ilk kez Davranışsal Neden Kuramına dayandırılarak modellenmesi ve nedenlerin düzenleyici etkisinin irdelenmesi çalışmanın özgün yönlerini oluşturmaktadır. Kavramlar arası ilişkilere dair hipotezlerin yanı sıra kavramların ölçümüne yönelik göstergelerin de önerildiği bu çalışma, lüks tüketimde satın alma davranışının modellenmesine yönelik kuramsal bir çerçeve olarak kabul edilebilir. Modelde yer alan ilişkilere dair hipotezlerin istatistiksel olarak sınanması ise gerçekleştirilebilecek gelecek çalışmaların konusunu oluşturmaktadır.
  • Article
    Full-text available
    In recent years, competition between brands have been linked to mass prestige associated with the brands. Mass Prestige (Masstige) is very important to study, and yet it is a relatively less investigated construct in the literature. This study is an attempt to contribute to the literature grounded in masstige theoretical approach by examining the prestige associated with the four best-selling laptop brands: 1) two American brands (HP, Dell); and 2) two Asian brands (Lenovo and Acer). We analyzed the competition between these brands in the second fastest growing emerging market, India. In order to measure Masstige, we used the Masstige Mean scale. The results show that American brands have the potential to be seen as prestige brands while Asian brands are trailing behind in masstige value and competition. Finally, but not less important, this paper discusses the potential reasons for different masstige value of four laptop brands.
  • Article
    Although pricing strategies have significant effects on brand performance and have been growth drivers of the luxury industry for decades, there is only little research on luxury pricing strategies. Most academics and managers believe that there is a ‘democratization of luxury’ since the 1980s. Today, luxury is regarded as accessible for almost anyone. On the other hand, researchers and consumers still consider ‘high prices’ as one of the most important luxury characteristics. To resolve this paradox, this paper analyzes ‘expensiveness’ as a key feature of luxury products: Is luxury expensive or has it really democratized? It outlines the different types of luxury with reference to their ‘expensiveness.’ Based on a literature analysis about research on pricing in luxury marketing, the paper presents eight indicators of ‘expensiveness.’ After discussing how the Veblen, Snob and Bandwagon effects break the law of demand, analyses of real data follow with some case studies about the price development of luxury products in different countries and product categories. They show that the method of price comparison by Fourastié can provide brand managers a more realistic picture about the ‘expensiveness’ of their products for their target customers. The paper concludes with some major lessons learned.
  • Article
    This study examines differences in luxury value perceptions and their influence on luxury purchase intentions among collectivists and individualists. According to empirical evidence from 1,608 responses to the Brand Luxury Index (BLI), collectivists have stronger perceptions of price-controlled values (i.e., conspicuousness, high quality). Conspicuousness negatively affects luxury purchase intentions among individualists but not among collectivists. High quality positively impacts luxury purchase intentions among collectivists but not among individualists. Hedonism (a consumer-driven luxury value) plays an important role in luxury purchase intentions among individualists. Moreover, a multi-group analysis confirms the differences between the two cultural groups. The extended-self is a universal luxury-value perception on luxury purchase intentions for both groups. Additionally, subjective norms strongly influence luxury purchase intentions in both cultures. Furthermore, the results show that there is a difference in the impact of the uniqueness value on luxury purchase intentions between women and men.
  • Article
    Full-text available
    Luxury is in fashion and is now to be found within almost every retail, manufacturing and service sector. New terms qualifying luxury regularly appear such as 'premium', 'ultra-premium' and 'hyperluxe'. Today, luxury is everywhere - but if everything is 'luxury' then surely the term itself has no meaning? What really is a luxury product, a luxury brand or a luxury company? "The Luxury Strategy" is a definitive new work that sets the record straight. Luxury is as old as humanity and it is only by a thorough understanding of the genuine concept, that it is possible to define a rigorous set of rules for the effective management of luxury brands and products. "The Luxury Strategy" rationalizes the management of this new business concept based on the highly original methods that were used to transform small family businesses such as Ferrari, Louis Vuitton, Cartier, Chanel, Bulgari, Gucci and Prada, into global brands. "The Luxury Strategy" explains the difference between 'premium' and 'luxury', and sets out the rules to be applied to the luxury marketing mix (the opposite of those for classic marketing). It describes how to implement a luxury strategy within a company and delivers clear principles for becoming - and remaining - 'luxury'.
  • Article
    Purpose ‐ The authors' research was carried out with the aim of analyzing perception of luxury and luxury brands among an international sample of young people. Design/methodology/approach ‐ This article was based on an empirical study among 233 respondents. First, a qualitative analysis of content using the respondents' own words was conducted. Then, to show whether there are differences between countries and significant groups of countries, an analysis of variance (one-way ANOVA) was performed and analyzed with Fisher F-test and post-hoc Duncan tests. Findings ‐ Beyond the belief in the existence of two stable groups of developed and developing countries with regard to luxury, this study shows a situation that requires further analysis. The main results show some strong cross-cultural differences in the perception of luxury, which is multi-faceted as demonstrated by previous studies in this field. Research limitations/implications ‐ Results of this exploratory study confirm that the concept of luxury presents multiple facets, and the authors' analysis provides an in-depth survey of the main categories and attributes that can be used to describe this concept. Although this study was only exploratory in nature, a number of comments can be made to highlight the congruence between the concept of luxury for young people and recent academic literature. Practical implications ‐ To maintain their brand equity, companies in the luxury sector seek to improve their image within younger targets. Managerial implications of the authors' research indicate that international luxury companies should take into consideration the multi-faceted concept of luxury in general, but also the main differences between countries in the continuum between the "status" and "emotional" dimensions of luxury. According to the authors' research, luxury companies cannot adopt a global strategy when addressing the six countries analyzed. Some managerial recommendations are developed in this perspective. Originality/value ‐ The additional value of this article stems from its reliance on a cross-cultural in-depth study between six countries (Italy, France, Germany, China, Japan, and USA). The balance between qualitative and quantitative techniques makes this article particularly relevant when drawing both conceptual and managerial conclusions.
  • Article
    Full-text available
    Why are we seduced by luxury brands? What functions do these brands fulfil? What added values do they convey? What brands deserve the appellation ‘luxury’ and which ones do not? Such were the questions posed by an empirical research study seeking to understand luxury from the consumers' standpoint. The results, summarised in the present article, show that there is no single and homogeneous vision of what a luxury brand is. There are four types of luxury brands, each one characterised by a different value or functions profile, and aiming at different consumer segments. Analysing the functions luxury brands fulfil provides new insights into the reasons why a brand is or is not attractive. Focusing on a young sample, this study also provides clues as to sustaining brand equity long term.
  • Article
    Full-text available
    The aim of this article is to study the concept of luxury levels and to assess whether they are significant for consumers. Perceptions of five brands were measured: Chanel and Mont Blanc for accessible luxury level, Rolex for intermediary luxury level and Ferrari and Van Cleef & Arpels for inaccessible luxury level. Also three luxury perception scales were compared: Kapferer (1998), Vigneron and Johnson (1999) and Dubois et al (2001). Various statistical analyses are carried out in order to validate the structure of the scales and to show their discriminant validity with regard to the five luxury brands encompassed in this study. This research shows some convergences between the three scales as well as the utility of these scales for differentiating luxury brands. Finally, the predictive validity of these scales is unlighted, validating the distinction of brands among the three aforementioned luxury levels. Results also show that there is a luxury continuum at a theoretical level, reinforcing the notions of accessible, intermediate and prototypical inaccessible luxury.
  • Article
    Full-text available
    Luxury retail strategy differs from other retail strategies not merely in distinctive formulations of product, price, distribution, and appeals to customer distinction. Instead, it increasingly stands or falls on the legitimacy of a charismatic creative director. The director offers an aesthetic brand ideology. Luxury retail draws on the principles of art and magic to assemble the charismatic persona of the creative director and to diffuse his aesthetic ideology to the brand. Moreover, luxury retail strategy enlists magical and aesthetic principles within and without the store to achieve these ends. Finally, retail luxury is producer rather than consumer oriented and seeks to generate awe rather than community. This strategy appears to be to some extent a response to legitimacy crises provoked by recent strategic extensions of luxury brands into mass marketing. We offer some implications for marketing in which the charisma of a key personage is at stake.
  • Article
    Full-text available
    Purpose – The purpose of this paper is to identify econometrically the determinants of wine consumption of US consumers. Design/methodology/approach – In empirically identifying driving forces of wine consumption, we used 122 survey responses from Northern California consumers. Findings – The study found that even knowledgeable or frequent consumers of wine purchase across all price points. Further, a significant positive correlation exists between knowledge and volume of wine consumed. All three regression techniques applied in this paper indicate that knowledge remains the most important determinant in wine consumption. Practical implications – The results emphasize the need for US wineries to better educate and connect with consumers by developing compatible positioning strategies and marketing programs that are as informative as they are appealing. Originality/value – As one of the few studies of the US wine market employing econometric analysis, this paper offers a fresh perspective on the consumption behavior of wine drinkers in the USA.