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The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands

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The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands

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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'.
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The challenges of
luxury branding
Jean-Noël Kapferer
Keywords
conspicuous consumption, fashion, luxury, premium.
Introduction: The irresistible growth of luxury
Whereas once it was a niche research domain, attracting mainly historians, philosophers,
moralists, sociologists and economists, luxury has become a prolific research theme in equally
as many managerial domains, including marketing, finance, human resources, sustainable devel -
op ment, strategy, supply chains and law. Luxury research even has its own journal (Luxury Research
Journal). What prompted this shift in academics’ attention?
Perhaps the most compelling reason is that luxury is no longer a small sector, aimed only at
the happy few. Luxury offerings and their ubiquitous brands are highly visible facets of
globalization and consumption societies. A simple observation pertaining to retailing reveals just
how pervasive luxury brands have become: There are luxury brand stores in every major capital
city of the world, as well as in China’s second and third tier cities, most airports, and other
hubs. Luxury department stores and commercial centres have opened in emerging countries,
signalling their growth and desire to enter consumption society. As a sector, luxury also is highly
successful, steadily growing since 1990.
According to estimates by Bain & Co. (2014), the luxury consultancy company, in 2013,
the overall luxury market reached 800 billion euros (B), including 319 Bfor cars, 138 B
devoted to hotels, and 218 Bin personal luxury goods (e.g. watches, jewels, leather, clothing,
fragrance). In 1990, personal luxury goods accounted for only 90 B. But in 2013, Ferrari sold
only 6,950 cars, and Rolls-Royce sold 3,500, suggesting that growth in the luxury segment
results from its appeal to a broader swath of society (Nueno and Quelch, 1998).
The Chinese middle class represents 300 million people (Wang and Wei, 2010), so the
prospects for this sector are compelling. They might not buy private islands, yachts, Bentleys
or Lamborghinis, but they can purchase a Hermès bag, a Rolex watch, some Chanel accessories,
a few nights in a five-star hotel or a birthday dinner at a Michelin three-star restaurant, anywhere
in the world. Western countries have exhibited steady growth in their consumption of luxury
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goods over time; emerging countries, such as Brazil, Russia, India and China (the BRICs), have
fallen rapidly and deeply in love with luxury (Chadha and Husband, 2006). What might have
been described as superfluous consumption in the past has become a seeming necessity to upper-
middle-class households throughout these countries.
The rise of the luxury sector also offers a sign of the growth of an economy, moving from
production to consumption. Bernstein Research (2014) has shown that the best predictor of
luxury market growth in any country is gross domestic product growth, and this sort of economic
growth is most remarkable in emerging countries (BRICs, Korea, Nigeria, South Africa). In
20 years, none of the countries that currently constitute the European Economic Community
are likely to remain part of the G8. Emerging countries are the future for the luxury market,
because their middle classes want to take a seat at the world’s consumption banquet and buy
the same symbols of wealth that they see in Hollywood movies or on Western celebrities.
Although the United States remains the world’s top luxury market for now (Bain & Co., 2014),
China has reached fourth place, having just bypassed France. Chinese consumers, both at home
and while travelling abroad, as approximately 22 million do each year, represent 29 per cent
of the global personal luxury goods market (Bain & Co., 2014).
In mature countries, which feature market saturation, luxury growth also has been made
possible by the ‘accessorization of luxury,’ a process by which inaccessible brands become more
accessible. Not everyone can buy a Chanel or Dior dress for 20,000 , but millions can access
Gucci sunglasses, sporting its famous logo, at 350 or buy Chanel N°5 fragrance for 85 .
This growth is why Wall Street loves the luxury sector, noting its substantial margins and high
rate of growth. Virtually every venture capitalist and investment fund seeks to reproduce the
successful fishing expedition of B. Arnault, CEO of LVMH, the world’s top luxury group. He
bought an industrial fabrics company called Bidermann for a small sum, just because it owned
the rights of an old lady named Dior. Then he took full control of Louis Vuitton (LV), itself
once an old lady brand too, turning it into the world’s most valuable luxury brand (Interbrand,
2013), worth $24.90 billion. It is the seventeenth-ranked global brand in terms of financial value,
considering all product categories (Apple is the leader, worth $98 billion).
The challenges of luxury management today
This section introduces the main challenges facing the modern luxury industry. In Western
countries, because of their history, the word ‘luxury’ typically evokes the dreamed of lifestyle of
high net worth individuals (HNWI, with at least $1 million in cash) or even ultra-HNWI (with
at least $30 million). Surveys of Western consumers reveal that the word luxury is associated with
dreams: superb yachts or mansions, private islands, private jets, gorgeous diamond collars, and so
on, all out of reach for everyone except the happy few. But the reality of the luxury industry
consists of brands that make products and services much more accessible to the happy many of
the world. Chinese consumers thus associate the word with items they find in all premium
department stores. In this context, the following challenges face the luxury industry today:
Can the cornerstone luxury value of rarity reconcile with Wall Street demands for
constantly more growth from luxury companies (Kapferer, 2015)? Is rarity still part of the
essence of luxury today or just a communication signal, illustrated by a few exceptional
products, while most profitability comes from mass products? This distinction is becoming
increasingly critical (Silverstein and Fiske, 2003; Thomas, 2008).
Because ‘luxury’ is a word that prompts sales, it is becoming one of the most overused
words in business and marketing. But are all the companies and brands that call themselves
‘luxury,’ or that are perceived as such by the general public, actually implementing a luxury
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strategy? Some of them actually seem to be adopting a masstige approach (mass marketing,
embellished with imitations of luxury codes), a fashion strategy, or even a premium
strategy. Porsche sold 162,000 cars in 2013, Lexus sold 520,000, and BMW, Mercedes and
Audi each moved more than a million cars. Are they still luxury brands, or are they actually
premium brands?
Considering their unique traits, do luxury companies and brands require specific manage -
ment skills? Such specificity naturally is disappearing as companies grow and face the need
to hire managers outside of the founding family. Most of these outside hires come from
fast moving consumer goods (FMCG) companies, where they learned how to master retail
globalization trends, the international management of production, pricing, and commun -
ication tactics.
If luxury becomes, instead of a rarity, a fashionable ‘must have’ for everyone, due to
extensions of logo-typed accessories, how can these brands combat counterfeiting? And
should they? In a sense, counterfeits represent an entry range of luxury brands for consumers
with insufficient resources. They increase the fame and awareness of these brands. People
who buy a counterfeit LV wallet today might want to access the real product when they
gain greater success, to signal that they have ‘made it’, economically speaking.
Can a luxury brand reduce its prices without losing its status, or does the prestige of the
brand depend on the price, such that the industry moves subtly from actual product rarity
to virtual rarity and brand prestige as levers of the luxury dream?
Is the constant growth of luxury beyond the happy few sustainable? The insatiable demand
for natural ivory will lead to the extinction of elephants; the demand for exotic rare woods
for luxury furniture leads to deforestation of parts of Africa and Brazil (Bendell and
Kleanthous, 2007). But sustainability involves more than ecology; it also is concerned with
social harmony and equilibrated economic growth. Xi Jinping, the Chinese prime minister,
launched ‘frugality laws’ in China in 2013 to combat corruption that relies on luxury sectors.
Fine watches and rare spirits serve as gifts to buy specific favours, can be easily transformed
into cash, and are not too visible (compared with a car).
How will the luxury sector evolve if one-third of its clients come from a single country?
China transformed Buddhism and Marxism; will it transform luxury too? And in what ways?
Finally, how will Internet sales affect the concept of luxury? Although it represents less
than 5 per cent of the personal luxury goods market, these sales likely will increase in the
future. Luxury websites are accessible to anyone. Will this shift change the nature of luxury,
whose stores long have been restricted to the happy few (Liu et al., 2013; Okonkwo, 2010)?
To address these questions, we first must define the object of analysis: What is luxury? As we
explain in the following sections, this simple word contains various meanings and disparate realities,
which represents yet another challenge for luxury managers.
The many definitions of luxury
To define luxury, we must establish three key notions:
1 Luxury as a concept is debatable and subjective.
2 Luxury is an economic sector, once populated mainly by family firms but now more and
more concentrated in publicly listed groups.
3 Luxury is a specific strategy, not to be confused with a premium or fashion strategy,
even if consumers sometimes lump the different kinds of companies together (Kapferer
and Bastien, 2012).
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475
The luxury strategy, invented by the brands that constitute the sector, turns classical marketing
rules, as established by FMCG brands to create mass markets, on their head. A luxury strategy
obeys anti-laws of marketing, such as higher prices as a method to increase demand. Only true
luxury brands can benefit from this Veblen (1899) pricing effect (Amaldoss and Jain, 2005).
Sales by luxury brands also have largely recovered from the global economic crisis, such that
today luxury is a micro-economic, small, but very visible and flourishing sector. This sector
also has been affected by globalization trends, shifting focus from production to retail. For example,
luxury brands are compelled to open stores all around the world, to cater to a travelling elite
and local upper-middle classes. This demand for storefronts is very costly, which may be why
so many family companies have sold to groups (Kapferer and Tabatoni, 2012). Despite continued
references to mythical luxury ‘houses,’ as if they were still independent units, most brands are
owned by vast luxury groups such as LVMH, Kering, Richemont, EPI or Prada Group.
On the basis of these various definitions, what companies can be considered part of the
luxury sector then? Many experts argue that firms such as Ralph Lauren and Coach look
like luxury but actually are masstige companies, managed according to classic marketing laws.
In contrast, Wall Street often regards them as part of a broad premium sector, lumping together
all companies and brands that sell premium products in premium stores and deliver premium
margins. Some 50 years ago, the ‘houses’ were known by their speciality: LV was a leather
trunks house, Fendi a fur house, Hermès a former saddler, Berluti a shoe maker. But today, all
these names are referred to as luxury brands, illustrating that luxury has become a transversal
qualification, regardless of former product specialization. Furthermore, the focus has moved to
brands. Thus LVMH is a luxury conglomerate, as are Kering and others, even though LVMH
owns and manages more than 60 brands, reflecting various specializations (e.g. wines and spirits).
This conglomerate has unique know-how related to financing and managing the growth of
luxury brands. Luxury is not business as usual. It requires unlearning classical marketing
principles. But what about the concept of luxury? If we do not define it with precision, how
can brands manage it?
A plethora of definitions is available. Each academic researcher offers his or her own, and
the current language is full of nuance. Luxury thus can be an absolute concept, referring to an
idealized, inaccessible lifestyle, or it can connote some kind of excess for the sake of pleasure,
beyond what reason would anticipate. ‘My luxury’ even might imply an intimate, personal
decision about how a person spends money or time for the sake of pleasure (e.g. an executive
taking the time to go fishing with her or his children).
Similar to art, luxury is part of these concepts and can be approached from different angles,
with highly subjective results: Your luxury is not my luxury. There is also a cultural dimension.
The French for example tend to consider essential luxury as expensive objects bought for
hedonistic and status motives really, for any reason but functionality. In the United States,
nothing can be non-functional, and each dollar spent should have a logical justification. Even
limited editions are not bought solely for the sake of pleasure, because they create an aftermarket
that offers prospects for a good, fast return on investment. In addition, US brands that claim to
be luxury brands often are accessible in price, because their lack of intangibles prevent them
from charging higher prices effectively.
Each academic discipline also offers different interpretations. For example, an economic view
of luxury centres on ‘needlessly expensive products or services, priced above their functional
value’ (Yeoman, 2011: 48). This definition highlights that the price of luxury cannot be justified
by function alone, in line with Adam Smith’s truism that people are never as ready to spend a
lot of money as when they do not need the purchase. However, this economic definition lacks
discriminatory power, in that it might apply equally well to the price of rare stamps or other
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collections that typically would not be classified as luxuries. For sociologists, the economic
dimension lacks consideration of the socially stratifying role of luxury. Pierre Bourdieu (Bourdieu
and Nice, 1984) and Jean Baudrillard (1998) assert that luxury reflects the taste of the elites.
Taste is not a given but must be socially promoted by tastemakers. Fashion has different
tastemakers, whose influence is often a bottom-up process, moving from the street to the runway.
Luxury instead is elitist and aims to provide a symbolic lift to its owners. Its function is to
demonstrate their power and impose their tastes on others. But today there is not one single
elite. Instead, many elites fight over power, which is why there are so many types of luxury
brands. Old money competes with the new rich to serve as the source of taste, and the two
sides do not choose the same brands. Old money despises the choices of a new elite, comprising
sports figures or Hollywood actors. Silicon Valley is giving birth to yet another class of rich,
aspirational elite that seeks to promote more dematerialized or sustainable luxury.
Overall then, wealth is not sufficient to fuel a luxury sector and its imitative drives. Stanley
and Danko (1998) identify the many ‘millionaires next door’ who own a Toyota Celica instead
of a Porsche and have never even considered purchasing a great Chateaux Bordeaux. This
generally outdated vision of wealth entails saving each day for retirement. But the luxury
sector instead has grown so remarkably because of the emergence of the new rich, including
CEOs and top managers of companies created in emerging countries that want recognition for
their hard work. They care less about the future, because their focus is on the now, when they
seek the same symbols of happiness that their Western counterparts enjoy. But in the endless
cycle of emulation by imitation, as soon as a wider public starts purchasing some objects of
taste, elites move to another form of consumption that they regard as more discriminant
(Baudrillard, 1998).
What a definition of luxury should be
The key reason luxury lacks a consensus definition is that most people, even academic
researchers, do not know what makes a good definition. According to meta-theoretical
recommendations (Zaltman et al., 1973), a good definition clearly specifies the properties (defining
characteristics) that an entity must possess to be included in the central concept. Such
belongingness might be discrete (e.g. binary, such as even versus odd numbers) or probabilistic
(varying degrees of belongingness). Most proposed definitions of luxury fail to meet this meta-
theoretical requirement.
For example, lexical definitions just substitute another term for the word luxury, without defining
either, such as when Bain & Co. (2014: 10) claims that luxury is ‘premium goods sold at premium
prices in premium stores’, without defining the meaning of ‘premium’. Similarly Vigneron and
Johnson (1999: 11) define a luxury brand as ‘the highest level of prestigious brands encompassing
several physical and psychological values’. But what is prestige?
Individual definitions instead disregard the classic difference between a ‘concept’ and a
‘conception’. Luxury producers tend to emphasize criteria such as being handmade, crafts manship,
quality excellence, or rarity. Critics define luxury as superfluous objects bought mostly for
conspicuous consumption. The producers’ conception thus omits the ostentation dimension of
luxury, suggesting that it signals refinement and taste, if not wealth and status. As such, this
definition is close to that of a ‘high artisanat’ (arts and crafts), but it ignores the social expression
of the self through luxury. It also prevents leading brands, such as Rolex, from being included
in the luxury set, because they have sought to maximize reliability and reduce costs by moving
away from handmade production. This brand cannot pretend it is produced by craftspeople
anymore, yet it remains an iconic luxury watch worldwide. The critics’ definition finds no
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value in the product itself, which is described only as a symbol. The entire task of the crafts -
person seems devoted to the production of something rare and expensive for the sole purpose
of being exhibited. Thus there are as many conceptions as there are individual stakeholders.
For some luxury managers, luxury goods are those whose consumption or possession prompts
a sense of elevation in terms of social status, cultural superiority, pleasure, or even self-concept.
But it may not be possible to wait to categorize an object until after learning if the consumer
feels elevated. In addition, a teenager might feel elevated by obtaining the latest Nike shoes,
but that does not make Nike a luxury brand. These conceptions of luxury also are ideological
or cultural, such that they aim to promote a viewpoint or sell an idea. Luxury should be a
conception everyone agrees on, grounded by a list of traits, such that each stakeholder has freedom
of judgment when asked to evaluate an object or brand on each trait.
Finally, many definitions combine both problems. For example, luxury products are those
products whose price in excess of what their functional value commands, are held as symbols
of the dreamed life of the riches, thus providing pleasure and distinction to their owners (Vigneron
and Johnson, 1999). There is a lexical issue (who are the rich?) and a personal/individual issue
(a luxury product is luxurious only if its owner perceives it as symbolic of another lifestyle).
To evaluate the quality of any definition, we need to consider its discriminatory power and
ability to categorize without error or doubt. Beverland (2005) identifies six attributes of a luxury
wine: heritage and pedigree, stylistic consistency, quality commitment, relationships to place,
unique method of production, and downplaying commercial motives (close to art). This
definition, which extends to other product categories, specifies attributes that warrant the inclu-
sion of a wine in the luxury category or concept. Unfortunately, this list of attributes cannot
dis criminate between, say, a Mouton Cadet Bordeaux wine sold for 15 and a Mouton-
Rothschild sold for 500 . Both are Moutons, but the former is a sub-brand of the latter, launched
50 years ago to sell wine that was not good enough to be sold under the Mouton Rothschild
name. Since then, Mouton Cadet has become one of France’s best-selling brands of bottled
wine and is surely not a luxury product. Some academics therefore recommend regarding luxury
as a relative concept, such that De Barnier et al. (2012) distinguish accessible luxury, which can
be bought by many people (e.g. Coach bags that cost less than $800 on average), from
intermediate luxury (e.g. Bottega Venetta) and from inaccessible luxury (Hermès Kelly bags at
$20,000 each). This tripartite approach suffers from a major problem though, in that it depends
too much on the individual. In some Middle Eastern settings, a watch that costs less than $5,000
is not even considered accessible luxury; in France, it would be an intermediate luxury. To
exist, the luxury business must be accessible to someone, even if the purchase involves yachts,
private jets or private islands. Access to such luxury is an underlying reason for why the ‘happy
many’ (Dubois and Laurent, 1998) want to emulate the happy few. The fundamental role of
luxury brand management is to define tight boundaries on the clientele on which the brand
will build, even if it later expands more broadly, while still trying to retain the original clients.
To ensure discriminatory power, a definition needs both a list of key attributes and
appropriate levels for each attribute: It is not just quality but the highest quality that matters.
Dubois et al.’s (2001) scale comes close. Using a factor analysis of perceptions of luxury
goods, they define luxury as a combination of six facets: very high price, excellent quality, scarcity
and uniqueness, aesthetics and polysensuality, ancestral heritage and personal history, and
superfluousness. However, we might question the inclusion of ‘superfluousness’, which is a
subjective value judgment. Some luxury buyers might consider their purchases necessary, not
superfluous, but that belief does not necessarily disqualify their purchases as luxury. Dubois
et al. (2001) measure superfluousness with two items (uselessness and non-functional) that tend
to apply more to art than to luxury. Superfluousness would move high-end German cars out
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of the luxury category, because to be worth its high price, a Porsche needs to be a real, functional,
high-tech car, not simply a piece of art.
This definition also raises concerns with regard to the scarcity dimension. Just a few brands
(e.g. Romanée Conti wines, Krug champagne, Ferrari, Rolls-Royce) actually limit their
production capacities. For the most part, luxury has become an important economic sector,
with revenues of 220 Bfor personal products alone (Bain & Co., 2014). Such growth has
been possible only by eliminating scarcity. Thus the luxury industry has moved from scarcity
to rarity, produced by feelings of exclusivity and uniqueness, which also has been called ‘abundant
rarity’ (Kapferer, 2012, 2015). If physical rarity were mandatory for luxury, today’s booming
luxury sector could not be considered luxury anymore.
To conclude, it is not the purpose of this chapter to propose just another luxury definition
but rather to find a workable one. It is important to distinguish between (a) working criteria
needed to determine if a good is or is not a luxury good and (b) individual judgments about
the position of a specific product or brand on these criteria. We need consensus about the criteria
but high variation in the perceived level.
To identify structural criteria, we consider two main sources: semantic analyses of qualitative
speech (Godey, 2013) and quantitative research. Many scales analyse the structure of public
perceptions of luxury (Kapferer, 1998; Vigneron and Johnson, 1999; Dubois et al., 2001). De
Barnier et al. (2012) combine three existing scales and show that, despite some idiosyncratic
differences, they converge on the following seven factors, ranked in order of decreasing
discriminatory power:
1 Elitism (very few people can buy it; it is very expensive);
2 Creativity (it is magical, very creative; high craftsmanship);
3 Uniqueness (rare; unique);
4 Distinction (for refined people; it shows who one is);
5 Refinement (attractive, dazzling);
6 Quality (superior; top quality);
7 Power (known, leading brand).
Their research offers a reminder that elitism is the kernel of the luxury concept and the
source of the sector’s growth, because this notion attracts the happy few on a regular basis but
also appeals to the happy many on a more exceptional basis – what Dubois and Laurent (1998)
call ‘excursionists’. These consumers are willing to imitate the wealthy by enjoying, if not their
aspirational lifestyle, at least the same brands. A significant part of Ferrari’s revenues come from
licensed, accessible products (e.g. clothing, accessories, toys) sold in Ferrari stores.
How global is the concept of luxury?
As the globalization of business continues to increase, an insightful approach might be to ask
global clients what they consider the key attributes of luxury. Affluent clients were recruited,
according to their self-declared purchases of items beyond a specific, high price. The 500
respondents from each of six countries (USA, China, Brazil, Japan, Germany and France) represent
both mature and emerging markets and selected, out of a list of ten traits, the four that were
most important for defining luxury (Kapferer, 2015: 11). The results are in Table 32.1.
Although there are some local idiosyncrasies (e.g. the importance of looking fashionable in
China, product intemporality in Japan), the homogeneity of the answers is notable, though perhaps
not surprising. People learn about what constitutes luxury not from their parents or families
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479
but from the brands themselves, which are pervasive, with highly visible stores and commun -
ications. The international research company IPSOS (2013) regularly conducts a World Luxury
Tracking Survey, in which it asks respondents, ‘What brands come to your mind when you
hear the word luxury?’. In these results, high homogeneity again tends to arise, with the same
star brands being identified (LV, Chanel, Gucci, Ferrari, Rolex, Hermès, Prada, Rolls-Royce).
Do these brands come to the respondents’ minds because they match the criteria in Table 32.1,
or is the process reversed, such that experience comes before the essence? For new generations
and in emerging countries, luxury is what the brands that are found on the luxury floors of
department stores or luxury commercial centres are doing. The homogeneity of traits that define
luxury for affluent consumers thus might be the result of globalization by the brands themselves.
The luxury sector is the one of the most global, in terms of its branding and marketing, such
that it allows virtually no local adaptations.
From a meta-theoretical standpoint, luxury definitions thus must go further to specify whether
all the defining characteristics need to be present or if it is possible to exclude one or two and
still constitute luxury. At what point does something cease to be a luxury product? This question
is critical for downward extension management (DelVecchio and Puligadda, 2012; Dall’Olmo
et al., 2013; Kapferer and Laurent, 2015). Is a pair of Chanel sunglasses, priced at 300 , still a
luxury product? The price is relatively accessible, but the Chanel logo might extend its halo of
elegance and a privileged lifestyle to any object that features it. Most definitions focus too much
on the luxury product, disregarding the fundamental role of the brand itself in dubbing the
object ‘luxury’ and endowing it with nearly magical powers. Exploratory research indicates that
the more powerful the brand, the more it can spread its magic aura to even quite mundane
products (Kapferer et al., 2014). Accessories blessed by the brand name thus can earn very high
margins.
How luxury creates value
Looking at the growth of the luxury sector worldwide, the question becomes, ‘what creates
such demand?’ How many billionaires or millionaires are there in the world? It depends who
is counting: Forbes? Credit Suisse? Cap Gemini, BCG? An average estimate would be 1,800
billionnaires and 17 million millionaires in 2015. (i.e. at least $1 million in cash). The former
are the targets of Rolls-Royce, Bentley and Ferrari. But these groups alone cannot explain the
increase in the personal luxury goods market from 90 Bto 217 Bin just 24 years. Luxury
has grown so much because this sector aims at everyone, without seeming to aim at everyone.
Recent research in marketing also moves away from identifying traits that structure
consumers’ perceptions of luxury and explores instead the nature of the value created by luxury.
Hagtvedt and Patrick (2009: 610) define a luxury brand as one that ‘has premium products,
provides pleasure as central benefit and connects with consumers at an emotional level’. This
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Table 32.1 What luxury means for affluent clients in six major luxury markets
France USA China Brazil Germany Japan
1High qualityHigh qualityExpensiveHigh qualityHigh qualityHigh quality
2PrestigeExpensiveHigh qualityPleasureExpensivePrestige
3ExpensivePrestigeFashion Dream Fashion Expensive
4PleasurePleasureMinorityExpensiveDream Intemporal
Source: Adapted from Kapferer (2015: 11), with permission
definition suggests that hedonism is the main value created by luxury. Unfortunately, it also
could apply to Apple products or Illy coffee. Veblen’s (1899) masterpiece reminds us of the
importance of social value too: Luxury goods show who we are to others. Its value is in social
recognition. Wiedmann et al. (2007) propose an integrated, tripartite model that distinguishes
functional, individual and social value creation. Functional value implies that, unlike art, luxury
products must perform extremely well (a luxury car remains a car). Individual value refers to
self-identity values, hedonic benefits and liking of materialism. Social value is fulfilled by luxury
conspicuousness. Wiedmann et al. (2007) add financial value to their model too, which is
awkward. When measured by an item such as ‘Luxury is inevitably very expensive’, it constitutes
a defining characteristic rather than a value stricto sensu. In addition, luxury follows anti-law of
marketing, so ‘it is not the price that makes luxury, but luxury that makes the price’ (Kapferer
and Bastien, 2012: 74). Wiedmann et al. (2012) also extend their multidimensional model to
multiple countries.
Cultural perspectives on value creation
Historians (e.g. Castarède, 2009) remind us that luxury is as old as humanity. It started as a
tribute to the gods: jewels buried in graves, golden temples, and rich cathedrals. Luxury was a
hymn to the magnificence of God and a way to buy favour or express appreciation for a miracle.
The price thus offers a measure of the sacrifice. These ancient dimensions have not disappeared
but instead underlie present consumption norms. Luxury always involves buying something
other than the product itself, whether admiration, respect, refinement, status, self-care, self-
reward or pleasure. Luxury is like Janus, the double-faced god: There is a luxury for oneself
and luxury for others. Veblen insisted on the latter. Modern ideology insists on the former (self-
pampering role). But both roles are necessary to justify higher prices.
Luxury is also intimately tied to the vertical organization of society and produced by this
organization. In the eighteenth century, luxury was the exclusive prerogative of aristocrats.
‘Etiquette laws’ forbade non-aristocrats from dressing or behaving like aristocrats. With the end
of the aristocracy, the role of luxury has changed, such that whereas once it signalled the social
hierarchy, it now creates the hierarchy (Kapferer and Bastien, 2012). We have a meritocracy era,
when everyone can be rich (in theory) or behave as if they were rich (buying an occasional
bottle of Dom Perignon champagne). Luxury brands compete not on ‘quality’ – an objective
reduction of the product, used as an alibi – but on a latent social hierarchy of good taste and
symbolic capital. Therefore, luxury needs brands. The difference is not in the product any-
more but in the ability of luxury brands to trigger appropriate certifications of good taste
that serve as gatekeepers in postmodern societies. The high price is not enough to make a pro-
duct into a luxury, especially if it is not endowed with the blessing of tastemakers and the right
brand.
Marketers keep asking questions of consumers to understand the levers of their purchases.
This approach implies a dominant psychological perspective, according to which individuals
make decisions alone. But sociology indicates that such individual preferences are illusions; luxury
is not outside, waiting to be identified, but rather is an output of the social organization of
society and the competition of elites to impose their taste, in what has become the creative
society. Creativity cannot be compared, as objective quality can be, but it must be ranked and
put into a hierarchy (Bourdieu and Nice, 1984; Baudrillard, 1998). For modern sociologists,
luxury is a social preference, constructed in the service of the industry’s main problem: how to
grow in a saturated market. It does so by capitalizing on the needs for status, triggered by modern
societies.
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Why urban economies trigger luxury consumption
What can explain the remarkable growth of the luxury business? For example, what benefits
does luxury deliver to increasing numbers of people, and why has this sector, traditionally aimed
at the happy few, undergone such expansion? Part of the reason might be that when luxury
groups went public, they faced new demands to produce double-digit growth and profits
(Kapferer and Tabatoni, 2011).
But in addition, the luxury industry pivots on appearances and semblances, which partially
explains its remarkable success in Asia, where ‘saving face’ is a central cultural concern. No
acquaintances will visit a person’s flat in Seoul or Cheng Du, but everyone can see their face,
clothing, handbag, car, and wines served at their table at a restaurant or karaoke bar. In the
West, self-differentiation is essential (two women would hate to be wearing the same dress to
a party), but Asian cultures tend to accept conformism: They want to be unique, just like everyone
else (Chevalier et al., 2009). Queues at the same luxury shops are filled with people wanting
to buy the very same expensive handbag. The price paid is a measure of the consumer’s own
value; buying a counterfeit product would mean the consumer is a fake. The new rich in emerging
countries appreciate luxury largely because of its high price (see Table 32.1), which signals a
measure of their own worth and commands respect. They are self-made people, and now they
need to build their social identity, or what Belk (1988) calls their extended self, using qualifying
products and, most particularly, brands.
Modern urban societies also exacerbate competition among residents, creating intensified
needs for self-branding, as exemplified by the popularity of Facebook. This competition
involves getting the best jobs and positions within a company, as well as the nicest mates. Big
towns are mating places, and across the world, the median age at which people get married has
increased. Working people have more money and independence, and they invest their time in
seeking a perfect mate. Janssens et al. (2011) and Griskevicius et al. (2010) indicate that men’s
interest in status goods increases in an environment in which mating is a central preoccupation.
According to this sexual perspective, men engage more in displaying their success through
conspicuous objects and brands. Drawing from evolutionary psychology, luxury possessions act
as costly signalling of good genes for reproduction. Today’s Chinese luxury market is pre dominantly
a male luxury. They are highly concerned by success and sexual mating. A recent study (Hudders,
2014) shows that women exhibit expensive leather bags in front of their female friends to safeguard
their romantic relationships (i.e. ‘keep away from him; he loves me to the point of buying all
these luxury goods for me’).
In a creative society though, consumers might be challenged by questions about the most
appropriate choices. How do they know what to buy? What is good taste and what is not?
What is cool? What is hot? The importance of social networks in diffusing answers to ‘What
kind of people buy this brand?’ is paramount. Consumers make decisions on the basis of their
knowledge about who buys what and how many. Luxury brands thus are made by their clients.
As Mandel et al. (2006) show, reading about a successful person who seems similar to the self
(e.g. from the same school) increases consumers’ expectations about their own future wealth,
which enhances their desire for luxury brands. In addition, such information increases people’s
materialistic values.
Finally, in this race for success, there are losers and winners. The many losers feel powerless,
or without control over others. Rucker and Galinsky (2008) reveal that less successful people
then might try to compensate, by acquiring high status objects, especially if those products are
visibly conspicuous. Overspending in this context represents a placebo that helps restore their
sense of power and dignity. Han et al. (2010) agree that rich people demand fewer status signs,
Kapferer
482
especially the old rich. New rich have money but lack status, so they blatantly exhibit such
symbols. After years of deprivation, today’s Russian oligarchs show exuberance and generosity,
buying hundreds of bottles of Cristal Roederer Champagne at a party for their friends. Luxury
brands adapt to these demands by resizing their logos: The smaller the Mercedes model, the
bigger the logo, and vice versa. The same holds true for LV bags, whose logo size is inversely
proportional to its price.
What is the essential role of brands in luxury today?
Originally luxury did not require brands. Even as late as the turn of the twentieth century, only
a handful of wealthy people owned a car; today, very few have private jets. Such simple possession
was enough to qualify their lives as luxurious. But modern luxury also can be signified by brands.
Because most people have a car, to achieve differentiation, they rely on the names of these cars
(Mercedes, Cadillac, Bentley) and the discriminatory prices they evoke. In emerging coun-
tries, luxury is manifested through the brands’ dazzling stores. In local households, the concept
of luxury seemed unknown, but brands taught them its reality, which explains why developing
countries demonstrate such strong logo consciousness. They might not know the essence or
concept of luxury, but they can recognize luxury brands.
The seemingly endless growth in the luxury sector means the abandonment of the artisan
as a source of production, except for made-to-measure models and small batches. Paradoxically,
the more the luxury industry grows, the more it needs to communicate about a mythical reverence
for craftsmanship, to combat negative images that might arise, tied to the irresistible growth of
production. Some consumer groups have even criticized luxury companies for creating
misleading advertising that tries to make people believe their products continue to be made by
hand.
The artisan used to talk about the product as a paragon of art. Time and labour were the
essence of the story. Today, it is the brand that confers meaning and tells its own story about
the products. Brands are infinite sources of intangible value and thus levers of higher pricing.
This upward pricing trend is mandatory for an industry that cannot effectively pursue volume
but must always sell less than is demanded and somehow select its clients. Increasing prices is
a tactic to cause the segment of ‘mere conformists’ to stop buying. Conformists seek recognition
among their peers; they are not connoisseurs (Corneo and Jeanne, 1997). Thus the brand pleases
the ‘snobs’ (Amaldoss and Jain, 2005), whose preferences for it grow as the number of buyers
decreases. They accept paying more for that very purpose. Moreover, the brand can rely on its
history, whether true or not, to create more non-comparable elements associated with it. Products
are always somehow comparable, but luxury brands aim to be ‘absolute brands’ – incomparable
and increasingly related to art. Is it possible to compare Matisse and Manet? Patek Philippe and
Rolex? The more the luxury sector grows in size, the more luxury tends to call itself art, implying
activity that is guided by aesthetic purposes and maintained as central to culture. This ‘artification
of luxury’ (Kapferer, 2014, 2015) is ideological and purposeful. In reality though, art produces
single pieces, and money is not the issue, whereas luxury produces handbags, cars and watches
whose sole objective is to be sold; otherwise the artist, or designer, will be fired.
The locus of power of the brand also has moved, from atelier to store. People enter a Prada
or a Dior shop; their initial choice is of the brand. These stores are places for nearly holy,
multisensory experiences, which cannot yet be recreated by any online experience (Okonkwo,
2010). Comparisons also can identify the brand as a sort of religion: Luxury features icons
(etymologically, the figure of a saint) and flagship stores built as cathedrals, to impress the members
of the parish or market. Dion and Arnould (2011) push this analogy further, analysing how
The challenges of luxury branding
483
Kapferer
484
magic transfers to the product and consumers during sales rituals that take place in the flagship
stores (Perey and Meyer, 2011). Despite the undeniable progress made by digital technologies,
building a luxury brand and commanding real pricing power still requires symbolic investments
in highly expressive brick-and-mortar stores. Consumers’ online purchases, according to recent
surveys, largely are driven by their search for a good price or a good deal. Reducing luxury to
a price and then ‘going to the cart’ is a source of banalization and thus a long-term risk (Truong
et al., 2009).
Luxury segmentation
Sociology research acknowledges that it is impossible to understand luxury simply as something
that is, or an object waiting to be analysed. Luxury is the output of the social dynamics of a
society, whereby some groups seek to signal their symbolic superiority in taste, if not wealth
and power. All members of society use brands to position themselves, but luxury brands are
those used in the higher-end game, involving the elites – whether old or recent – and a new
upper-middle class searching for recognition. Endless classifications of brands have been
proposed, which multiply the nuances of luxury and threaten to make the concept itself empty
(e.g. casual luxury, accessible luxury, mass-luxury, über luxury). In most cases, these terms refer
simply to the price level, lumping together brands of very different natures, such as fashion
brands and premium offerings with a touch of style. The ease of use of clustering algorithms
has allowed academic research to propose various typologies of luxury brands, but unfortunately,
they are mainly descriptive and lack theoretical foundations. We suggest instead a classification
based on the core social functions fulfilled by luxury brands in a given society, as we have discussed
in this chapter. We present it in Figure 32.1.
Luxury segmentationLuxury segmentation
Perso nal experience
(for the self)
Integratio n
above
Dissociating from below
Search for respect
Reassurance of class
Institutional visas of taste
Inherited product culture
Connoisseur
Exclusive bespoke brands
Uniqueness, creativity
Avant-garde brands
Standing out, trendiness
Flashy, show off brands
Displ ay of log o
(for others)
Luxury as personal
expression
Luxury as affirmation of
power
Luxury as art of living Luxury as membership
Figure 32.1 A functional perspective on luxury segmentation
Source: Adapted from Kapferer and Bastien, The luxury strategy (2012: 122), with permission.
The bottom of the vertical axis symbolizes the need to be integrated into an aspirational
class, even symbolically (as is the case for Chinese consumers). The top of this axis symbolizes
a contrary movement, by which consumers seek to stand out from the crowd. Then the horizontal
axis refers to the need to signal superiority, either through a product culture or by the exhibition
of holy logos. In turn, we propose four types of luxury segments and brands to appeal to them:
The lower right quadrant is the bulk of the luxury business: Queues of tourists passively
wait in front of luxury brands’ flagship stores in the capital cities of the world. These brands
are worldwide visas of distinction. Because they are so well known, they confer respect
onto their owners. They induce no risk, so the size of the brand and its growing volume
of sales is not a problem, as long as prices keep rising. The power of the well-known luxury
brands is a guarantee of taste. The logo must be visible, as a holy sign, and they often can
be found in airport tax-free zones.
The upper right quadrant is a consequence of the growth of the former category. If some
brands become adored by the happy many, the happy few must differentiate themselves
another way. They choose more expensive, very visible and flashy brands: Lamborghinis
instead of Ferraris, Dolce & Gabbana instead of Chanel. These brands attract people with
high needs for recognition and power.
The upper left quadrant also provides differentiation, but through edgy brands or even
start-ups – typically, the brands we might find in selective, multi-brand shops, such as Colette,
which thrive by discovering new talent.
•The lower left quadrant is the connoisseur corner. These brands promote a product culture,
selling excellence in life. For them, there are no luxury brands, only luxury products. This
stance represents their ideological, self-serving storytelling.
Differentiating luxury, fashion and premium
Although the general public might call them all ‘luxuries’ (due to their excess price relative to
function, for the sake of pleasure and status), there are three main modes for managing high-
end brands and companies, as detailed in Figure 32.2: the luxury business model (or luxury
strategy), the fashion business model, and the premium business model. The term masstige refers
to mass-marketed products that evoke an image of class (e.g. Polo Ralph Lauren; Silverstein
and Fiske, 2003; Truong et al., 2009).
Substantial confusion exists regarding the identification of business models, because research
needs to go beyond their obvious actions, not rely only on what they say or what their clients
think. Even if all these brands might be called luxury by their clients, an in-depth analysis of
their sources of profitability, economic engines and value equations reveals three different patterns.
Only one of them deserves to be called a luxury strategy (Kapferer and Bastien, 2012).
The triangle in Figure 32.2 can help mitigate this confusion. Contrary to the claims in many
marketing textbooks, luxury is not ‘more premium’ – that is, premium products traded up or
with a higher price. There is a limit on the price of premium brands, because they are comparative
in essence. Any increase in price must be justified. With a luxury strategy, no one ever talks
about price or justifies it, because it is art. Did Picasso or Warhol ever justify the prices they
asked? We use these two artists as examples, because they made their wealth by abandoning
scarcity as an economic principle. Warhol industrialized his art, multiplying the originals ad
infinitum, and there are thousands of Picassos.
To become luxury, it thus is not enough to increase the price of a premium product. Any
excellent wine cannot pretend to be a luxury wine (Beverland, 2005). Elitism underlies luxury,
The challenges of luxury branding
485
Kapferer
486
which is why luxury evokes high prices in most countries (Godey, 2013). But the high price
of luxury is special; it cannot be justified by function or performance alone. It is the price of
singularity (Karpik and Scott, 2010), built by intangibles (e.g. heritage, history, country of origin,
place). If it were based solely on tangible differences, such that every gap in price were justified
by superior performance, it would be a premium or super-premium product (Kapferer and
Bastien, 2012), not a luxury. The prices would be capped, because premium brands cannot
access very high prices, due to their lack of intangibles or incomparability. Even very good
wines cannot demand the high prices applied to Petrus or Chateau Pape-Clement, because they
lack any sacred dimension. The same holds true for an Audi or a BMW.
Fashion brands are plagued by the threat of not being fashionable anymore. Their time
perspective is necessarily short term, unlike luxury, which always thinks long term. Each season,
fashion brands must make their profits quickly, often by leveraging artificial rarity (i.e. limited
series, time limits) and the contagion of desire (Girard and Gregory, 1979). The margins must
be huge in the early days, because after a few months, any unsold products (which are no longer
fashionable) need to be sold at deep discounts or sent to factory outlets. The primary obsession
of fashion thus is not quality; why invest in quality, if fashion is ephemeral? Although many
clients call their preferred brand a fashion luxury brand, the business model is a fashion one,
not a luxury one. Each of these business models also seems to attract different countries, as we
reveal in Table 32.2. Most Italian luxury brands behave, quite successfully, as fashion brands,
whereas US brands act as premium brands with a good image. French luxury brands carved the
principles of a luxury strategy, which since then has been adopted by brands from across the
world, such as Rolex, Ferrari, Patek Philippe and Tiffany’s. They abandon traditional marketing
rules to build their luxury brands, such that they follow the anti-laws of marketing.
THE POSITIONING TRIANGLETHE POSITIONING TRIANGLE
LuxuryLuxury
Fashion Premium
Social elevation
Timeless
Self-distinction
Hedonism
Social tribal
Imitation
Instants
Frivolous Seriousness
Non-comparable
Priceless
Rare quality
Superlative
Performance/ Price
Investment
Comparability
Realism
Figure 32.2 Positioning of three business models
Source: Adapted from Kapferer and Bastien, The luxury strategy (2012: 32), with permission.
Is counterfeiting really harmful?
A side effect of the widespread appeal of luxury is the growth of the market of counterfeits,
both deceptive (buyer is not aware) and non-deceptive (sold at a low price, the buyer knows
it is not the original but a nice looking copy). The former cheat the buyer; the latter do not.
With regard to the latter, counterfeits make the luxury dream and logos accessible to those who
cannot afford them but want to be integrated. Objectively, they are the ultimate step to
democratizing luxury (the preceding step being trading down through accessories; Kapferer and
Michaut, 2014). In addition to being unlawful by principle, counterfeiting has another drawback,
in that the value of luxury brands rests on their ability to select the right clients. When a brand
evokes non-aspirational clients, it dilutes its social appeal. Objectively, the multiplication of
counterfeits creates a risk of prejudice, because they diminish the all-important exclusivity factor
that is required to sustain the value of luxury (Groth and McDaniel, 1993; Wilke and
Zaichkowsky, 1999). Commuri (2009) demonstrates that luxury buyers in Thailand and India
were affected by the multiplication of fake products on the streets. In this case, we recall that
luxury is Janus-faced: for oneself and for others. The new rich from developing countries buy
well-known luxury brands to differentiate themselves, but the prevalence of fakes threaten their
source of pride.
But are counterfeits always bad? In some cases, they provide benefits to the luxury company
(Ritson, 2007; Frank, 2011). Nia and Zaichkowsky (2000) demonstrate that non-deceptive
counterfeits, whose price clearly signals that they are fakes, do not influence genuine brands’
consumer-based equity. Many analysts also suggest that counterfeits contribute to build brand
awareness, and Barnett (2005) argues that they increase the snobbery value of originals. In
developing countries, counterfeits help educate the masses, by revealing who the prestige brands
are and encouraging appetites for the genuine product (Bekir et al., 2011). In developed markets,
the presence of low quality luxury counterfeits increases consumers’ willingness to pay for the
originals (Romani et al., 2012), but only for well-known, highly popular brands.
The challenges of luxury branding
487
Table 32.2 Cultural differences in business models
French model Italian model American model
Typical brand L.Vuitton, Chanel Prada, Armani R.Lauren, Coach, . . .
Value proposition THE DREAM THE TREND THE LIFESTYLE
Communication Heritage, creativity Fashion, Live Italian Stores as storytellers
Distribution Exclusive Selective Mass Prestige, Factory
outlets and Web
Excellence in . . . Creativity Fashion Marketing
Production Workmanship Materials and craft Mass produced,
emphasis on design
Place Made in France Made in Italy, Brand USA, made in
some made in China China
Price level Expensive Segmented with sub- From accessible to
No sub-brands brands expensive trading-up
Level of control No licenses OK for licenses OK for licenses
Source: The author
The future of luxury: is it sustainable?
Marketing research on consumers’ sustainability attitudes and behaviours mostly focuses on FMCG
products (Boulstridge and Carrigan, 2000; Carrigan and Attalla, 2001; Newholm and Shaw, 2007;
Gupta and Ogden, 2009). This is reasonable; the volume of destruction is greatest in this market,
with the most impact on planetary resources and climate. Some notable results emerging from
this research include the attitude–behaviour gap, such that people express positive attitudes toward
and desires for sustainable products but do not purchase them (Chung and Monroe, 2003).
Academic researchers also analyse fashion brands (Shaw et al., 2006; Morgan and Birtwistle,
2009) and the extent to which environmental or ethical parameters affect the choices of consumers
and producers. In the fashion sector, anything that is no longer fashionable gets wasted, which
prompts strong criticisms. The growth of the fast fashion industry, as embodied by brands such
as C&A, H&M, Target, Mango and Zara, is accompanied by devastating stories of work
conditions in low wage countries, to which production is subcontracted (Black, 2011; Siegle,
2011; Cline, 2012).
Until recently (Bendell and Kleanthous, 2007), luxury had not come under the radar of
sustainability advocates, nor did academics pay much attention, largely because the small size
of the sector meant that it had a relatively small impact. Compared with the fashion industry,
which purposefully plans for the obsolescence of its products, luxury promotes high quality,
intemporal, lasting products and is willing to preserve the rare resources that create its uniqueness
and value. Advertising for Patek Philippe explicitly highlights that the watches should be bought
to be transferred to the next generation.
Research on luxury consumers’ attitudes and behaviours relative to sustainability thus is just
beginning (Gardetti and Torres, 2014). Are luxury consumers ready to integrate sustainable
development as a purchase criterion? Empirical research suggests they are not (Kapferer and
Michaut, 2013, 2014). Davies et al. (2012) also indicate that British consumers’ propensity to
consider ethics is significantly lower for luxury, compared with commoditized, purchases, though
these authors use the phrase ‘ethical production’ instead of sustainable development. What factors
might explain this low sensitivity of luxury buyers to sustainability questions?
First, these purchases are rare. Purchasing luxury is an exceptional act for most consumers.
Thus, their perception of any impact their purchase might have is diminished. Second, luxury
purchases offer rare moments of happiness. Consumers may wish to protect these moments,
without ruining them with thoughts of dead animals or poor working conditions of the labourers
who made the items.
Third, consumers might not know that there are sustainable luxury brands (for example
Stella McCartney, who refuses to sell leather; Edun, which is managed by Bono). There is no
familiar segment of brands called ‘sustainable luxury’. We also add another reason, based on the
preceding analyses: their high prices might signal that luxury brands must already take sustainable
development into account, because they have to comply with stringent national laws. Although
they call themselves luxury brands, some sustainable brands might be acting more like premium
brands, in constantly seeking to prove and demonstrate their worth. Luxury and premium busi-
ness models differ. Luxury brands cannot be compared, and they sell dreams. Premium brands
are the ‘best in class’ on some criteria that need to be measured and compared. This distinction
suggests a central question then: Do sustainable luxury brands offer sufficiently exceptional
creativity to ensure their status as luxury brands?
Although we find no explicit demand for sustainable development in luxury sectors, it could
offer a reason that people boycott brands that fail to ensure sustainable development. This promise
represents a latent expectation, due to the high price of luxury items.
Kapferer
488
Furthermore, there is more to sustainable development than ecological issues. Slow growth
and social harmony are two other pillars. The luxury sector reveals growing inequality in revenues
and patrimony in emerging countries. Even in China, a socialist nation, 1 per cent of the
population accounts for 30 per cent of its wealth (BloombergBusiness, 28 July 2014). Critics thus
are addressing conspicuous consumption more closely, with less tolerance. The visibility of luxury
stores stimulates these criticisms. Moreover, part of the remarkable growth of luxury in emerging
countries is due to their high levels of corruption. To avoid being easy targets and scapegoats
for growing social inequality, luxury brands need to better establish a gradient, from very accessible
to inaccessible. But such a shift would largely blur the frontiers and make high luxury far less
distinct. This is the main dilemma of the industry for its future.
Managerial implications
Luxury is a sector like no other. It is an expression of the dynamics of open societies, in which
people seek to climb the social ladder and let it be known. But to build brands and sustain
their luxury status, price is not enough. They must be purchased by the right persons, those
who create a taste hierarchy. Classical marketing paradigms cannot apply. In an extensive
benchmarking study of the most profitable luxury brands, Kapferer and Bastien (2012) identify
some key features of luxury brands, such that they build their success slowly, by trial and error,
and have invented alternative marketing approaches, radically different from the FMCG rules.
Of the twenty-four anti-laws of marketing adopted by luxury brands, we excerpt some of them
here for managers to consider:
•Forget positioning; think brand identity only (due to the intrinsic incomparability of luxury
brands).
Increase average prices to grow demand (due to the steadily increasing purchasing power
of the middle class).
If a product sells too much or too fast, discontinue it (otherwise the brand might become
a fashion brand).
The role of communication is not to sell but to refuel the dream. Unlike FMCG brands,
for which purchases boost loyalty, purchase dilutes the luxury dream (Dubois and Paternault,
1995), and this dream must constantly be recreated.
Communicate to non-buyers, a consequence of ‘luxury for others’. If the luxury brand is
not known beyond the core target market, it cannot create status value.
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The challenges of luxury branding
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... Past studies show that luxury is more about what a brand represents than what the product really is (Han et al., 2010). These unique characteristics make luxury brands different from mainstream brands on many ways (Kapferer & Bastien, 2009). For instance, while consumers' general preference for customized products has been widely documented, customization diminishes purchase intention for luxury brands since the designer's expertise and judgment are replaced by those of the consumer (Moreau et al., 2020;Norton et al., 2012). ...
... While traditional luxury brand communication has focused on catering to privileged customers by highlighting the high status of the luxury brand (Kapferer & Bastien, 2009), the global marketplace has experienced the democratization of luxury in recent years (Brun & Castelli, 2013;Truong et al., 2009) such that "luxury, once the ordinary of extraordinary people, has become the extraordinary of ordinary people too" (Kapferer & Valette-Florence, 2018, p. 38). Masstige describes a phenomenon that less affluent consumers can afford luxury products due to market expansion (Kapferer & Bastien, 2009), challenging conventional views of marketing and branding of luxury goods and services (Kumar et al., 2020). ...
... While traditional luxury brand communication has focused on catering to privileged customers by highlighting the high status of the luxury brand (Kapferer & Bastien, 2009), the global marketplace has experienced the democratization of luxury in recent years (Brun & Castelli, 2013;Truong et al., 2009) such that "luxury, once the ordinary of extraordinary people, has become the extraordinary of ordinary people too" (Kapferer & Valette-Florence, 2018, p. 38). Masstige describes a phenomenon that less affluent consumers can afford luxury products due to market expansion (Kapferer & Bastien, 2009), challenging conventional views of marketing and branding of luxury goods and services (Kumar et al., 2020). ...
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Luxury brands are increasingly adopting chatbots for online customer service. But, little is known about the role of adding design features such as emoticons on customers' luxury experience. This study fills this research gap by exploring the influence of a luxury brand chatbot's adoption of emoticons on status perception and its underlying mechanisms. Results from two experiments suggest that luxury brands might be better off not using emoticons in chatbot communications because it dampens the brand status perception due to perceived unexpectedness, which in turn decreases the perception of the appropriateness of the interaction with chatbots. However, this negative effect of luxury brand's use of emoticons in chatbot communication only exists for traditional luxury brands, not for masstige brands. This study advances the literature on AI, particularly regarding luxury brand‐specific chatbot applications. It also offers insights for luxury brand managers that they should be cautious in adopting emoticons in chatbot communication given the risk of ruining the brand status, especially when the brand is a traditional luxury brand as opposed to a masstige brand.
... Social, economic, and cultural differences affect the perception of luxury (Vickers & Renand, 2003). Brands such as Apple, Starbucks, and Dior fragrances capitalize on such perceptual cultural, social, and economic differences to induce an image of luxury (Kapferer & Bastien, 2009). Evidence indicates that the image of luxury and prestige can also be associated with non-luxury brands through a masstige strategy. ...
... Research often defines conspicuous consumption as aggressive and selfish (Belk, 1999;Heine, 2012;Kapferer & Bastien, 2009;Wang, John, & Griskevicious, 2021). Mass marketing, in turn, is associated with waste and unsustainable behaviors, due to environmental consciousness (e.g., waste of water and pollution) or social concerns (e.g., working conditions and low salaries) (Amatulli et al., 2020). ...
... The bandwagon effect occurs when the masses follow peers, celebrities, or social groups they aspire to, belong to, or admire (Kastanakis & Balabanis, 2012. While these empowered new consumers are eager to improve their self-status and move closer to the upper social classes (Belk, 1999), for F I G U R E 1 Conceptual model: consumers' relationship with masstige brands and happiness people with a higher-than-average "need for uniqueness" (Kastanakis & Balabanis, 2012, p. 1403, the perceived value of these expensive items, services, and brands is at risk (Heine, 2012;Kapferer & Bastien, 2009;Vigneron & Johnson, 2004). The bandwagon effect is more visible in people with low need for uniqueness and, thus, with high levels of social conformity. ...
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This study investigates how the relationships consumers establish with prestigious brands can lead to brand happiness. A study of 545 responses covering 19 global brands assessed consumers' perceptions of their relationship with prestigious brands—in both functional and symbolic categories—and brand happiness. Using structural equation modeling and moderation analysis, we show that (1) the prestige associated with brands induces consumers to formulate relationships with those brands and (2) brands' mass prestige (masstige) helps them achieve brand happiness. We show that consumers' attitudes toward luxury brands moderate the masstige–brand happiness relationship. In addition, brand classification (functional vs. symbolic) is an important moderator, with consumers perceiving symbolic brands as more intimate and, thus, as exhibiting more prestige and contributing more to brand happiness than functional brands. The more passionate consumers' relationship with a masstige brand, the happier they are with the brand.
... Thanks to these characteristics, luxury goods command a deep product attachment from buyers (Kapferer 2012;Whan Park et al. 2010) which may result in increased brand loyalty, a propensity to pay price premiums, and a strong commitment to engaging into a long-term relationship with the object (Thomson et al. 2005). For instance, a suit tailor-made to the user's preferences, needs, and measurements offers a perfect fit not only physically but also emotionally. ...
... Localization is part of their value, as is the culture or historical reference that is typically embedded in their products. This is one of the reasons why luxury companies do not delocalize as intensively as mainstream brands do (Kapferer 2012). Many are completely vertically integrated or exert tight control over their suppliers. ...
... Exclusivity and rarity have always been the most critical traits for premium and luxury brands (Zhan & He, 2012). Despite their rarity, brands have realized that they need to proliferate to remain competitive and go where the customers and markets are (Kapferer & Bastien, 2013). Recent studies questioned the rarity principle of premium and luxury brands due to the bandwagon effect (Kapferer & Laurent, 2016;Kastanakis & Balabanis, 2012;Paul, 2019), which creates mass prestige (masstige). ...
... Luxury brands aim to have this be closely linked with prestige, high-quality and enjoyable experiences (Siu et al., 2016). When a brand has strong and positive associations, it is easy to remember its high-quality and luxurious features and benefits, which makes the consumer happy to use the product (Kapferer & Bastien, 2013). Consumers are more likely to feel strongly about a brand when they know more about it and have some positive, strong, and unique knowledge about it in their minds (Kumar et al., 2020). ...
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Masstige marketing is a strategic word for market penetration for premium but reachable products based on brand equity, trying to develop brand awareness, likability, affection, and attachment. Hence masstige scale may allow firms to measure brand equity to derive insights into the popularity of their brands. However, there is no empirical evidence available to test whether these scales are related measures of brand equity and, at the same time, independent measures, respectively. This study investigates whether the masstige scale and multidimensional consumer‐based brand equity scale measure the same constructs. A total of 493 participants evaluated four different athletic shoe brands. The multi‐trait, multimethod and confirmatory factor analyses suggested that the masstige scale may be a viable alternative to consumer‐based brand equity and masstige value. We discuss the implications and provide directions for future research derived from our findings. This article is protected by copyright. All rights reserved.
... Joy et al. (2014) assert that narratives are important to the sustainability of brands. Kapferer and Bastien (2012) stated how stories about luxury brands such as Louis Vuitton originated as a manufacturer of luggage and that Ferrari produces high-performance sports cars conveyed via tales. Literature has identified various story requirements as a pre requisite (Deighton, Romer, and McQueen,1989 commercial included a sequence as a story-based stimulus and has a beginning, middle, and finish. ...
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Storytelling is rising in prominence in digital marketing. It is used as a marketing tool and used by firms in brand positioning. The purpose of this study is to explore how brands tell stories about themselves on digital networking. In recent times, corporations resort to the various ways in which brands present narratives about themselves through digital networking. This paper examines the contents of storytelling shared by various brands on digital media. The conceptual study's aim is to investigate the ways in which brands employ various types of storytelling, as well as to learn how communication occurs on various social media platforms and the consequences this has for corporate management. So, this study is done from the point of view of brands to find out how communication is done on social media platforms and its implications for corporate managers. ___________________________________________________________________________________
... Suštinski, agilno upravljanje komunikacijama uključuje različite kanale komunikacije (na primer internet, televiziju, radio) i kombinovanje različitih aktivnosti (upravljanje informacionim sistemima, oglašavanje, prodaja, direktni marketing, odnosi s javnošću) kako bi se postigao maksimalni komunikacioni uticaj na potrošače (Kapferer, Bastien 2012). Istovremenim prisustvom u različim medijima omoućava se širok obuhvat različitih segmenata potrošača, ali i drugih stejkholdera, obezbeđuje izgradnju pozitivnog imidža i reputacije preduzeća/brenda i olakšava ostvarivanje marketing ciljeva. ...
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Features of modern military operation, observed from the aspect of the theory of management, determine the military operation as a project. This paper presents a comparative analysis of quantitative and qualitative characteristics of the life cycle of a complex investment projects and military operations. Explained the phases and stages of military operations to focus on the planning process as a function of management.
... Suštinski, agilno upravljanje komunikacijama uključuje različite kanale komunikacije (na primer internet, televiziju, radio) i kombinovanje različitih aktivnosti (upravljanje informacionim sistemima, oglašavanje, prodaja, direktni marketing, odnosi s javnošću) kako bi se postigao maksimalni komunikacioni uticaj na potrošače (Kapferer, Bastien 2012). Istovremenim prisustvom u različim medijima omoućava se širok obuhvat različitih segmenata potrošača, ali i drugih stejkholdera, obezbeđuje izgradnju pozitivnog imidža i reputacije preduzeća/brenda i olakšava ostvarivanje marketing ciljeva. ...
... The first paper of this section is entitled: "The intimacy trap: Navigating the commercial friendships of luxury". Because, despite the rise of digital channels, salespeople remain critical to a luxury brand's success (Kapferer & Bastien, 2012;Merk & Michel, 2019), the authors explore how luxury salespeople manage their relationships with luxury customers. Based on ethnographic fieldwork in luxury stores, focusing on the interaction between salespeople and confirmed luxury customers, this paper offers an analysis of commercial friendships in these settings. ...
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The present special issue represents the outcome of the Fourth Monaco Symposium on Luxury, organized by the International University of Monaco and OMNES Education. The Symposium is a biennial event that brings together academics and practitioners from around the globe. Due to the outbreak of Covid, the symposium was postponed twice, and a new call and additional submissions led to a sharp increase in the number of papers submitted and then accepted. This issue follows three special issues based on the previous Symposia (Chandon, Laurent, & Valette-Florence, 2016; Chandon, Laurent, & Valette-Florence, 2017; Chandon, Laurent, & Valette-Florence, 2019). After its worst depression in history, the personal luxury goods market experienced a global V-shaped rebound in 2021 (Bain & Company, 2021), descending from €281 billion in 2019 to only €220 billion in 2020 and rising again to €288 billion in 2021. Indeed, the personal luxury goods market experienced a remarkable performance in the first quarter of 2022, growing by 17–19%, at current exchange rates (13–15% at constant exchange rates), over the same period in 2021. Despite the challenges and disturbances that happened in early 2022, the mid-term direction of the luxury market remains unchanged. Bain & Company estimates market growth to reach €360–380 billion by 2025 (Bain & Company, 2022). Whatever the challenges faced by the luxury sector, it does not really seem to be in crisis. Overall, luxury is still well and alive. This editorial puts the spotlight on three important and emerging themes in luxury research and then summarizes the seventeen articles included in this special issue on luxury.
... An emotional benefit passes ownership feeling to the customer when they buy branded products (Brun, 2008). Prior research on emotional benefits has shown linkages between expensive products and trust (Kapferer & Bastien, 2009) as well as brand image and trust (Cailleux et al, 2009). This research endeavor has used these research constructs to develop an emotional benefits model, in order to test the same empirically. ...
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This study focused on how and whether cause campaign affects emotional benefits as well as trust of consumers in the sustainability of organic cosmetics. It examines the relevance of emotional benefits as a mediating variable between cause campaign and trust in the sustainability of organic cosmetics. While this study found evidence of cause span effect on emotional benefits and trust, there was also evidence of the strong mediation effect of cause purview on trust. The findings also indicate that the model is valid and has good fit. The relative predictive relevance of the model has high impact on the cause span and trust. This research endeavour is significant because it has several implications for trust, with regard to sustainability of organic cosmetics which is conceptualized and operationalized at an individual level.
Book
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This book is a reprint of the Special Issue Sustainability and Consumer Behaviour that was published in Sustainability