Advances in Luxury Brand Management

The luxury industry is large, complex and very competitive and one that has flourished significantly in the past couple of decades (Okonkwo, 2009a; Ko et al., 2016). Luxury was once known as a quiet industry that was driven by product excellence and managed by families. Its value proposition was made up of a mix of high-quality products, brand heritage, unique knowledge, exclusivity, personalisation of services, and bespoke communications fused with long-term relationships with selected clientele and categorised by high prices and prestigious physical stores (Kapferer, 2014). Most of the above is still relevant and true for the luxury industry, but nowadays much of the industry is driven by large conglomerates. The economic concentration is increasing with the top ten of the largest companies accounting for more than 50 percent of all revenues in the luxury industry (Deloitte 2016).

Few articles on luxury appeared in Journal of Brand Management before 2000. Since then, the flow has been nearly constant, even as the number of conferences dedicated to luxury topics multiplies, and business schools increasingly offer courses and curricula focused on luxury management. Why does this sector, which originally aimed at a small minority of extraordinary consumers, attract such widespread attention today? The answer is in the subtle, rarely mentioned shift in the luxury concept, from worshipped ateliers to a true industry. The sector itself has changed; since 1995, it has based its impressive and steady growth and profitability on mass sales, thereby abandoning rarity as a source of value, as the current chapter details.

Although the definition of a ‘luxury’ brand is open for debate, the natural evolution of luxury, with luxury brands first being adopted by the affluent and wealthy before inevitably being translated and reinterpreted down to mass markets, raises new challenges for marketing strategists. Luxury brands need to stay in front of luxury consumers, through the discovery of new and different ways to give expression to their desires. This chapter discusses the fundamental difference between communication and connection, and identifies a means of assuring the greatest long-term success for luxury marketers by connecting with the luxury consumer using brand-related experiences

In the last two decades, luxury brand management has generated much interest and discussions in both academic and business circles. Among business leaders, the debates have been related to the associated challenges and paradoxes that have emerged as a result of the evolution of luxury since it became a consolidated economic sector in the late 1990s, led by the vision of conglomerates such as LVMH, Gucci Group and Richemont.

Today luxury is everywhere. Everybody wants his products to be luxury. The concept of luxury is attractive and fashionable. There are luxury columns in all magazines and journals. There are TV shows on the business of luxury and on luxury products and services. Even mass-consumption brands name many of their models ‘Deluxe’ or qualify their experience as luxurious. New words have been recently invented and promoted that add to the complexity: masstige, opuluxe, premium, ultra-premium, trading up, hyper-luxury, real or true luxury, and so on. There is a confusion today about what really makes a luxury product, a luxury brand or a luxury company. Managing implies clear concepts and, beyond these concepts, clear business approaches and pragmatic rules. The aim of this chapter is to unveil the specificity of management of luxury brands. Going back to fundamentals, one needs to distinguish it strongly from both fashion and premium or ‘trading up’. From this starting point, it sets out some of the counter-intuitive rules for successfully marketing luxury goods and services.

The significant growth of luxury consumption in recent decades has been accompanied by a prevalence of pirated and counterfeited goods. Given that the market for counterfeits relies on consumers’ desire for real luxury brands, it is critical for researchers and marketers to understand the reasons why consumers buy genuine luxury brands, what they believe real luxury is, and how their perception of luxury value affects their buying behavior in the trade-off between authentic or counterfeit products. Based on a comparison of studies that provides a holistic view of the phenomenon of counterfeit consumption and a comprehensive model, the key drivers of perceived value will be defined, helping to reduce the complexity of counterfeit consumption and enable the development of customized countermeasures.

The luxury sector thus far has received scant attention from sustainable development activists and watchgroups. Yet, this focus is changing. Even if other sectors may be more relevant to the cause of sustainability, luxury brands that have gained intact reputations for sustainability must take care to maintain it. Therefore, the present research investigates the level of sensitivity of actual luxury buyers to the cause of sustainable development, insofar as it concerns the luxury sector, luxury brands and their purchases. Do consumers’ attitudes towards sustainability spill over to their opinions about the sustainability of luxury itself, or is luxury a world apart? The findings show that luxury buyers have ambivalent attitudes, such that they consider luxury and sustainability somewhat contradictory, especially with regard to the social and economic harmony facet of sustainable development.

Research relevant to the creation and development of luxury brands is a growing area of interest and importance to branding practitioners and scholars. The issue here is that it is difficult to move forward when current brand luxury theory resembles a patchwork of definitions, methods and metrics. To add clarity, delineate brand luxury from other similar terms and concepts, and improve brand luxury knowledge, this chapter probes brand luxury through seven lenses. The findings enable brand luxury practice and theory to move forward on the basis of scientific merit. The results delineate brand luxury from competing terms such as brand status and prestigious brands – enabling practitioners and academics to precisely determine the extent to which luxury contributes to a brand, resolve whether or not a brand is a luxury brand, and establish with some accuracy the net worth of the brand luxury market.

After outlining 10 characteristics that help to define luxury branding, we identify and discuss some of the challenges and opportunities in managing their growth tradeoffs. Particular emphasis is placed on understanding brand equity measurement and brand architecture as they relate to growth strategies for luxury brands.

What distinguishes high-luxury brands from those that are low on luxury? This chapter discusses a theoretical framework of the brand-luxury construct that leads to a specification of the dimensions of luxury as applied to brands. The development of a scale for the measurement of the dimensions of brand luxury is then described. The chapter concludes with a consideration of the theoretical and practical implications regarding the symbolic use of luxury brands for the public policy-maker and consumer

Although luxury goods form a distinct economic sector in many countries, a certain vagueness still remains over the concepts of luxury and the luxury brand. How does the luxury brand differ from the ‘up-market’ brand or the ordinary brand? Are the differences simply those of degree or inherent in the luxury brand’s nature?