Liverpool Business SchoolMarketing Management
3.CHALLENGES IN MARKETING LUXURY BRANDS
The success of the business depends on the selection of the target market. Hence,segmentation and targeting becomes a major challenge for marketing luxury brands. Luxury products try to market themselves in the upper class, high income society as they are thecustomers who intend to differentiate themselves in the society (Stegemann, 2006).Conventional luxury products marketing have been forced to rethink about its targeting because of the increase in wealthy public, emergence of internet and other technologicalforces (Seringhaus, 2002). Luxury products are positioned as an esteemed product inMaslow’s hierarchy and so it has to deliver the requirements which possess a self-esteem,recognition and status. Marketing mix can be used to discuss the various challenges in themarketing of luxury brands:
Luxury product has got a central role in the marketing mix. It should differentiateitself from the competing products in its quality, legacy, integrity, price, and rareness. Theaura of luxury products is more appealing to the customers than its exclusiveness. Quality of the product comes from either the use of expensive raw materials or by the use of complicated and elongated processes. Legacy describes the privileged connection of the product with the past; relation to the history and tradition which lies far behind the craze of fashion. Even though a luxury product can boast all the above qualities, it still has to face thechallenges from fake brand names.
The pricing method of a luxury brand is entirely different from that of an ordinary brand. The main factor to be considered while pricing a luxury brand is the customers andwhat kind of price they can afford. The company need to decide their market should be nicheor broad in their pricing strategy. A Rolls Royce falls into a niche market with highlyrecognisable customers like the British Royal Family while an upper class Mercedes Benzfalls under a broader market as an affordable luxury to most of the high income customers.Another factor to be considered is the cost of the present products and brands in the market.High prices are derived in comparison with the products and services delivering similar functionalities. A major challenge to luxury brands is that they can never start or be part of a price war. Once the price is reduced so that anyone can afford, the product will become toocommon, the customers will lose confidence on that product. The product will not beconsidered as a luxury product from that point. However, in the opinion of Lei (2009), priceis the only constant characteristic of a luxury brand. Another challenge could be the use of flexible payment systems like credit cards, which gives the customers a higher buying power.