The Concept of Luxury Brands - Presentation | Luxury Goods | Brand

The Concept of

Luxury Brands
Dr. Klaus Heine

Definition, Characterization & Categorization of Luxury Products & Brands
Introduction

The Concept of Luxury Brands

What are luxury brands not?

What are luxury brands?
www.conceptofluxury.brands.com

www.upmarkit.com The Concept of Luxury Brands K. Heine 2
Introduction

What means Luxury? – Luxury is a relative Term that could refer to almost
Anything or Nothing depending on whom you ask.
“The only luxury good I own is my car. It’s a Volkswagen Polo. This is also
“Luxury means to me something not everyone can afford.” (Constantin)
to have the freedom
to set off against the
mass – in every way –
to maintain a lifestyle
that fits me and that is
not geared to the
mainstream and to
social norms. The real
luxury for me is to
have time and fun
with my friends.”
(Jasper)

“Luxury stands for exclusivity, excellent quality, rarity, differentiation. I am fascinated by
luxury watches, since they are a symbol for the love for the detail. Preferably I also would like
to say: "I don’t look for the time, I look for my watch." Typical for a woman, I have already
an eye on the shoes of Manolo Blahnik. There are women in New York who take the risk of a
surgery in order to fit into these shoes. I wouldn't go that far, because I already have perfect
feet.” (Chun-Lan)

Luxury Product Marketing Class, long time ago: Winter Semester 2006/2007

Source: Statements of the participants of the seminar “Luxury Product Marketing” at the department of marketing at TU Berlin, winter semester 2006/2007.

www.upmarkit.com The Concept of Luxury Brands K. Heine 3
Introduction

Overview about the Approach to Definition

Identification of a basic definition of luxury
Color TV Differentiation by type of relativity Clean air…
Step 1:
Conceptual Framework

Luxuries Differentiation by area of research Luxury goods…
Semantic
Analysis Luxury services Differentiation by market segment Luxury arts…

Result: Broad definition of luxury products and brands

Selection of types of dimensions / approach to definition
Step 2:
Dimensional Analysis of existing definitions
Analysis
Result: Set of requirements for luxury product characteristics
Step 3:
Operationalisation Identification of dimensions by literature analysis and empirical study
Step 4:
Result: Definition of Luxury Products and Brands
Definition
Step 5:
Constantly updating the categorization
Review

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 4
Basic Definition of Luxury

Basic Definition of Luxury

„Bad“ (vs. “Good”) Desirable

Necessity Luxury

Necessity Ordinary Luxury

Luxury is anything that is desirable and more than necessary and ordinary.

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 5
Basic Definition of Luxury

From 1900 to Today to Future – How Definitions of Luxuries change

1900 1910 1920 1930 1940 1950
• Model T cars • Fur hats • Fur coats • Baseball tickets • Televisions • Color televisions
• Pianos • Electric clocks • Movie “talkies” • Canned foods • Air travel • Credit cards
• Radios • Fountain pens • Gin • Indoor plumbing • College degrees • Visits to
• Hand-cranked • Cadillac's • Vacuum • Refrigerators Disneyland
Victorians • Kodak cameras cleaners • Convertibles
• Transatlantic • Washing
travel machines

1960 1970 1980 1990 2000 2050
• Stereo sound • Designer jeans • Vacation homes • Internet stocks • Flat-screen • Space tourism?
systems • VCRs • BMWs • Palm Pilots monitors • Transatlantic
• 35-millimeter • Solar homes • Microwave • Cell phones • Maybach travel?
cameras exemplars ovens • Yachts • Eternal youth?
• SUVs
• Warhol • Junk-bond
lithographs portfolios
• PC’s
• Champagne

Source: According to Sacharidou, The Evolution of Luxury Market, LVMH 2006, p.4.

www.upmarkit.com The Concept of Luxury Brands K. Heine 6
Basic Definition of Luxury

The Types of Relativity: The Relativity of Luxury splits into a Regional, Temporal, Economic,
Cultural and Situational Relativity.

Situational Regional
Relativity Relativity

Hierarchic
Cultural Relativity Temporal
Relativity Relativity

Economic
Relativity

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 7
Basic Definition of Luxury

These Types of Relativity can be used to determine a General Perspective from which Luxury
should be defined within the Field of Luxury Brand Management.

Perspective: Perspective:
Normal conditions Global

Situational Regional
Relativity Relativity

Hierarchic
Cultural Relativity Temporal
Perspective:
Relativity Relativity Perspective:
Upper class Present time

Economic
Relativity

Perspective: Representative for the entire society in developed regions
Luxury is anything that is desirable and more than necessary and ordinary. As a general rule, this is defined from a
global perspective, for the present and for normal conditions. While the exclusivity of resources is evaluated by the
entire society, the desirability of resources and the appearance of luxury are determined by the upper class.
Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 8
Basic Definition of Luxury

Based on the Extended Basic Definition, there are many Resources
that can be differentiated from Luxury:
Example of Non-Luxury Type of Relativity Explanation
A luxury in Jakarta, but not from the
Clean air Regional relativity
perspective of most people

A luxury in the 1950’s, but not from
Color TV Temporal relativity
today’s perspective

A luxury for a student, but not from
VW Polo Economic relativity
a gross-societal perspective

A luxury in the hip-hop scene, but
Gold teeth grill Cultural relativity not from the perspective of the
upper class

Might be a luxury after a strict diet,
McDonald’s Hamburger Situational relativity
but not under normal circumstances

Accordingly, the extended basic definition limits the scope of luxury from almost anything to a more
reasonable level and therefore already helps to dissolve a large part of the controversies about the
definition of luxury.

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 9
Major Understandings of Luxury

The Understanding of Luxury by Area of Research: Luxury products constitute a Subset of Luxury
Goods, which, in turn, form a Subset of Luxuries.

Philosophic-sociological Understanding: Luxuries
Resources that are desirable and more than necessary and ordinary,
e.g. musical talent, time, and true love
Microeconomic Understanding: Luxury Goods
Goods (product categories) that are more than necessary and ordinary
and suitable for the exchange on the market,
e.g. air conditioning systems and golf equipment

Managerial Understanding: Luxury Products
Products that are more than necessary and ordinary compared
to the other products of their category,
e.g. Louis Vuitton bags and Rolls-Royce automobiles

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 10
Major Understandings of Luxury

“Luxuries” correspond to the Philosophical-Sociological Understanding and the
broadest Scope of Luxury.

Everything we can think
of – “Luxuries comprise all
resources which are desirable
and exceed what is necessary
and ordinary.”

Luxuries are not necessarily marketable, which means that we can’t necessarily buy/sell them.

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 11
Major Understandings of Luxury

The Understanding of Luxury by Area of Research: Luxury products constitute a Subset of Luxury
Goods, which, in turn, form a Subset of Luxuries.

Philosophic-sociological Understanding: Luxuries
Resources that are desirable and more than necessary and ordinary,
e.g. musical talent, time, and true love
Microeconomic Understanding: Luxury Goods
Goods (product categories) that are more than necessary and ordinary
and suitable for the exchange on the market,
e.g. air conditioning systems and golf equipment

Managerial Understanding: Luxury Products
Products that are more than necessary and ordinary compared
to the other products of their category,
e.g. Louis Vuitton bags and Rolls-Royce automobiles

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 12
Major Understandings of Luxury

Microeconomic Understanding: In Microeconomics the Term “Luxury Goods” is
established and mainly refers to entire Product Categories.

Luxury goods are distinguished from necessary or ordinary goods by consequence-related measures; thus
the luxuriousness of any good is not determined by its characteristics, but by peoples’ reaction (changes in
demand) to exogenous stimuli:

1 = High price elasticity (> =1)
The demand of (dispensable) luxury goods
decreases relatively strongly when prices are rising.
= High income elasticity (> 1)
2
The demand of (dispensable) luxury goods (also superior goods)
increases relatively stronger than the income.

Luxury goods correspond to the micro-economic understanding and the middle scope of
luxury, comprising all goods which exceed what is necessary and ordinary, and are suitable
for exchange on the market.

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 13
Major Understandings of Luxury

The Understanding of Luxury by Area of Research: Luxury products constitute a Subset of Luxury
Goods, which, in turn, form a Subset of Luxuries.

Philosophic-sociological Understanding: Luxuries
Resources that are desirable and more than necessary and ordinary,
e.g. musical talent, time, and true love
Microeconomic Understanding: Luxury Goods
Goods (product categories) that are more than necessary and ordinary
and suitable for the exchange on the market,
e.g. air conditioning systems and golf equipment

Managerial Understanding: Luxury Products
Products that are more than necessary and ordinary compared
to the other products of their category,
e.g. Louis Vuitton bags and Rolls-Royce automobiles

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 14
Major Understandings of Luxury

The Managerial Understanding of Luxury usually refers only to the best
Products of a Category: “Luxury Products”.

Examples of Non-Luxury Products Criteria No Luxury Products, but. . .
Philosophical-sociological
Luxury level

Musical talent, time and true love Luxury resources
understanding
Micro-economic
Air conditioning and golf equipment Luxury goods
understanding

The broad definitions of luxury products and brands can be summarized as follows:
Luxury products correspond to the managerial understanding and the smallest scope of
luxury, comprising all products which exceed what is necessary and ordinary compared
to the other products of their category.

Luxury brands are associated with products which exceed what is necessary and ordinary
compared to the other products of their category.
Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 15
Major Understandings of Luxury

The Understanding of Luxury by Area of Research: Luxury products constitute a Subset of Luxury
Goods, which, in turn, form a Subset of Luxuries.

Philosophic-sociological Understanding: Luxuries
Resources that are desirable and more than necessary and ordinary,
e.g. musical talent, time, and true love
Microeconomic Understanding: Luxury Goods
Goods (product categories) that are more than necessary and ordinary
and suitable for the exchange on the market,
e.g. air conditioning systems and golf equipment

Managerial Understanding: Luxury Products
Products that are more than necessary and ordinary compared
to the other products of their category,
e.g. Louis Vuitton bags and Rolls-Royce automobiles

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 16
Limiting the Scope of Luxury Products

Limiting the Scope of Luxury Products

Despite its small scope in comparison to luxuries, the definition of luxury products still
covers a wide variety of different products. Therefore, and according to the basic idea of
definition by reduction sentences, the scope of luxury products is further limited by
differentiating the major luxury market segments.

Luxury Products Luxury Services Luxury Real Estate
Private Luxury Products Public Luxury Products
Branded Luxury Products Unbranded Luxury Products
B2C Luxury Products B2B Luxury Products
Founder-independent Luxury Products Founder-dependent Luxury Products
Uni-regional Luxury Products Multi-regional Luxury Products
Contemporary Luxury Products Luxury Antiquities

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 17
Agenda

• Basic Definition of Luxury
• Major Understandings of Luxury
• Characteristics of Luxury Products & Brands: The Code of Luxury
• Major Types of Luxury Products and Brands
• Masstige Strategy

www.upmarkit.com The Concept of Luxury Brands K. Heine 18
Luxury Characteristics: The Code of Luxury

The Essential Functional Characteristics of Luxury Products

Symbolism
(Meaningful)

Extraordinariness Price
(Creative) (Expensive)

Characteristics of
Luxury Products

Rarity
Quality
(Exclusive)
(Superior)
Aesthetics
(Beautiful)

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 19
Luxury Characteristics: The Code of Luxury

What do we have to do with that Chair to create a Luxury Product?

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 20
Luxury Characteristics: The Code of Luxury

The Essential Characteristics of Luxury Products

• High-priced in an inter-categorial
Symbolism comparison, which excludes
“affordable indulgences” such as
Extra- Häagen-Dazs icecream
ordinariness Price
Constitutive
Characteristics of
Luxury Products
Rarity
Quality

Aesthetics
• Most expensive products in an intra-
categorial comparison
“Porsche is certainly not for me – this No luxury product…
car is just for people who cannot afford
something else”

Kisabaka (2001, p. 121) proposes that the five percent of the
most expensive products belong to the luxury segment.

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 21
Luxury Characteristics: The Code of Luxury

Price Paradox

• Mass products are facing a strong price competition: If the
price for a product is increasing, fewer people will buy it
• For luxury products this must not be the case: The high
price demonstrates quality and exclusiveness
Price • If the price for a luxury product decreases, it will have a
Paradox negative influence on the perceived quality and the image
• Therefore, for many luxury products a price decrease leads
to a declining demand in the long run – and a price increase
to a rising demand of the product because of higher
exclusivity

Sources: Trommsdorff, V., Heine, K. (2008) Das Marketing von Luxusprodukten. In: WISU – Das Wirtschaftsstudium, Vol. 37, Issue 12, pp. 1669-1674. Dubios, B. (1992) Comment surmonter les
paradoxes du marketing du luxe, p. 36.

www.upmarkit.com The Concept of Luxury Brands K. Heine 22
Luxury Characteristics: The Code of Luxury

The Constitutive Characteristics of Luxury Products

Value & Durability:
Symbolism Durability covers the aspiration of luxury
product manufactures to create
Extra- everlasting products, which won’t be
Price
ordinariness disposed even after long utilization or
Constitutive
Characteristics of defect, but rather repaired and which
Luxury Products even gain in value over time so “that you
can even leave them to your
Rarity grandchildren”
Quality

Aesthetics Manufacturing complexity:
“Manufacturing one of the excellent
Lange & Soehne wristwatches often
Functionality & Performance: takes one and a half years”
“I’m floating over the streets in this car
with a huge power, which I don’t need, Service:
but the feeling to have it is very “You get a lifelong guarantee for a Hermès
relaxing” belt. If you need a new hole, you just send it to
them and they do that for free”

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 23
Luxury Characteristics: The Code of Luxury

The Constitutive Characteristics of Luxury Products

Major Manufacturing Concrete Abstract
Characteristics Characteristics Product Characteristics Product Characteristics
Expertise of
Quality Material & Components Durability & Value
manufacturer
Manufacturing Construction &
Comfortability & Usability
complexity Function principle
Functionality &
Workmanship
Performance
Features Safety

Product size

Service

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 24
Luxury Characteristics: The Code of Luxury

Product Paradox

• For mass products marketers study consumer expectations
and create products accordingly
• For luxury products it is often the other way round:
Marketers propose products to the demanding target group
• Luxury consumers want to be surprised by the designers
Product with something creative and above their expectations (the
Paradox expected unexpected)
• Often there is a designer or artist who is setting new trends
and standards, i.e. initiatives come from the luxury brand
• Product development is based on designer inspirations and
not (only) on consumer necessities

Sources: Trommsdorff, V., Heine, K. (2008) Das Marketing von Luxusprodukten. In: WISU – Das Wirtschaftsstudium, Vol. 37, Issue 12, pp. 1669-1674. Dubios, B. (1992) Comment surmonter les
paradoxes du marketing du luxe, p. 36.

www.upmarkit.com The Concept of Luxury Brands K. Heine 25
Luxury Characteristics: The Code of Luxury

The Constitutive Characteristics of Luxury Products

• Compared to the other
Symbolism characteristics, aesthetics was
mentioned most often (229 codings)
Extra- • The aesthetics of luxury products
Price
ordinariness comply with the taste of the elite
Constitutive
Characteristics of • And represent the cultural relativity
Luxury Products of luxury
Rarity • Symbolic meaning can arise from
Quality product design, specific product
information, and the brand image.
Aesthetics • The Gucci boutique in Miami is
“sex for the eyes”
“The eyes are consuming”
“The well-designed object is essential in
life to feel well” “I have to differentiate from others
mainly with my appearance as I don’t
“…for people who are aesthetes” have an occupation”

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 26
Luxury Characteristics: The Code of Luxury

The Essential Characteristics of Luxury Products

“I was the only one with this bag
Symbolism – and that’s a great additional
value”
Extra-
Price
ordinariness
Constitutive “They have just a very limited
Characteristics of production… it’s not
Luxury Products exchangeable like a mass market
product”
Rarity
Quality
“There are already too many
Aesthetics BMW drivers in my circle of
friends"

“Everything which is very famous is likely
“I have this bag already since one year
to be a mass product”
and now everyone is walking around
“It’s nothing special anymore if everyone with such a thing. And I will soon get rid
owns it or if you can buy it on every of it again”
corner”

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 27
Luxury Characteristics: The Code of Luxury

The Scarcity Principle: The Rule of the Few – Less is Best and Loss is Worst

• In our need to control our world, being able to choose is an important freedom. If
Description something becomes scarce, we anticipate possible regret that we did not acquire
it, and so we desire it more. This desire is increased further if we think that
someone else might get it and hence gain social position that we might have had.

• Worchel, Lee and Adewole (1975) offered subjects cookies in a jar. One jar had ten
Survey Results
cookies in and the other jar had two. Subjects preferred the cookies from the jar
with two in, even though they were the same cookies.

• The scarcity principle is used in sales, with ‘sale ends today’ (scarcity of time),
Example ‘whilst stock last’ (scarcity of product) and so on.

• Indicate that what you want the other person to
Using it choose is only going to be available for a limited
time and that there may not be many left in any
case. Hint of other people waiting in the wings
for a chance to get it.
• In romance and in business, play hard to get.
Make it seem like your time is precious.

Source: Cialdini, R.B. (2009) Influence: Science and Practice 5th ed., Pearson Education: Upper Saddle River, p. 198 et seqq.; Worchel, S., Lee, J., Adewole, A. (1975) Effects of Supply and
Demand on Ratings of Object Value. Journal of Personality and Social Psychology 32(5), 906-914.
.
www.upmarkit.com The Concept of Luxury Brands K. Heine 28
Luxury Characteristics: The Code of Luxury

Rarity

Sources of Rarity

Limitation of Production Output Individualization

Natural Limitations Artificial Limitations Non-industrial Manufacturing

Usage of Natural Materials,
Scarcity of the Ingredients
e.g. marble

Codified Limitations Planned Variation

Limitations of the Personalization according to
Manufacturing Capacity Customer Wishes

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 29
Luxury Characteristics: The Code of Luxury

From Natural to Virtual Rarity of Luxuries:
Their Compatibility with Volume Ambitions
From Natural Type of Rarity Driver Compatibility with Volume
Natural Rarity: limited ingredients,
components, capacity, human
1 Little: Limited availability
expertise
e.g. diamonds, rings, fur

Techno-rarity: innovations, new
2 products and features Average: Reserved to top of lines
e.g. first fridges, air-bags

Limitation and Individualization:
Limited editions, custom-made
3 Average: Costs of limited series
orders, one-to-one relationships
e.g. Vuitton graffiti bags

Information-based Rarity: marke-
ting / brand secrecy, vocabulary, Good: No physical limit
4
„starification“ of the value chain
To Virtual e.g. trendy artists

Source: In accordance to Catry, B. (2003): The Great Pretenders: the Magic of Luxury Goods, Business Strategy Review, p. 16.

www.upmarkit.com The Concept of Luxury Brands K. Heine 30
Luxury Characteristics: The Code of Luxury

Distribution Paradox

• Marketers want a certain level of diffusion for their
brand in order to achieve success in the marketplace;
yet, if their brand is over diffused, it loses its luxury
Distribution characters
Paradox • Excessive distribution leads to a loss of exclusiveness
• Selective distribution is essential for luxury goods to
keep the exclusive image

Sources: Trommsdorff, V., Heine, K. (2008) Das Marketing von Luxusprodukten. In: WISU – Das Wirtschaftsstudium, Vol. 37, Issue 12, pp. 1669-1674. Dubios, B. (1992) Comment surmonter les
paradoxes du marketing du luxe, p. 36.

www.upmarkit.com The Concept of Luxury Brands K. Heine 31
Luxury Characteristics: The Code of Luxury

The Constitutive Characteristics of Luxury Products

• Results often “only” from a different
Symbolism design or construction principle
• Consumers expect a “kick”, which
Extra-
Price could be just a detail such as special
ordinariness
Constitutive buttons or an unusual positioning of
Characteristics of the button border
Luxury Products
Rarity
Quality
The new shirt “seems to be army-style
Aesthetics from the distance, but from close-up it
appears that it’s actually covered from
small trees”

“Eye catcher at the second view”

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 32
Luxury Characteristics: The Code of Luxury

The Constitutive Characteristics of Luxury Products

• Results from implicit (product design)
Symbolism and explicit communications (brand
communications)
Extra-
Price
ordinariness
Constitutive
Luxury products “have a lot to say –
Characteristics of
they talk to you”
Luxury Products
Rarity “It is very fascinating to open a bottle of
Quality
wine from 1921, which witnessed two
world wars – and when you imagine
Aesthetics what all happened since that time…”

“I have a very special relationship to
cars. They have to turn me on. It’s very “A jacket, which was made of Tibetan
much about feelings, a lot of feelings. quilts from a Russian immigrant in
And the S-Class can come with super Paris”
features, but it just doesn’t turn me on” “I use these brands to position myself as
a brand”

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 33
Luxury Characteristics: The Code of Luxury

Communication Paradox

• (1): Because of the trend and consumer motive
connoisseurship many luxury consumers look for the
authentic, true brand which is not known by everyone.
• Therefore – in heavy contrast to the market of mass
Communication products – an investment in widespread communication
Paradox can damage the image, the exclusivity of the brand
• (2): Communication for mass products is often focused on
the product.
• In the luxury business it is essential to focus communication
on service and in particular on the brand and its image.

Sources: Trommsdorff, V., Heine, K. (2008) Das Marketing von Luxusprodukten. In: WISU – Das Wirtschaftsstudium, Vol. 37, Issue 12, pp. 1669-1674. Dubios, B. (1992) Comment surmonter les
paradoxes du marketing du luxe, p. 36.

www.upmarkit.com The Concept of Luxury Brands K. Heine 34
Luxury Characteristics: The Code of Luxury

Overview about the Essential Characteristics of Luxury Products and Brands

• The brand offers products which belong to the most expensive products
Price
of their category.
• The brand offers everlasting top-of-the-line products, which won't be
Quality
disposed of even after long utilization or defect, but rather repaired and
which often even gain in value over time.

• The brand behaves like a chic and vain dandy, who would never leave the
Aesthetics
house in less than perfect style. Whenever and wherever the brand is
seen, it embodies a world of beauty and elegance.
• In contrast to mass-market brands, the brand needs to limit its
Rarity
production and tries not to disclose its (high) sales numbers. The brand
plays hard to get and is not available at all times or places.
• The brand has a mind and style of its own and its products offer a "kick"
Extraordinariness
and surprise with the "expected unexpected."

• The brand stands for "the best from the best for the best"; its charisma
Symbolism
fills the room, and regardless of whether it is of a conspicuous or
understated nature, deep inside, it is swollen with pride.

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 35
Luxury Characteristics: The Code of Luxury

The Variety of possible Results

Heine, K., Phan, M. (2010) Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal. 19(2): pp. 108-114.

www.upmarkit.com The Concept of Luxury Brands K. Heine 36
Luxury Characteristics: The Code of Luxury

Basic Strategic Objectives of Luxury Brand Management
Repetition: Luxury Brand Identity

Brand Identity
Functional Component Emotional Component
Characteristics of Luxury
Products and Brands

Price

Quality

Aesthetics

Rarity

Extraordinariness

Symbolism

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 37
Definition of Luxury Products and Brands

The Definition of Luxury Products & Brands

Luxury products have more than necessary and ordinary characteristics
compared to other products of their category, which include their
relatively high level of price, quality, aesthetics, rarity, extraordinariness,
and symbolic meaning.

Luxury brands are regarded as images in the minds of consumers that
comprise associations about a high level of price, quality, aesthetics, rarity
and specialty.

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 38
Operationalization of Luxury Products

Luxury Brands are the Great Pretenders
Marketing is used to make People believe that Products have these Luxury Characteristics.

Extra- Symbolism
Price Quality Rarity Aesthetics
ordinariness (brand personality)

Product Price Communication
Distribution policy
policy policy policy

Communication of the
Quality leadership Superlative pricing strategy Selective distribution
luxury brand personality

Iconic products Regular price increases Flagship stores Catwalk shows

Memberships in Super-superlative priced
Waiting lists Celebrity endorsement
recognized associations products

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 39
Agenda

• Basic Definition of Luxury
• Major Understandings of Luxury
• Characteristics of Luxury Products & Brands: The Code of Luxury
• Major Types of Luxury Products and Brands
• Masstige Strategy

www.upmarkit.com The Concept of Luxury Brands K. Heine 40
Major Types of Luxury Products and Brands

The Relationships between Luxury Products and Brands

Luxury Brands

Luxury-branded
Products Non-Luxury
Luxury Products
Products

Luxury Products Non-Luxury Products
Non-Luxury-
branded Products

Non-Luxury Brands, but (at least) Luxury Product Brands

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 41
Major Types of Luxury Products and Brands

Types of Luxury Brands by Level of Luxury, Business Volume and Awareness

By Level of Luxury By Awareness By Business Volume
+ - -

Con-
Elite- noisseur Micro
level brands

Top-level Small-scale
Luxury brand brands

Star brands
Medium-level Medium-scale brands
+
Luxury brand

Large-scale brands
Entry-level
BIG player
luxury brand
- GIANT player +

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 42
Agenda

• Basic Definition of Luxury
• Major Understandings of Luxury
• Characteristics of Luxury Products & Brands: The Code of Luxury
• Major Types of Luxury Products and Brands
• Masstige Strategy

www.upmarkit.com The Concept of Luxury Brands K. Heine 43
Masstige Products & Brands

Differentiation to Masstige („New Luxury“)

Price setting
Inter- and
Inaccessible

Intra-categorial

Luxury Brand
Intermediary
For the broader population:

Masstige
Brand

Premium
Accessible

Brand

Risk reduction and
information efficiency Dominating Brand Benefit Ideational Benefit

Source: According to Meffert/Backhaus/Becker (2003) Luxusmarkenstrategie, p. 6; Heine, K. (2012) The Concept of Luxury Brands., www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 44
Masstige Products & Brands

Luxury Brands vs. Masstige Brands

Product / Brand Characteristics Prestige
Extra-
Price Quality Rarity ordinariness Aesthetics Symbolism

Luxury top

brands

Masstige
brands

Premium
brands
Medium-
level brands

low

Source: Heine, K., (2017) The Concept of Luxury Brands. Upmarkit, www.conceptofluxurybrands.com.

www.upmarkit.com The Concept of Luxury Brands K. Heine 45
The World Luxury Brand Directory

Directory of Luxury Brands:
https://upmarkit.com/high-end-luxury-brand-directory

A good start for market analyses: What are the best manufacturers of suitcases? Bed linen? …

www.upmarkit.com The Concept of Luxury Brands K. Heine 46
More information...

Publisher: Upmarkit OÜ, Tallinn
All rights reserved. No part of this publication
may be reproduced, stored in computerized
systems or published in any form or in any
manner, including electronic, mechanical,
reprographic, photographic, or other means,
without prior written permission from the
publisher.
© 2017, Upmarkit OÜ, www.upmarkit.com
www.upmarkit.com
Picture: Taigi/Shutterstock

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.