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Luxury Brands and their Role in Luxury Purchases (Luxury Tracking Report 1Q2004)
Unity Marketing, April 2004, Pages: 70
The first issue of the Luxury Tracking Service Results focuses on the the importance of branding in the luxury market. Do consumers demand higher expectations from luxury brands?
Purchasers of the 1Q2004 results, will also have access to the Consumer Luxury Consumption Index. The luxury consumption index is a tool designed to help luxury marketers assess the vitality of the affluent market.
After ending 2003 on a high note, luxury consumers stepped back slightly in their overall confidence with the March 2004 Luxury Consumption Index at 97.8, compared with a baseline of 100 in January.
The phrase ‘new luxury’ is tossed around a lot of late, often synonymous with ‘masstige,’ i.e. mass prestige, as it applies to affordable, new generation luxury brands like Starbucks, Victoria’s Secret and Panera. However, the concept of mass-marketed luxury doesn’t go far enough to explain the paradigm shift that is taking place in the luxury market today.
Two ways to define luxury: intrinsically and consumer-centrically
In the old luxury world view, luxury is defined as the special qualities, features and attributes intrinsic to a product. In most categories, whether fashion, automobiles, furniture, linens, jewelry, or tabletop, specific product features constitute luxury. For cars it’s handling and ride, leather seats and wood detailing; in jewelry, platinum and real gemstones; in linens, 500 thread- count sheets, Egyptian cotton, etc. Here the product expresses or incorporates features that confer the ‘best of the best’ status. Many old luxury companies stop here, focusing their resources only on creating the ultimate product.
New luxury companies recognize that the intrinsic definition of luxury does not reflect the changes taking place in the luxury market today. According to the report new luxury companies recognize the need to incorporate consumer experience and perception into the luxury branding equation. They begin by offering the ‘best of the best’ quality, but go that extra step to deliver not just a great thing, but a wonderful experience to the customer. Luxury companies like Tiffany, Godiva Chocolatier, Saks Fifth Avenue, KitchenAid, Sub-Zero are attuned to this new experiential luxury paradigm.
In recent focus groups new luxury was described as:
- Quality is in eyes of beholder. We often associate quality with expensive, but it doesn’t necessarily have to go hand in hand. Sensual experience, massage, wonderful dinner, travel, a treat, something very special you do for yourself.
- A state of mind, being able to do something that I couldn’t do before.
- Luxury means I can live my life in a way that I don’t have to worry about money. Luxury doesn’t mean labels. It means comfort. If I want to go somewhere and I am able to do it, that is luxury.
- Luxury to me is not a necessity, but a privilege. It means to be able to do things in regard to services, time, material things.
- The most luxury ever is to have enough time to do whatever you want and be able to afford it.
- I buy what I like and what I want. It is nice to have that feeling that you can do what you want when you want it.
Luxury brands and the role they play in luxury purchasing is the subject of investigation in this 1Q2004 Luxury Tracking Study, based on a survey of 650 households with incomes over $75,000 (one-third over $150,000). Panelists reported purchasing luxury goods and services over the most recent two months, attitudinal and expectation data about their households and the economy.
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