Goods need legitimacy in the eyes of the target consumer to be classed as luxury, otherwise they are just expensive. Luxury goods are always more than the sum of their parts or the value of their components. Luxury goods gain legitimacy through a combination of factors which burnish a product with desire and kudos.
- Heritage: Very important for existing brands. For new brands this can only be gained by time or by allying/ partnering with brands or designers who can confer heritage.
- Design / Designers: Luxury products are well designed, beautiful and distinctive. The designer is often part of the story and not anonymous. The product design and brand are intrinsically linked (you can often tell the brand by looking at the design). The designer marries design and craftsmanship to create unique distinctive products that have the brand identity embedded. The designers story is often a good way of compensating for a lack of heritage in new brands.
- Brand positioning: Rigorous approach reinforcing all other elements of the mix and also communicating in a way and format that is recognizable as luxury and similar to other products. Only once a brand has been accepted can it be more innovative. It is important that a brand isn’t seen as trying too hard, luxury is often effortless.
- Sales channels: Generally luxury products will be sold next to other luxury products, proximity allows potential clients to easily classify and identify a brand as luxury, and understand the pricing. The channels and the sales process are also luxurious experiences. Paris, Milan, London and New York are key for luxury positioning; Hong Kong, Shanghai, Moscow, Dubai and LA are key for sales.
- Price: Luxury goods are expensive (higher than premium products). Price for hard goods is typically seven times bill of materials (BOM); for Jewellery three times BOM.
- Longevity: Apart from fashion, luxury products last longer than premium ones - they have lasting value.
- Rarity: Not accessible to everyone due to price, waiting time, scarcity of materials, membership criteria and being artificially scarce due to being a limited edition. Sometimes managed scarcity is an integral part of a products appeal.
- Quality: Highest quality possible in the product category, perceivably higher quality than standard/ premium product.
- Craftsmanship, Manufacturing and Materials: Luxury goods tend to be hand assembled/ hand-made. They are made from expensive materials and finished to the highest standard. You can tell the craftsmanship and materials by sight and often by how the product feels (e.g. weight in hand).
- Origin: Location is important for a brand and a product; certain countries can confer a beneficial halo that helps confer legitimacy. Where a product is made is very important to end consumer. France, Italy and Switzerland and to a slightly lesser extent England are traditional areas for luxury / fashion and therefore a brand with origin from these countries has an advantage.Scandinavia is good for premium design and interiors.Other Europe, US & Japan have to work harder to gain luxury legitimacy; fashion brands can work or ones focussed on traditional crafts.
These 10 factors combine to give a product legitimacy as a desirable luxury product. Overall a luxury product is a “Symbol of success”, it confers“glamour” and generates “Pride of Ownership”.