Luxury Brands Business Model

Brands are regarded as images in the minds of consumers and other target groups, which are designed by companies to identify their products.Luxury brands are perceived as images in the minds of consumers that comprise associations about a high level of price, quality, aesthetics, rarity, extraordinariness, and a high degree of non-functional associations.A few characteristics make a luxury brand stand out of the “herd” of other brands out there.

(I) They don’t advertise to sell:

Now that seems like an oxymoron, but it’s not actually. Instead, they market a dream to the middle class, the dream of owning a fancy car or a shiny watch. Most people who are regular customers will buy these luxuries anyway. This is not measured by short-term sales increases because, unlike consumer packaged goods, possession of a luxury good dilutes the excitement one had before the purchase was made.

(II)Create a niche brand in the minds of a nonowner

The idea is not only to build a top of its class product but also to try to create envy in the minds of the nonowners. The more the masses envy the owners of their products, the more is the prestige and social status associated with the brand. This is why Aston Martin, though catering to the highest echelons of the society, advertised extensively by product placement by featuring its cars in James Bond movies so that everyone in the streets could recognize one, thus endowing the driver with admiration.

(III): They maintain full distribution:

Luxury Brands maintain a high standard of quality for its products. A single failure in the production could spell doom for its brand. News like these spread like wildfire in the fashion industry, and it becomes quite challenging to recuperate from these minor hiccups. This is where one-to-one service and interaction should take place. The experience must be exclusive. Ralph Lauren bought back a lot of its licenses that it had given out as they realized they were risking too much by letting production and distribution out of their hands.

(IV) The price of the luxury brand shall always increase:

As the income of the masses rises, it is vital that the price of the brands keep increasing as a way of maintaining the aura and prestige of the brand.It seems that the model is infallible. No matter how hard a recession hits the world, there will always be people at the top of the pyramid wanting to indulge themselves and carve out a niche for themselves. 

— Avichal Agrawal (Co-founder editor)

Leave a Reply

Your email address will not be published. Required fields are marked *