Luxury brands must adhere to certain rules if they wish to flourish and grow, according to James Ogilvy, former publisher of Luxury Briefing and principal at Ogilvy & Co.
WHAT IS LUXURY? The answer to that question is quite easy: something we don’t need. But what is a luxury brand? That question is a little hard- er to answer because luxury is in the eye of the beholder – the consumer.
Twenty years ago, the luxury industry was very different and, in terms of brands, it was a different landscape altogether. London’s now iconic Sloane Street was, in the 90’s, still the home not just to the early designer boutiques, but to supermarkets, pet shops and dry cleaners. Gucci was an organization in turmoil, Prada was known for making nylon bags and burberry was still at the back of a dusty cupboard.
Then in the 1990s, three things happened: the development of technology as the internet started to develop; the democratization of wealth and global spread of affluence; and the development of emerging markets.
As wealth moved from the EU, US and Japan into the east, the luxury brands followed the money and there was a new surge of awareness and aspiration. This developed into a steady march of growth. Take Louis Vuitton, for example. It had just 50 stores in the early 1990s. This figure is now more like 500.
And for brands to flourish and grow, they should stick to the following “golden eight” rules:
- Set a vision for your brand, then define it and make it relevant in the market
- Remember the heritage of your brand and maintain a direct reference to your story
- Have tight control of your distribution and try to avoid unofficial “grey market” imports
- Make sure the quality of your materials is exceptional
- The design of luxury brand goods has to be perfect – as if we need reminding
- The “hand of man” should still be evident and craftsmanship has to be exquisite – from the stitching to the finish
- Stick to the brand code and make sure you use a “brand language”. If you keep an obsession with the level of detail in your language, this means it will become more recognizable
- Service – the human factor – is a huge part of being a luxury brand and this describes the everyday “mythology” of the brand and how well the people stick to the brand code and implement it in their deals with customers on a daily basis
Consider the luxury consumer market. This used to be small, but it has grown and high-end customers now represent a complex challenge to luxury brands. These customers – like the brands they buy into – have a distinct culture; and what could be tasteful for one customer could be seen as vulgar by another. Also, buying habits are changing and 30% of purchasing decisions are made by the click of a mouse, so it has become harder for brands to engage in person with their clientele. But if luxury brands keep thinking about the golden eight, customers will respond – brands just have to be more persuasive than ever before in a competitive market.
As such, luxury brands have moved into more aspirational branding – making their products more accessible to those who have saved up.
For instance, the “blue box” has become synonymous with luxury jewellers Tiffany & Co. Consumers want a product in a Tiffany box and, as such, the retailer’s most popular purchase is a padlock which retails for less than $150 – just so customers can have a tiffany product in a blue box.
Armani has made its men’s briefs an affordable brand lead-in and used the soccer player David Beckham to model them, appealing to a more aspirational audience. And in the automotive world, you can buy a low-spec Land Rover for less than a specced-up Ford Focus.
The danger for luxury brand , though, is that if they make their products too “cheap” or too accessible, they risk diluting their brands prestige. Luxury brands are connecting into new and sophisticated markets, and they are moving to use the digital world to drive aspirations through websites and social media.
Travel signifies the rising levels of disposable income and acts as a catalyst putting people into contact with luxury and offering them a direct experience compared with just being online. Travel drives aspiration.
The growing trend is for personalization and, as such, luxury brands are moving to create bespoke – or at least personalized – products. Design is a great driver, and we now look for great design in everything ranging from clothes and furniture to kettles and toasters.
What is the best brand of all? It would have to be Hermès because it adheres to the golden eight impeccably time and again. It has both superb brand management and financial performance, and has become a best-performing business within its sector.
But how can the lessons from luxury branding apply to leaders?
The principles that have brought long- term success to the likes of Hermès have a surprisingly broad application for businesses. We have seen it with Apple – witness the visionary leader, the brand story, great design and materials, control of distribution, exceptional service, premium pricing, personalization through all the accessories, etc. But the principles also apply to individual leaders in terms of driving through the vision, heritage, design, control, the brand code and, of course, service and the whole human side.
There is almost no area in the business world, however unglamorous, where attendance to these apparently “luxury brand” fundamentals will not lead to the establishment of long-term position at the top of the sector with premium pricing to match.