Luxury concerns all trades

1. LEARNING FROM LUXURY
ALL SECTORS CAN DRAW ELEMENTS OF STRATEGY FROM LUXURY.
The luxury marketing strategies are not limit to the traditional luxury markets. In fact, you can
always find, in every trade or market, a luxury niche, or more precisely a niche in which a
luxury strategy could be successful, even in those trades where it is not inmediately apparent.
In this article, I analize the strategies implemented by three well-know and prestigious brands.
Verónica Cochón Vazquez
Strategic Marketing Adviser
Specialized in Luxury Market
Understand the rules in order to adapt them
When you are not in a traditional luxury sector, the more important point is to respect the
specific rules of luxury, or at least to understand them well enough to adapt them to the sector
in question.
A trade is particularly favourable to a luxury strategy if its average price is rising, or at least
stable. In particular, it is the relative price to the market that must be taken into consideration
and not the absolute price of the product. The price of the product might be decreased, but it
must decrease significantly less than the market price, so as to conserve a high price premium,
and in addition it is necessary to plan a compensation strategy for existing clients.

2. LET´S SEE SOME EXAMPLES
How Apple follows a luxury strategy
As everybody knows, Apple was founded in 1976 by Steve Wosniak and Steve Jobs in
California, around a vision: that of the computer with a human face, the computer as the
servant of man and not the other way around.
In fact, Apple´s strategy has all the characteristics of a luxury strategy applied to a traditional
market. Let´s review them:
. A strong vision at the beginning, a creative Utopia.
. A historic, creative founder, nurturing and personifying this Utopia, who, having been
supplanted, returns to save the now-declining company.
. A temporal dimension that now solidifies over time.
. A status component: when you use an Apple, you show it off proudly.
. A collective cultural dimension and a personal one (Apple fans can spend hours explaining
to you to what extent their computer is different from, and nicer than, that of any other brand)
and exceeding pure functionality through an aesthetic dimension and sensual materials (glass
and aluminium for the Imac)
. A relationship to art, since the brand is worshipped by design professionals.
. Personalization taken to the extreme
. The systematic creation of virtual rarity. Hence the queues of clients waiting an entire night
for the opportunity to buy an iPhone as soon as it comes out.
. The systematic creation of rarity. Hence the queues of clients waiting an entire night for the
opportunity to buy an iPhone as soon as it comes out.
. Increasingly controlled distribution. Since 2001, exclusive boutiques and dedicated Apple
stands are multiplying, which enables them to remain in direct contact with their clients, and
never in direct comparison with other PC brands.
. The prices clearly higher than all competitors prices and never reduced
. Total control on production and a clear transparency of the working conditions
. Apple is not only a brand, but above all a universe.
The Lacoste example
Admittedly Lacoste is not a luxury brand but it follows the model of most luxury brands. On
analysis, one can find the ingredients of the management of luxury brands and manyo f its
guiding principles:
. A real story is told, that of tennis champion René Lacoste, who was one of the French Tennis
Musketeers. At that time tennis was an upper-class game, similar to golf.
. Lacoste has a historic, iconic product, the classic t-shirt.
. There is a constant concern for quality, with hand finishing, genuine mother of pearl buttons,
and the embroidered crocodile, the brand´s symbol.

3. . The advertising campaign does not aim to sell a product but rather to make people dream:
. Exclusive Lacoste stores have opened on the most fashionable avenues around the world.
. The brand´s presence in sporting events, mainly through sponsoring, revitalizes its historic
tennis and golf roots and puts it in the news
. Growing importance is given to creativity, thanks to fashion designers.
. Limited series, created by fashionable such as Chinese Li Xiafeng or Jonathan Adler at higher
prices
. There have been launches of it bags such as the Cathy bag (Catherine Lacoste, daughter of
the founder, who was the youngest world golf champion)
. Worldwide expansión including the emerging markets China, India, Russia and Brazil
. A wider range of products associated with fashion is offered: shoes, accesories and of course
perfume
. Price stretching has taken place across the whole range to boost the image
MIXED STRATEGIES
Sometimes a purely strategy is difficult, and often costly, to pursue. In particular, it is highly
demanding in terms of distribution. We might therefore wonder if it is not possible to pursue
both strategies in parallel, within the same brand. This is what I call mixed strategies,
characterized by the fact that they are practised under the same brand name, one part using
the traditional four Ps, the other, the four Ps luxury.
In a so-called two-tier system strategy, one of the tiers is luxury, the other premium. The tiers
are clearly separated, but within the same house.
For example, in cosmetics, new brands are continually being born, close to luxury, but in reality
only part of their business is inspired by luxury. Caudalie, a french cosmetic brand, was born
in the Bordelais región, the high place of French wine. It is base on vinotherapy. We find both
the luxury, in the brand´s exclusive hotels and spas base on the universe of the vine and the
premium dimension, in the selfcare products and sold in the classic perfumery networks. In
this case, there is no possible confusion: the products of the two tiers bear the same brand
name, share the same concept, but are completely different.
Let´s analyze the Nespresso Brand
In this case, the product offer itself comprises a luxury part and a premium part, the two being
closely intertwined. Unlike the previous case, you do not buy one product or the other, you
must buy both.

4. A luxury strategy on the capsule
Here we find all the elements of the luxury marketing mix:
. The complete control over distribution, Louis Vuitton style, maintaining the direct contact
with the client and subtly using the internet for repurchase and personalized dispatch.
. The product strategy (limited series, specific pattent technology, the quality of the coffee
obtained, the look of the capsules)
. The price strategy, very high
A Premium strategy on the machine
Once the machine has been bought, the brand is installed at home, and since the machine
and the capsule are interdependent, a loyal client base, which is the first stage of success in
luxury, is quickly created, for a reasonable investment cost.
Since there is one common brand, it is in terms of communication that it was necessary to
choose between the two strategies: luxury or premium. By using George Clooney as the star
in its advertising, Nespresso chose the premium strategy. Nespresso could equally have used
a luxury strategy, without using a star, but rather by communicating on the dream of coffee,
a cultural and sophisticated product dating back to recent antiquity. By way of complement,
George Clooney could have been used as a Brand Ambassador: his image, more than star,
allow for this.
What is clear is that Nespresso chooses the premium way, it will face a difficult battle against
competitors. For a full luxury strategy, the brand must control the machine, both in production
and distribution and fix the sustainability issue of the caps.
The considerable success of Nespresso shows the relevance of this mixed approach. Two
conditions must be met. The first is that the offer must comprise at least two complementary
elements and both must be indispensable: they must be overlapping. The second is that it
must be possible to place the brand name on both.