The oldest business model, originated in France. Luxury branding is not about getting a consumer to choose a luxury brand over the competition. Its about getting them to see the brand as the only solution to their desire. By Adam Smiths classification of goods, luxury goods  are limited in supply, difficult to procure and very expensive

Product categories of Luxury sector are:

1. Fashion:

  • Apparel (Pret-a-Porter, Haute Couture)
  • Accessories (watches, jewelry, leather goods, silk accessories, eyewear) – hard luxury

2. Beauty:

  • Hair
  • Fragrances
  • Cosmetics

3. Beverages

4. Machinery (cars, yachts, aircraft, cruises)

5. Property (hotels, clubs, resorts, spa, homes, maisons)

6. Luxury food

7. Fine Art

8. High quality design

Luxury consumer base on physical and psycho-social attributes of luxury brand, which have symbolic, functional and experiential value.

  1. Psycho-social attributes in expressive dimension have symbolic value (rarity, uniqueness, expensiveness, exclusivity, inaccessibility, conspicuousness)
  2. Psycho-social attributes with functional value (excellent quality, craftsmanship, durability, refinement)
  3. Physical attributes have experiential value, based on experience (elegance, sophistication, innovativeness, comfort, handcraft, creativity)

So, as a value proposition of Luxury brand, customers claim/expect mainly:

  • Timelessness /durability
  • Heritage of the brand
  • Uniqueness
  • Exclusivity
  • Craftsmanship

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“We call Cartier a maison, not a brand. We have the mission to be an artist and create jewelry and watches that are universal and eternal. Universal in that it appeals to connoisseurs all over the world; timeless in that it is revered and dreamed of today and also 50 or 100 years from now” – Stanislas de Quercize, President & CEO of Cartier

Luxury brands value chain

Companies are usually vertical integrated in:

  • Design
  • Manufacturing
  • Retail

There are French brands that are usually fully integrated (as Louis Vuitton). Italian brands otherwise focused on design and manufacturing and have a network of selected suppliers.

Characteristics of Luxury Brands

Remember, its all about superior competences. In the center of luxury brand – the brand with its heritage, tradition, signature code (versus fashion brands center, which is always a designer as a persona with personal interpretation and creativity expressed in fashion show).

Timing: born two centuries ago in France, Italy and Switzerland

“Ferragamo is one of the few brands with a long history, heritage, and absolute integrity… really the epitome of what luxury should be in the new century” – Michele Norsa, CEO Salvatore Ferragamo

Geographical and Cultural Differences in Value Chain Design

French brands: Vertically integrated in production and distribution »Louis Vuitton, Hermès

Italian brands: Focused on design and manufacturing, not totally integrated in distribution, mix of retail and wholesale channels » Tods, Ermenegildo Zegna, Salvatore Ferragamo

American brands: Referring to accessible luxury, focused on design and retail, not integrated in manufacturing » Coach, Michael Kors

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