High Symbolic Value

Leading brands have a crystal clear understanding of how they interact with customers. The desired experience is planned and anticipated as much as possible. But perhaps their most admirable quality is the brand’s ability to learn from each customer interaction and adjust accordingly. One segment that does this well is luxury. Luxury brands are premised on offering high symbolic value to a select segment that responds to status, exclusivity, and perceived quality far more than price.

Luxury brands have long employed the notion of the Customer Journey enjoying a more longitudinal and continuous view of their experiential touch points. And, of course, they inherently leverage Word-of-Mouth (WOM) to build the cache associated with precious and limited goods.

Unlike most brands, their organizations are more unified in serving their customers. Many brand organizations have multiple departments tasked with the brand experience that causes duplication, neglect, and disconnect. Luxury brands are generally more homogeneous in their organizational design (though I have seen the occasional horrendous one too).

The entire Customer Journey for luxury brands is predicated on aspirational communications with the underlying message being “one has arrived”. And this has become the biggest danger to the entire segment. By definition, there should be small markets for luxury goods because the masses cannot afford them. However, many luxury brands have Louis-Vuitton-Neverfull-PMattempted to expand their share and volume defeating the category’s purpose.

Ubiquity and access to a luxury brand sounds like smart business but actually erodes its value by removing exclusivity. Entry level pricing as seen in the luxury car market is a trend based on the idea that the customer will remain loyal over time as they grow more affluent. However, that initial access to the brand erodes its prestige at the very outset. Worse yet is when a luxury brand discounts its price – it virtually tarnishes its position immediately in such cases. Indeed, pricing is one of the most strategic levers available to luxury brands.

Often knock-offs are mentioned in the context of luxury. Undeniably, they impact financial performance by stealing sales. Though such efforts have the bizarre effect of adding to the brand’s image as one highly desirous of ownership even if through illegal means. Whether it be a Hermes scarves, Manolo Blahnik shoes, or Patek Philippe antique watches, the luxury market’s staying power remains evident. But the category puts itself at risk if it forgets who its real customers are and the prestigious and exclusive journey they wish to take.

 

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