Luxury Brands Need Specific

Management

24 Anti-laws

1
The keys to succeed in luxury goods:
the paradox

 Do exactly the opposite of what was

taught in traditional brand management
and marketing lessons!

2
 The paradox of luxury goods

 High price

 High cost

 Craftsmanship

 Limited distribution

 Low promotional activity

 Advertising with no sophisticated copy strategy

3
 Law n°1
Forget about ‘positioning’, luxury is
not comparative

4
Spring-Summer 2017
Haute Couture Chanel
 Law n°1
Forget about ‘positioning’, luxury is
not comparative
 Positioning
– is the difference thats creates the preference for a given brand over
the one that it has decided to target as a source of new business

 Coca-Cola: ‘the real thing’

 Pepsi-Cola: ‘the choice of new generation’

 Luxury is ‘superlative’ and not ‘comparative’ : being unique is

what counts, no comparison with a competitor

 Chanel has an identity but not a positioning: identity is not

divisible, it simply is

6
 Law n°2
Does your product have enough
flaws?

7
Hermes woman’s watch
 Law n°2
Does your product have enough
flaws?
 Luxury perception: ‘product of excellence’ but…

 Functionally, Seiko watch is superior to many luxury watches

 Luxury brands not interested in being the leader in utilitarian

or functional comparisons

 They are hedonistic and symbolic

 Hermès watches, Ferrari cars

9
 Law n°3
Don’t pander to your customers’
wishes

10
Cartier Rouge

11
 Law n°3
Don’t pander to your customers’
wishes
 In traditional marketing, the customer is king

 The luxury brand comes from the mind of its creator, driven by
a long-term vision

 What are the factors behind BMW’s success?

– Clear brand identity: ‘sheer driving pleasure’

– A stable, family shareholding (Quandt)

– German company culture

12
 Law n°4
Keep non-enthusiasts out

13
Dior Handbag

14
 Law n°4
Keep non-enthusiasts out
 BMW management has calculated that BMW target accounts
for 20% of the upper segment

 The brand has preferred to exclude 80%

 BMW brand growth is achieved by penetrating new countries,

not new customer segments

 To grow, BMW preferred to buy 2 other (English) car brands

– Mini
– Rolls-Royce

15
 Law n°5
Don’t respond to rising demand

16
Gucci

17
 Law n°5
Don’t respond to rising demand
 The essence of the mass marketing model is growth in annual
results

 At Ferrari, production is deliberately kept to fewer than 6 000

cars a year

 Limited number of Hermès bags

 Rarity value sells!

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 Law n°6
Dominate the client

19
Louis Vuitton

20
 Law n°6
Dominate the client
 Luxury is a consequence of meritocracy

 Luxury restratifies the so-called classless societies…

 …But on the basis of merit, no longer simply on birth

 The relationship between parents and children is very close to

that between brand and client

21
 Law n°7
Make it difficult for clients to buy

22
You can wait two years for a
Mikimoto pearl necklace

23
 Law n°7
Make it difficult for clients to buy
 The greater the inaccessibility, the greater the desire

 The absence of rarity leads to the immediate dissipation of

desire

 Luxury has to know how to set up necessary obstacles to

desire:
– financial,
– cultural,
– logistical,

 Time is a key dimension of luxury: wait 2 years for a Ferrari or

a Mikimoto pearl necklace

24
 Law n°8
Protect clients from non-clients,
the big from the small

25
Armani

26
 Law n°8
Protect clients from non-clients,
the big from the small
 Modern luxury works on the ‘open-close’ principle

 Too much ‘open’ is harmful to the brand social function:

Lacoste crocodile

 Too much ‘closed’ is too confining and leads to financial

suffocation

 The luxury brand becomes segregationist and forgets all

society’s democratic principles: PR are ultra-carefully targeted
(Louis Vuitton CRM)

27
Tag Heuer ad

• No commentary
• No blurb
• No sales pitch
• Cryptic baselines
• « What are you made of »
• « Don’t crack under pressure »

28
Versace

29
 Law n°9
The role of advertising is not to sell
 In luxury the dream comes first

 BMW head in the US:

 « My job is to make sure that the 18-year-olds decide that, as

soon as they have the money, they will be buying a BMW…

 …I have to see that when they go to bed at night they are

dreaming of BMW »

 The dream must always be recreated and sustained, for reality

kills the dream

30
Leviev Emerald-Cut Tourmaline
Earrings

31
 Law n°10
Communicate to those whom you are
not targeting
 Luxury has two value facets: for oneself and for
others

32
Cartier Pasha 18K Yellow Gold Alarm Moon
Phase Blue Dial

33
 Law n°10
Communicate to those whom you are
not targeting
 Luxury has two value facets: for oneself and for
others

 In traditional business keywords are efficiency and ROI:

– Media plan concentrates on the consumers target

 In luxury, if somebody is looking at somebody else and fails to

recognize the brand, part of its value is lost

 It is essential to spread brand awareness beyond the target

group

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 Law n°11
The presumed price should always
seem higher than the actual price
 In mass markets: introductory prices

 In luxury, when an imagined price is higher than the actual

price, that creates value

 Top-class restaurants menus do not show prices

35
Berluti

36
 Law n°12
Luxury sets the price, price does not
set luxury
 Traditional business is fully ‘demand based’

 In luxury you first come up with a product then you see at

what price you can sell it

 The more it is perceived to be a luxury, the higher the price

should be

 Key consequence for selling:

– Sales staff help people understand, share the mystery, the spirit,
the time invested….which explains the price

– Customers will be free to buy later

37
Bottega Veneta

38
 Law n°13
Raise your prices as time goes on in
order to increase demand
 In standard market model, when price falls, demand rises

 With luxury, the relationship is reversed

 Krug and Dom Pérignon champagnes

– Dom Pérignon was introduced at a price 3 times higher than that of

Krug!

– Then Krug substancially increased its prices: within 10 years it went up

from $19 to $100 a bottle

– And created Krug Clos du Mesnil that fetches a cool €800

 REMEMBER : Luxury is ‘superlative’ and not ‘comparative’

39
Graff

40
 Law n°14
Keep rising the average price of the
product range
 In traditional business, you launch a product at a skimming
price, then when competition comes onto the scene, you drop
the price

 In luxury it is precisely the opposite

 A brand that cannot grow in volume and profitability other

than by launching accessible products shows that it is no
longer part of the luxury market

– Mercedes (regular and premium cars) and Maybach (luxury)

41
Louis Vuitton

42
Strategy for pricing a new
product
Skimming High price

Market
pricing

Penetration Low price

pricing 15-43
 Law n°15
Do not sell
 The luxury strategy is the very opposite of the volume
strategy

 In luxury, not trying too hard to sell is a fundamental

principle in relations with customers

 Marketing Director at BMW USA:

– « When it comes to luxury, the best way of reaching the very well-
off is to let them come to you »

44
Berluti

45
 Law n°16
Using stars to promote luxury is
extremely dangerous
 A luxury brand is courted by the stars

 In the same way, the stars are courted by journalists and

paparazzi

 The brand must respect its customers, but it also has to

dominate them

 Even the most famous ones

46
Graff

47
 Law n°17
Cultivate closeness to the arts for
initiates
 In traditional business, the brand follows people’s tastes
(music,…)

 Luxury is not a follower, it is creative

 Luxury brand is a promoter of taste, like art:

– Louis Vuitton sponsoring piano concerts at the Abbaye de

Royaumont

– Cartier Fondation d’Art Contemporain

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 INSPIRATION
17th century dutch paintings…
Valentino FW 2013/14

49
 Law n°18
Don’t relocate your factories
 Reducing costs is vital in the mass markets, and this often
means relocating factories

 Luxury: you buy a product steeped in a culture or a country

 BMW builds its cars in Germany (except 3 Series)

 BMW keeps production of the Mini in the UK

 BMW 3 Series built in Thailand and in the US as access

products are not true luxury any longer

50
Balenciaga

51
 Law n°19
Don’t hire consultants
 The ‘best practices’ they offer in counsel may work for mass
marketing, but would gravely affect pricing power luxury

 Consultants will consider 2 groups when devising your brand’s

next move
– customers and competitors

 The two people consultants study are the very two groups that
luxury doesn’t pander to?

 Firstly, the brand would shift its focus from quality to pursuing
savings or quick profits

 Secondly, the brand would become a follower and any sign of

imitation can be the death of brand identity

52
Bottega Veneta

53
 Law n°20
Don’t test
 This goes back to Luxury’s stance on excluding customer’s
taste and influences in their product development process

 Mass market often utilises testing to get a sense of their target

group’s tastes and preferences

 This kind of feedback then helps the firms develop the product
so that it can appeal to the masses

 Luxury educates the customer, thus they only get to interact

with the final product

54
Rolex Oyster Perpetual Date

55
 Law n°21
Do not look for consensus

 The main focus will always be the customer with superior

tastes over the mass market offerings

 Instead of looking outwards to the customers for direction,

luxury brands look internally and have a discussion on the way
forward

 If the house believes in the next step and rally around it, they
can succeed in convincing their potential customers as well

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57
 Law n°22
Do not look after group synergies
 Mergers or acquisition are often followed by synergies to
eradicate redundancies

 But it could break a luxury brand: Ford and Jaguar’s synergies

 LVMH has proved that it is to bring luxury brands together

under one group and still maintain their individual statuses:
maintaining each brand’s independence and identity

58
Versace Fine Jewellery Collection

59
 Law n°23
Do not look for cost reduction
 While most companies are working to keep their costs down,
luxury avoids this approach as cost reduction often leads to
compromised quality

 Pricing power is not based on cost reduction

 Hence the emphasis on added value and feelings of uniqueness

 Each member of staff plays a part in the value creating process

– an artisan who gets an idea that originated on the workshop floor
during production or perhaps it could be a member of the sales staff

60
Bulgari B zero1 Ceramic Collection

61
 Law n°24
Do not sell openly on the Internet
 The internet takes away some of the fundamentals the luxury
brands use in their strategy: the one-on-one customer
interaction

 However, luxury bands haven’t completely dismissed the

internet

 The brands considered to be supreme luxury use the internet

to tell their stories about the individual products and of the
brand

62
Louis Vuitton

63
 Anti-Laws Limitations

 The anti-laws may be powerful but they do have their

limitations

 For starters, growth is limited for a brands that adheres to

these rules

 Secondly, it’s a highly demanding management style

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