Luxury Brand Building: DNA, Codes, Management, and Pricing
Lesson 5: DNA & Codes
A) Creating a Luxury Brand: Nine systematic and necessary elements of signature of a luxury brand:
- The figure of the brand’s creator
- The logotypes
- A visual symbol
- A repeated visual motif
- A brand color
- A favorite material
- The cult of detail
- Constant hymns to the manual work
- A typical way of doing things
B) Two Distinctive and Unique Elements to Create and Establish a Luxury Brand: DNA and Codes.
C) Country of Origin Effect (COO): It is a key element of distinction. Not necessarily all the elements and components of a product need to be sourced in the country of origin.
D) Brand DNA and Codes:
a) DNA Characteristics:
- Unique and unmistakable
- Connected to the origin of the brand
- Not influenced by client perception
- The dream of the product
- Carries the original meaning
- Cannot be quickly altered “repositioning”
- Influencing everything
b) Codes Characteristics:
- As important as DNA
- Codes are the external symbols of a brand (logo, graphics motif, color, pattern, other).
- Must belong to the brand, not the category
- Unmistakably recognized by clients
E) Luxury and Marketing Research: Traditional marketing research techniques do not work in luxury: purchasing and consumption of luxury goods is heavily influenced by psychological factors, recruiting real luxury consumers for interviews is challenging, product performance is not a KPI for luxury.
Lesson 6: Brand Management
A) Today’s Luxury Brands: Today’s best brands are in touch with their own humanity and the humanity of others. They listen to consumers, employees, and investors and respond to the messages they receive. The challenge for brands is to respond quickly and with sincerity. They are reliable, familiar, exciting, and surprising. They have the power to touch and change us because they are human creations.
B) Successful Brand Management:
- Maintaining a premium image
- Creation of many intangible brand associations
- Pleasurable purchase and consumption experiences
- Brand elements are important
- Secondary associations
- Control distribution
- Premium pricing strategy
- Brand architecture managed carefully
- Competition must be defined broadly
- Legally protect all trademarks
C) The 8 P’s of a Luxury Brand (Ingredients for a Desirable Luxury Brand):
- Performance
- Pedigree
- Paucity
- Persona
- Public figures
- Placement
- Public Relations
- Price
D) How do Luxury Brands Nourish Their Cult and Their Personality?
Through Storytelling: It is done when an emotional experience is shared about a product. Brands must think of the customer as an audience because people receiving and hearing a story must perceive it as authentic. It is a crucial part. It is all about emotional transportation by using the vehicle of storytelling. Brand stories can be used to create and reinforce positive brand associations.
E) How to Grow in the Luxury and Fashion Business?: Through brand extension by vertical declination or horizontal diversification (or a combination of both).
F) Licensing in Luxury: Third-party companies which are granted by a brand the right to design, manufacture, and distribute at wholesale level certain products of the brand in a given territory. Examples: joint collaboration, licensee in charge or manufacturing and logistic, licensee in charge of distribution / in charge of product development.
Lesson 7: Pricing
A) Is Price the Major Factor in Luxury Strategy?: In contrast to mass-market products, price reduction in the long run usually leads to decreasing demand and vice versa. The objective of a luxury brand is constantly increasing the average price.
B) Price and Demand Models:
- Bandwagon effect: Consumers buy more products because others do it (fashion). Individuals are trying to fit in.
- Snob effect: Consumers buy fewer products because others do it. Opposite to bandwagon.
- Veblen effect: The higher the price, the higher the demand. Consumers perceive higher utility at a higher price.
- Diderot effect: Consumers buy products or styles that they already own. People are starting to rent luxury goods.
C) Why Luxury Products Have Different Retail Prices?: Different areas cost of life, global and local brand positioning, exchange rates, local duties, competitors’ strategy, VAT exemption.
D) Pricing Strategies:
a) Benchmarking (competition by product and region)
b) Transfer pricing (accounting practice)
c) Discounts (due to product obsolescence)
c) Movement of certain tax entities in the logistics and sales product chain to low-tax countries.