Myths of Luxury Branding

Shared by Paul C.
Kostial
www.KostialCompany.com
Office - 888.241.6634, Extension 719
The Six Myths of Luxury Branding

How to Build a New Luxury Brand
By Pamela N. Danziger, Unity Marketing
Many people both in and out of business believe that advertising makes people desire luxury, so
the key investment in luxury brand building is budgeted to advertising. The simple fact is the
great bulk of advertising we are exposed to day-in-day-out doesnt work to drive sales. It may
well build brand awareness, but the traditional medium of advertising does not work in this
multi-media, information-intensive society. Luxury marketers need to do something vastly
different to get their luxury branding messages to consumers and hopefully drive consumers to
action.
Half the money I spend on advertising is wasted; the trouble is, I
dont know which half. - John Wanamaker (1838-1922)
Luxury Marketing Catch-22: How Do You Build a Luxury Brand if

Advertising Doesnt Work Anymore?
Just because most advertising doesnt generate sales doesnt mean that luxury companies should
necessarily stop advertising. Rather they need to create ads that resonate and are relevant to the
passions, desires and fantasies of the consumer. The brands ads must tell a story that will be so
involving that the consumer becomes part of the brand story. But the brand story needs to be
revised, refined, reinvented as the values of the consumer change (as they inevitably will).
Brands must be expansive so that they can become part of many peoples lives and they can
change with the times.
The key word is RELEVANCEdelivering meaning to the
consumers life today and having an expansive vision in order to
continue to deliver meaning to the consumer in the future as their
life changes.
Unity Marketing, 2005
Excerpted from Pamela Danzigers Let Them Eat Cake Marketing Luxury to the Masses as well as the Classes (Dearborn Trade, 2005)
Shared by Paul C. Kostial
The lesson here is to look at brands that have longevity and have sustained themselves over time,
like Burberry which was founded in 1856, as well as many other luxury brands that have a
history spanning decades even centuries, and you find brands that continue to reinvent
themselves to stay relevant. The key word is RELEVANCEdelivering meaning to the
consumers life today and having an expansive vision in order to continue to deliver meaning to
the consumer in the future as their life changes. Look at failed or failing brands, like Polaroid,
Schwinn bicycles, Miller High Life beer, Singer sewing machines (have you noticed that interest
in home sewing is going through the roof, but the Singer brand isnt around anymore to take
advantage of it), and you find companies who failed to keep their brand relevant. They didnt
have an expansive vision of what their brands could deliver.
Since in the luxury marketing world, branding is both the medium and the message in the
promotion side of marketing, we need to deconstruct the six myths of luxury branding in order to
build lasting luxury brands for the new luxury market.
Luxury Marketing Myth #1: Advertising is key to promoting and selling

luxuries
Reality: The luxury marketing triple play generates sales: the product
brand, dealers brand, price/value interact to make sales
In luxury marketing there is a subtle interplay between three factors that most strongly influence
the luxury consumer to buy: the price/value relationship (with an index value of 125, which
means this factor is 25 percent more important than the average); brand/company reputation
(also index value of 125); and store/dealer reputation or, in case of experiential luxuries, the
service providers reputation (index value of 124). These three factors interact synergistically to
encourage the consumer to buy.
In luxury marketing there is a subtle interplay between three
factors that most strongly influence the luxury consumer to buy:
product brand, dealer or stores brand or service providers
reputation, and price/value relationship.
On the other hand, luxury consumers ranked advertisements, including television, magazines,
newspaper dead last among the factors that influenced their last luxury purchase.
Influencers Index
Price/Value Relationship
Total
125
Brand/Company Reputation
125
Store/Dealer Reputation or Where Purchased
124
Recommendations of Friends
93
Articles & Reviews
90
Internet/Website
85
Salesperson's Info
83
Advertisements
75
These three factors of primary importance in influencing luxury purchase Price/Value

Relationship; Brand/Company Reputation; Store/Dealer Reputation are what I call the luxury
marketing triple play which work synergistically together to encourage the consumer to buy.
Luxury Marketing Myth #2: Luxury consumers buy because of the brand
Reality: Brands justify purchase; they are not the reason why people buy
We all know that some consumers buy luxury brands solely because they ARE luxury brands.
Be it status, badge value, or just the desire to show one is part of a special in-crowd, some
people buy Burberry just for the check or Chanel for the CC. But that definitely is not the case
with the typical luxury consumer.
Only in a handful of luxury categories automobiles, cosmetics and beauty products, watches
and electronics and photography equipment do a majority of affluent consumers rate the brand
as very important in their purchase decision.
By asking luxury consumers how important the luxury brand was in their last purchase, we learn
that in most categories of luxury the brand plays a supporting (i.e. rated by most as somewhat
important or unimportant) rather than a starring role (i.e. rated by most as very important). In
other words, while product brand is more important than media advertising in influencing the last
luxury purchase, product brands, except in a few categories such as automobiles, watches,
fragrance and beauty, and electronics/photography equipment, are rated by fewer than half of the
luxury consumers as very important in their most recent purchase decision.
Brand Rated Very Important in Last Purchase

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Any Home
48%
Electronics
42%
Kitchenware, Cookware
36%
Tabletop
29%
Kitchen Appliances
27%
Art & Antiques

22%
Linens & Bedding

Garden/Outdoor
Furniture, Lamps, Floor Coverings
Fabrics, Wall & Window Coverings
19%
18%
17%
Any Personal Luxury

83%
Automobiles
64%
Watches
62%
Fragrance & Beauty

36%
Fashion Accessories
32%
Clo hes & Apparel

Jewelry
20%
Despite the widely held belief that brands are the big draw in the luxury market, our research
showed that while brands send quality messages or convey special qualities that the consumer
desires, luxury consumers dont have a definitive list of luxury brand names in their head, like
they do with definitive price lists. They are much more fluid in their brand reference points and
have no die-hard conviction that one brand necessarily is better than, more luxurious than or
somehow superior to another.
Luxury consumers are much more fluid in their brand reference
points and have no die-hard conviction that one brand necessarily
is better than, more luxurious than or somehow superior to
another.
The simple fact is luxury brands are not all that focal in why luxury consumers buy. In other
words, you rarely find a luxury consumer saying I am going to buy this bag because it is by
Louis Vuitton. Rather, you are much more likely to hear, I am going to buy this bag because I
really love it, and it is by Louis Vuitton so it costs more, but it is worth it.
So if the luxury brand isnt the primal cause why luxury consumers buy, what role does the
luxury brand play in the purchase decision? It is a justifier that gives the consumer permission
to buy. Luxury consumers buy luxuries because they want to and this desire is emotionallydriven and right-brain controlled. The shopper falls in love with a Chanel handbag and is at the
cash register paying for it before her rational mind kicks in to remind her that she surely doesnt
need another handbag! That is where justifiers come into play. Justifiers are left-brain reasons
that give consumers permission to buy luxuries. The more extravagant the purchase or the more
cautious and careful the shopper, the more justifiers (e.g. a well recognized luxury brand that is
at the top of fashion, of the highest quality and that will be a classic for years to come) are
needed to stack the buying equation in favor of the purchase.
The luxury brand, therefore, justifies the purchase. It confirms
that the product is of outstanding qualitywill last a long
timewill be in style for years to comeis worth the price
tagwill be admired and noticed by people in ones social circle
that matter.
Because the brand plays a critical supporting role in getting people to buy, companies must
continue to invest in building stronger branding relationships with consumers.
Luxury Marketing Myth #3: Exclusivity is critical to maintaining the allure of

luxury brands
Reality: Individuality and uniqueness are luxurious; Exclusivity its
better because only I can have it and you cant is definitely not the
appeal
Todays American luxury consumers bring a decidedly democratic ideal to their participation in
the luxury market. They believe that everyone is entitled to luxury. Over three-fourths of luxury
consumers agree with the statement, Luxury is for everyone and different for everyone. The
5
democratic ideal of luxury challenges the more traditional concept of exclusivity in luxury that is
derived from European aristocratic ideals of luxury. From this European aristocratic perspective,
luxury is made even more luxurious because it is unavailable to everybody else. This reflects
old luxury thinking that is defined from an external perspective.
Exclusivity, in and of itself, brings very little luxury value to
todays democratically-minded luxury consumer. That said, the
luxury consumer also yearns for more specialness in their
experience of luxuries.
Exclusivity, in and of itself, brings very little luxury value to todays democratically-minded
luxury consumer. That said, the luxury consumer also yearns for more specialness in their
experience of luxuries. While Americans are uniquely classless in their philosophical outlook,
they are still driven by an underlying desire for personal expression and individuality.
Exclusivity for the sake of exclusivity, as expressed by the European luxury ideal, is not what
American luxury consumers value, rather its an exclusivity derived from ones ability to express
a personal point of view, an attitude and ones uniqueness.
So the challenge for luxury marketers in the American luxury market is to deliver greater
exclusivity by making the luxury consumer feel special and unique, but never let it morph into
class snobbishness or arrogance. This delicate balance is very hard to pull off successfully.
Those marketers that do will achieve great rewards.
Luxury Marketing Myth #4: Luxury brands are something to own and to
have
Reality: Brands must perform Luxury brands must satisfy luxury
consumers performance expectations
Thinking about how the luxury brand performs for the consumer, (i.e., how it delivers a superior
experience), is the way that old luxury is transformed into new luxury. In other words, luxury
is not about having and owning as in the old materialistic luxury world, but the experience and
feeling that the luxury delivers in the new experiential luxury paradigm. Performance then is
the new key word that we should use today when talking about luxury brands. It is performance
not only in the sense of mechanical execution (e.g. cars, watches, electronics), but also
performance as it relates to how the product delivers or performs experientially.
The concept of luxury brand performance connects both the intrinsic definitions of luxury (i.e.
quality performance, design performance, uniqueness performance) with the experiential
dimensions about how the luxury brand makes the consumer feel and the way they experience
luxury.
The concept of luxury brand performance connects both the
intrinsic definitions of luxury (i.e. quality performance, design
performance, uniqueness performance) with the experiential about
how the luxury brand makes the consumer feel and the way they
experience luxury. It is through performance that old luxury,
encompassing the noun or the thing, is transformed into new
luxury that delivers the experience, the feeling, the emotion to the
consumer.
Luxury brand marketers must make sure the brand has all the superior intrinsic features that the
brand promises, and that it delivers the experiential values that touch the consumer emotionally.
It is in the dimension of performance in all its many aspects that luxury branding must focus.
Luxury Marketing Myth #5: Luxury brand awareness means marketing

success
Reality: Brand loyalty, not awareness, measures meaningful consumer
connection with the brand
Brand awareness, that is where the consumer recognizes the name of a particular brand,
measures only one thing: brand awareness, not marketing success or branding success. Just to
be aware of a brand, and this applies especially in the luxury arena where many brands have
upwards of 80 percent brand awareness in the general population, does not mean that one will
buy a brand or even consider buying a brand.
How then do you measure the effectiveness of those efforts, if brand awareness wont do it?
Brand loyalty is the metric that Robert Passikoff, founder of Brand Keys, a marketing and
7
branding consultancy, proposes as the way the success or failure of corporate strategy to connect
with the luxury consumer is measured.
By taking the percentage of luxury consumers who rate brand very or somewhat important in
their purchase decision and doing a few more calculations, we can stack up the key luxury
product categories in order to show how consumer brand loyalty operates within and between
luxury product categories based upon an index average of 100.
Luxury Category Brand Loyalty Index
0
20
40
60
80
100
120
140
160
180
Any Home
167
Electronics
147
Kitchenware, Cookware
126
Tabletop
101
Kitchen Appliances
94
Art & Antiques

77
Linens & Bedding

66
Garden
63
Furniture & Floor Coverings
59
Home Decora ing Fabrics, Wall Coverings, Window

Any Personal Luxury
168
Automobiles & Rec Vehicles

129
Watches
125
Fragrances & Beauty

73
Fashion Accessories
65
Clo hes & Apparel

Jewelry
40
For example, the index of brand loyalty reveals that in home luxuries, the brand is 67 percent
more important to consumers in the purchase of electronics and photography equipment (167
index). Within the personal luxuries categories, luxury consumers rate brand 68 percent more
important when buying automobiles (index 168) than the norm. As we have seen, brand loyalty
is highest in categories that are mechanical in nature (e.g. gears, movements, wheels and motion)
or highly personal (e.g. cosmetics, beauty products).
High brand loyalty categories are characterized by intense competition among marketers with the
top brands being those that forge the strongest connection with the luxury consumer.
8
Low brand loyalty categories, such as jewelry (index of 40), or home decorating fabrics, window
or wall coverings (59 index), signify luxury categories where opportunities abound for new
luxury branding strategies because the competitive playing field is virtually open.
Luxury Marketing Myth #6: Luxury brand is about the product

Reality: Luxury brands connect corporate strategy with consumer
psychology
The role of the luxury brand is to connect corporate strategy, which controls the design and
manufacture of the object and develops the branding messages, with the consumer psychology
which gets people to buy. Its through the performance of the brand, both in tangible and
intangible emotional ways, that the company delivers an experience of luxury satisfaction to the
consumer. Luxury marketers, while they must design and manufacture the ultimate best of the
best products, also need to realize that the product, the thing itself is secondary to the experience
of the thing by the consumer.
The brands are the embodiment of corporate strategy, designed,
created and directed by the company. The brands connect with the
consumers psychology and encourage them to buy.
The essential role of brands and branding in the luxury market is to influence the consumer in
their purchase decision, which ultimately is the only thing that really matters. Our luxury brands
become the medium through which we influence the consumer to buy. The brands are the
embodiment of corporate strategy, designed, created and directed by the company. The brands
connect with the consumers psychology and encourage them to buy. The luxury brands dont
work alone, but they are a critical aspect of justifying the consumers luxury purchase.
A luxury marketer that focuses solely on the product or the thing and designs the ultimate best
of the best product is missing a huge opportunity to deepen their connection with the consumer
in the emotional realm. Fine quality things are nice, but they dont necessarily motivate the
consumer at the experiential or emotional level. Luxuries that perform only at the intrinsic level
are missing the most important dimension of luxury and that is the emotional, experiential realm.
That is why it is imperative for every single luxury marketer selling things to fully and
completely embrace the experiential dimension of luxury. They not only need to design and
produce the best of the best thing, but they need to make sure that their best of best product
also performs and delivers the emotional, experiential satisfactions that the luxury consumer
most desires and craves.
Keys to Building a New Luxury Brand

In conclusion, the keys to building a new luxury brand boils down to a few key ideas:
A luxury brand must be expansive: It must be a big idea that gives the marketer
new places to venture and new opportunities to meet in the consumers personal
life.
A luxury brand must tell a story: Story telling is a fundamental way humans
transmit and process information. Brand recognition is no substitute for brand
connection and its through brand stories where consumers can connect. It
through brand story telling that corporate strategy connects with the consumer.
A luxury brand must be relevant to the consumers needs: A luxury brand must
be relevant to consumers needs, meeting their passions and desires emotionally
and physically. And a luxury brand must stay relevant as luxury consumers
needs change, thus the necessity to have an expansive brand that gives marketers
room to grow.
A luxury brand must align with consumers values: Consumers are bringing a
new sensibility into the marketplace that is about more than having and getting.
They want their consumerism to provide a greater meaning and they are looking
to do good when they shop.
A luxury brand must perform for the consumer: The experience of a luxury brand
all comes down to how well the brand performs its experiential duties for the
customer. If it makes him or her feel wonderful, special, unique, as well as
performing its specific material role or purpose wonderfully, whether it be a
cooking pan, an evening dress, a set of sheets, or a new PDA, then it meets the
consumers performance expectations. It is luxury.
10
More about Let Them Eat Cake: Marketing Luxury to the Masses as well
as the Classes
In marketing circles today the luxury market is all the rage. And no wonder, the affluent
consumers have incomes two-and-one half times larger than the average and their households
spend twice as much on all kinds of consumer goods and services. In her new book, Let Them
Eat Cake: Marketing Luxury to the Masses - as well as the Classes, Pamela N. Danziger draws
on an in-depth investigation of the luxury market to set out who the new luxury consumer is
and how new luxury marketers can connect for greater marketing success.
In the past few years, the luxury market has been traded up. Its been masstiged,
democratized, and reinvented. And worst of all for marketers today, its been obfuscated. I
wrote Let Them Eat Cake to set the record straight on the new luxury market and how marketers
and retailers can tap its potential, explains Pam Danziger.
In Let Them Eat Cake: Marketing Luxury to the Massesas Well as the Classes (Dearborn
Trade Publishing, January 2005, $27, hardcover) Danziger explains how the only way marketers
can win with consumers today is to enhance and build more luxury into their brands at every
price point. The challenge is that the concept of luxury has changed as the tradition-bending
baby-boom generation has evolved into the new luxury market.
Backed up by a two-year longitudinal research study of luxury consumers defined as the top 25
percent of U.S. households (incomes of $75,000 and above), Pam Danziger draws on 20 years of
research experience to offer a new direction for luxury marketers. She discovered a totally new
type of luxury consumers that she identifies as butterflies the affluent consumers who have
emerged from their cocoons to reconnect with the outside world and who respond strongly to
luxury goods and services that connect with their dreams, desires, passions and value system.
Luxury is no longer something out there, restricted by income levels, personal wealth, or
spending budgets, Danziger says. Its an experience everyone wants and believes they deserve.
Today, everyone is part of the luxury market. In addition to consumer research, Danziger
provides insights from more than 25 trend-setting luxury marketers, including American
Express, KitchenAid, Starwood Properties and Crystal Cruises. Let Them Eat Cake explains how
todays luxuries become tomorrows necessities by being reinterpreted down from the affluent
11
classes to the general masses. The new book offers specific, actionable advice to marketers
who will learn:
The 7 things that every marketer needs to know about todays new luxury consumer
Where the 'new luxury' market has come from and where it is going with the baby-boom
generation at the helm
Luxury today is really a verb; marketers must transform their luxury thing into an
experience
The 4 personalities of luxury consumersthe Butterflies; X-Fluents (Extreme Affluents);

Cocooners; and Aspirersand how to market more effectively to each
Luxury pricing is not about the money, but the meaning
Exploding the 6 myths of luxury branding so marketers don't go wrong in their 'new
luxury' branding efforts
11 lessons for marketing luxury to the masses and the classes and everyone in between.
The winning marketing strategies in Let Them Eat Cake are for every consumer marketer and
retailer, regardless of where they sit in the luxury pricing spectrumwhether they target the
mass market, the budget shopper, the affluent consumer or anyone in between.
Let your customers go to Wal-Mart to get their plain white bread, Danziger says, but when
they come to you let them eat cake.
12
Excerpted from Pamela Danzigers Let Them Eat Cake: Marketing Luxury to the Masses as well as the Classes (Dearborn Trade, 2005)

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Shared by Paul C.

Office - 888.241.6634, Extension 719

The Six Myths of Luxury Branding

Luxury Marketing Catch-22: How Do You Build a Luxury Brand if

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Luxury Marketing Myth #1: Advertising is key to promoting and selling

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Store/Dealer Reputation or Where Purchased

Articles & Reviews

These three factors of primary importance in influencing luxury purchase Price/Value

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Brand Rated Very Important in Last Purchase

Art & Antiques

Linens & Bedding

Any Personal Luxury

Fragrance & Beauty

Clo hes & Apparel

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Luxury Marketing Myth #3: Exclusivity is critical to maintaining the allure of

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Luxury Marketing Myth #5: Luxury brand awareness means marketing

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Art & Antiques

Linens & Bedding

Furniture & Floor Coverings

Home Decora ing Fabrics, Wall Coverings, Window

Automobiles & Rec Vehicles

Fragrances & Beauty

Clo hes & Apparel

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Luxury Marketing Myth #6: Luxury brand is about the product

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Keys to Building a New Luxury Brand

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

Unity Marketing, 2005

Shared by Paul C. Kostial

Office - 888.241.6634, Extension 719

The 4 personalities of luxury consumersthe Butterflies; X-Fluents (Extreme Affluents);

Luxury pricing is not about the money, but the meaning

Unity Marketing, 2005

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