Brand Management and Marketing of Luxury Goods

The marketing of luxury brands is a highly complex and difficult task and differs strongly from the management of ordinary brands. At the heart of the difficulty lies a paradox: To increase sales and at the same time to preserve exclusivity. A luxury brand has to be anchored in the heads of as many people as possible and be desired but it must remain inaccessible to most of them. The more a luxury brand or good gets actually purchased, the more it loses ist aura of exclusivity, ist attractiveness and ist 'dream value'.The purpose of this book is to analyze the specificities of the management and marketing of luxury brands in comparison to ordinary brands. The analysis will mainly focus on the four elements of the marketing mix, namely product, place, price and promotion. A detailed analysis of the four elements will disclose the particularities of luxury brands and present the requirements of successful luxury brand management which is able to overcome the difficulties resulting from the mentioned paradox.



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Chapter 3, Personal and Social Functions of Luxury:

Experts have detailed the well-defined functions brands fulfil for the customer. First of all, they reduce the risk of making wrong decisions: Brands create trust in the expected performance of a product and provide continuity in the predictability of the product benefits. Additionally, bundling information about the manufacturer and the origin of a product in the form of a brand helps consumers find their way in a commercial environment that gets more complicated day by day. Additionally brands provide the creation of image benefit and deliver self-expressive value (Kotler/ Pfoertsch 2010).

These functions are also relevant for luxury brands but their relevance and relative importance is different compared to private labels and premium brands. The functions of risk reduction and information efficiency tend to play a rather subordinated role in the purchase decision of luxury brands (Lasslop 2005: 475).

By contrast, the function of image benefit is more important and is supplemented by a couple of other personal and social functions which help customers construct and maintain identity and social meanings:

‘The symbolic meanings of products operate in two directions: outward in constructing the social world, and inward towards constructing our self-identity. Products help us to become our Possible Selves’ (Mootee 2008: 11).

The personally oriented purchase of luxury goods is to a large part internally driven and reflects self-fulfilment goals. Socially oriented purchasing behaviour in contrast is externally driven, reflecting a desire to impress others. It is often referred to as conspicuous consumption (Veblen 1899). It is evident that a clear-cut distinction between personal and social functions of luxury brands is not always possible as they are usually intricately linked. Nevertheless, for analysis sake this chapter will discuss both personal and social functions of luxury brands in distinct sections and analyse their interaction.

3.1, Personal Functions:

Luxury brands offer customers the possibility to reward themselves and have self-expressive and sentimental value. In contrast to the social functions of luxury, personal functions reflect self-fulfilment goals rather than the desire to express status towards others. It has been suggested that internally motivated customers purchase luxury goods for personal satisfaction or to secure superior quality, not to signal their wealth (Valtin 2008: 252).

Luxury items as being high-quality goods are able to deliver intrinsic pleasure to the owner and to fulfil the hedonistic drive to treat oneself (Husic/ Cicic 2009: 231f; Valtin 2008: 252). Apparently, purchasing expensive and elaborate goods is a way to reward oneself: After suffering a high amount of stress, work and pressure, people enjoy allowing themselves a little bit of luxury. The purchase decision is not based on the need for the items or functional product characteristics, but on the desire to relieve stress, hardship and pain from work. Spending money on unnecessary items and irrational consumption in order to enliven the daily grind delivers pleasure. Experts see a new trend in the wish to pamper and reward one-self which matches the new trend of well-being (Lasslop 2005: 470).

Brand managers and marketing specialists are aware of the human desire to recompense oneself and have used self-gratification in advertisements to exploit the consumers mind into buying luxury items. Especially in advertisements of premium brands which try to be perceived as high-end products the main pitch is often ‘you deserve this’, or as a famous cosmetics producer states it ‘because you’re worth it’ (L’Oreal 2011: online).

The consumption of luxury is a way to reward oneself through the purchase of single goods. Although, as John Keats says in his poem Endymion ‘a thing of beauty is a joy for ever’ (Keats 1818: 3) whose loveliness will never pass into nothingness the acquisition of a luxury good is a short term gratification. Thus, the purchase of luxury goods has a certain inherent addictive character: The more you buy luxury goods, the more you get rewarded, the more you depend on it and want of it. The desire of growth and maturation - experts call self-realisation (Lasslop 2005: 480) - becomes bigger. One can conclude that the more a luxury company convinces customers that by purchasing a luxury good, they reward themselves, the more likely customers will repeat their purchase decisions and continue to buy products of the brand. In line with classical behaviouristic theories one can assume that customers ‘learn’ through rewards - it is in fact a form of conditioning.

Humans tend to consider their possessions parts of themselves (Belk 1988: 139f). As luxury goods are very valuable items they increase one’s perceived worth. If one accepts the assumption that consumption is an extension of the self (Belk 1988: 139f), then the consumption of luxury goods is the extension of a ‘better self’.

The behavioural economist Dan Ariely points out that we always overvalue what we possess (Ariely 2009: 130) because our possessions are intricately interwoven with our experiences and feelings which we value very highly. The possession of luxury goods works in both directions: We appreciate them because they are expensive and beautiful and we appreciate them even more if they are ours. At the same time their high value reflects and enhances our own value - they work as some sort of convex mirror which augments our ego.

Luxury goods are also regularly purchased as presents. High-quality presents offer the possibility to give someone a treat while enabling the giver to present himself as a wealthy and generous person with good taste. A large number of luxury presents is given to women by men who want to win or to keep the ladies’ favours. The 1953 movie ‘Gentlemen Prefer Blondes’ immortalizes Marilyn Monroe singing ‘Diamonds are a girl’s best friend’ and illustrates although in light-footed Hollywood style the intricate relationship that exists between wealth expressed in luxury goods and the possibilities this offers in emotional or amorous relationships.

The tradition of luxury gift-giving is especially pronounced in the Chinese culture partly explaining the luxury boom in Asia. Sales of luxury goods rise during the Lunar New Year when everybody gives each other presents.



Lucie M. Scholz was born in Bavaria, Germany, in 1987. She grew up in Brussels, Belgium, and studied Communications Sciences (BA) in Munich and Mexico City and after a stay at the University of California earned her Master’s degree in Business Administration with distinction. She has been working for a renowned luxury brand in the cosmetics industry for several years now.