The Luxury Strategy

[smark]

Since most of you guys here focus on consumer goods and "traditional"/mass marketing methods, I thought it would be a good idea to provide you with a macro-level view of the so-called "Luxury Strategy." This is the most successful marketing & management strategy used in the luxury sector (cars, yachts, jewelry, resorts, etc.) to date and is what allowed a number of small but profitable European companies to grow into global billion-dollar enterprises during the late 20th century.

Note: Though the “Luxury Strategy” has primarily been used (and has been more successful) in the usual luxury sectors listed above, it can be used in any saturated/competitive sector where one wishes to differentiate himself. Best Example: Apple. Having said that, from here on I will be focusing on the application of this strategy in the luxury goods sector and NOT the luxury services sector.

This strategy is based on the synonymous book The Luxury Strategy by two professors of HEC Paris (Europe's luxury research center) and one of which used to be the CEO of Louis Vuitton in the 1980s when it was still a rapidly-growing ‘local’ company.

Luxury’s Four ‘Ps’ (product, price, place, promotion)
​

1. Product.

• Quality, timeless products made to serve a certain purpose (no matter how small or insignificant that purpose may be) that are highly beautiful.
• Tied to a heritage, unique artisanship/know-how and a specific culture.
• Products should take the role of social markers, thus providing the owner with a certain degree of status in any social setting (as long as the brand and/or the product are recognized by others).
• Luxury products are not perfect products. They may be of superb quality but it is their flaws that distinguish them (similar to a worshipped piece of art). I like to refer to this as ‘imperfect perfection.
• At least one part of each product should be made by hand.

2. Price.

• Products should be offered at a price that cannot be justified by their mere function(s).
• This high price is justified by a number of intangibles such as: the perceived rarity of some of the materials used, the culture to which the luxury brand is tied to and maintains a constant connection with (i.e. Ferrari and Italy), the ‘unique’ manufacturing and testing methods used to create each product, the rarity surrounding a product due to the low number of pieces made, the prestige surrounding a well-known brand, etc. A ‘test’ to see if a brand truly is luxury is if it can ask any price it wants for a product (only applies to already established brands). In the book, this is referred to as pricing power.
• The average price point of a luxury brand should increase overtime. This is done by constantly releasing pricier and pricier products.
• Though luxury products are most often quite expensive, it is their price in relation to the price of other ‘comparable’ non-luxury products that makes them expensive, NOT their absolute price.
• A relatively high price alone is NOT enough to classify a product/brand as luxury.
• The price of a luxury product should NEVER be communicated. This includes ads, as well as not using price tags at the brand’s points of sale (if legal).

3. Place.

• Distribution is restricted and controlled. Usually, products are only sold in the brand’s own stores (think Hermes) OR through a qualified network of authorized dealers (think Rolex).
• Service should always accompany a luxury product, whether through exceptional customer treatment or personal product delivery, for example.
  
• A luxury brand store should be thought of as a sacred temple where everyone is welcome, but only those who believe in the brand and are willing to pay the required price can join.
• The store must enhance the image of products by elevating them as objects of art.
• The appearance of the store, as well as the management of client relations, should signify the brand’s price level (not too ‘cheap’ but not too ‘expensive’ either). The ‘trap’ here is for a store to appear so luxurious that buyers are intimidated to walk in.

4. Promotion.

• In the book this is primarily referred to as ‘communication’ and consists of (list is in order of increasing significance): paid advertising (mostly magazine ads and billboards in strategic locations), some influencer marketing (where known influencers/bloggers review the brand’s products), brand content (videos/short films, as well as pictures and small bodies of text on social media and the brand’s own website), sponsorship of sporting and cultural events as well as exclusive parties/galas. The most important form of communication for a luxury brand though is word of mouth; which funny enough, is primarily encouraged through the exclusive parties/events mentioned above.
• The goal of luxury brand communication is not to sell more products, that is the result of ‘the dream;’ which is what happens when the brand and its products are respected and talked of in a dream-like way, leading to each individual identifying with the dream that the brand can offer (i.e. Rolex watches and the dream of success).
• Thus, communication is used not only to create this ‘dream’ but also ‘recharge it.’ Because every time the brand sells a product, a piece of the dream is lost and the brand is partially weakened.
• Everything a brand does should be PR-able (personal/public relations). It is said that a brand which is not often mentioned in the press or displayed/talked about in films, music, or any type of pop culture is not truly a luxury brand.
• No, or little, passive mass advertising (i.e. TV). The only clear exception to this is perfume, but even perfumes released by true luxury houses such as Louis Vuitton do not usually follow a luxury strategy.

For a brand to be truly luxury, all four ‘Ps’ must follow a luxury strategy. If even one luxury ‘P’ is not followed (for the most part) then the brand is following what is known as a ‘mixed strategy’ (example: Nespresso).

So what do you guys think?

 

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[rpeck90]

Read the book a while back, some good ideas but rambled on about China etc.

FYI the 4 P's you put up are the marketing mix (not to confuse its luxury connotation with general marketing principles).

If you really want to learn about Luxury, I would strongly advocate looking at Markus Kramer, whom I had the pleasure of meeting in 2014. He used to be the Global Marketing Director of Aston Martin, has worked with a multitude of brands, largely focused on the "luxury" market.

Here's a TED talk by him:

View: https://www.youtube.com/watch?v=SiL3upgq3pw


He told me the underlying pre-requisite to luxury is pedigree. You simply cannot have luxury without some sort of heritage. Looking at some of the larger luxury holding co's demonstrates this -- LVMH's oldest brand was founded in 1530.

Another amazing resource you should look at is this video by LVMH CEO Bernard Arnault:

View: https://www.youtube.com/watch?v=EhNKy5yNIgs

The biggest problem most people have with luxury is that they conflate it with premium. Premium and luxury are not the same (just because you can charge a "premium" for a product does not make it luxury). Luxury is ostentation (rather like art); premium retains functional value. Fabergé is luxury. Pandora is premium.

What would a $20,000 phone or tablet look like?

That was $10k until the company went bust.

--

My advice - if you have to label it "luxury", it is likely premium.

Luxury speaks for itself.

 

[Deleted50669]

I've got it. Carbon fiber dildos. "It rides like a Bugatti, because it's made from the same stuff."

Jokes aside, luxury products are great for kickstarter. Working with suppliers is probably hellish, but well worth it.

 

[Walter Hay]

Below is an extract from my book on labeling:
"Here is one outstanding example of labeling and a slogan that created a perception of exclusivity and extravagance that appealed to the target demographic:


Who would think that a time when extreme poverty was widespread and many thousands of businesses and business owners had suddenly been bankrupted, would be the right time to launch “The World’s Most Expensive Perfume”? This was one of the most successful product launches ever, but is now almost lost in the mists of time. It happened during the Great Depression of the 1930s when millions were out of work, and many formerly successful businesses had folded. That’s when the most expensive perfume ever sold was launched with staggering success.

It was created in 1929 (the year of the Wall Street Crash), and even though it was marketed as “The World’s Most Expensive Perfume” it was a huge hit.

The bottle had simple straight lines and the label seemed so ordinary, with a stark black print on a beige background, but by twining a golden thread around its neck the designer gave an impression of luxury. It succeeded largely because it gave wealthy women whose fortunes had survived the stock market crash of 1929, the opportunity to shamelessly flaunt their wealth.

In Life Magazine 1933 it was stated: "Most expensive of Patou's perfumes is ‘Joy’ which commands $35 for two-thirds of an ounce.” This was at a time when a loaf of bread cost $0.05 and huge numbers of people couldn’t even afford to buy a loaf. The selling argument behind this walloping price is that each customer who ordered it was entitled to have a special label bearing the message: "Made for….." (The rich woman’s name.) The perception created was brilliant: Exclusivity. Only attainable for the richest and most successful people."

The brilliance of this appeal to exclusivity is seen in the fact that after a brief launch campaign, no further advertising was needed. The customers unknowingly sold the product by almost invariably displaying it in their bathroom so that guests at their lavish parties would see it and envy their hostess. The result was of course, they had to have a bottle too.

The problem eventually was that the more women there were who copied their hostess, the less exclusive the product became.

Walter

 

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[biophase]

I have a friend that runs a high end boutique. She sells her own brand and one day she gave me some, I said let me pay for it, it’s $120. She said there’s $2 worth of product in there, don’t worry about it. I said why don’t you price it at $50 then. She said my clients won’t buy anything priced under $100.

She also said that people are selling the same thing on amazon for $15.

 

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[rpeck90]

Also any more insights from @rpeck90 who is clearly very well versed in the luxury space. @biophase made some great points about the COG for say the cosmetics and electronics industries....so a great question for premium vs. luxury is what other areas is there such a massive value skew that a $2.00 product can be marked up to $120 and still provide relative value? As opposed to the heritage etc. that comes with the luxury product?

The biggest thing I found with luxury/premium comes from the people behind the brand - there's almost always some "genius" who at least had the "idea" to pursue something revolutionary.

As mentioned by @ChrisV below, this may result in the development of a new type of product (Dyson) - or may lead to superior quality (Virgin Atlantic) through the continued refinement of what's presently available.

This works *everywhere* - even on this forum. MJ DeMarco is a premium brand unto himself; the forum representing the ideal he figured out and put into his first book. This expertise is what you pay for when you choose to hand over $120+ yearly membership of the "INSIDERS" forum.

Considering that Facebook caused a near-riot when it originally suggested it would introduce a "paid" tier, I think that's a great example of premium marketing. Nor is it the only... it's my belief that every "business" is there to provide a "service". This service depends entirely on who "you" are and what you're able to deliver to a community. Your products are tools to make this service a reality to a wider community.

MJ's "service" is to destroy "action faking". The millionaire stuff is arbitrary; his sole role - or at least that of his "brand" - is to guide people down the path of consistent - productive - action. It doesn't even need "massive" action... just consistent steps towards doing something legitimate with your life.

If you want a GREAT example of this in action, check this guy out (1:43 if you're strapped for time)...

View: https://www.youtube.com/watch?v=Aa6H5vPSJLs

I watched this last night and was bowled away by the raw PASSION this guy (the surgeon) has. Notice he's *NEVER* mentioning "surgery", "medical" or anything like that. He's a SCULPTOR creating defined (timeless) beauty... and gets paid EXTREMELY well to do it.

The women go to him NOT for a nose job, but to get "the look" that's going to get them onto magazine covers and other stuff - the service he provides needs to achieve this result, otherwise the aura is lost & people don't want to pay the money. 2:22 is the precise moment the patient - Kathryne - is sold on the procedure (notice the smile and then glance back at the mirror -- "hmmm, I guess it could work").

Notice how she calls him "Dr Raj"? Premium brand.

You can tell it's premium (you may argue luxury - although in my definition, it is only premium because the work still has functional value in her life) - she explicitly says to the camera "I wonder if he can fit me in" / "has any appointments". This is the hallmark of moving away from commodity to premium/luxury (he's doing her a favour, and she's the one paying for it).

It kind of makes me sad when people knock a brand like Mercedes or Patek Phillepe. Like so much work went into making such a great product where no sacrifices are made. Every detail is perfect, every corner is well thought out.

And they get no respect.

Ask 40 people on the street “Who invented the Automobile” And almost all of them will answer “Duh... Henry Ford!” which it totally wrong.

The real answer?

View attachment 21064
View attachment 21065
And besides that Mercedes-Benz has been the innovation of the Automobile.

View attachment 21066

Besides making the verst vehicle, in the 50’s they innovated crumble zones, electronic stability control, first vehicles with climate control, instrumental in the innovation of anti-lock brakes, FOUR WHEEL INDEPENDENT SUSPENSION (Cars before that just had f*cking rods through the wheels,) they were the first to do crash testing, the gated shifter, First electric powered vehicle, first supercharged car, etc etc etc

Mercedes is no joke. They’re not some BS for rich people. They’re a major innovator in the automobile market and arguably the #1 contributor to new technology.

Leading Through Innovation



Remember: Today’s luxury products are tomorrow status quo. There was a time where only the most luxurious of cars had radios own them. It’s flagship brands that move industries forward.

Dr Ferdinand Porsche is another great example of this...

• All those Tiger I & Tiger II tanks in WW2?
• The Ferdinand tank destroyer?
• VW Beetle (one of the most popular cars of *ALL* time)?

Yep...

With Porsche, we see something that has been replicated by many "Premium" / "Luxury" brands over the ages -- the crucible of the brand starts with the work performed by a "genius" (which is just a euphemism for someone entirely committed to a particular ideal).

The difference arises from the "level" of work performed by this individual & their team. Anyone can design a car... but only Porsche had the foresight, ideas, experience & foresight to design "his" cars.

Whilst he provided his services to governments, companies and other institutions during much of his life, when it came time to exemplify his craftsmanship into a product (tool) which would showcase all of the gains/advantages the team had discovered/developed during a period, he could *only* do this through his own company.

It's often the case that the people behind great brands didn't need to create the brand. They certainly weren't bothered about crafting some sort of monolith company the size of Apple, Standard Oil etc.

Rather, they were busy focusing on perfecting their underlying skillset - providing their "service" to people who were interested in paying, and then discovered an issue that they could use their expertise to resolve. The solution they created sat at the core of their "offer" which then cultivated their brand.

We see it with Lamborghini, too (developed tractors + marine engines before cars)...

We also see it with Robert Noyce + Gordon Moore (worth $8.4bn), who founded Intel:

If you're interested in the story of IT/computers, reading up on Noyce + the Fairchild 8 is truly remarkable. The men in this photograph are single-handedly responsible for creating Silicon Valley and ALL of the modern electronic / technical developments we all take for granted.

Without the work performed by these individuals, I would not be typing this to any of you today.

----

I think the point I'm trying to make is that if you're worried about how much markup you can apply to a product, you're not in the premium/luxury game.

Premium is generally the result of inward excellence, which takes a lot of refinement, skill and work to pull off. Luxury is simply taking this inward skill and making it so rare / potent that only a certain demographic are able to even consider owning a part of it.

"Let success come to you" pretty-much sums it up. If the quality of "your" work is not deep enough to warrant people seeking you out, you're not doing it well enough. This comes into the product/offer stuff I've explained before. People never buy the product; they're buying what it "does". I can explain more about that if required, but it will go off topic I think.

 

[rpeck90]

Just wanted to highlight this.

BRILLIANT BRILLIANT BRILLIANT.

You should charge money for your posts.

That realization shifted my whole focus; forgive my clumsy meandering here; but I look at it like: First we seek to satisfy basic needs, then we seek to enhance the utility value of what we have (4gigs of ram to 32 gigs of ram) etc, then the game becomes -- how do I translate/imbued the very essence of my soul into this space, this home, this car, this dish, this item of clothing, this social experience -- such that when someone takes one look at what I've left behind (and how I've arranged it), they'll say, "David was here"

David's my name btw. LOL in case anyone is confused.

Thanks for the kind words & rep --

Yep, that's a great way to put it. If not familiar, you've described the hierarchy of human needs.

The big point I wanted to emphasize was that whilst it's relatively simple to observe how it all works, designing, manufacturing & marketing a product/service/solution which fits the premium/luxury criteria is difficult; not just from the exacting standards demanded - but from the fact that it's an "inclusive" process (as I mentioned before) -- "luxury" isn't about products, it's about process & people.

A good example would be a fat personal trainer, or I guess a broke college professor trying to teach you about business - why would you listen to someone who doesn't follow their own advice? Maybe their advice isn't worth listening to... but NOT useless.

This is the mistake most people make. They're simply the messenger. They have no achievements of their own. They don't push you very far up the social totem pole because they haven't gone there themselves.

It's the same with premium/luxury - you can't charge a high price for something which is either lacking in quality, insight, innovation, social precedent or inspiration. Its value has to come from somewhere (even if that value is subjective).

In the case of luxury, the value is much deeper than "it's a better product", or "it's got history/pedigree". It needs resonance (step 4) - the idea that your highest creative ideal matches a community's.

And what's REALLY interesting is that the greatest brands went against the grain. They did things so "proudly different" ;-) that they started to attract people by virtue of the quality of what they were doing. This quality acted as their differentiator - hence the modern trend of identifying "luxury" towards uncompromising quality (which is true but IMO only a symptom of a deeper ideal).

The simple truth, though, is that luxury doesn't need opulence... it's more about reverence. Think of the Shroud of Turin. If that thing did in fact grace the mortal remains of Christ... would you not argue that owning it would certainly be a "luxury" experience? The cloth itself is neither clean nor high quality. In fact - if it's real - it had a dead person in it. It's got blood stains on it. So what makes it worth so much?

The best example I can think of with this is Alexander's breastplate - stolen from his tomb by the emperor Caligula. Lost to history, the breastplate itself would have never made "little boots" the new Alexander... but the implication was that it would at "empower" him to perform feats as ambitious as the great man. What's interesting is Alexander - who wanted to be the "new Achilles" - ALSO followed this process - stealing Achilles' shield (or some say his spear) from Troy shortly after his crossing of the Hellespont.

The breastplate is the quintessential luxury item. It means very little on its own (negligible functional value)... but because it was used by Alexander himself (who was near deified in the centuries between his death and the onset of Christianity), it held special reverence in the hearts of most of the Roman emperors.

Indeed, Julius Caesar himself was said to have broken down & wept at the feet of a statue of Alexander during his Quaestorship in further Hispania, inspiring him to pursue the path he did. In Plutarch's Parallel Lives, Caesar is compared (favorably) to Alexander. Who does that? Why?? What's the reason for that to happen?

The same can be said about many of the greats of antiquity. Mont Blanc have diamond-encrusted Hannibal pens, there's an Alexander the Great watch for sale for $700k+ and tons of other stuff. Buying those products does NOTHING for you on a material level (apart from raising a few eyebrows) -- the key is that it gives YOU the sense of purpose, mission and belief that you can achieve what you truly want.

The point many miss is that when you say "luxury", they think of "reclining seats", "the best leather", "hand crafted" and all the trappings of material wealth. That's all good, but can be attributed to premium, too (such is the case with Filippo Loreti mentioned prior). "Hand-crafted" (in my opinion) - whilst a great way to differentiate in the modern age - is typically an homage to the processes of old... where the women of Lesbos worked feverishly with their purple dye (for example).

There's something sitting at the "core" of "luxury" which I don't think anyone has covered. This is why I wrote those other posts... if you can make a book $30,000 - what sits behind that?

The higher up the social hierarchy you go - as you pointed out - the goal / purpose changes. People identify their mortality. They want to make a mark on the world, and want to use products, ideas, inspiration and tools to do it.

This is where many of the world's "luxury" brands started out - over time, as their core "utility" was adopted by more & more people, they developed manufacturing processes etc and elevated their brand higher - typically - through the use of social partnerships (Louis Vuitton started out as the royal luggage manufacturer for Empress Eugénie de Montijo (wife of Napoleon III); Christian Louboutin had his break designing for the Moulin rouge -- could be wrong on that one but 99.9% sure he had something to do with it).

--

Telling - the stuff I posted about women / femininity before ...

• How many women would want a Hannibal pen?
• How many would want Alexander's breastplate?

They don't care... they want to indulge in social intrigues and all that other crap. Women are in NO way as materialistic as men - at least in the same way. They treat materialism (whilst obviously they'll buy shoes etc) as a means to enhance their SOCIAL experiences. Men buy things (primarily) to enhance their reputation etc. Whereas you just whisper the name "Hannibal", "Caesar" or "Alexander" to many of the world's CEO's - you'll get an instant reaction of reverence, most women simply wouldn't care. I often tear up when thinking about Milteades' feat at the battle of Marathon.

Thus, you have to ask yourself...

If it's the case that women would not want a diamond-encrusted Hannibal pen, is it luxury? Does it really stand at that pinnacle of desire that most people would associate with the term?

Likewise with a Birkin bag from Hermes.

It can be hand crafted out of the skin of the aliens that landed at Roswell - would I give a damn? Nope. Thus, could you really consider it a "luxury" item (to me)? Premium, certainly... but luxury?

This raises the biggest point of all.

Maybe luxury has nothing to do with the "thing" itself. As @ChrisV mentioned - it's about how it makes someone feel. But... maybe it goes deeper.... perhaps luxury is about what it pushes someone to do... to behave... to BE.

At the core of ALL reverence lies something that was achieved beyond the capacities of other men. This is why the likes of Elon Musk holds so much reverence in the business world. If he wasn't there, would Tesla be a viable proposition? Nope. Likewise with Jobs, Gates and the swathe of other "luminaries" of the modern world.

Rather than looking outward at what constitutes a luxury "product", why not look inward at where the "idea" of luxury comes from. Why not consider the weight of what products, tools and ideas bring forward? The Holy Grail wouldn't have diamonds and jewels on it. It's the "cup of a carpenter"... yet it's been one of the most sought-after relics in history. It's definitely a "luxury" product... yet would not have ANYWHERE near the level of craftsmanship that the latest Swarovski crystals may have.

Luxury isn't helping people "lose weight" or "get from A to B"... it's about giving them the keys to a better life. A beautiful life. A life full of youthful energy, eloquence, sophistication, intellectualism and inspiration.

How YOU deliver that determines your luxury. The price people are willing to pay (remember, people want to pay luxury prices because they believe the products are going to elevate their lives THAT much more than the other stuff) - is determined by how much weight / reverence / gravitas your solutions brings to the market. This can't be faked.

 

[rpeck90]

I'm aware of that but thanks for pointing it out.

Didn't mean to be condescending - many people have little-to-no experience with it, that's all

Would you be interested in talking more about this @rpeck90?

Sure! rpeck@frontlineutilities.co.uk

Honestly though, this is something I've been having some trouble with.

As someone who's worked for 6+ years on a "brand building" CRM software (and thus having looked quite deeply into the draw of brands), the secret can be summarized as follows: people NEVER buy the product.

The product is the "delivery" mechanism for a deeper result. The potency of this result, and the context of the environment through which it's delivered, determines its value to the buyer.

This comes from within, and is typically heavily tied to craftsmanship/excellence/experience of the originator (hence the perceived necessity of a pedigree/heritage). The deeper the perception of the illustriousness of the craftsmanship (and the perceived result it brings), the deeper the reverence of the brand.

This is why many influential brands are named after the craftsmen/women who founded them (Chanel/Porsche/Ferrari/Disney/Hughes/Ralph Lauren/Louis Vuitton/Christian Louboutin etc), and why "big names" from history are those who are perceived to have achieved more than others.

Caesar, Alexander, Hannibal and Napoleon are some obvious examples - Hannibal's being so potent that the Italian national anthem still includes an ode to the man who finally beat him, Scipio.

To be esoteric, it's my opinion that everybody has a pool of "creative energy" inside their soul. This energy can be directed however you wish - the best focus it intently on a particular "thing"... the more given to the pursuit of this "thing" determines the level at which others perceive your brand. Most give it away.

The process for this has remained consistent for the past 2k+ years - someone of magnanimous talent "got to work" in whichever field was conducive to their skills. Through the continued delivery of their service, they'd happen into ideas / problems for which they "wanted" a solution. If the tools (products) they created as solutions were good, they'd be adopted. The art of business was to manage the production & distribution of these solutions.

This is what happened with James Watt, without whom we would not be conversing today. It also happened to Imhotep, one of only two non-Pharaohs to be deified after he died.

What I've seen from the "luxury" sector is the steady commercialization of this process.

The mistake 99% make is putting the product first.

The product is merely a tool - designed to achieve a particular "result" conducive with the person who created it. This result, and its pursuit, is really what people are buying, and associate with a brand - be it luxury, premium or convenience.

The magic lies in the service delivered as a means to achieve the result.

I won't go into depth about it - all I'll say is that what most people ascribe to a brand is only what you see externally. Really, the magic happens "internally". What we've seen over the past 60+ years is the movement of this into the "post industrial" era, with the manufacturing of the goods first getting industrialized, and latterly their accessibility (through the net).

Today, people accept you can buy any brand at the click of a button - what they're hungry for is how it's actually going to improve their lives...

“If the 20th century was about manufacturing,” said Michael Burke, the chief executive of Louis Vuitton, “the 21st century will be about intangibles” — concern for preservation, heritage, the environment... 1.

In the case of Vertu, for example, the $10k phones were interesting - but what people were really buying was the "lifestyle" attached to them. Exclusive clubs, vacation spots, business networking, product/service purchasing, credit facilities etc - stuff that only Vertu could offer, and happened to be delivered through their technology (which they did do, but nowhere near as deep as I thought appropriate).

Their big problem was being too focused on the phones themselves. The phones have very little to do with the underlying "offer" people were buying. What they should have done is shifted the underlying offer to being the most exclusive "business" device in the world, and tied their product + ancillary services to it.

They key is understanding what "result" you're there to deliver to a community.

P.S. I believe it would be helpful for everyone here if I do some follow-posts to correctly identify luxury, as well as outline its differences between "premium" and "fashion."

Why not try and explain why brands such as Ralph Lauren and Michael Kors have massive followings, and how luxury / premium can be used to induce that? It's a question I've considered for a long time.

 

[ChrisV]

I wrote this post in the other thread, but I wanted to copy it here too...

I definitely don’t agree when people look at Luxury as a simple marketing strategy. It’s not.

I love this quote by Coco Chanel:

Luxury isn’t a marketing gimmick. Luxury happens when every detail is pleasing to the senses. The product being purchased is beautiful and pleasing to the eye. The feel... it’s not made of cheap materials. It’s not made from plastic. It’s made of beautiful materials like pewter or silver or platinum. When you close the door on a Rolls Royce it feels solid and good. Imagine buying a Rolls Royce and closing the door and it having a hollow tin can sound like a Hyundai. Or taking off the license plates off your Mercedes-Maybach and seeing plastic screws. When you buy an Aston Martin the key i doesn’t say “Made in China,” and it’s made of cheap plastic. They’re made of glass. They feel nice. They’re heavy. They’re solid.

Just watch 20 seconds of this video real quick. Starting at 16:05 and Up to the part about the floor vents:
The 2018 Rolls-Royce Phantom Is a $550,000 Ultra-Luxury Car

Luxury products aren’t luxury becasue someone decided they were luxury. They’re luxury because every aspect of them are designed to elicit pleasure. That’s the difference between a 17K Japanese Transportation Appliance by Toyota and a 118K Mercedes S-Class Luxury Vehicle. The Mercedes S-Class elicit pleasure in every detail. The leather is supple and feels good to the skin. The contours of the vehicle are beautiful yet aggressive. The ride is comfortable. You don’t hear the annoying road noise. They spend extra time gradually sanding away every minor annoyance, so you’re more comfortable. People buy products that increase pleasure and decrease pain. In a sports car, it’s different. The focus is on creating an exhilarating driving experience rather than focusing on comfort. But the goal is the same: increase pleasure, decrease discomfort. And the more you can do that, the more people will pay. You can’t just slap a Rolls Royce logo on a Honda and think that’s the only reason people pony up 400K for the thing. I’m sorry but it’s just delusion.

 

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[GoGetter24]

It’s like trying to explain a Monet to someone who just doesn’t pay attention to art.

This is precisely what I mean. The Monet is just a picture. The man who had the (tremendous) skill to paint that is long dead. Now it's a social rank commodity. It's rare (only I can have it, so I'm special), and you can talk down to other people that they don't understand the value. You can pretend to be more "cultured" etc, thereby purporting a higher social rank. It serves no other purpose.

A handmade $20,000 Patek Phileppe that’s designed to be passed down from generation to generation isn’t the same as a $12 Made in China Casio watch, and to imply so is f*cking crazy.

That's just bias though. There's no way in hell you're going to bend to the idea that they're equal value after you've paid $20k for one. That watch is unambiguously inferior in terms of timekeeping technology to the Casio: it just looks a lot prettier. It's entire value is in the marketing about "designed to be passed down" etc. The fact that it's handmade doesn't necessarily increase it's value: machines are better at precision engineering than people are. It's purely man jewelry for social rank buffing: "oh my watch was handcrafted by a team of monks in the Himalayas out of meteorite metals over the course of 15 years. It doesn't even have hands: you just know the time from it instinctively. And yours?", "just tells the time".

But all of this is academic. The point is, as we can see in your case, people want to buy these stories. And therefore there is money to be made from them. Lots of it. So please don't misinterpret this as being against luxury: I'd just rather be on the selling side than the buying.

 

[biophase]

When you say ‘make’ what do you mean... raw materials used to build it? Or do you add in shipping costs, R&D costs of making headphones that sound great, paying the top designers in the industry and other company overhead

See, that’s the issues when people say ‘X product only cost $Y to make’... the actual manufacturing cost is only a tiny tiny fraction of the entire cost to make an item.

I understand that there are R&D costs associated with making a product and that those need to be absorbed in the sale price. So let’s say for the sake of ease that my price included the year of R&D and all the improved materials.

I guess my point is that luxury is the mark up beyond that difference. Let’s say that most companies mark up retail prices 4x. Luxury companies may mark up 10x.

That’s what you are paying for, the amount marked up beyond its improved value.

I can make a product for $3 and sell for $10 on Amazon. I can make a slightly better version for $3.25 and attach a brand name to it and sell for $20. Where that $.25 improvement should have only made the retail price go up to $11.

 

[Kak]

There is also an added element here. It’s often associated with new money vs old money...

I would argue it’s less about when the money was made and more to do with the need to prove yourself to others or confidence in yourself. Old money exists, but it isn’t as prevalent as one might think. The true elite, powerful, businesspeople are frequently mistakenly added to this category. I’ll call the majority of these folks “legacy builders.” More like first generation old money.

The 300k per year, good job, Jones’s love stuff like Rolex, Range Rover, and Bentley. They are the brands associated with wealth in their circles. They love blowing money on cars, homes and vacations. Cheap country clubs. They won’t leave much when they die. They are the big fish in the little pond.

The true 1 percent, elite, legacy builders... are actually less ostentatious. They have less to prove. They appreciate the finer things in life, but an S Class or LS isn’t to impress. It’s because it’s a nice car. Everyone they associate with can afford one. No one cares. So these folks are more concerned with timeless quality and timeless style. Patek (not the nautilus) is far more up their alley and they want to give timeless stuff like that to their kids along with the businesses, the home, and contacts. They are the big fish in the ocean.

Think about the architecture between the “old money” neighborhoods; large, formal, stately, estate homes tucked into the private side of a larger lot and a high price per square foot. It’s 50 years old, tastefully updated, and more expensive than ever. In contrast, the suburban McMansions bursting at the seams, minimal landscaping to make the most ostentatious display of “I’m rich, look at me” they can possibly muster for a million bucks. In 50 years it will be a crackhouse.

Very very often, less is more.

 

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[biophase]

So I just caught up on this thread. It sounds like a car forum with 2 kids arguing about which car is better.

So imagine a 25 year old with a Ferrari. This person probably enjoys showing it off. The car is for personal pleasure and also for social status. To him the car is impractical and hard to drive but he will deal with it.

Now compare to a 60 year old with a ferrari that likes to track the car and a vette or lambo just doesn’t feel the same. It’s not because his friends will think he’s awesome. They all know that he’s rich. It’s because he actually needs it’s performance capabilities.

It’s the exact same car, but bought for different reasons. You could argue one is luxury and overpriced and one is for value/premium and worth every penny.

 

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[ChrisV]

It's more about social rank.

An LV is just a bag. Some of them are just a single colour, small leather bag, that likely cost about $50 in materials. The chief costs are in the marketing that "this item indicates high social status", by paying famous actresses & models to pose with the bag and mention the brand in their press appearances etc. The actual item is just a small piece of dead cow with some paint.

Same with watches. A simple $10 quartz Casio wrist watch is a far superior piece of technology to any Swiss mechanical watch. But the latter look special. You have to be explained to, using terms like "exquisite", and wankingly referring to the watch as a "time piece" (or a "fine time piece"), why the watch is good. When in fact it's inferior to the Casio, as you have to wind it everyday, and those "special handcrafted" wheels in it are far less accurate than quartz, and you can read a digital time much faster than an analogue one.

Again with DeBeers & diamonds. People are gullible. You can sell anything to them as "luxury" as long as your marketing budget is big enough. In Asia they eat birds nests because it's "luxury" FFS.

If you believe that, you hopelessly don’t understand luxury products.

Same with watches. A simple $10 quartz Casio wrist watch is a far superior piece of technology to any Swiss mechanical watch.

Please please please tell me you’re joking.

Luxury products are not just about social rank. If you think that a Hyundai and Mercedes are the same thing, you’re F*cking nuts.

Whenever I get out of a Hyundai I feel like greatful to still have my life in tact. I feel like I just got done riding the brain scrambler at the carnival.

People who haven’t been around refined luxury products for a long time just don’t understand this. It’s like trying to explain a Monet to someone who just doesn’t pay attention to art. “Dude it’s a picture of a bridge... I don’t see the big deal.”

A handmade $20,000 Patek Phileppe that’s designed to be passed down from generation to generation isn’t the same as a $12 Made in China Casio watch, and to imply so is F*cking crazy. Have you ever held a Patek
phileppe? I used to have one (was selling it) and the beauty is jaw dropping. This was the Patek I had:


If Patek Philepe ever released anything that looked like this....

The fact that a Louis Vuitton was “made from $50 worth the materials” is irrelevant. Imagine if I said “the Monet Lisa is junk.. it was made from only $20 worth the paint supplies.” The Bible was made from $2 worth the paper and ink. The Godfather trilogy DVD set was made from $.40 worth the plastic. If you were bleeding to death $2 worth the cloth would save your life. Everything about Entrepreneurship is about taking raw materials and making them into something that’s useful or beautiful for humans.

People don’t just buy luxury materials to be “better than” other people... and even if so, why does one product denote superiority while the other doesn’t.

 

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[Walter Hay]

I don’t disagree that luxury products are usually better in quality but the luxury part is what they charged you for, not it’s proportional value.

In your example your $70 pair of headphones probably should cost $30 but they charged you a $45 luxury premium.

That $7 headphone may have cost $2 to make and your $70 headphone maybe cost $5 to make. But instead of charging $30, they upcharged you and were able to do it because of brand recognition.

There’s probably another brand selling the exact same headphone for $25 somewhere.

As I have posted in other threads from time to time: I have been in many factories where side by side production is under way using the same materials, the same design, the same level of human handling, the same manufacturing equipment and the same quality control.

BUT.... On one production line they attached a store brand label, or a generic label, or no label at all.

On the other production line they attached a big name expensive brand label, and those who must have the best, for whatever reason, will pay as much as 5 to 10 or even 20 times the price of the one with the "ordinary" label.

Everything was the same except for the label, but the buyers won't even look at the identical product without the label that is of critical importance to them.

Self delusion? Or have they been subtly brainwashed to not just look up to the big brand, but to look down on the lower cost exact equivalent?

I am not talking about knockoffs. I am talking about the real deal differently labeled.

I have no illusions that in a good many cases there are differences in quality, and I enjoy using good quality. Since I entered the fastlane many years ago I have only owned and driven European cars.

Not the ridiculously expensive ones that I could afford, but I chose to buy real value instead, and enjoy the luxury without the envy bonus that is mostly exceedingly poor value unless evoking envy is something you need (or crave). Then I suppose, you will pay whatever clever marketers can extort from you.

Walter

 

[smark]

Guess I'm a bit late to the party. Been really busy the past few days.

Hublot seems like the Audi of the watch world... "functional luxury" I guess.

And don't forget about Tag Heuer. I get the same "functional luxury" vibe from them that I get from Hublot.

how would one go about pricing such a thing? And how would you make a valid market entry within the space?

In terms of pricing, it's all about finding that range (which can be quite wide) where your good/service is perceived luxurious, but can still attain some decent sales volume. Obviously, finding that range first and making sure that you're towards the high end of it is another story and very specific to what you're selling.

As far as making a market entry goes, give me guys a year and I'll let you know what happens hahah.

LV / Moet etc could be considered "luxury" because their quality is timeless.

Precisely. Luxury = Timeless.
To me, a good with absolutely NO functional value (besides its beauty) is more closely related with art than luxury. The way I see it (and the way the book distinguishes between the two), is that a luxury good must ALWAYS have some functional value, no matter how small or insignificant.

A Panthere de Cartier ring for example certainly has very little use value, but it still has some function as a personal accessory. On the other end of the spectrum, "premium" is "pay more, to get more" (like @rpeck90 had mentioned). The best "premium" example I can give is Lexus - great cars, yet quite unoriginal, lacking roots/culture/heritage, employ mass advertising like mass-consumer good brands, focus on the price instead of the product and its aura, not hedonistic enough, largely depreciating value, etc...

the person with the 8 figure salary can afford the Maybach as opposed to the Corolla, therefore the car is the CAUSE of the rank rather than the rank being caused by the car.

Indeed. Luxury's main social purpose is to signify the socioeconomic inequality that exists in the world's capitalist societies. If you were a multi-millionaire, would you rather go eat shitty food at a Jack in the Box in a high-crime area, OR in a Michelin star restaurant in Beverly Hills?

luxury products are more pleasurable to all the senses

You sir, have an excellent understanding of luxury. It's like you've read the book already hahaha.

I don’t disagree that luxury products are usually better in quality but the luxury part is what they charged you for, not it’s proportional value.

True. I always tell people that if you want a good car, get a Lexus. But if you want a "real car," something more like an Aston Martin or Pagani would be in order. Why?

Though there are some tangible differences such as more aesthetically appealing design, the partial use of the human hand in production, the use of better materials, more comfortable interior, etc. the difference in price can largely be attributed to a set of intangibles which elevate the product and the brand. Does that mean that luxury is "just marketing" though? Quite the contrary. That's like like saying that French culture/heritage is "just history" because it is based on events and traditions of the past which don't matter as much anymore. Not a great example, but you get what I mean.

They market it as a fashion item, but it's backed up by actually being a leading piece of phone tech.

I would disagree. Though Apple IS a luxury brand, they source their production in other counties which employ debatable working conditions (they have been criticized for this in the past) and make use of technology that is no different than any of their competitors. But due to the fact that they have full control of the software and hardware of their products (due to their products being closed systems) they can fine-tune them and customize their functionalities far more easily than any other computer & phone company out there.

I do congratulate them on everything else though. Their design, marketing, management, beliefs and even the actual name (Apple) are exactly why their Market Capitalization is over 1 TRILLION USD at the moment.

Same with an LV.

Louis Vuitton handbags are not well-known because celebrities wear them. Celebrities wear them BECAUSE they are well-known. If you think a multi-billion dollar luxury brand needs a celebrity to "elevate" their products and increase sales, then you're lying to yourself. They mostly use them for cultural reasons to appeal to a certain geographical region. This is in huge contrast to how a fashion brand like Guess uses celebrities, where they expect the individual to increase the prestige of the brand.

Louis Vuitton himself amassed quite a reputation with his made-to-order trunks more than 150 years ago, which were used by wealthy sea travelers to protect their belongings while at sea. The LV brand pays tribute to this piece of heritage by providing the modern equivalent to its clients - city handbags - (among other products, some of which are not luxury) while its classic trunks are still in demand in the second-hand market. If this is not the personification of luxury, then I don't know what is.

She also said that people are selling the same thing on amazon for $15.

Welcome to the lucrative (and largely unprofitable) world of high fashion. The only brand (which coincidentally also happens to be a luxury brand) that has managed to remain highly respectable and profitable over the years while basing its identity on fashion, is Chanel. All other brands that primarily sell expensive "high fashion" pieces that lack intrinsic beauty and any sense of timelessness are in deep trouble, and make use of low-priced accessories and licenses to remain in business. Only the likes of cheap fashion brands like Forever21 (which base their profits on volume and turnover) are successful. Your friend probably enjoys high to moderate profitability at the moment (depending on her sales volume) but as soon as that fashion style flees away, she'll have to find the next "big fashion trend" and order pieces that look a certain way.

Fashion, has nothing to do with luxury or premium. Fashionable products are just that, fashionable. They are not timeless, and will probably look terrible from the point of view of someone a few years (or months) from now. But some of Mademoiselle Chanel's iconic styles, or the antique Aston Martin shown below, will never go out of style no matter how many years pass; and actually increase in value in the long-term.

 

[Kak]

I would say that actually it’s the opposite. Anyone who’s a billionaire who buys a 30K Chrysler 300 rather than buying a much much nicer 600K car is the stupid one.

So you die with $1,634,926,034 in the bank rather than $1,634,456,034 (whoopyty do) because you cheaped out and bought some uncomfortable 30K peasant-mobile, rather than a beautiful, comfortable, luxurious chauffeured pleasure box.

You want to hold on to a bunch of ‘fun coupons’ (money) that’s just a number and are worthlesss on their own rather than actually purchasing something that will bring you enjoyment.

But these are the people who are stupid suckers.

I read some interesting statistics once actually... The average billionaire gives far less of crap than the 2-5 million dollar guy wanting to let everyone know how successful he is. The average net worth of a newer S class driver was more than the average Rolls driver (Rolls was only like 3 million AVERAGE).

I know a lot of multi-millionaires and a few billionaires... The richer of them daily drive things like S classes, Lexus LS/LX and Range Rovers. Hell, one in particular, easily worth 50m, daily drives a Nissan Armada. Another, a Honda Pilot. GMC Denali. Lincolns. Escalades. They don't need or want the attention a rolls gives off.

I think buying an S class when any of these folks could easily have a Rolls is more a decision of quickly deminishing marginal returns as they spend more and more... No one bats an eye at an S class. Rolls is rap star, hollywood, drama city. The same reason they buy Embrarer light jets instead of Gulfstream. Paying more for drama? Not an upper class thing to do. Maybe their kids would.

 

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[ChrisV]

I'd argue "luxury" means different things to different demographics. For the one-percenters this stuff is all trash. Conversely, to the middle class many would categorize those products as luxury. To me luxury is itself a highly subjective label to which meaning is ascribed by the type of consumer. I have a friend in investment banking who scoffs at Rolex and won't wear anything but Patek Phillipe.

Rolex is junk. They’re mass-made and faux-quality. Like if you hold a Patek Phillipe and play with it for a while it’s just embarrassing. They’re muchhhhhh higher quality. Your friend isn’t an elitist.... Rolex is just hated among watch lovers. They’re the Bose of watches. It's is what peasants believe is quality, just like they think Lexus is a luxury car despite the fact that it has the same exact chassis as a Toyota and rides like a tin grocery cart. Rolex, to watch lovers, is ca-ca.

But it’s not necessarily about price... like Movado is a highly respected brand among watch lovers, even though you can get one of those for like $150. While a Rolex can run you $3000 and a Patek 20K+.

Rolex is literally the only brand of watch I’d never buy. I’d buy a timex before a Rolex.

 

[ChrisV]

Honestly, Coco Chanel gives my favorite definition of Luxury of all time:





I honestly think there’s not much to say after that.

 

[MTEE1985]

but is it really worth $71,000?

Good question....that’s the whole point right? What exactly is anything “worth?” There are very few items in this world with a (relatively) universally agreed upon worth. Gold, Silver, copper etc for their melt value maybe? Even that’s a stretch. And in that case then that watch is obviously worth much less in platinum and mechanics than $71,000.

Luxury items are a hyper-reality based on how they make the owner feel. Imagine if you lined up 100 people and asked them what that watch was worth...my guess is you’d get responses ranging from $100-$100,000+ because, as has been beaten to death, the worth of it is all relative.

That’s why the true luxury items are the ones where the price point isn’t a consideration. It’s beauty, elegance, timelessness or as @ChrisV added with the image, the opposite of vulgarity. The dollar value of said item could be as little as $100, or could be millions.

The idea here is to think about what are some good premium items in the marketplace that don’t have a luxury niche, or conversely, what is a luxury item that doesn’t have a more mainstream premium option available to more people?

You’re a snowboarder right? How much is a standard snowboard, boots etc? How much is a premium one? How much is top of the line? What’s the difference between the three considering they’ll all get you down the mountain and are roughly the same size, shape and weight?

 

[rpeck90]

This is not the first time you're saying this.....you're tempting us again, making us salivate and drool!
I hope you can write an ebook one day. Maybe even start now. Forget about that Ruby-On-Rails project thing.

I always make it a rule to only read and learn from people who have real success in the real world (e.g: MJ, Dan Pena etc...), but I would totally make an exception for you. Shut up and take my money. I'll pay $100 for your ebook, or more, if you want. Upload it to Kindle store already!

As it happens, I already had a title in my head for a couple of years... if you wanted it, I'll just give it away for free (when done). I don't feel it's right to charge for business advice unless there are results associated with it...

Out of curiosity, do you believe there's such a thing as luxury digital products? Premium definitely exists (any high ticket course could be deemed "premium"), but what about luxury?

How can you create a luxury digital product according to this definition? Is it even possible or is luxury limited to the offline world?

Not sure about luxury. I think there will be a point where it becomes so (if cars can be considered such, then I'm sure digital can be too). It's all to do with the depth of experience you're getting.

Digital is really just about extending our connectivity with others; so if you're going to get a "luxury" digital product, it will likely come in the form of some sort of super high end type of experience like what Vertu had with its concierge / VIP events service. I'd need to think about it more tbh.

In terms of premium, I have a good example from when I worked with Ludvig Sunstrom - wanted to create a "digital commonplace" application.

Like most things, I got carried away and ended up having to scale back the ideas. HOWEVER, that would have been a 100% "premium" digital product (ignore the screenshot, I need to work on that)...


I wanted to have a "pre-release" evening in Stockholm with the model we hired for the initial promo, and have that streamed to his blog with launch partners. The pre-release evening would be a hobnobbing networking event...



This evening would be part fashion, part cocktail evening, part millionaire networking.

To give an idea as to the type of experience I was trying to convey, I would have had it in the Crazy Horse if we felt Paris would have been a better option.

The key thing to note is that NO ONE **IN HISTORY** has ever designed a "digital commonplace" before. It's a 100% brand new solution which gives us somewhat of a creative scope through which to develop it. I had the idea of developing a Zapier type functionality-set (which would be vastly improved), matched with the ability to integrate each "system" into a central data-stream...

[[ Some copy, don't need to read if not interested... ]]



Functionality aside, I told Ludvig early on that his "brand" with SGM was to help modern men achieve GREATNESS. The type of stuff Homeric heroes were worshiped for, except warped around the "modern" method of achieving this. I said his book ("BOOH") should have the subtitle "Path To Imperium" and should be the book on "greatness".

Irrespective of this, the point is that the "digital commonplace" software was going to be billed as premium. The entire experience needed to tie into SGM's core offering, and the whole way it was going to be showcased / released into the world was a strictly premium affair (limited availability, high prices, etc).

Perhaps if we took this and matched with some "timeless" physical / boxed products - that would push it into the luxury space. Probably not...

How to then convey the benefits I believe becomes the challenge, largely because we live in such a commodity based society where low price wins and frugality is viewed as a noble way to live like you’re doing good in the world by being cheap.

OR as mentioned above is the true definitely of premium and luxury simply that you say it best by saying nothing at all?

Let me give you an example of how I believe it works. Could be wrong...

I started selling stuff online at 15/16. Bought some skateboards on my dad's credit card and couldn't pay him back, so had to get a job. This allowed me to drop out of school and I've been working on "Internet" based promotions ever since.

In 2011, I started looking at doing something "big" (I wanted to build a massive product/business like Microsoft/LinkedIn/Facebook) and decided to pursue a project called FrontlineFusion. I made a cardinal mistake in that I made a product I wanted (which is still legit because it's where I got all this branding stuff from) - either way, I ran out of money and was broke at 25.

Rather than close the company down, I decided to go against the accountant's advice and keep it alive. This was ratified by the UK tax authority, to whom I wrote a letter to asking if I could pursue dormancy.

Now, Frontline is the company I've been working on. It's taken time to build up but it's starting to regain momentum. I bought the domain PCFixes.com (which I've been working on) as well as several others (not at the same time). Whilst the "brand" itself means relatively little - the products it ends up developing - and their impact on the consumer's lives - will be where the value resides...


The point is that when a buyer comes for one of the company's new products - or when I'm talking to a prospective *REAL BUSINESS* client - do you think they'll pay attention to the history of the company? The depths we went to in order to cultivate a valid solution for the buyer? The pedigree the company has? The 9+ YEARS that we've been in business?

This is EXACTLY the same as why Elon Musk is currently holding Tesla together. You really think it would be anywhere near as attractive an "investment" if it had some mere mortal running it?

What if I went ahead and coughed up the £15k for fl.co.uk? Imagine the impact that would have on the business' ability to develop a clientele from that. The implication is that you're a swinging dick because you went to the lengths of buying that asset.

None of that stuff needs to be vocalized, but is still apparent to the end buyer. Same with models. I love beautiful people, but the implication of hiring a model is to say "this is the shit because we went to the lengths of hiring a [damn expensive] model". That's why I can look a business owner square in the eyes and tell them that our stuff works, and will improve their business X Y Z. Some kid who started yesterday cannot do that.

This is the first step to offering a premium service (verifiable pedigree). After that, it's about developing a series of products / services which gradually increase in intensity (price) (even Hermes offers $200 pocket squares) - the depth you're willing to go to will determine the type of buyer who seeks you out.

It's a brutal process, but if you stick at it (hence why I've been relatively quiet... I decided to focus squarely on improving my own underlying skillset + investments as to be able to deliver a branded experience akin to everything I've been espousing). If I caved in and just did surface-level stuff, I'd probably be worth several $million now.

Perhaps you can see why you can't just slap a label on something and call it "luxury" / "premium" - it's everything you *don't see* that counts. This doesn't mean you shouldn't promote / share the product (and its message) - the key is appreciating that most of the important stuff cannot be explained in words anyway. How would you explain Ferrari's pedigree? What about "Frontline" (my brand/company)? Why is MAC such a dominant brand in the cosmetics world when it basically uses the same ingredients as all the others? It's all part of the same pie.

 

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[rpeck90]

If anyone is interested, you might also wish to look up about Taschen.

This is a book company, but - interestingly - they produced some of the most expensive books ever created. Their most expensive piece (I believe) was the huge $20,000 biography of Muhammed Ali (GOAT):

This thing was so "great" a product that it was given to president Obama as a gift.

The big point about them - and this in particular - is that most of the buyers of this book are likely not buying it to honour Ali (who was obviously great)... it's more a "reminder" to themselves about their own work ethic, ideals and motivation.

You tend to see this a lot from the luxury / premium sector (more-so luxury) -- people tend to buy a "better version of themselves", and their "investment" into the underlying product is essentially an investment into their own psyche etc.

--
From Wikipedia:

In 1999, Taschen expanded to the luxury market with the Helmut Newton SUMO.

Signed and limited to 10,000 copies, the folio-sized publication quickly sold out and later became the most expensive book published in the 20th century, with SUMO copy number 1 selling at auction for $304,000.

This book paved the way for Taschen’s GOAT – Greatest Of All Time, an homage to Muhammad Ali, which Der Spiegel called “the biggest, heaviest, most radiant thing ever printed in the history of civilization.”

Further Collector’s Editions followed, including titles with Nobuyoshi Araki, Peter Beard, David LaChapelle, Sebastião Salgado, Annie Leibovitz and the Rolling Stones, often reaching ten times their original price within a few years

Highlights my own.

I think it demonstrates a point many have raised already - "luxury" isn't skin-deep.

It mostly takes the form of some "breakthrough" the company made either in the development or delivery of their service (as mentioned in my previous post - it's often the case that prem/lux companies got "deep" into an ideal and worked out a bunch of new techniques to provide as effective an offer as possible).

I discovered the company after looking at their Michelangelo book:

What's interesting is whilst they don't actually fill any ergonomic need in the marketplace (their collector's edition books are far too big to be of any practical use), they do one VERY important thing...

They're actually what are known as "coffee table books".

I didn't know about these until I discovered Taschen - they're used by many leading brands to portray the style/ambiance of their underlying culture. Coffee table books are not "books" for the masses; they're a curation of art - typically telling a visual story of someone, or something, that many would consider extraordinary.

Now... think about this. These books are not meant to be something you sit down and actually read. They're meant as inspiration. If you were "selling" these, you would not sell that because it's not really what people are buying. The true value of these books lies in their sophistication.

I have a theory that people buy one of two things - to get paid, or get laid.

When considering these books - it's a sex play. You're trying to show others (or perhaps yourself) that you have more "inherent" / "intrinsic" value than the other guy. A young single guy may buy several for his apartment, as any girls he brings back are going to *instantly* clock them (unless she's blind drunk).

And, yes, girls pay attention to shit like that. Women are implicit; men explicit. Whilst having a "useless" book like that on a coffee table may be lost on most men, the implied message it sends to women is ... "I have style" / "I have value". It won't do much on its own - but blended with the other trappings of a high value male, the message is strong.

After discovering Taschen, I started to see these books everywhere. Here are examples from two tailors (Manolo Costa + Linda Makhanya) I follow on Instagram...

--
Irrespective of this (Taschen sell many cheap products) - there's a new book they're looking to release...

Starting at $6,000 and another edition at $30,000 - I would definitely consider this "luxury".

It has all the hallmarks of a luxury product... limited editions (1,947 - the date Ferrari is considered to have "officially" launched), super exclusive craftsmanship (notice the red leather being the leather from the cars) and the deliriously ostentatious book stand to keep it in.

To be clear - it's not "premium" because it has very little functional value. In 3,500 years, the books will still hold the same - if not more - value as they do today. Think of them as one of those priceless "chronicles" that are passed down through the generations, except for the modern "post-industrial" era.

To most people, the product itself will have negligible value. "Who needs a $30k book?" they say... well if you're the type of person who's a collector of Ferrari automobiles, or are looking to curate an atmosphere / ambiance beyond functionality - it's a piece which will add a touch of reverence, depth and sophistication to any environment... of course, all coated in a splash of that beautifully garish Italian racing red.

The point is that if you're looking at this stuff from a marketing perspective, and trying to determine the difference between premium and luxury - the above products are (IMO) definitely luxury (they don't do anything except provide more sumptuousness to an environment). They're art - bound in pages, designed to elicit the timeless feelings of beauty, abundance & tranquility.

Whilst the products themselves look gorgeous - to give some perspective on why this is important for any branding you may wish to pursue, you have to appreciate that both Taschen and the general idea of "coffee table books" fit a very particular category - neither book, nor art. They're almost like a decorative ornament... except they still provide some functionality in the sense that they are beautifully printed and bound. In other words, they're meant to be displayed.

--

In terms of your own marketing, the way I see it is like this...

There are a number of different "grades" of product. Each of these grades could be matched against Maslow's hierarchy of needs. I explained this on the Damian Pros thread, so won't expand on it here.

If you're looking at how you can increase the "value" of what you're offering, you need to look at how you can push your service, and - by virtue - clients, up the totem pole. This has very little to do with "what" you're offering, but more about "how" you're offering it - and, ultimately, what that means to the end buyer.

NEVER chase buyers. They don't want to know you, or what you can do. They want to SEE what you have done for others. The trick to growing a great business - and ultimately a brand - is to let people discover your value by virtue of the quality of work you produce over time.

This can't be faked, but CAN be manipulated depending on who you are (hence why pedigree is important):


Anyone who doesn't know Faberge, he was a 19th century jeweller, most famous for the "Easter eggs" he produced for Tsar Nicholas II as gifts for his wife. The original Faberge Eggs are a massive collector's item, with extremely high prices because of their exclusivity and association with the Romanovs. The name Faberge is huge - but most importantly - you give the above to a woman and you're basically saying she's royalty.

The idea of it being an Egg is not important. The diamonds etc don't matter. What matters is you're really saying to your woman that her inherent "value" (women have value and are genetically programmed to accentuate / flaunt it) is worth an extortionate amount (perhaps even priceless). The necklace says that she's a princess and her "value" is so much higher than every other woman's in any social setting she finds herself. As mentioned, women are implicit. None of the above is spoken... it's all done with perfect subtlety.

This is partly why women love weddings so much. Apart from the 'estrogenic' (I made up that word) lust for "families" etc - it's [perhaps the only] time when she gets to parade her "value" to everybody as ostentatiously as she wants. It's exactly the same feeling as a guy who cashes his first £1m cheque.

Perhaps you design software. Rather than considering the "speed" of your product, or even if it's "designed in the UK" - think about the underlying solution, what it's actually there to deliver to the buyer, and whether it does that job as effectively as possible. What else can you do - especially if you consider leveraging the likes of social media - to create a "new level" of your service, for those clients who require the most exacting treatment possible?

Anyone with two brain-cells knows that luxury/premium are often associated with "status". But that's just a symptom of an underlying need/desire. People want to have better sex and to make more money. Money is used either for "power" or "freedom". Most on this forum want freedom. Most of Dan Pena's acolytes want power. Deliver either and you'll be seen as a God.

This suggests - to me - the whole premium/luxury ideal can be applied to "any" product, but has to come with the context of what you're actually going to do for the end user. Taschen may deliver a conversation starter for young G's trying to get laid... but also provides an ode to the finesse, sophistication and eloquence so intrinsic to our idea of civility. Whether they're for you is irrelevant; they're a feature of many a billionaire's coffee tables.

--

Thought this was worth a mention (from the Italian racing red wiki page):

In the Peking to Paris race of 1907, the first to arrive in Paris was Prince Scipione Borghese, an Italian aristocrat, who was accompanied by Luigi Barzini, a journalist who worked for The Daily Telegraph, and a valet, Ettore, who acted as his mechanic and traveled with a supply of Lanson champagne. The prince was so confident of winning that he took a detour from Moscow to St Petersburg for a dinner in honour of the team, and afterwards headed back to Moscow and rejoined the race.

Their chief rival was Charles Goddard, a fairground worker and con artist who, until he learned of the race from a scrap of newspaper he found blowing in the wind, had never sat in a motor car and who was arrested for fraud as he approached the finishing line. Goddard, who came second, lacked the resources of Borghese and had to beg fellow competitors for fuel. In a desperate attempt to catch up, he set an endurance record for non-stop driving for 24 hours. The prince's prize was simply a magnum of Mumm champagne, and the red colour of his 1907 Itala car was adopted by Italy as its racing colour in his honour.

 

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[CareCPA]

This is a weird thread.

It started with a discussion of luxury strategies, and there are amazing posts randomly in the middle, but the majority is "my taste in cars/watches/purses is better than yours, so that makes my brand luxury." Then it turned into "why would I pay that much for something, where's the utility?" I doubt utility is the main driver for a luxury purchase.

I'd like to see more objective analysis of what makes luxury. If a Rolls Royce is luxury and a Hyundai isn't - why? What if you find the Hyundai seats more comfortable, the car more responsive, and the handling to your liking - is it now a luxury? Or does it need a V12 in to be considered luxury? If it needs the V12, would a V8 be ok? Where's the line?
Does it need hand-sewn seats to be luxury? If so, why? You can get better precision with machinery than with humans.
Does it need a hand-made grille to be luxury? Why?
We've spent decades creating machines to do a better job than we can do as humans. Why, all of a sudden now, do we value things created by hand more than those by machine?

That one isn’t worth it, imo. The exterior/interior colors are ugly.

This is a subjective opinion. Is all luxury subjective? If you don't like something, does that mean it's automatically not luxury?

The first criteria I look for in a drivers’ car is: “Is it available in Stick Shift”

The lowest model of any car is often a stick-shift, since it's the cheapest transmission option to put in a car. Why are some stick shifts luxury while others aren't? Where do you draw the line?

It seems as though this thread started as a luxury discussion, and then devolved into a thread on individual's tastes. Just because you don't like something doesn't mean it isn't a luxury product. Conversely, just because you think something is the best, doesn't make it luxury.

 

[Merging Left]

Back to discussing luxury strategy...

I think you may have completely missed it in here. We're not going to be able to justify the $700k price tag because that's the whole point of luxury. The utility of the good does NOT justify the price. Further, I think it's safe to say that you're not Rolls Royce's target consumer. You, personally, don't value that brand, which is fine.

Why do people pay so much for a Rolls Royce?
1) The quality is superior to a Chrysler 300. You can't rationally argue against that. If you put the two next to each other and ask which one is nicer, the Rolls wins 100% of the time.
2) The brand is more valuable. People notice a Rolls Royce. They say "wow, that's a Rolls Royce." Nobody says "woah, look at that Chrysler 300. You never see those!"
3) For some, the high price tag is a positive. The fact that only the elite can afford it is part of what makes it valuable. It's a luxury good in the economic sense of the word. If RR offered the Phantom for $35k, the same people who would have paid $600k for it won't even consider it at $35k.

Why do people pay thousands or even tens of thousands for a Hermes dress? Because it's a very high quality dress, and because it's Hermes.

Like @rpeck90 has mentioned (many times) in this thread, when someone buys a Rolls Royce, they're not buying a car. It's much more than that. You need to let go of the association between $700k and the functionality of the car, because they're not paying for the functionality of the car. If it was purely about function, everyone would be driving Kia's.

The brand has value. Does a Rolls Royce feel considerably nicer than a S-class Mercedes, purely from a comfort perspective? Probably not. So why do people pay so much more for a Rolls? Because it's a Rolls.

This thread is about discussing what enabled those brands to command such high price tags, and what strategies do they use that we might consider in our own business endeavors?

 

[rpeck90]

So would it be fair to say that a new luxury product cannot be produced? A premium product can be produced and the market determines if it reaches luxury status?

Interesting - partly true I believe... but I think that luxury can be manufactured, just not like how many people see it. And remember, all of this is my own opinion. I don't work in the luxury sector; the majority of this knowledge comes from the work I did on a branding product from several years back.

I see luxury not as a "thing" you pursue, but a method you embrace. My interpretation is that premium can be tied to functionality and luxury cannot. The Hannibal pen and Alexander watch are certainly functional... but the $700k price tag (not sure how much the Hannibal pen costs) cannot be tied to any sort of functionality... the pen doesn't write better than anything else, and the watch doesn't tell the time better than other watches. Likewise with Faberge's proclaimed work. Eggs? You can't even wear them.

That doesn't mean they don't have value. The idea of a "luxury urn" is not luxury because that's not what luxury is for (luxury's value is really tied to your own character / persona). It's not the urn that's important - but the monument to your memory. In that case, yes, you can have luxury...

The "luxury" element comes from the subjective nature of each piece. As mentioned with Taschen's Ferrari book - I don't have any sort of desire for that product, but that doesn't mean it doesn't have value to the right buyer. Whether the book was hand-made etc doesn't matter at all to me - but to someone like Ralph Lauren who is a Ferrari collector... yes, it would add to the value of the product.

A great example of this is when Kevin - Mr Wonderful - O'Leary claimed his underwear was hand-stitched by Italian virgins. Does it really matter who made the underwear? Or whether the creators were virgins or not? Nope... what he was saying was "I'm better than you". That's pretty much what "luxury" is about - but not in the sense of being vulgar. It's an internal pursuit. Bad example; if it was "true" luxury, he would never have to mention that Italian virgins made the underwear - he'd just wear them and be content that they cost $900 a pair (or whatever the price was).

--

To wrap it around the perspective of what *you* can do in your own world, think about what "luxury" means to you. Do you REALLY care about which car you drive? Do you REALLY give a damn that it has some carbon fiber on the steering wheel? Does it REALLY matter? When you're on your death bed (in what I hope is a very long time away), are you going to be so pleased that you owned a Rolls Royce?

Not me - there are FAR better things to concern yourself with. Obviously, if you're a "car guy" that's a different ballgame. But I'm not. And that's the point... with "luxury", you're buying tools / experiences that you feel are going to bring highlight to your life.

• Perhaps you could argue that a "luxury" hotel isn't so much about the 5* nature of the resort... but the quality of women who regularly stay there. The implication - of course - is that you get to "play with the models".
  
  This wouldn't be stated publicly... but that's pretty-much what people (men) would be buying. Do you think they'd want to pay a large amount for that experience? A price beyond the functionality of the resort? I think so. Would you not consider that luxury? What about all the Don Perignon and other ridiculously highly-priced drinks they'll buy to accentuate the experience?
  
  
• If you're a tailor, whilst the clothes are deliriously good - what would inspire more people to buy a top-end tux? They're buying it to wear for certain occasions (prom? Opera? wedding?)... why not MAKE said occasions yourself? Why not host a cocktail evening every single month, where you bring in the creme of your crop to showcase exactly what they're working on (millionaire networking)? Why not have excursions to Paris, Roma or Milano?
  
  Again, the kicker with the majority of these things will be the quality of the company (both male and female). You get pretty hostesses, many of your clients will just turn up. You get several big hitters in the room and you'll have a legit luxury offering that is both rare and special.

Real luxury is never stated because that's not what it's for. Real luxury is about giving yourself an identity... a purpose... a reason for being. Rather than being hedonistic, consider the underlying implication of it all -- what does owning a massive fountain pen do for you? Do you not see the resemblance to the likes of scepters, orbs and crowns that royalty adorn themselves with? Does this not suggest there's a deeper play going on?

Remember, people are paying to get laid or paid. Your place on the value scale is determined by how directly & potently you deliver either of those two ideals. Premium delivers it in a functional way (faster/more intricately); Luxury bypasses functionality and enters the stratosphere of artistic desire.

This - to me - means that you should be able to imbue what you're doing with a touch of luxury. Just as Kramer deigned it "fairy dust", there's a hidden (magical) element which you can weave into any "premium" offering to make it luxury. This magical element is why the likes of historic relics are so sought after. Their original owners demonstrated their use of the element to the highest degree possible.

As such, what about your own business? Forget Rolls Royce... what about you. You're selling products on the Internet - what can you do to bring the "luxury" element to your clients?

The secret of life is to create. We - as a race - are successful because we used our hands, and latterly brains, to build new tools. We created new ways of doing things, to communicate, travel and indulge in life. With each generation, a talented few have risen to the fore and pushed us up to the next rung.

If you're a software developer - what about creating a "physical" package with your product, limiting the number of physical copies & having a pre-release evening? That would make it premium... but luxury? That comes from the quality of the evening, and what it ends up doing for the buyers. In the example of the "Digital Commonplace" I mentioned several posts back, I wanted to have a demi-fashion show with burlesque dancers and models (Crazy Horse).

The show itself isn't functional. It has no purpose beyond giving the attendees a glimpse into the "world" of what we'd created. The implication is to say "follow the system we've built and you'll get pussy beyond your wildest dreams"... but it's not stated, is it? If I stood there and said that shit, it would diminish the value of the product inexorably. The luxury element comes from the "promise" of achieving the God-like status few will ever elevate to. All the "products" you see in the luxury space are really just attempts to crystallize that in the material world... as explained, the way it works is subjective.

--

Ultimately, the idea of creating a "luxury" product is not the way to go about it. Luxury is born - organically cultivated over a long period of time. You cannot strategize, plan or "invent" luxury (as you would premium) - it has to be the result of the way in which you do things.

The key thing I've found (and could be wrong) is that "real luxury" comes from significant moments. I tried to explain this with the other posts - Elon Musk's reputation is built off his success with PayPal, SpaceX and Tesla. Bill Gates' reputation is based on his Microsoft fortune. Caesar's crossing of the Rubicon. This is what men "buy" when they buy luxury; they want to capture a small piece of what these men "great".

As explained previously, the process is different for women. Women want to flaunt their "value" without being judged. They want to be the center of attention, with all the world ogling the delicacy & elegance they exude from each perfectly-preened pore. As a man, that doesn't matter. I want to be revered, admired and honoured. Women want to be appreciated. How well a product delivers either determines whether it's considered a "luxury" by the community. The price then comes from the perceived sanctity & scarcity of said product.

 

[rpeck90]

As a follow-up, from Seth Godin's blog:

Luxury goods are needlessly expensive. By needlessly, I mean that the price is not related to performance. The price is related to scarcity, brand and storytelling. Luxury goods are organized waste. They say, "I can afford to spend money without regard for intrinsic value."

That doesn't mean they are senseless expenditures. Sending a signal is valuable if that signal is important to you.

Premium goods, on the other hand, are expensive variants of commodity goods. Pay more, get more. Figure skates made from kangaroo hide, for example, are premium. The spectators don't know what they're made out of, but some skaters believe they get better performance. They're happy to pay more because they believe they get more.

A $20,000 gown is not a premium product. It's not better made, it won't hold up longer, it's not waterproof or foldable. It's just artificially scarce. A custom-made suit, on the other hand, might be worth the money, especially if you're Wilt Chamberlain.

Plenty of brands are in trouble right now because they're not sure which one they represent.

Here's another good one:

For many consumers, the dividing line between premium goods and luxury goods is hazy, but for branding purposes, there are clear differences. A common misconception is that luxury goods are simply more expensive than premium goods, but it’s not the price tag which defines luxury. While it’s true that luxury brands are typically (but not always) more expensive than premium brands, luxury is defined by timelessness, story, scarcity and social cachet.

Premium brands on the other hand, are defined by their price-quality ratio – we feel that it is worth paying extra for a premium brand because of the product quality, whereas luxury brands usually have a price which is far beyond their actual functional value.

The branding strategy is very different for luxury brands and premium brands. It would be a major mistake for either type of brand to emulate the other’s marketing – premium brands cannot become luxury brands simply by raising their prices, and luxury brands should not attempt to broaden their appeal into the premium market, or they risk losing the very exclusivity which is part of their luxury appeal.

Positioning, a mainstay of premium marketing, has no place in luxury branding. Luxury doesn’t meet a need or solve a problem, and so it is intrinsically wrong to position a luxury brand based on how it compares to its competitors. Luxury consumers aren’t interested in more features giving better value for money – that’s a premium marketing angle. Luxury consumers want to know about a brand’s heritage, prestige and uniqueness; it’s identity which counts, rather than a competitive edge.

Customer feedback has an active role in premium marketing, as manufacturers and service providers strive to provide something better; something that the customers have asked for. In luxury marketing, however, brands must remain faithful to the vision of their creator, such as when BMW refused customer requests to increase legroom in their back seats, for fear of spoiling the car’s line.

Perhaps the most counter-intuitive of all luxury marketing techniques is this; it helps to put obstacles in the way of the purchase. Premium branding means making it easy to buy. However, if anyone can walk into a store and buy that bag, it’s not an authentic luxury item, no matter how big the price tag. The Hermes Birkin bag is an excellent example of how scarcity, and difficulty in buying, feeds into the feeling of exclusivity and luxury. To retain a strong presence in the luxury marketplace, brands will need to come up with ever more inventive ways to limit the availability of their products.

While premium advertising seeks to sell, luxury marketing seeks only to educate – and much of it is meant to be seen by those who could not possibly afford the products, feeding again into the air of exclusivity and the magic of desire. Similarly, while premium brands may lower their prices to stimulate demand, luxury brands raise their prices to increase their cachet with consumers.

Understanding these core differences in branding and marketing strategies is essential if your luxury or premium brand is to maintain its market share, and to grow in a competitive marketplace.

 

[Merging Left]

It's more about social rank.

An LV is just a bag. Some of them are just a single colour, small leather bag, that likely cost about $50 in materials. The chief costs are in the marketing that "this item indicates high social status", by paying famous actresses & models to pose with the bag and mention the brand in their press appearances etc. The actual item is just a small piece of dead cow with some paint.

I'm not sure that's entirely true. The product must still be high quality. It has to last a long time - that's how you build the reputation of "timeless." Maybe the raw goods are cheap, but the craftsmanship is expensive.

Factually, LV's cost of goods sold for 2017 was 34.7% of their revenue. So their €1,500 bag actually costs them €520.50. Granted, there's more than just material costs included in that figure, but luxury ain't cheap to make. To your credit, their Marketing expense was 38.5% of their revenue. All the way to the bottom line, the net profit percentage is only 12%. So on that €1,500 bag, they're keeping only €180, which is not nearly as impressive as I had hoped. Operating profit, which I think is EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, is 19%.

Finally, it's worth noting that this info is for LVMH, the luxury conglomerate that owns Louis Vuitton and other brands.

 

[biophase]

This is precisely what I mean. The Monet is just a picture. The man who had the (tremendous) skill to paint that is long dead. Now it's a social rank commodity. It's rare (only I can have it, so I'm special), and you can talk down to other people that they don't understand the value. You can pretend to be more "cultured" etc, thereby purporting a higher social rank. It serves no other purpose.


That's just bias though. There's no way in hell you're going to bend to the idea that they're equal value after you've paid $20k for one. That watch is unambiguously inferior in terms of timekeeping technology to the Casio: it just looks a lot prettier. It's entire value is in the marketing about "designed to be passed down" etc. The fact that it's handmade doesn't necessarily increase it's value: machines are better at precision engineering than people are. It's purely man jewelry for social rank buffing: "oh my watch was handcrafted by a team of monks in the Himalayas out of meteorite metals over the course of 15 years. It doesn't even have hands: you just know the time from it instinctively. And yours?", "just tells the time".

But all of this is academic. The point is, as we can see in your case, people want to buy these stories. And therefore there is money to be made from them. Lots of it. So please don't misinterpret this as being against luxury: I'd just rather be on the selling side than the buying.

Interesting point about the watch. Imagine you take the Casio back in time, let’s say to 1900 and then compare that to the watches of that time. I’d bet the citizens would marvel at the casio and think that it was worth way more than their current watches.

Now imagine that you brought back a Casio calculator watch! What would that be worth? It can do math and tell time and can light up!

This brings back the functionality vs quality issue. The casios functionality would have been unbelievable in 1900 and people would surely think it should cost more.

But we are talking craftsmanship vs functionality now. Our value is based on difficulty of construction vs what the object can actually do.

 

[biophase]

There was a time that I thought like you. Then one day after I bought a new iPod, I wanted a really great set of headphones to go with it, so i researched it, found a great pair that cost $70 which made me understand why people buy high-priced luxury items. Buying that $70 set of headphones set off a chain of events that made me understand the very subtle difference between $7 headphones and $70 headphones. And later $400 headphones. If yo think the only difference between these things are a ‘story’ you’re nuts.

And if you think people only buy this:

as opposed to this:

....If you think they only buy the Mercedes Maybach instead of the Corolla because they want to feel ‘special’... you’re just wrong. The Maybach is objectively better. I think you’re mixing up the cart and the horse. A person who makes 20,000,000/yr is higher on the social rank than someone making 23,000/yr, and the person with the 8 figure salary can afford the Maybach as opposed to the Corolla, therefore the car is the CAUSE of the rank rather than the rank being caused by the car.



Yes, the Patek is more beautiful than the Casio. Again, luxury products aren’t just some clever marketing bullshit. They’re designed to invoke pleasure at every turn. Beauty is one trick they use, but luxury products are more pleasurable to all the senses. Headphones sound better, blankets feel better, food tastes better. It’s not just ‘social rank.’ Most people don’t even know what Sennheisers are. If I wanted social status I’d just get Beats, a Rolex and Levi jeans. But the sh*t I buy (personally) people don’t even know what these brands are. Adriano Goldschmied jeans. True Religion hoodie. Most people have no f*cking clue what any of these brands are. But I look f*cking good when I go out ;D

I don’t disagree that luxury products are usually better in quality but the luxury part is what they charged you for, not it’s proportional value.

In your example your $70 pair of headphones probably should cost $30 but they charged you a $45 luxury premium.

That $7 headphone may have cost $2 to make and your $70 headphone maybe cost $5 to make. But instead of charging $30, they upcharged you and were able to do it because of brand recognition.

There’s probably another brand selling the exact same headphone for $25 somewhere.

 

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[Walter Hay]

I have owned many cars in my lifetime and have rented many different makes and models of cars in 19 countries during my business travels.

Without a doubt, the most uncomfortable car I have ever driven was a Jaguar XK120. Highly acclaimed mainly for its styling when released in the 1950s, I found that apart from its high performance, it was horrible to drive, and the interior apart from the leather was basic. The instrument panel was more visible to the passenger than to the driver.

True it had walnut paneling, but that appeared to be attached as an afterthought. You can still buy a good specimen for around $250,000. I guess that means that it fits the definition of luxury.

On the contrary, the Porsche 356 from the same era, was not only trimmed beautifully, with very comfortable contoured leather seats and with instruments straight in front and visible through the see-through steering wheel. Performance was staggering, with the exciting feel of high G Forces pushing me back into the leather.

Not as pretty as the XK120, but don't say that to a Porsche aficionado. Good specimens can be obtained for a paltry $50,000. Must be because it's not a luxury item.

Walter