The Luxury Strategy

[MTEE1985]

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

Airbags too I believe...on top of all that they then decided to give away these patents for the betterment of the world.


Fascinating about the wine. @Mike154 who just joined us is in that space, I’d be interested to hear his thoughts in regards to the $10 vs. $50 vs $500 bottles of wine as far as process, cost to make etc.

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?

 

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[ChrisV]

I think the line between premium and luxury can be blurred. Some brands are both.

To me ‘premium’ denotes functionality in some way. Premium Basketball shoes should make you a better player. Luxury Basketball shoes should be made of soft supple leather and hug your feet as you walk upon a fluffy cloud of love.

Premium = the best

Luxury = comfort. Or beauty.

Again, I think you can have elements of both.

 

[ChrisV]

You know what the funniest thing is.. when people say “People only buy Ferraris for status and ego”... It’s just funny because 95% of Ferrari owners keep their shit in the garage where no-one will see them and take them out like... twice a year. Doug Demauro wrote about this extensively when he did an experiment of owning a Ferrari for a year. He said it was the most annoying experience of his life. People wanting to take pictures, honking in traffic with the same lame joke in their Civic (“WANNA RACE HAHAHA”).... He said something like “I would think to myself let me take the Ferrari out for a joy ride” but then remembered how annoying it was to get stopped in traffic every 6 feet, and just fired up Forza on the Playstation instead.

But I guess it depends on where you live.

That being said....

View: https://www.youtube.com/watch?v=kj58hRUe05M

 

[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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[MTEE1985]

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 and 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.

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 them to their kids along with the businesses, the home, and contacts.

Think about the architecture between the “old money” neighborhoods, 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. And 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.

Very good point. True luxury is understated elegance and timeless.

 

[ChrisV]

Patek (not the nautilus)

Lmfao. Yea, what a godawful watch lmao.

 

[ChrisV]

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 and 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.

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 them to their kids along with the businesses, the home, and contacts.

Think about the architecture between the “old money” neighborhoods, 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. And 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.

Here’s the other thing..

I think everyone has an identity and culture they’re proud of.

People who drive Jeep Wrangers want to show off that rough ’n rugged vibe.

People who drive Prius want to show off their care for their environment

People who drive Teslas want to show off their Tech-savvyness

So maybe Audi/BMW/Mercedes owners do want to show off their elegant style.

I think everyone has an image they’re proud of.

You could argue ALL of them have egos about who they are and the products they buy. And all of them can feel l superior in their quests. ALL of them can have Egos or be humble. The guy with a Ferrari wants to show off his status? But the guy with the Prius may want to show that he’s better than the guy with the Ferrari. “Oh look at that guy… Look how much more I care about the environment than HIM with his 8mpg car.” A guy on the Bicycle can look down at the guy in the Prius like “Look at these guys… all they care about is Material Possessions.”

See, part of the reason I have an issue when people say “oh people only buy lux products for status” is that I almost feel like it’s a subtle attempt at a put-down. In other words “I’m superior because I’m not like those guys who care about all that status stuff” which ironically is status seeking behavior in itself.

But back to my point…

Yea, people want to express themselves with the products they purchase. A skateboarder is going to want to show off his Vans or DC shoes… A punk rocker is going to want to show off their vintage Rock and Roll T-Shirts… Someone from the Financial district may want to show off their Farrigamo Tie. And Me? Mercedes BMWs Acuras are just part of my personal style.

Everything you buy is an expression of who you are. I think the “New Money” stuff is when someone is trying to be someone who they really aren’t. J Leno is First Generation wealth…. yet he has 10 Ferraris. 50 Cent on the other hand probably just bought his Ferrari to show off. There’s a difference between an Avid Car connoisseur/collector buying a Ferrari and 50 Cent. %0 Cent is probably like “YO BRO LOOK AT THIS SICK WHIP I JUST COPPED” where J Leno would be more like Kak said “First Generation Old Money.”

When people talk about New Money and Old money they’re really talking about class. Self Made Millionaires are by definition new money, but I don’t think anyone would accuse Elon Musk of acting like “New Money.”





But yes “Less is more” is a theme I notice among Old Money (regardless of generation) types.

This is beautiful to me:



This isn’t:



But truthfully, I like this little $50 watch more than all of them.



New Money to me is flashy orange Lamborginis. Old money to me is subdued gunmetal grey Aston Martins. New Money says “Hey look at me!” Old Money says “I’ll just be over here if you decide you want to look at something beautiful.”

Edit: Actually.. I don’t know if you guys have ever seen this but Doug DeMauro bought an Aston Martin and no one even LOOKED at it. Video here He had a Ferrari for a week and couldn’t make it half a block without someone wanting a picture. Was pretty hilarious.

 

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[Kak]

See, part of the reason I have an issue when people say “oh people only buy lux products for status” is that I almost feel like it’s a subtle attempt at a put-down. In other words “I’m superior because I’m not like those guys who care about all that status stuff” which ironically is status seeking behavior in itself.

Agreed. The "I'm above material possessions" crowd are so up their own a$$ it's ridiculous. That is jealousy dressed up in self righteousness. I can almost smell the smug bullshit emanating from the phrase "material possessions."

Now. There are groups of people that all are worth hundreds of millions or close. They don't give a shit about the neighbor's new 150k car. If they wanted that car, they could have that car. I legitimately believe them that they don't care and I believe them that they already drive what they want to drive. There are people with legitimately nothing to prove, at least when it comes to money.

 

[ChrisV]

Agreed. The "I'm above material possessions" crowd are so up their own a$$ its ridiculous. That is jealousy dressed up in self righteousness. I can almost smell the smug bullshit ruminating from the phrase "material possessions."

Now. There are groups of people that all are worth hundreds of millions or close. They don't give a sh*t about the neighbor's new 150k car. If they wanted that car, they could have that car. I legitimately believe them that they don't care and I believe them that they already drive what they want to drive. There are people with legitimately nothing to prove, at least when it comes to money.

This is Warren Buffets Car. $45,000. And he only bought it because his daughter thought his previous 2006 DTS was embarrassing the family lol. He also lives in a home worth $260,000 and has for like 60 years.



My dad made 6 figures and drove a minivan lol. Vette in the garage but loved his Nissan Quest lol.

 

[Xeon]

Rolls Royce is the biggest scam of a car, there is literally nothing special about these cars

But but but.....a Rolls Royce is the Spirit of Ecstasy!

 

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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.

 

[MTEE1985]

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).



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.

Asking you to explain more than you already did would not be fair to you and your time. Rep sent.

I realized after writing my comment about the $2 for $120 how poorly I worded it. It isn’t the margin that is important but rather how is that product positioned that her customers basically insisted on paying $120 for it? It is surely a good product but at a cost of $2, it is not a luxury product. Much in the same way a person may never even consider a bottle of wine under $100, a car under $100,000 or a watch under $20,000.

The inward excellence mentioned exemplifies it nicely. That is something that can be achieved (generally, not always) through production, materials, R&D etc. 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?

Hope I’m making sense to more than myself here.

 

[Xeon]

I can explain more about that if required, but it will go off topic I think.

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!

 

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[ChrisV]

c300's civics and corollas are the same thing. I have been in all of them, my fat hairy a$$ was in a c63s AMG and for 6 digits I'd rather get a Civic for like 10-15k. Was to uncomfortable and the inside looks super cheap.

Huracans tho? Whole nother level.... I could justify the $400k+ tag (was just at the dealer a couple of weeks ago)

The two cars in my pic are almost a mill, inside the cars are super plain. Rolls Royce is the biggest scam of a car, there is literally nothing special about these cars. Again I would argue a little Civic for a fraction of the price is much nicer.

He just said that a Civic is nicer than a Rolls Royce and that C300s and Corollas are the same thing. Please kill me now.

 

[rpeck90]

Asking you to explain more than you already did would not be fair to you and your time. Rep sent.

I realized after writing my comment about the $2 for $120 how poorly I worded it. It isn’t the margin that is important but rather how is that product positioned that her customers basically insisted on paying $120 for it? It is surely a good product but at a cost of $2, it is not a luxury product. Much in the same way a person may never even consider a bottle of wine under $100, a car under $100,000 or a watch under $20,000.

The inward excellence mentioned exemplifies it nicely. That is something that can be achieved (generally, not always) through production, materials, R&D etc. 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?

Hope I’m making sense to more than myself here.

Thanks for the rep - I can go more into it if required.

In terms of the wording, I see what you mean now. For "positioning" for prem/lux, I think you need to look in the mirror and determine who "you" are. Most people aren't of that calibre, and thus could never command the prices associated with it. You can't "target" a luxury crowd, they have to be impelled.

The prices associated with premium/luxury are typically a denotation of "demand" - which - to me - is indicative of the quality that someone brings to a solution. This is why certain fashion designers, chefs and beauticians "command" a large amount of money -- their time is "worth" more than others.

That quality might not appeal to most, but for those who have decent money... be it the likes of a model, company exec or whatever... buying something of refinement becomes a prerequisite (typically because it reflects their calibre in some way).

For products, whilst you've got the obvious argument of quality/materials etc - I believe there is something else at work; something much deeper that triggers the reverence that is deeply associated with prem/lux. It's part process, part materials and part solution. The higher up the food chain you go, the more esoteric / ephemeral it becomes (buying an heirloom in the case of Patek Phillipe).

 

[ChrisV]

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.

I love this too. He’s a greatt salesman, and his salesmanship stems from the fact that he truly believes in his art.

Although, I’m so against plastic surgery in women aside from fixing deformities or accidents. The girl you can tell she’s gotten many surgeries.

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

Yea I think most of those brands worked elsewhere

BMW started with Aircraft Engines. BMW too.

Even BMW’s Logo

"The white and blue checker boxes are supposed to be a stylized representation of a white/silver propeller blade spinning against a clear blue sky.”
​

The Mercedes 3-pointed star represents:

"On land, on Water and in the Air“.​

Mercedes Explains Meaning of Three-Pointed Star Logo

Ferrari, of course started with F1 cars.

It's often the case that the people behind great brands didn't need to create the brand.

I love this. You know, we too often think of ‘branding’ as some type of marketing thing, but i think that’s just an extension of the creator(s) vision. Ferrari’s branding? To make an F1 car that’s street legal. Apple’s brand? Beautiful products that combine Technology and the Humanities. Mercedes? A refined luxury car. Porche? A refined luxury car with more of a focus on performance. Rolls Royce? The ultimate in british luxury. Notice how their branding is almost a perfect reflection of their creators visions. Branding starts with the product. You can’t brand a banana as an orange.

 

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[MTF]

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?

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.

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

 

[ChrisV]

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).



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.



I can explain more about that if required, but it will go off topic I think.

Go for it. If you think it might derail the thread I’m sure people would love to hear in a separate thread.

 

[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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[Kak]

He just said that a Civic is nicer than a Rolls Royce and that C300s and Corollas are the same thing. Please kill me now.

C300 is still a poser car marketed directly at middle class spendthrifts. Anyone with a job can afford one. “You deserve it,” they tell you. Hahaha... Yep you deserve a tiny, Carrolla sized car for 50k. I hate all the small luxury cars.

They’ll build up their car to everyone, “it’s sportier than the S Class” they are really thinking “I wanted the S Class, but my life didn’t work out quite the way I hoped.”

 

[GoGetter24]

That's $36,000 per case of wine. Wut.

I love the fact I can't tell the difference between wines and am immune to hype.

I always feel like I'm getting a huge discount just by buying cheap Chilean wine. I drink it, it tastes like wine, I'm happy.

 

[MTEE1985]

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.

And that is 100% the difference in automobiles. From a features standpoint I’ll concede that there is little difference between a $40k C300 and a $20k Civic but under the hood and from the paint job down to the frame they have zero in common.

 

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[sparechange]

C300 is still a poser car marketed directly at middle class spendthrifts. Anyone with a job can afford one. “You deserve it,” they tell you. Hahaha... Yep you deserve a tiny, Carrolla sized car for 50k. I hate all the small luxury cars.

They’ll build up their car to everyone, “it’s sportier than the S Class” they are really thinking “I wanted the S Class, but my life didn’t work out quite the way I hoped.”

heres $20k


Heres $500k





Yes, I stand by my comment of civics corrallos and royces all being the same crap.

 

[sparechange]

What I'd really like to know what is the production cost of exotics such as Lamborghini/Ferrari etc

 

[Kak]

What I'd really like to know what is the production cost of exotics such as Lamborghini/Ferrari etc

Probably more than you think.

Why? They are short run automobiles. So the R&D has to be spread out over fewer cars. Furthermore cost saving measures that work for continuous runs of a popular car won't always apply. They are "handmade," or whatever they advertise, likely because they have to be. It would be cost prohibitive to invest in an extensive assembly line for a car that sells rarely.

 

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[MTEE1985]

Probably more than you think.

Why? They are short run automobiles. So the R&D has to be spread out over fewer cars. Furthermore cost saving measures that work for continuous runs of a popular car won't always apply. They are "handmade," or whatever they advertise, likely because they have to be. It would be cost prohibitive to invest in an extensive assembly line for a car that sells rarely.

Well said, the incorrect blanket assumption that luxury cars are literally the same thing with a different badge and huge markup is an abundant one. The most obvious example is the people who see a Lexus and say “nice Toyota”. Some similarities? Of course. But a LS500 is not even remotely close to being an Avalon with a “L” on the front.

heres $20kView attachment 21095


Heres $500k


View attachment 21097


Yes, I stand by my comment of civics corrallos and royces all being the same crap.

My personal biases aside that one is boring and one slightly arousing:

It takes one man one day to make a Rolls Royce radiator and then 5 hours are spent polishing it. The Rolls Royce radiator grille is made entirely by hand & eye - No measuring instruments are used

The cars space frame chasis is first built in Germany and then shifted to Goodwood plant (England).

Inside the paint expanse, it requires 22 steps, 5 layers of paint and seven days before the body is perfect and in total 45 kilograms of paint is sprayed onto the body shell. This takes almost a week to 10 days because, even the paint works are mostly done by hands & the last layer of paint is done by couple of robots.

The process of polishing takes 5 hours.

A special tradition is used named “Bookmatching”, where the veneers are given glossy finish to give the mirror look from each side.

450 pieces of leather and 17 days are necessary for completing the interior.

The star looking roof needs one of the best and skillful workers, who take about 12 hours to build one roof.

you have options such as Rabbit pelt, Ostrich, Shark & Crocodile skin as upholstery options.

The cars interior consists of 42 different parts of veneers totally handcrafted.

Civic= sitting coach on Delta
Rolls Royce= a damn G650

That’s not to say there is anything wrong with sitting coach on delta, it’s simply a personal preference. I happen to personally think for a daily vehicle I’d lean toward a pickup truck. Doesn’t mean I don’t want a super car for the weekends.

 

[sparechange]

Still cant justify a $500k+ tag on a Rolls,

I rode in a Bentley before and they look super cheap inside, might of been a few years older but it was a huge disappointment.

Don't believe the hype, its all brilliant marketing by people that are extremely skilled to make you believe a bunch of bull****

 

[sparechange]

Inventory | Rolls-Royce Motor Cars Alberta

Heres a Phantom for $671,000

If you look at the car honestly with 0 bias and ignore the marketing you have to be crazy to think the car is actually worth that much and that much better than any modern luxury car from Korea or Japan

Looks like a souped up Chrysler 300 with fancy leather.

Whoever runs the marketing/branding at Rolls Royce is doing a good job

 

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[MTEE1985]

Still cant justify a $500k+ tag on a Rolls,

I rode in a Bentley before and they look super cheap inside, might of been a few years older but it was a huge disappointment.

Don't believe the hype, its all brilliant marketing by people that are extremely skilled to make you believe a bunch of bull****

You bring up a good point with Bentley because they did go through a phase where VW took the Phaeton and jazzed it up and called it a continental. Imagine if you saw a 7 series with a RR emblem.

Comes back to the OP point that they violated some of the product principles. With RR, the $650,000 price tag regardless of your perceived value is there to say “this represents the best in the world” and in that respect it works. From there it comes down to the individual to decide on if the item is worth it.

To you getting a Porsche 918 when it was released for $900k or a Lamborghini for $300k might be considered a better use of money than the corporate executive purchasing a Phantom for $500,000.

 

[ChrisR]

Imagine if you saw a 7 series with a RR emblem.

This is sarcasm right?