The Luxury Strategy

[Niptuck MD]

true luxury goods require little to no marketing. the purchasers/acquirers do all the work for you.

 

[Niptuck MD]

S, the real Lexus

totally agreed. my forseeable sedan of choice is a ls600h with the 5.0v8 bro haha

 

[Niptuck MD]

BMW and Audi are riddled with useless tech for the sake of tech and they are pieces of sh*t.

agreed and i should know! i worked at several bmw plants (non-germany) they treat their subcontracted workers like shit too!

 

[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]

Patek (not the nautilus)

Lmfao. Yea, what a godawful watch lmao.

 

[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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[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.

 

[sparechange]

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

 

[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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[sparechange]

2016 Mercedes Benz C-Class AMG C 63 S RWD NE Calgary AB 24016857

Here is the exact car I was in a couple weeks ago.

Found it *extremely uncomfortable* and the interior is low quality garbage.

I preferred the Avalon or Camry for a fraction of the price. Would the Mercedes be more fun to drive with 500+hp? Absolutely, but for day to day driving combined with the reliability a little Toyota is a better car overall.

German cars are extremely notorious for breaking down constantly. You think for 6 digits you'll have a bullet proof car but thats not the case.

 

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[MTEE1985]

This is sarcasm right?

Haha 100% yes. Addressing the misconception that luxury cars are all badge and no substance. Not saying literally a 7 series but if BMW were to take the 7, change a few things and slap on the spirit of ecstasy and call it a RR.

 

[ChrisR]

Haha 100% yes. Addressing the misconception that luxury cars are all badge and no substance. Not saying literally a 7 series but if BMW were to take the 7, change a few things and slap on the spirit of ecstasy and call it a RR.

Haha. Okay, I wasn't sure because that's exactly what BMW did.

 

[ChrisV]

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.”

The C300 is probably one of my favorite Mercedes. I’ve loved every year of those.

The C class is a sports sedan, the S Class is a large luxury sedan.

Given infinite money and a choice between a C and an S class, I’d definitely choose a C-Class. A) the S class is way too big, B) The C class comes in 6-spd manual.

 

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[ChrisV]

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****

The types of people who buy Rolls Royces make that in 500K months. If you made 500K in two months, I’m sure you wouldn’t be buying a civic. I know I wouldn’t.

 

[ChrisV]

Why ‘sure’. Some people don’t like big cars. I have no use for big sedans. Every car I’ve ever owned was a 2 door stick shift Sports car.

My favorite Mercedes (in order)
SL
SLS (AMG GT)
SLC
C
A (I actually like those quite a bit)
S
E

But honestly, my favorite of those is still the C because they don’t make any of the other ones in 6-spd standard (SL, SLS, SLC) which is important. If the other ones were available in standard I’d change my mind.

 

[Kak]

@ChrisV I bet you'd rather have a Boxter than a 911 too.

 

[sparechange]

hmm 911's thats a car worth the money...



With my current product I'm 10,914 sales away from buying this baby! wooo!

Although cash in hand I'd opt for a cheaper car and grow the capital to 7 figs +

 

[ChrisV]

I suspect with FU money you may find yourself at least test driving a S63...all the comforts with stupid performance and handling. My personal favorite is in the middle of the two with the E series, E43 or 63.

Given FU money I’d buy a Ferrari F430 stick shift in gunmetal grey, an Aston Martin stick shift Vantage V8 as a daily driver (not V12 since it will be daily,) A white Rolls Royce Phantom and maybe a Porsche.. Most likely a Carrera GT.

The first criteria I look for in a drivers’ car is: “Is it available in Stick Shift”... That’s a deal breaker for me. I’ve never owned an Automatic car and don’t want one. They’re more fun, you get the full driving experience, and those flappy paddles just aren’t the same.

In terms of an S-Class.. in my opinion, those cars are meant to be chauffeured vehicles. Hence the reclining back seats, laptop rest, etc. They’re the type of car you have someone else drive so you can sit in the back seat with your laptop and get work done. A Maybach S-Class I might consider if I had FU money and a chaffier, but truthfully for a chauffeured vehicle I’d want a Rolls.

But no I’d never want to drive an S-Class. For driving I’d prefer something with a manual transmission.

Don’t get me wrong, they’re beautiful vehicles... they’re just not for me to own. A C-Class is small nimble vehicle with a manual trans. That’s something I’d own.

 

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[sparechange]

What fascinates me most about the premium/luxury discussion is the emotional responses. Your personal opinion being neither not wrong but skewed toward vehicles as strictly utilitarian I.e. civics and Camry’s however, when it came to the 911 which is an unbelievable albeit extremely unfunctional car, it’s “worth the money”. Just shows how the premium market is so fluid and so objective.



I suspect with FU money you may find yourself at least test driving a S63...all the comforts with stupid performance and handling. My personal favorite is in the middle of the two with the E series, E43 or 63.

LOL I realize I'm a bit of a hypocrite although as a fan of Porsche (practicality as a daily driver along with performance/luxury) Its a ''value'' purchase.

As mentioned of the Rolls Royce its not really justifiable to drop 500-700k on one as it looks the same as a Toyota atleast to me...more like a Chrysler 300 actually with nice leather.

Everyone has they're ''taste''

 

[ChrisV]

But holy shit, are these sexy.

 

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[sparechange]

Oh baby, throw some leather seats in there and do a $700k markup

 

[ChrisV]

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

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

So I’d agree that that isn't worth it to me at least..

Now these on the other hand.....

 

[sparechange]

Ok I'll play along, whats the value add for $700k on the car above besides a group of people staring at you?

 

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[ChrisV]

Oh baby, throw some leather seats in there and do a $700k markupView attachment 21158

No.. it’s more like “Trace the exact design of a Rolls Royce, replace it with cheap Made in China parts and do a $470k markDOWN"

Dude, it’s an imitation.

It’s like if i took your Porsche you posted, had engineers copy the design almost to a T, but in a 200 horsepower lawnmower engine, cheap cloth seats,, cheap suspension and try to mass market it to middle class families. It’s not a Porsche. It’s like a fake Made in China Louis Vuitton bag.

Without Rolls Royce Chrysler would have nothing to copy, the same way Hyundai keeps trying to copy the S-Class and pass it off as theirs.

 

[sparechange]

If the Rolls was 30k no one would care about it. Pricing is almost the biggest part of the brand. Its a fake premium

 

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[ChrisV]

Ahahaha stupid billionaires.. they’re such suckers

They make a 550K purchase that doesn’t even affect their bank accounts

i would hate to be them haha!

Idiots

 

[ChrisV]

If the Rolls was 30k no one would care about it. Pricing is almost the biggest part of the brand. Its a fake premium

Okay.. so go start a car company. Go trying to sell a 30K quality car for 500K.. i bet you 100,000 you don’t even sell one

people know the difference

 

[sparechange]

Currently I'm in negotiation with Elon Musk and Jeff Bezos to create the first flying electric car actually.

Little do you know.........

 

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