The Luxury Loophole

Brands no longer need to be scarce to earn the luxury tag.  Patrick Schmitt considers a very delicate balancing act

WHEN JANIS JOPLIN sang "Oh Lord won’t you buy me a Mercedes Benz" she would certainly have been disappointed if an AClass had dropped from the sky.  With its stunted proportions and Ford Focus price tag, it’s not exactly the uber Führer carrier the manufacturer is famed for.

Nevertheless, this baby Benz has the same associations with luxury as a three pointed star-bearing wheeled mass of metal double-parked in Mayfair, engine running and chauffeur standing by. 

This is because the brand has managed to retain its top end image with cars in different categories.  There has been expansion, but it has been managed in a disciplined way.

And although some have said we are in a world of luxury overload in which manufacturers of premium products have sacrificed long term status by increasing volume, others believe a balance has been found between retaining an image of exclusivity and increasing production, even if it’s a delicate one.

But before considering the methods to increase quantity in a category associated with quality, it seems sensible to first question what is a luxury brand?  For instance, in the world of lager, is it Stella Artois? Or can beer never be a luxury? How about wine? Is it a luxury in itself?

The simple answer is it comes down to consumer perception, because luxury, like beauty, is in the eye of the beholder.  But despite the inherent subjectivity of defining luxury, there are certain methods of creating and maintaining an image of indulgence, whatever the category, even if the product or experience is far from scarce, and it involves careful control of both manufacturing and marketing.

To begin with, the most important aspect to acquiring and retaining luxury status is the nature of the item itself, which must be both beautifully made and unique.  "A luxurious product must have craftmanship and design; something that cannot be easily replicated by other brands," according to Vincent Gillet brand manager, Moët and Chandon.

 "And in Champagne this is the blending of the grapes and finding the best quality ones." Rita Clifton, chairman of Interbrands agrees: "Number one, you’ve got to have a great product.

It must be distinctive. In all designer fashions brands the product is king. You show it on the catwalk," she adds.  Secondary to this, but still key, is the packaging. According to Mary Lewis of brand designers and strategists Lewis Moberly, "80% of the information we receive is visual and there are very strong visual codes for luxury brands."

Luxury today is communicated using simple but confident designs, for instance the trademark Chanel square (evident in both its bottle and label design); not the elaborate and ornate creations of old.

However, there is more to building a luxury brand than the creation of a product and its packaging.  A company’s pricing policy, for instance, is an important differentiating factor. So it is cost that helps one detect luxury.

"Chandon sparkling is premium, Sainsbury’s own label is premium but Moët and Chandon is luxury," according to Gillet.  Another more economic-based definition of a luxury brand is one that consistently commands and justifies a higher price than others with a similar function and quality.

But while price may be the cue for quality and the product the justification, it is marketing that drives the sales and maintains the image.  For example, creating associations with certain people, places or events and then communicating that is an effective technique for driving a luxury image.

"With Moët", Gillet notes, "we’ve had 270 years of our product being in the hands of the right people.  Yes it has opened up to a wider audience, but historically it was drunk by the aristocracy and royalty and today, the aristocracy are, I suppose, celebrities." 

And Moët has certainly made sure its branded bottles are firmly grasped in the hands of the beautiful, rich and famous through its support of London Fashion Week. 

Similarly, Veuve Clicquot has developed a glamourous image by smartly positioning itself as the "Champagne of the Season" through the sponsorship of high profile and typically English sporting and cultural summer events.

In addition to this, where the product is distributed can also be key to its image.  Clifton in particular warns against the cheapening of a brand through over licencing, suggesting this has been the problem for Pierre Cardin, and could become one for Calvin Klein.

"The main asset in the luxury sector is the brand – just the name itself is worth 75% to 80% of the total company value.  You must keep it under control.  You’d be mad to muck about with it," she warns. So this involves nurturing brands in their own stores, although this is rather less important for drinks than it is for designer clothes.

Top end Champagne houses, for example, have managed to keep control of their brands despite being in the hands of third parties like supermarkets or airport duty free outlets.  As Gillet comments: "If the product is high quality it doesn’t matter where you sell it."

But whether in Selfridges, Sainsbury’s or your own branded outlet, there is something more subtle occurring that has allowed the luxury brands to significantly raise volume without eroding their image of exclusivity.

For instance, almost anyone could be swinging a Gucci handbag, sporting Armani or sipping Champagne, and yet all these names still have strong connotations of luxury. Even Hermès now stocks canvas.

And the reason for this is manufacturers have carefully tiered their lines, with scarce and expensive top end products and then a base of more accessible and cheaper items. Such a structure could be likened to a triangle, with a broad and volume-driven bottom and a peak of rare and often obscure items.

Clifton cites Armani: "It appears in different guises.  You have Emporio Armani, Armani Jeans, Collectione Armani and Armani fragrances.  There’s a part that’s accessible to everyone.  It gives an excuse to sell at different volumes and prices but without cheapening the image."

Also in the world of designer clothes Clifton comments on Jasper Conran, noting that his products are "adaptive".  She explains: "He has done a version for Debenhams, allowing consumers to buy a chunk of the magic but he has not undermined the image."

James Ogilvy, publisher of The Luxury Briefing notes this in drinks: "Some might have a premium part of their brand with a wide distribution, for example, Johnny Walker and its Blue Label.  But, the lower end benefits rub off from the higher end products."

Take Bollinger, whose entry level Special Cuvée is hardly common, but certainly far removed in price at least from the top level RD.  The other technique is to hold onto a rarefied image with the introduction of limited editions.

Something Ogilvy describes as "artificially appearing to be exclusive". In the world of fashion these temporary releases are often bespoke, with Gucci, for instance, allowing customers to choose the style and colour of their handbags and shoes in restricted quantities.

In drinks, you have anniversary commemoration, limited release batches, special blends and, of course, vintages.  So it would appear that the boundaries of luxury have stretched in both directions, meaning this once highly exclusive category can now be both accessible as well as obscure, affordable as well as priceless.

But this has meant the purest from of luxury is now hard to find – one driven by scarcity.