Sustaining a Luxury Brand

In the marketplace for luxuries, there are two kinds of customer: those who seek luxury for its own sake, and those who seek luxury as a means to bolster their social image.  My sense is that if a luxury brand is to be sustainable, it must embrace the first and shun the second.

For the hedonic customer, luxury is access to pleasure, and there is a strong and sustainable demand.   So long as the brand delivers the pleasure that was expected, its consumers can remain engaged (and re-engaged) and the only means of competition is to deliver a substitute product that legitimately provides greater pleasure.

For the status-seeking customer, luxury is a means to gain approval, and the demand for the brand is only sustainable so long as others approve of its consumption.    Because there is no evaluation of the qualities of the brand itself, only of the opinions of those the status-seeker wants to impress, there is nothing that the brand can do to the product itself to reinforce and retain the loyalty to the customer.

To compete with a luxury brand for the status-seeking market, one need only to sway public opinion: the product can be unchanged and objectively just as good as it ever was, and the competing product does not have to be any better – it only needs to be more fashionable.   This is easily accomplished by advertising and publicity efforts: get a person who has high social esteem to endorse the brand, directly or indirectly, and the flock of status-seekers will follow.

Fashion is innately perishable: when one group adopts a brand to distinguish itself from other, lesser, groups, its inferiors will seek to imitate it, which tarnishes the cachet of the brand in the eyes of the group that wished to differentiate itself.   Because those with whom they do not wish to associate are using the brand, they must abandon it to seek another brand to remain distinct.

In this sense, pursuing the status-seeking market will drive short-term revenue but will not sustain the brand.    If the quality of the product is not harmed, then the hedonic customers will remain after the status-seekers have moved on to the next brand – because it is the quality of the brand, not its public image, that results in their satisfaction.

But very often, the quality of the product is compromised to gain popularity, whether directly (the product is changed to suit the perceived “tastes” of a majority of its customers, who are now status seekers who have no taste at all) or indirectly (the product is compromised to lower its price so that it is affordable to a broader market).

This may be the reason that many of the luxury brands of the past have fallen from grace or disappeared entirely, while certain other luxury brands have stood the test of time: if it remains indifferent to the demands of the status-seekers, it may enjoy temporary popularity while retaining its core customers.   And it seems that few are able to do so.