Introduction 1. PART one Back to luxury fundamentals In the beginning there was luxury The end of a confus ion: premium is not luxury 39
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1 CONTENTS Introduction 1 PART one Back to luxury fundamentals 3 01 In the beginning there was luxury 5 A brief history of luxury 5 The 20th century and the democratization of luxury 9 Luxury, the individual and society 16 Positioning of luxury in our present-day society 22 Money, fashion, art and luxury: boundaries and ambiguities 24 Luxury: learning from religion and art The end of a confus ion: premium is not luxury 39 The multiple approaches to the concept of luxury 40 Denying the specificity of luxury 41 There is no continuous movement from premium to luxury 42 It is not easy to exit luxury through a downwards strategy 43 From where has the current confusion arisen? 43 Towards a definition of luxury 45 Exiting the confusion: the case of the car 48 Relativity of luxury in cars 49 Is automobile luxury the pursuit of perfection? 50 Top-of-the-range, upper-premium and luxury cars 51 The luxury car: creation, mythical models and social prestige 53 What link does luxury have with technology? 56 The constituents of the myth of the luxury car 57 Luxury and expressions of national identity 59 Beyond the product: services and privileges 61 The magic of cult objects: licences and boutiques Anti-laws of marketing 65 1 Forget about positioning, luxury is not comparative 65 2 Does your product have enough flaws? 66 3 Do not pander to your customers wishes 67 4 Keep non-enthusiasts out 69
2 vi Contents 5 Do not respond to rising demand 69 6 Dominate the client 70 7 Make it difficult for clients to buy 71 8 Protect clients from non-clients, the big from the small 71 9 The role of advertising is not to sell Communicate to those you are not targeting The presumed price should always seem higher than the actual price Luxury sets the price, price does not set luxury Raise your prices as time goes on in order to increase demand Keep raising the average price of the product range Do not sell Keep stars out of your advertising Cultivate closeness to the arts for initiates Do not relocate your factories Do not hire consultants Do not test Do not look for consensus Do not look after group synergies Do not look for cost reduction Just sell marginally on the internet Facets of luxury today 85 On the importance of the label 85 Luxury: the product and the brand 87 The ingredients of the luxury product: complexity and work 89 Superlative, never comparative 91 Luxury and cultural mediation 91 Luxury and history 93 Luxury and time 95 Tradition is not passéisme 97 Luxury is made by hand 98 Real or virtual rarity? 99 Rarity and sustainability 103 Luxury and exclusivity 103 Luxury and fashion: an essential difference 106 Luxury and art 107 Luxury and charity 109
3 Contents vii PART Two Luxury brands need specific management Cus tomer attitudes vis -à-vis luxury 113 What is the size of the market? 114 To be rich or to be modern? 115 Heavy users and day trippers 117 The four luxury clienteles 118 A strong axis of segmentation: sensitivity to the product or to the logo? 120 A second axis of differentiation: authentic does not always mean historical 123 A third axis of differentiation: disruption or integration? 123 How countries differ in their attitudes 124 Why are Western luxury brands globalized? 127 China today and tomorrow 130 Why India resists Western luxury 133 Russia: the psychology of oligarchs Developing brand equity 139 There is no luxury without brands 139 Managing luxury by the brand 140 Products, experiences and brands 141 A luxury brand is a real and living person 143 A luxury brand has roots 143 A luxury brand must radiate 143 No life cycle for the luxury brand 144 A legitimacy created from authority, class and creation, more than from expertise 145 The financial value of luxury brands 145 The core of the luxury brand: its identity 147 Building brand coherence at contact points: central and peripheral identity traits 151 Two modes of luxury brand building 152 Building the luxury brand: the dream equation 153 The luxury brand compass: architecture of product roles 156 Luxury brand equity in the digital era 158 Why and how does the digital world challenge luxury? 159 Managing the dream through communication 163 Defending the brand against counterfeiting 163 Counterfeiting as a way to diagnose the health of the strategy of the brand 168 Always defend your rights and communicate frequently 169
4 viii Contents 07 Luxury brand s tretching 171 Luxury expansion through line extensions and brand extensions 172 The origins of luxury brand stretching 173 Luxury stretching: a practice that has changed the sector 174 Comparing the Italian and French models of extension 175 Two models for brand stretching: vertical or horizontal? 176 The pyramid 178 The galaxy 179 Success factor of luxury extension 179 Typology of brand stretchings 182 Leading a brand stretch 184 Growth by stretching: the Mont Blanc case 185 Stretching: preserve coherence, but be creative and unexpected 188 Maintaining brand identity across sub-brands: the Armani case 190 Building credentials in a new category: the Chanel case 191 The risk factors of brand stretching 192 Controlling the boomerang effect of brand stretching Qualifying a product or s ervice as luxury 197 No product without service 197 The luxury product and the dream 198 Functionality and dreams do not follow the same economic models 200 The luxury product is not a perfect product, but a sacred product 201 Luxury product and competitive universe 201 Luxury product and time 202 Occasion of use and perception of value 203 Lasting a lifetime... and beyond 203 Prolonging the ecstasy of a privileged moment 203 Adapting to its time 205 Structuring the luxury range: how is the range of a luxury brand organized? 206 Innovating through a new product range 207 Don t sacrifice the past to the future 211 A mode of production as a lever of the imaginary 211 The opposition between luxury and relocation 213 Licenses signal the departure from luxury 214 The challenge of luxury services: creating the gap 214
5 Contents ix 09 Pricing luxury 217 What about price elasticity? 218 Increase the price to increase demand and recreate the distance 219 What price premium? 222 Fixing the price in luxury 223 Managing the price over time 224 No sales in luxury 227 Price reductions 228 The price and its communication 229 The price is not publicly advertised 230 The price must be sold 230 Price: the two challenges of the luxury strategy Dis tribution and the internet dilemma 233 Luxury is in the distribution 233 You sell to someone before you sell something 234 It is the price, not the product, that is sold to the client 235 The sales personnel should never earn direct sales commission 236 Distribution shows that the brand dominates clients, but respects them 237 Distributing is first of all about communicating 238 Distribution should not only show off, but enhance the product image 239 It is distribution s job to communicate the brand s price level 239 A luxury purchase is a lengthy act 239 Distribution is luxury s weak link 241 The choice of a new sales point cannot be delegated 243 Distribution must manage rarity 243 Distribution protects you from competition 244 Luxury and mode of distribution 244 Luxury and digital distribution (the internet dilemma) 247 Luxury brands: when, what, and how to sell on the internet Communicating luxury 255 You don t communicate to sell 255 You communicate because you sell 256 You don t talk about money 256 You communicate, you don t advertise 257 No personalities in the advertising 261 The role of brand ambassadors 262 Building the social driver of desire 263
6 x Contents Permanently encourage word of mouth 264 What balance should there be between local and global communication? 265 The internet and communication in luxury 265 The unique codes of luxury communication 271 Making the brand s visual language denser: the nine signatures of the brand 271 Making the brand denser through tales, stories and rumours 272 Adapting the communication register to the type of luxury 273 The dialectic of the local and the universal Financial and HR management of a luxury company 277 Financial issues in luxury companies 277 Luxury and profitability 279 Globalizing 281 Luxury, volume and profitability 281 Managing the human capital in luxury 284 PART Three Strategic perspectives Luxury bus ines s models 297 Luxury products with a profitable core trade 298 What are the pitfalls to avoid in this working model of a luxury product with a profitable core trade? 302 Luxury products with a too-restricted core range 305 The perfume business model 312 The business model of luxury trades with very high overheads 315 The high-tech business model (highly innovative industry) 318 Crises and luxury business models Entering luxury and leaving it 323 Wanting to be luxury is not enough: the conditions of luxury 323 Why envisage a luxury strategy? 325 Start small and become profitable 326 Once profitable, grow quickly 327 Acquiring an existing brand 329 Departing from luxury 331 The end of a luxury brand 331 Taking a brand out of the luxury universe 335 Leveraging the image in a low-cost strategy 338
7 Contents xi 15 Learning from luxury 341 Luxury concerns all trades 341 Understand the rules in order to adapt them 342 How Apple follows a luxury strategy 342 Luxury according to MINI 345 Mixed strategies 347 Managing a luxury strategy in B to B 349 Luxury marketing as the future of traditional marketing 352 What marketing issues of today could luxury marketing help to resolve? 353 The Lacoste example 353 Learning from luxury Luxury and s us tainable development: convergences and divergences 359 Luxury and sustainable development 360 Adopting the luxury strategy to foster sustainable development 372 References 377 Index 383
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