Starting a business is one thing but creating a luxury business is an entirely different journey. When you think of big luxury brands they all follow a similar model.
Specific niche
Symbolic value
Differentiation
Superior Brand Promise
Exclusivity
Identify a specific niche is what luxury brands are built on. The premise of being available to a selective group of consumers that hold value in status over the underlying price. This is why defining a niche is important. This segment needs to be those of affluent customers. The offering of symbolic value (which we will get into next) can be translated through product, experience, availability, exclusive gifts and price.
Emphasizing symbolic value is the most important element when developing a luxury brand. Luxury brands are about creating a social stand for customers. Once the customer feels that social status is above others, they will happily pay premium prices. You can highlight a brand's symbolic value by storytelling. This can range from the founder's stories, background and hardships to speaking to sustainable efforts.
A differentiation strategy by definition is an approach businesses develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. The main objective of implementing a differentiation strategy is to increase competitive advantage. While most businesses offer differentiation through products offered. A luxury brand differentiates the actual customer experience as well. For example, purchasing a bag from Banana Republic will give you an entirely different experience versus purchasing a bag from Gucci.
Delivering and upholding brand promise is a crucial part of a luxury brand. When specific departments and organizations are created to support these promises you can be successful. Not only do luxury brands need to consistently deliver on the promise of symbolic value, but they also will need to project consistency and continuity in every possible touch point. An example would be Louis Vuitton and its repairs. Louis Vuitton promises to repair any item that is affected by manufacturing error and they will cover the cost.
The main element of holding symbolic value for a luxury brand is its exclusivity. Perceptions of exclusivity can be unattainable prices, limited geographic availability, limited supply etc. This creates a sense of demand in the eyes of the consumer.
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