Luxury Branding And Emergence Of Masstige Brands

Positioning strategies for luxury brands combine a high professed esteem with rational value premiums in demand to fascinate middle-class customers. These approaches are different from those applied by customary luxury brand owners, who keep a austere constancy between perceived prestige and price rewards so as to reserve their brand’s exclusivity.

This paper discusses Masstige, a marketing cliche coined in the U.S. by Boston Consulting Group executives, referring to mass prestige associated with ownership of certain brand name products. It is a marketing trend in which products proposes customers some of the status that comes with brand-name luxury goods, but at a segment of the price. The dimensions, scope and typology of luxury brands with respect to Masstige brands are studied in this paper. Further strategies are formulated for Masstige brand markets based on the inferences derived.

Today luxury is everywhere. During the nineteenth and early twentieth centuries, with the rise of world trade, luxury was the product of great craftsmen-Christian Dior the frock-maker, Louis Vuitton the trunk maker, James Purdey the gun-maker. More recently in the industrialized world, with the problem of mass production largely solved, luxury increasingly became the brand-carefully crafted symbols, which go beyond the material, beyond the craftsmen to invoke a world of dreams, images, signs, and motifs. The extraordinary growth of the luxury sector worth of US $ 20 billion in 1985 to its current (2009) $ 180 billion worth has been taken by globalization, wealth-creation prospects, new market segments, culture convergence and international travel.

Ten Defining Characteristics of Luxury Brand

Maintaining a premium image for luxury brands is crucial; controlling that image is thus a priority.

Luxury branding typically involves the creation of many intangible brand associations and an aspirational image.

All aspects of the marketing program for luxury brands must be aligned to ensure quality products and services and pleasurable purchase and consumption experiences.

Brand elements besides brand names – logos, symbols, packaging, signage and so on – can be important drivers of brand equity for luxury brands.

Secondary associations from linked personalities, events, countries and other entities can be important drivers of brand equity for luxury brands.

Luxury brands must carefully control distribution via a selective channel strategy.

Luxury brands must employ a premium pricing strategy with strong quality cues and few discounts and mark downs.

Brand architecture for luxury brands must be managed very carefully.

Competition for luxury brands must be defined broadly as they often compete with other luxury brands from other categories for discretionary consumer dollars.

Luxury brands must legally protect all trademarks and aggressively combat counterfeits.

Constituent Value Dimensions of Luxury Brands

Luxury brands have three components or dimensions: the functional, the experiential, and the symbolic.

The functional dimension is where the luxury brand has it material embodiment. Both product and service brands have physical manifestations and accoutrements. Functionality is stressed because this is the domain of what an object does in the material world, rather than what it represents. Thus Christian Dior initially made outstanding clothes of great functionality, Louis Vuitton made great trunks built to withstand world travel, and James Purdey made guns that were highly accurate and built to withstand the rigors of hunting life. Today, Rolls-Royce continues to be known for its near silent operation, impressive performance, and for the exquisite quality of materials and craftsmanship.

The experiential dimension is the realm of individual subjective value. A person’s subjective taste is the ultimate arbiter of luxury; it is where personal, hedonic value is found in a brand. Thus, what might be considered epicurean to one person is bland, or even repulsive, to another. For example, Kopi Luwak is the most expensive coffee in the world. While some coffee connoisseurs prize the bean’s unique bitter flavor, others are appalled that the main reason for the distinctive taste is that the kopi (Indonesian for bean) begins its journey to the cup by passing right through the digestive system of the Asian Palm Civet.

The symbolic dimension is the realm of the social collective. Here the symbolic nature of luxury brands comes into play-by symbol it is meant that which signifies a constructed and evolved narrative, myth, or dream-world. It has two aspects: the value a luxury brand signals to others, and the value of that signaling to the signaler. Thus a Ferrari may signal wealth, prestige, and performance, and it can be used to constitute and reinforce the owner’s self image as well. Similarly, Gucci clothing might signal the wearers’ wealth as well as their edgy, au-courant taste to others. As Keller has it, for brands whose core associations are primarily non-product-related attributes and where benefits are symbolic, relevance in user and usage imagery is critical. He also argues that symbolic benefits are especially relevant for socially visible, “badge” products.

It is important to note that these three dimensions of luxury are contextual. Symbolic and functional value change with the context. In the 1920s a Rolex watch was accurate to one second a month is somewhat beside the point today when the cheapest digital watch easily surpasses this. Experiential value for an individual might also change over time-as their tastes evolve or change. For example, even gourmets might think paying $335 for an ounce of Beluga caviar excessive, but as their tastes become more sophisticated, they will seek these products out.

The scope of luxury goods and services industry

The growth of the client base on luxury and the subsequent lowering of the entry barriers to the industry have resulted to a rise in both offerings and competition across all luxury categories. Whether it is fashion and accessories, leather goods, fragrance, skincare, cosmetics, wines, spirits, timepieces, jewellery, automobiles, private jets, hotels, home decoration or concierge services, the supply of luxury is currently incessant.

Typology of Luxury Brands

Luxury brands can be differentiated along two dimensions: aesthetics and ontology-the branches of metaphysics concerning perception and being.

Aesthetic judgments rely on our ability to acutely discriminate value or quality in something. Like most faculties aesthetic discrimination is phenomenon specific and only comes with experience of that phenomenon. It is related to luxury through the development of taste and the appreciation of beauty and refinement. Howard Gardner in his theory of multiple intelligences contends that people have an aesthetic intelligence that is developmental in nature. Luxury is a process, an experience rather than a thing. Thus the role of the viewer becomes central, as does their experience, expertise, and aesthetic refinement. Heidegger calls one who brings a work of art alive through their contemplative experience of it a preserver; this notion is developed by White who generalizes the aesthetic-preserver process as one of revealment. Thus a distinction can be made between the neophytic observer and the aesthetic preserver.

Ontology is the branch of metaphysics dealing with the nature of reality or being. Philosophers have argued that the nature of reality is either permanence or flux, being or becoming. Process- or becoming philosophy argues that change is fundamental, while being- or substance philosophy argues for identity or states. Luxury goods have traditionally been associated with endurance-items that last: the Élysée Palace, the heirloom repeater watch, and the diamond that is forever. Transience has received less attention in relation to luxury.

Thus from aesthetics we can differentiate the novice and the expert, the uninformed from the educated enthusiast. From ontology we can distinguish being and becoming, enduring and transient. Taken together, these provide an insightful typology with which to differentiate and explore luxury brands. Specifically, the dimensions of aesthetics and ontology delineate four modes:

The AO Framework-A Typology of Luxury Brands

The Modern

Here the ontological mode stresses the enduring, while the aesthetic mode is as a novice. This is the realm of commercialized luxury: there is no need for expertise to understand or appreciate the luxury product or service. The price of admission into this mode of luxury is simple: money-and not astronomic amounts of it. This is the world of democratized luxury. As Schumpeter says, “The capitalist achievement does not typically consist in providing more silk stockings for queens, but in bringing them within the reach of factory girls.”33 This mode is exemplified by Bernard Arnault who created the conglomerate LVMH SA and has since then gone on to make Gucci bags and Givenchy perfume accessible around the world. The modernist luxury mode is typically vilified by purists such as Thomas who argue that popularization of traditional luxury brands goes hand in hand with their abasement and vulgarization. While Thomas might be viewed by some as a disparaging snob, he might indeed have a point: The price paid for popularization is often loss of exclusivity, identity, and deterioration in quality as a result of mass production. As the aesthetic mode is predominantly novice, luxury brands in this quadrant are typically used for symbolic value; luxury is bought status. Luxury becomes conspicuous possession.

The Classic

As with the modern, the ontological mode stresses the enduring, while in contrast the aesthetic mode is as an expert. Here the world of luxury is in the tradition of great art, the monumental. The ancient Greek ideals of beauty, perfection, and endurance have informed much of the West’s notion of art and classic luxury. In this instance “luxury is not consumerism. It is educating the eye to see that special quality.” That is, one needs expertise or aesthetic discernment to fully appreciate this mode of luxury. For example, unlike the enthusiast, the novice is unable to appreciate the superb balance and craftsmanship of the Purdey side-lock shotgun. This is the realm of “purist luxury,” which of course has huge symbolic value but is only truly appreciated and understood with experience and the development of aesthetic discernment. This mode has higher barriers to entry than the modern, as one needs experience and expertise in addition to money in order to appreciate it. Now luxury is an aesthetic possession.

The Postmodern

In this instance, the ontological mode stresses the transient, while the aesthetic mode is as a novice. Here the world of luxury is evanescent-it is the latest hot thing, it is glitz and glamour. There is no need for expertise to understand or appreciate the offering. It rejects hierarchies of taste, refinement, depth and other cultural distinctions. Experience can be baggage, knowledge can be an anachronism. This is the world of surface and appearance: It is the Hollywood actress’ Oscars dress, the latest nightclub, “Dancing with the Stars,” Las Vegas, facelifts, and makeovers. It is the hyper-real. Indeed, the copy can transcend the original as in the case of the Venetian hotel in Las Vegas-all the magic of Venice (the canals, the gondolas, and the buildings), without the downside (the garbage, the smell, the flooding, the mosquitoes). Here luxury is conspicuous consumption.

The Wabi Sabi

Here, like the postmodern, the ontological mode stresses the transient, and like the classic, the aesthetic mode is as an expert or enthusiast. This is luxury as the ephemeral-the rare orchid that blooms for just one day. Although present in all cultures and times, a philosophy of the ephemeral is perhaps best enunciated in the Japanese notion of wabi sabi, a world-view that is centered on transience-where the impermanence, incompleteness, and imperfection of life is raised to the highest form of art It is mirrored in the tequila connoisseur’s obsession with real agave (rather than raw spirit alcohol) as an expression of the soil; it is the British obsession with wild gardens; it is the rare black truffle; and it is the antithesis of homogeneity. Here luxury is the deep taste of the moment; it is mindfulness of ephemerality; it is aesthetic consumption.

Emergence of Masstige Brands

Changes in contemporary consumer behavior in western societies have led to the emergence of a new meaning and perception of luxury. ‘New luxury’ has been defined as ‘products and services that possess greater level of taste, quality and aspiration than other things in the category, but are not so exclusive as to be out of reach’. Within a broader context, observers have pointed to the trend of middle-market consumers trading up for products that meet their aspiration needs, referred to as the ‘luxurification of society’.

Masstige is a marketing cliche coined in the U.S. by Boston Consulting Group executives, referring to mass prestige associated with ownership of certain brand name products. It is a marketing trend in which products offer consumers some of the prestige that comes with brand-name luxury goods, but at a fraction of the cost.

The strategies to attract the middle class consumers are radically dissimilar from those applied by traditional luxury brand holders, they maintain a rigid consistency between supposed prestige and value premiums to preserve their brand exclusivity.

These new customers for luxury are younger, they are in more numbers, they earn more and faster, and they are far more malleable in financing and indecisive in choice. Competition for their attention is strong, and their consumption arrays are changing life for all others around them. The luxury market may be seen as becoming a relative mass market, which not only includes members of the wealthiest social class, but also those who belong to more modest classes.

This democratization of the luxury market has been accompanied by a widening range of offers from firms. These new offers are often targeted to the mass and are less expensive than traditional luxury goods, which have a well-confined exclusivity in terms of both accessibility and price. Examples of new luxury goods can range from an urban BMW 1-series starting at $ 19 000 to Ralph Lauren Polo shirts sold in outlets for $ 9 or Swaroski crystals with prices as low as $ 20. These new luxury products tend to be more accessible to middle-class or lower-class consumers because they are sold at reasonable price premiums.

Typology of Luxury Brands – Masstige Brand

The AO Framework-A Typology of Luxury Brands

In the AO framework discussed above, masstige brands fall under the head of the Modern, signifying commercial conspicuous consumption. This is the realm of commercialized luxury: there is no need for expertise to understand or appreciate the luxury product or service. The price of admission into this mode of luxury is simple: money-and not astronomic amounts of it.

Masstige brands primarily offer status, which is especially important to newly affluent individuals. Luxury goods in this quadrant must be tangible goods; they are not necessarily services or items that are consumed. To reiterate, explicit possession is what matters most. Small leather goods by Vuitton typify products in this quadrant-they are non-subtle reminders that their owners have enough money to spend (potentially) thousands on a bag.

Masstge brands are global brands with universal cachet. Managers of these brands need to ensure that their goods are readily, but not widely available. That is, readily purchased worldwide in select (often company-branded) retail outlets, or on high-end websites. The challenge in doing so is to manage the tension between exclusivity and ubiquity. It would not do for Vuitton to sell their goods at Wal-Mart, Sears, or Costco. By the same token, they cannot have Vuitton retail stores on practically every street corner (or even in malls) à la Starbucks. One key solution might lie in developing a luxury, stand-alone retail environment that creates a destination for shoppers in a central shopping location; ideally clustered around other stand-alone luxury boutiques (it is no accident that Vuitton and Hermes stores are often located near each other). Web sales should be limited to one or two websites that specialize in luxury goods, and screen buyers based on their product affinities and past purchase behavior. Price stability is paramount (it would not do to sell these goods at a discount), and considerable effort must be taken to guard against counterfeits (which dilute the brand’s quality, and increase its potential ubiquity).

Possibly the key dilemma facing the luxury brand manager, especially in publicly traded companies, is the issue of balancing the exclusivity of the brand while generating increasing revenues. For on the one hand, revenues are generally increased through volume-and volume kills the cachet of exclusivity; while on the other hand exclusivity is generally maintained through limiting supply or access to an offering-and this generally sacrifices growth and even long term viability. Failure to solve this dilemma has resulted in the death of many a luxury brand: Pierre Cardin and Packard (with the Packard Clipper) are prime examples of exclusive brands that failed by chasing revenues down market; Bristol Cars and Wildsmith the Shoemaker are example of luxury brands whose failure to grow rendered them financially unviable.

Consider Ferrari-the source of the brand is the cars; the cars give the brand meaning and identity. This source is scrupulously protected: each car is very expensive, ultra high-performance and exclusive (only a limited number of each model is made). The brand, in contrast, is leveraged so that it appears on items as diverse as apparel to computers (co-branding Acer’s performance range). The key here is to leverage the brand in categories that do not compete with the brand’s source.

Vulnerabilities

In the case of Masstige brands, brand managers must contend with the dual threat posed by ubiquity. Ubiquity first makes an exclusive good less exclusive. It also creates situations where copycat goods proliferate. Vuitton’s handbags, for example, are amongst the most replicated in the stalls of the Ladies’ Market in Hong Kong. As a result, there is little or no cachet to owning an original, when its knock-off is, prima facie the same on the arms of two different ladies. Ubiquity also dilutes the cachet conferred by the luxury good in the first place. When Christian Dior licensed his brand to any and all that would pay in the 1970s, they saw the value of the original fall considerably. That any middle-class consumer can now afford a Mercedes-Benz thanks to aggressive financing packages and extensions into lower-priced vehicles diminishes the brand’s attractiveness to those in the elite classes. When a luxury good becomes jejune, it loses its luster, and falls from luxury to the more commonplace.

Masstige Strategy

The AO framework suggests that luxury brands are in many ways different from brands in general and mass market brands in particular. Rather than learn lessons from mass market branding strategy, luxury brands may indeed have lessons to teach.

In the bottom-left “commercial” quadrant, the brand manager’s challenge is to “exclusivize” the brand: to make it exclusive to enough customers that possessing the brand becomes a victory and not something that everyone can attain. This can be achieved through a skilful blend of product mix strategy, pricing, ads,and distribution. For existing luxury brands, this might mean creating exclusive social networking sites, as did jewelry-maker Cartier when it recently launched its own MySpace page-the first luxury brand to do so.

A masstige positioning strategy is viewed as being very innovative and effective because it combines a successful prestige positioning with a broad appeal but with little or no brand dilution. Such a strategy has made some of the new luxury brand owners the largest firms in their industry in terms of revenues.

As shown in the figure above, in terms of perceived prestige, new luxury brands are substantially closer to traditional prestige brands than middle-range brands. In terms of price, however, they are substantially closer to middle-range brands than traditional luxury brands.

Conclusion

The line delimiting traditional luxury brands from other brands has become blurred by the emergence of new luxury brands, and it seems that a certain level of brand prestige can be maintained even when a mass targeting strategy is pursued.

A growing number of traditional luxury firms are widening the range of their offers with products that are more accessible to the mass. Examples could include BMW 1-series ( $ 19 000) vs traditional BMW sedans ( $ 50 000), Armani Jeans ( $ 100) vs Armani Haute Couture ($ 900) or Tag Heuer Formula 1 ( $ 550) vs Tag Heuer Link ( $ 4000). These latter brands have been trying to include consumers who belong to lower classes than their traditional customers. Even though these brands are typical examples of successful masstige strategies, it seems that most traditional luxury brands are concerned about brand dilution when pursuing this type of strategy. Indeed, the prestige of BMW would be seriously damaged if every single teacher were to drive one of the brand’s cars.

The critical success factor of a masstige strategy lies in the equilibrium between prestige differentiation and a reasonable price premium. In practical terms, substantial resources need to be invested in creating a prestigious environment around the brand so that the latter appeals to consumers as an aspirational brand. Such an environment may be created via visually appealing and prestigious stores or sections in department stores (Ralph Lauren in Galeries Lafayette), advertising in glamorous magazines (Hugo Boss in Vogue), holding seasonal fashion shows or exhibitions (Calvin Klein in New York) and signing well-known designers (for example, H & M and Karl Lagerfeld). At the mean time, adequate price premiums need to ensure limited accessibility to the brand for the mass market. Ideally, middleclass consumers should have access to the brand only on an occasional basis. Brand dilution tends to occur when purchases from middle-class consumers become relatively frequent or habitual, making the brand widely accessible and therefore less exclusive. In conclusion, masstige strategies may be seen as an opportunity to traditional luxury firms as long as these two recommendations are respected.

Future Research Scope

There is still a lack of empirical research on the causes, both psychological and demographic, of new luxury consumption patterns. Yet, researching these causes and testing them are critical for elaborating positioning strategies for masstige brands. Further study based on primary data collection and research to verify the above mentioned hypothesized positioning models of new luxury brands in relation to traditional luxury brands and middle-range brands can be carried out to draw implications for both academics and practitioners.

Also, as suggested earlier, the adequate equilibrium between perceived prestige and price premiums is critical to successful masstige strategies. Future research may therefore attempt to empirically assess the different equilibrium points for luxury firm. This would allow recommendations for appropriate price premiums according to the perceived prestige of a particular brand. Other suggestions for future research may focus on the effects of masstige strategies on consumer behaviour.