Pricing Luxury Goods – What to Consider

Silk Italian suits, dusty bottles of vintage wines from estate cellars, moisturizers made from crushed pearls, yacht holidays to Monaco and cashmere shawls from Hermes, these goods come oozing with luxury and for the privilege of ownership we expect to pay top price. Luxury goods feed desire and want and the more consumers long for them, the higher price tag they can find. Some may argue that luxury can be an illusion, that the higher the hype, the tighter the exclusivity and the bigger the demand regardless of the real value of the good. Of course all products, luxury or not have two different value systems – the real value and the perceived value and there is an age old saying that something is only worth as much as someone is prepared to pay.

The Art and Science of Perfect Pricing

When pricing Veblen goods it is therefore essential to up the stakes and hike the price tag so that the item already ticks the box when it comes to being perceived as part of the luxury market. The next consensus is to ensure that someone, somewhere is willing to pay the price and thus set the wheels in motion for better brand recognition and a name in the luxury bible. Of course there is a danger that comes with throwing the first price you think of at your good and hoping it will stick and this is where a little application of the art and science of pricing comes into play.

Basic Structures Still Matter

Companies do need to take the basic structure of pricing into consideration covering aspects such as costs, competitors and consumer demand. The cost of making the product, the cost of overheads and how much you need to get back on something are always the springboard for starting with pricing. There needs to be analytical data collected and pens put to paper so the Intrinsic Value Dependency can be etched out. Pay fierce attention to what your competitors are doing with their price tags as it can help you to figure out where your goods will land on the spectrum. The more your own product moves up the ladder and away from the dull and dreary label of a commodity the more it will be sought after and the more value it will gain.

Good Analytics are Worth Their Weight

Good analytics are worth their weight in gold when it comes to structuring a price for a product and this doesn’t mean you need to start from scratch. Your company, if you have done your marketing right, will already be sitting on a trove of information. You will be able to check what consumers are paying for other similar products, the current economic trends, and which external features have an impact on sales. Micro marketing and targeted exclusive offers can also be used to grab hold of data for which you can then go on to use for pattern finding analysis. Once you have all this data its best to set up an automated key analyses so all the information can be ran through a program quickly and efficiently

Elevating the Right Experience

Consumers will judge a products luxury merit on several factors which is why it’s essential to build the right environment around your brand. Luxury goods and luxury stores are often in wealthy or affluent areas of cities, have chic and opulent interiors and upmarket, expensive packaging that adds to the social status. The buyers experience needs to match their expectations for the product and deliver a feeling that they have effectively elevated their position in the world by making the purchase. The more you are able to give this, the easier it will be to secure the right price for your product.

Roxanne Genier

Roxanne is the Co-Founder of LuxeInACity and AgenceLuxury. An Avid sailor and traveler she stumbled into luxury in 2005 while working aboard superyachts. Since then she has been a private concierge for UHNWI and has helped several luxury brands with their digital needs.

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The Luxury Fatigue – Everywhere for Everyone

The Luxury Fatigue – Everywhere for Everyone

A university student doing a dissertation asked me today a few questions about the luxury market. Before I could answer her, I needed to know what she, herself, defined as a luxury brand. I have learned over time never to assume that someone else’s definition is the same as yours. And I was right. Like for most people, she referred to the fashion brands. I think that the fashion conglomerates have done a great job over the last 20+ years to market themselves as luxury and overshadow the fact that they are no longer true luxury brands. Let me explain my unconventional opinion on this niche market.

Luxury has always and will always be about experience. True luxury is about experiencing something that few can. When Louis Vuitton was alive and overseeing the daily operation of his store, he had, like everyone else, a limited supply of his most precious commodity – his time. To be allowed the luxury of purchasing one of his creation was indeed the most luxurious gift of all. The experience made you feel privileged. Therefore, the products were a luxury.

Nowadays, the luxury experience put forward by Louis Vuitton and several other high-end fashion brand is slowly eroding. They have forgotten the true meaning of luxury; the executives have instead pursued the promise of a gold rush. Let’s not fool ourselves, the fashion business is a good business to be in.

Although the quality of the products is still good, the fashion brands have forgotten to control one of the most important aspect of their distribution – the exclusivity. When you can find a Vuitton bag everywhere as part of the wardrobe of anyone, how can you claim to offer luxurious products?

I travel a lot, more than the average person. In fact, in the last 18 months, I have driven from Canada to Colombia, with a few European and North American side trips. Random places, where I have seen a Louis Vuitton handbag, cannot be counted. I have seen hundreds, if not thousands, of the same patterned bags in the hands of tourists. In fact, I have been to over 65 countries in the last 15 years, and I have never been in a country where I did not see their handbags.

Luxury is not about a price tag; it’s about an exclusive experience. I have the Louis Vuitton fatigue, and I am convinced I am not the only one. Luxury should not be for everyone.

Roxanne Genier

Roxanne is the Co-Founder of LuxeInACity and AgenceLuxury. An Avid sailor and traveler she stumbled into luxury in 2005 while working aboard superyachts. Since then she has been a private concierge for UHNWI and has helped several luxury brands with their digital needs.

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Why All Luxury Brands Should Sell Online

Exclusive, elite, rare and sublime, these are just a handful of words that many luxury companies hope will emulate in a consumers mind when they hear a certain brand name. Yet these companies also feel that should they unmask their brand image online that they are at risk of falling from the luxury pedestal. The fear is almost palatable and doesn’t come without deep understanding.

The online world of commerce has long been associated with lower prices, swift availability and an easy shopping system that goes against the luxury grain. Luxury brands work hard to build intricate heritage stories, rich buyer experiences and to soak their status with being selective as opposed to all-encompassing and it seems that translating this to the online marketplace is a tricky feat. Hermes wants you to feel the slip of their scarves in your fingers, Chanel wants you to sip champagne in their opulent temple like stores and Baccarat wants you to breathe in the fragrance of myrrh in their crystal sculptured bottles before you buy.

Luxury companies are well aware that they are selling more than a product, that they are selling a lifestyle and a visage that taps into our subconscious urge to be special. How can you carry that prestige to the online world where everything is up for grabs and the whole platform reeks of impersonal clinical cut style? This may be the very reason why Chanel, Hermes and Dior have chosen to keep their wares strictly housed in brick and mortar. Yet the reality is they could also be falling short when it comes to opening the door of opportunity.

Luxury brands that don’t sell online may be keeping the valuable retail experience alive, they may be placing themselves far from the maddening crowds and they may be retaining their exclusive playing hard to get appeal, but they are also alienating many of their own potential buyers. The reality is that not everyone with a six figure income has the time, the patience and the drive to swing by the Champs-Elysees or Rodeo Drive in search of the latest trends. Wealthy people, like everyone else, are busy and also adore shopping from the comfort of their own home. Add into the mix the fact that many highbrow fashion boutiques have a bad rep for scrutinizing customers as soon as they step in the door and you start to see why the trends of luxury online shopping can seem attractive. There’s little doubt that luxury brands not adapting ecommerce are losing out on sales and kicking their own revenue in the teeth. Of course increasing sales isn’t always the aim of high class brands who tout retaining their integrity and protecting their image above all else.

Luxury branding is a creative entity there’s no doubt about it, building a beautiful brand, telling a story that inspires, showcasing the best of your talents and keeping the desire alive in consumers is an art form and why can’t that art form be applied to the online world? Just because a company chooses to sell online doesn’t mean it needs to lose its integrity. The very essence of an online luxury presence can be a remarkable challenge and can be controlled in the most exclusive fashion.  Beautiful online stores can be created much in the same vein as a brick and mortar set up and high spending clients can gain access to otherwise limited wares. In short there is a way for luxury brands to sell online without compromising their image and lowering the bar. Building an incredible online presence through social media is also something that luxury brands cannot ignore as this is where you lay the foundations for future clients, interact with customers and deliver innovative selling techniques to drive your revenue and reputation up. Of course all the social media interactions will drive traffic to your site and without anything to sell you are leaving the table bare and essentially turning your own customers away.

It’s not even all about money and loss of sales when it comes to the benefits of building an online marketplace, it’s about the future. The internet is here to stay and future generations are being raised to barely need to set foot in an actual store as everything is so readily available online. Luxury brands who continue to tread water rather than rising above the tides are sure to get left behind by not embracing the technological change.

Roxanne Genier

Roxanne is the Co-Founder of LuxeInACity and AgenceLuxury. An Avid sailor and traveler she stumbled into luxury in 2005 while working aboard superyachts. Since then she has been a private concierge for UHNWI and has helped several luxury brands with their digital needs.

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Great Luxury Marketing Resources for Brands

The Luxury market, like any market is constantly trending, changing and fluctuating with the economy and for those with a vetted interest it helps to stay abreast of these patterns. With the number of luxury consumers tripling over the past twenty years it seems that every day you can catch glimpse of headlines boasting luxury consumers new style, the changing habits of affluent shoppers and the rise of online marketing for luxury brands.

Of course many big name luxury companies choose to stick solidly to their roots and ideals, believing in the richness of their heritage as opposed to cresting and falling on the wave of the times. Yet all luxury businesses both big and small should be well aware of how the landscape around them is changing, who is emerging and who is lagging so that they are able to place themselves seamlessly in a way that effectively works for their business. The luxury niche no longer comes with a stiff upper lip and limited choice; it is savvy, sharp, wild and fiercely competitive, melding many styles and contradictions together. These luxury marketing resources for brands can be the perfect place to start in getting to grips with the world of luxury.

Luxury Daily

Leading the news in the world of luxury marketing, luxury daily is a divine place to peruse what’s hot, what’s not and what new launches and trends are currently making headlines. This is without a doubt one of the most comprehensive places to swing by with champagne in hand and find out who Sotheby’s have just signed a deal with, when you can expect Chanel’s new fragrance to hit the shelves and what pocket of the world the Ritz is planning on dazzling next.

Luxury Society

The luxury society is the place to be and be seen, even if it does exist in the sassy world of cyberspace. This virtual socialite party is a networking haven, throw on your pearls, grab your little black book and hurl yourself into an online world where you can have hearty debates, hash out new concepts, call on the expertise of other members and even strike up new business opportunities with other keen and able entrepreneurs. Along with meeting and greeting there is news to devour, headlines to hum over and close to the bone topics to explore.

Luxury Institute

Get a closer look into the world of luxury with the luxury institute. The blog is stuffed full of the latest luxury news whether its letting you know that Kate Spade is closing stores or giving you a glimpse into the most recent celebrity endorsements. Along with the latest headline grabbers there are many great articles pertaining to studies on luxury marketing and great advice from top affluent leaders on how to adapt your brand to boost your name and reputation.

LuxGuru

Lorre White AKA the luxury guru is no stranger to the world of the wealthy and with numerous press appearances under her belt she is the go to for all things fabulous. Lorre has firm connections in the power industry and her blog is filled to the brim with interesting articles, insights, product launches and so much more. For those who want to keep ahead of the current trends and who want to dabble in the world of inspiration and classy living, then the luxury guru can certainly point you in the right direction.

Brand Uniq

The power of marketing is arguably even more important when dealing in Veblen goods and this blog will give you plenty of pointers on how to place your brand in the limelight with strategic marketing skills. Simple, straightforward and free of fuss this blog is crammed with high caliber articles that will help you to place and position your brand, find the optimal pricing strategy, move your luxury presence into online world and more.

Bain Company 

Bain & Company have built their reputation for being the golden choice when it comes to consulting in the luxury niche and their articles have been published across the globe. From features in Forbes to the business standard they are certainly up there in the world of knowledge and know how. Covering a range of industries with far flung expertise it’s always good to swing by and check out their publications section to see expanding brands in the market, check equity reports and browse their archives.

Mckinsey 

Take a sneak peek behind the curtain with Mckinsey and find out the latest insights into luxury and consumerism. Those who want to know which markets are emerging, which digital consumer trends are growing and what’s happening differently in China than in Europe will adore the wealth of unbridled information available. Not only can you top up your know how on consumer trends but you can also get a ton of marketing strategy advice and tips on how to better engage your customers for growth.

Wealth X

Those immersed in the billionaire boom will find the news at Wealth X interesting to say the least. This financially indulgent blog not only shows you the money but also shows you where the money is changing hands, being kept, growing and falling. Not only can you find out about China’s newest investment laws but you can also get inside the heads of luxury entrepreneurs, see what designer bag maker Moynat has up his sleeve and see what challenges could be hitting the luxury market for the coming year.

Roxanne Genier

Roxanne is the Co-Founder of LuxeInACity and AgenceLuxury. An Avid sailor and traveler she stumbled into luxury in 2005 while working aboard superyachts. Since then she has been a private concierge for UHNWI and has helped several luxury brands with their digital needs.

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Luxury Marketing – Focus Must be on Cities

Where would the luxury world be without the glittering glass fronted stores on Paris’s Champs Elysees, the gold signs over New York’s prestigious Fifth Avenue and the Rolex and Christian Louboutin boutiques on Milan’s Via Monte Napoleone? There seems to be no doubt that when it comes to making the luxury world work for your product the focus has to start in the cities. The fast facts and figures are already scrawled across the internet telling us that no less than a staggering 85% of the luxury market growth will come from the world’s top 600 cities.

We all know the sprawling luxury metropolis names of London, New York, Paris and Milan but some other major players will be emerging from the shadows and accounting for much of the growth before the calendar ticks over to 2025. Unsurprisingly many of these cities can be found on the far eastern shores of China with Beijing, Hong Kong, Guangzhou, and Shenzhen leading the parade.

China is growing to become one of the leading consumers of luxury with a penchant for authentic brands and designer goods. According to Bain & Company, Chinese consumers spend over three times the amount abroad then they would spend at home. China is set to drive half the growth in the luxury industry which is why it’s essential for brands to turn their eyes to the east. The affluent Chinese market doesn’t only hold power over retail, sure elite Chinese travelers will love to swipe their platinum cards in the stores of Prada and Chanel but tastes are changing and they will want exclusive experiences outside of the shopping environment. Wealthy Chinese households aren’t succumbing to our idea of a recession, in fact they are only getting wealthier and the more they accumulate, the more they are looking to travel and the more they are looking to spend.

Yet even closer to western shores the dizzying height of spending seems to be led by countries like the USA, Italy and France with tourist luxury spending adding its weight to the bulk of the figures. One quick glimpse at the leading locations where tourists like to splurge takes us back to the cities. From chic weekend shopping trips in New York to European jaunts to Paris, Milan and London there’s no doubt that affluent visitors love to splash the cash in the major city hubs. It’s also essential to note that many of the world’s billionaires are also entrepreneurs who globetrot for business. The major financial haunts are often to be found in bustling cities and when these affluent city slickers step off their private jet they will be seeking high end retail for spending within the city limits.

Different cities have different draws and this will impact a luxury brands choice when it comes to which city is the best to focus on. The fashion capitals of New York, Paris and Milan clearly put their best foot forward when it comes to apparel yet skincare hits the top of the charts when it comes to Asia. Investors should note that the mature cities of our present luxury scope aren’t slowing down, only there seems to be more emerging cities joining the trend.

Forbes has noted that there seems to be a stronger affiliation to keep strength and investment in more western cities from many luxury brands, yet the resources needs to follow the growth. Companies must be willing and ready to send the best of their best to the places where the growth patterns are emerging. It also helps to have a firm footing with a good local partner or affiliate in the far flung cities so that you don’t go charging in without understanding the hurdles of how to conduct business on foreign far flung shores.

Mega cities are the future of luxury and no longer is this limited to old world Europe and the billion dollar mansions of the United States. China, the Middle East, Brazil, India all these places are on the rise and if luxury brands are successfully able to sweep their marketing towards these shores then we can all ride on the crest of this new world wave.

If you are interested in more details, download the McKinsey & Company report at http://mckinseyonmarketingandsales.com/sites/default/files/pdf/LuxuryScope.pdf

Roxanne Genier

Roxanne is the Co-Founder of LuxeInACity and AgenceLuxury. An Avid sailor and traveler she stumbled into luxury in 2005 while working aboard superyachts. Since then she has been a private concierge for UHNWI and has helped several luxury brands with their digital needs.

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