The Concept of Luxury Brands
Presentation Vol. 2.0
by Klaus Heine, 28 December 2011
Department of Marketing, Steinplatz 2, 10623 Berlin, Germany, Tel: +49.(0)30.314-29.922,, Klaus.Heine@conceptofluxurybrands.com, www.marketing.tu-berlin.de
Klaus Heine, TU Berlin, Lehrstuhl Marketing, Steinplatz 2, 10623 Berlin, Germany, Tel: +49.(0)30.314-29.922,, Klaus.Heine@conceptofluxurybrands.com, www.marketing-trommsdorff.de
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Definition of Luxury Products and Brands
The Concept of Luxury Brands
Klaus Heine
Technische Universität Berlin
Chair of Marketing
Steinplatz 2
10623 Berlin, Room ST 1.05
Tel: +49.30.314-29.922
Fax: +49.30.314-22.664
Mobile: +49.176.294.230.62
www.marketing.tu-berlin.de
Klaus.Heine@conceptofluxurybrands.com
Please feel free to contact me for any feedback or questions you may have!
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 2
Definition of Luxury Products and Brands
The Concept of Luxury Brands
What are luxury brands not?
What are luxury brands?
www.conceptofluxury.brands.com
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 3
Definition of Luxury Products and Brands
Objective of this Presentation
Definition of Luxury Products and Brands
in order
to differentiate between luxury and non-luxury products and brands
and
to distinguish luxury products and brands from similar concepts such as premium
and masstige products and brands
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 4
Definition of Luxury Products and Brands
Intensional vs. Extensional Definition
► Intensional Definition Extensional Definition
by typical characteristics by identifying
such as high price all luxury brands
and superior quality in a directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 5
Definition of Luxury Products and Brands
Overview about the Approach to Definition
Identification of a basic definition of luxury
Color TV Differentiation by type of relativity Clean air…
Step 1:
Conceptual Framework
Luxuries Differentiation by area of research Luxury goods…
Semantic
Analysis Luxury services Differentiation by market segment Luxury arts…
Result: Broad definition of luxury products and brands
Selection of types of dimensions / approach to definition
Step 2:
Dimensional Analysis of existing definitions
Analysis
Result: Set of requirements for luxury product characteristics
Step 3:
Operationalisation Identification of dimensions by literature analysis and empirical study
Step 4:
Result: Definition of Luxury Products and Brands
Definition
Step 5:
Constantly updating the categorization
Review
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 6
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 7
Basic Definition of Luxury
What means Luxury? – Luxury is a relative Term that could refer to almost
Anything or Nothing depending on whom you ask.
“The only luxury good I own is my car. It’s a Volkswagen Polo. This is also
“Luxury means to me something not everyone can afford.” (Constantin)
to have the freedom
to set off against the
mass – in every way –
to maintain a lifestyle
that fits me and that is
not geared to the
mainstream and to
social norms. The real
luxury for me is to
have time and fun
with my friends.”
(Jasper)
“Luxury stands for exclusivity, excellent quality, rarity, differentiation. I am fascinated by
luxury watches, since they are a symbol for the love for the detail. Preferably I also would like
to say: "I don’t look for the time, I look for my watch." Typical for a woman, I have already
an eye on the shoes of Manolo Blahnik. There are women in New York who take the risk of a
surgery in order to fit into these shoes. I wouldn't go that far, because I already have perfect
feet.” (Chun-Lan)
Luxury Product Marketing Class, Winter Semester 2006/2007
Source: Statements of the participants of the seminar “Luxury Product Marketing” at the department of Marketing at TU Berlin, winter semester 2006/2007.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 8
Basic Definition of Luxury
Basic Definition of Luxury
„Bad“ (vs. “Good”) Desirable
Necessity Luxury
Necessity Ordinary Luxury
Luxury is anything that is desirable and more than necessary and ordinary.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 9
Basic Definition of Luxury
From 1900 to Today to Future – How Definitions of Luxuries change
1900 1910 1920 1930 1940 1950
• Model T cars • Fur hats • Fur coats • Baseball tickets • Televisions • Color televisions
• Pianos • Electric clocks • Movie “talkies” • Canned foods • Air travel • Credit cards
• Radios • Fountain pens • Gin • Indoor plumbing • College degrees • Visits to
• Hand-cranked • Cadillac's • Vacuum • Refrigerators Disneyland
Victorians • Kodak cameras cleaners • Convertibles
• Transatlantic • Washing
travel machines
1960 1970 1980 1990 2000 2050
• Stereo sound • Designer jeans • Vacation homes • Internet stocks • Flat-screen • Space tourism?
systems • VCRs • BMWs • Palm Pilots monitors • Transatlantic
• 35-millimeter • Solar homes • Microwave • Cell phones • Maybach travel?
cameras exemplars ovens • Yachts • Eternal youth?
• SUVs
• Warhol • Junk-bond
lithographs portfolios
• PC’s
• Champagne
Source: According to Sacharidou, The Evolution of Luxury Market, LVMH 2006, p.4.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 10
Basic Definition of Luxury
The Types of Relativity: The Relativity of Luxury splits into a Regional, Temporal,
Economic, Cultural and Situational Relativity.
Situational Regional
Relativity Relativity
Hierarchic
Cultural Relativity Temporal
Relativity Relativity
Economic
Relativity
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 11
Basic Definition of Luxury
These Types of Relativity can be used to determine a General Perspective from which
Luxury should be defined within the Field of Luxury Brand Management.
perspective: perspective:
normal conditions global
Situational Regional
Relativity Relativity
Hierarchic
Cultural Relativity Temporal
perspective:
Relativity Relativity perspective:
upper class present time
Economic
Relativity
perspective:
representative for the entire society in developed regions
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 12
Basic Definition of Luxury
Accordingly, the Basic Definition of Luxury may be complemented as follows:
Luxury is anything that is desirable and which exceeds necessity and
ordinariness. As a general rule, this is defined from a global perspective, for the
present and for normal conditions. While the exclusivity of resources is
evaluated by the entire society, the desirability of resources and the appearance
of luxury are determined by the upper class.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 13
Basic Definition of Luxury
Based on the Extended Basic Definition, there are many Resources that can
be differentiated from Luxury:
Example of Non-Luxury Type of Relativity Explanation
A luxury in Jakarta, but not from the
Clean air Regional relativity
perspective of most people
A luxury in the 1950’s, but not from
Color TV Temporal relativity
today’s perspective
A luxury for a student, but not from
VW Polo Economic relativity
a gross-societal perspective
A luxury in the hip-hop scene, but
Gold teeth grill Cultural relativity not from the perspective of the
upper class
Might be a luxury after a strict diet,
McDonald’s Hamburger Situational relativity
but not under normal circumstances
Accordingly, the extended basic definition limits the scope of luxury from almost anything to a more
reasonable level and therefore already helps to dissolve a large part of the controversies about the
definition of luxury.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 14
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 15
Major Understandings of Luxury by Area of Research
“Luxuries” correspond to the Philosophical-Sociological Understanding and
the broadest Scope of Luxury.
Everything we can think
of – “Luxuries comprise all
resources which are desirable
and exceed what is necessary
and ordinary.”
Luxuries are not necessarily marketable, which means that we can’t necessarily buy/sell them.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 16
Major Understandings of Luxury by Area of Research
Microeconomic Understanding: In Microeconomics the Term “Luxury Goods”
is established and mainly refers to entire Product Categories.
Luxury goods are distinguished from necessary or ordinary goods by consequence-related measures; thus
the luxuriousness of any good is not determined by its characteristics, but by peoples’ reaction (changes in
demand) to exogenous stimuli:
1 = High price elasticity (> =1)
The demand of (dispensable) luxury goods
decreases relatively strongly when prices are rising.
= High income elasticity (> 1)
2
The demand of (dispensable) luxury goods (also superior goods)
increases relatively stronger than the income.
Luxury goods correspond to the micro-economic understanding and the middle scope of
luxury, comprising all goods which exceed what is necessary and ordinary, and are suitable
for exchange on the market.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 17
Major Understandings of Luxury by Area of Research
The Managerial Understanding of Luxury usually refers only to the best
Products of a Category: “Luxury Products”.
Luxury level
Examples of Non-Luxury Products Criteria No Luxury Products, but. . .
Philosophical-sociological
Musical talent, time and true love Luxury resources
understanding
Micro-economic
Air conditioning and golf equipment Luxury goods
understanding
The broad definitions of luxury products and brands can be summarized as follows:
Luxury products correspond to the managerial understanding and the smallest scope of
luxury, comprising all products which exceed what is necessary and ordinary compared to
the other products of their category.
Luxury brands are associated with products which exceed what is necessary and ordinary
compared to the other products of their category.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 18
Major Understandings of Luxury by Area of Research
Louis Vuitton, Rolls-Royce …Ariel Motor?! …Are Ariel Race Cars Luxury Products?
Ariel offers Functional Luxury :
• The Ariel is a race
car for the streets;
the driving
experience may be
“utterly, utterly
addictive“.
• The Ariel Atom V8
can cost £150,000.
However, it’s not a
(classical) luxury
product – because
it’s made for
maximum
functioning.
• Same would be
true for superior
alpine climbing
equipment.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 19
Major Understandings of Luxury by Area of Research
The Understanding of Luxury by Area of Research: Luxury products constitute a
Subset of Luxury Goods, which, in turn, form a Subset of Luxuries.
Philosophic-sociological Understanding: Luxuries
Resources that are desirable and more than necessary and ordinary,
e.g. musical talent, time, and true love
Microeconomic Understanding: Luxury Goods
Goods (product categories) that are more than necessary and ordinary
and suitable for the exchange on the market,
e.g. air conditioning systems and golf equipment
Managerial Understanding: Luxury Products
Products that are more than necessary and ordinary compared
to the other products of their category,
e.g. Louis Vuitton bags and Rolls-Royce automobiles
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 20
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 21
Limiting the Scope of Luxury Products
Limiting the Scope of Luxury Products
Despite its small scope in comparison to luxuries, the definition of luxury products still
covers a wide variety of different products. Therefore, and according to the basic idea of
definition by reduction sentences, the scope of luxury products is further limited by
differentiating the major luxury market segments.
Luxury Products Luxury Services Luxury Real Estate
Private Luxury Products Public Luxury Products
Branded Luxury Products Unbranded Luxury Products
B2C Luxury Products B2B Luxury Products
Founder-independent Luxury Products Founder-dependent Luxury Products
Uni-regional Luxury Products Multi-regional Luxury Products
Contemporary Luxury Products Luxury Antiquities
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 22
Limiting the Scope of Luxury Products
Luxury Products, Services and Real Estate
Luxury Products Luxury Services Luxury Real Estate
No…
• The managerial luxury understanding
usually refers to movable assets
(products in the classical sense), as the
luxury industry was and is characterized
by craftsmanship and engineering (Belz
1994, p. 648; Berthon et al. 2009, p. 50).
• Beyond that, especially luxury real estate
forms a distinct luxury segment. “World’s most
Marketing knowledge about products expensive
covers a basis for other luxury segments, apartments at
but still needs to be adapted to their One Hyde Park
specific characteristics. set to make £1
billion profit.”
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 23
Limiting the Scope of Luxury Products
Private vs. Public Luxury Products
Private Luxury Products Public Luxury Products
No…
• Instead of public luxuries such as
altar pieces or national monuments,
the term luxury products usually
refers to private luxury, which is
owned by a person or a private
organization (Sombart 1922, p. 86;
see also McKinsey 1990, p. 13).
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 24
Limiting the Scope of Luxury Products
Branded vs. Unbranded Luxury Products
Branded Luxury Products Unbranded Luxury Products
No…
• Unbranded luxury products are usually made
on commission by craftsmen.
• Because of the high relevance of brands in
the luxury segment, only branded luxury
products are considered (see Kisabaka 2001,
p. 104; Vigneron and Johnson 2004, p. 486).
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 25
Limiting the Scope of Luxury Products
Private vs. Public Luxury Products
B2C Luxury Products B2B Luxury Products
No…
“Peter Bock AG has been
• B2C luxury products, also referred to as crafting the finest pen nibs
personal luxury products, are marketed since 1939.”
to end consumers and can be used by a
person to enhance his or her personal life
(Sombart 1922, p. 86; Reith and Meyer
2003, p. 10; Valtin 2004, p. 186).
• In contrast to that, there is a distinct B2B
luxury segment, which includes luxury-
specialized suppliers to luxury brands.
One such supplier is Peter Bock, a
manufacturer of nibs for luxury fountain
pens.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 26
Limiting the Scope of Luxury Products
Founder-independent vs. Founder-dependent Luxury Products
Founder-independent Luxury Products Founder-dependent Luxury Products
No… Founder-dependent luxury
by Alexander Vethers
• Only founder-independent luxury products are
considered, which means that the existence of brands and
the manufacturing of products should not depend on the
life of their creators. The manufacturers of luxury
products should possess a distinct brand personality and
at least the capacity for infinite business operation.
• Although an artist could become a brand, these
requirements are not fulfilled as he or she may only create
founder-dependent products. Compared to other
products, the luxury art market follows very specific rules
and therefore forms a distinct luxury segment.
• The same is true for other industry segments such as
(star) architect offices and the relatively complex and fast-
changing market of (fashion) designer products.
Source: www.alexandervethers.com, http://www.margarethe-illustration.com, Heine, K., The Concept of Luxury Brands, TU Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 27
Limiting the Scope of Luxury Products
Typical Founder-dependent Luxury: The vast Amount of Luxury Fashion
Designers, who set up their Business within the last Years.
Founder-dependent Luxury Products
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 28
Limiting the Scope of Luxury Products
Uni-regional vs. Multi-regional Luxury Products
Multi-regional Luxury Products Uni-regional Luxury Products
No…
• Uni-regional luxury products are only
available in specic regions.
• For instance, shopping in the KaDeWe is
only possible in Berlin and spending the
night in Le Meurice is only possible in
Paris.
• However, many uni-regional luxury
brands have the potential to become
global. For instance, the luxury group
Hilton developed the New York-based
Waldorf Astoria into a global luxury hotel
chain.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 29
Limiting the Scope of Luxury Products
Contemporary Luxury Products vs. Luxury Antiquities
Contemporary Luxury Products Luxury Antiquities
No…
• With reference to temporal relativity,
only new products are considered.
• Luxury antiquities (including antique
cars) form a distinct luxury segment.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 30
Limiting the Scope of Luxury Products
Complementing the Broad Definition of Luxury Products
Based on these limitations, the broad definition of luxury products can be complemented as follows:
Luxury products correspond to the managerial understanding and the
smallest scope of luxury not comprising services or real estate, but
products which exceed what is necessary and ordinary compared to the
other products of their category. These products are branded,
founder-independent, multi-regional, contemporary and possessed or
used by a person to enhance his or her personal life.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 31
Limiting the Scope of Luxury Products
Examples of Non-Luxury Products
Examples of Non-Luxury Products Criteria No Luxury Products, but. . .
Penthouse at the “One Hyde Park” in
Movable assets Luxury real estate
London
Luxurious built-in cupboards made by Unbranded luxury products /
Branded products
a carpenter for his client commission work
Cologne Cathedral Private luxury products Public luxury products
Peter Bock quills for luxury fountain
B2C luxury products B2B luxury products
pens
“Garçon a la pipe” by Pablo Picasso Founder-independent products Luxury art
Badminton Cabinet from 1732 and
Contemporary products Luxury antiquities
Bugatti Royale Type 41 from 1931
Staying at Le Meurice in Paris Multi-regional luxury products Uni-regional luxury products
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 32
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 33
Operationalization of Luxury Products
The Analysis of 31 in-depth Interviews led to a Consumer-oriented
Definition of Luxury Products
Symbolism
Symbolism as
major benefit
Extraordinariness Price
ESP instead of USP Price as a benefit
Characteristics of
Luxury Products
Rarity
Limitation and
Quality
Quality as
Individualization
perception
Aesthetics
Stimulation as a
main benefit
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 34
Operationalization of Luxury Products
Eccentric Selling Proposition (ESP): Case Study Silk Production
• “Earlier the main exports of silk cloth, at first restricted to the nobility, had been from Bologna, Lucca and other Italian towns.
They had developed the mechanical reeling of silk using water power, apparently developing a Chinese model, while the
French industry at Lyon operated at a less sophisticated level.
• But the French court started to invite silk manufacturers from Lyon every six months to discuss future designs. By the time
that their patterns had been produced and the Italian manufacturers had set up their looms to copy them, the French court
was about to place its next order for a new pattern. So the Italian manufacturers were never able to catch up, leading to the
collapse of the weaving industry, and eventually of the production of yarn, in Bologna and elsewhere.
• It was not the appearance of change, of new fashion, that was remarkable but the way that change was regularly established
and the effects this had on industrialized production which were remarkable. It rivalled, and set the pattern for, today’s
annual fashion shows in Paris, Milan, New York, London and other capitals, shows that are marketplaces for the costumes of
the rich but which also set the terms for production for the masses, who with socio-economic developments have now been
drawn in to the frequent dictates of fashion” …. “After that time, fashion and ‘taste’ took over the role of distinguishing the
elite, with the whole process becoming more complex when this occurred.”
Source: Goody, J. (2006) From Misery to Luxury. In: Social Science Information, Vol. 45, Issue 3, p. 344 et seq.; Heine, K., The Concept of Luxury Brands., TU Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 35
Operationalization of Luxury Products
The Analysis of 31 in-depth Interviews led to a Consumer-oriented
Definition of Luxury Products
Symbolism
Symbolism as
major benefit
Extraordinariness Price
ESP instead of USP Price as a benefit
Characteristics of
Luxury Products
Rarity
Limitation and
Quality
Quality as
Individualization
perception
Aesthetics
Stimulation as a
main benefit
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 36
Operationalization of Luxury Products
Symbolic Meaning of Luxury Products & Emotional Branding:
Product Recommendations without Products
Source: Spiegel Neon/Modeheft (2009), April, p. 22.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 37
Operationalization of Luxury Products
Symbolic Meaning of Luxury Products & Emotional Branding:
Product Recommendations without Products
Source: Spiegel Neon/Modeheft (2009), April, p. 16 & 18.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 38
Operationalization of Luxury Products
The Most Important Ingredients of a Luxury Brand: Emotions & Image
Margin
Communication,
Know-how,
Image
Production
costs Dior
Source: Lebas/Israel-Russo/De Gouyon (1990) Stratégies de luxe. Jouy-en-Josas: Groupe HEC, p. 48; Heine, K., The Concept of Luxury Brands., TU Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 39
Operationalization of Luxury Products
Symbolic Meaning of Luxury Products & Emotional Branding:
Aldi vs. Monoprix
Aldi Monoprix
If products at Aldi say anything at all, they may say “I’m cheap and cheerful” or the butter
may say “I’m a butter” and the cookies may say “We are cookies” – while luxury products
seem to be real chatterboxes.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 40
Operationalization of Luxury Products
A typical Exemplar of a Luxury Product:
The “Kiss Kiss Or & Diamants“ by Guerlain
Symbolism
Design and
Extra- brand image
Price
ordinariness 45,000€
Reminds on 3 dices Constitutive
Characteristics of
Luxury Products
Rarity
Quality
Only 100 pieces;
Made of diamantes
personal lip stick color
and gravure Aesthetics and precious
Classic, time-less design; metals by a
helps to conceal signs of aging, French
to be free of duties and
goldsmith
limitations of space and time;
its design helps to forget its
purpose
Source: Trommsdorff/Heine (2008) Das Marketing von Luxusprodukten. In: WISU, Issue12., pp. 1669-1674; Heine, K., The Concept of Luxury Brands., TU Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 41
Operationalization of Luxury Products
What do we have to do with that Chair to create a Luxury Product?
Heine, K., Phan, M., Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal, Vol. 19, 2/2011, pp. 108-114.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 42
Operationalization of Luxury Products
The Constitutive Characteristics of Luxury Products
Major Manufacturing Concrete Abstract
Characteristics Characteristics Product Characteristics Product Characteristics
Price Price
Expertise of
Quality Material & Components Durability & Value
manufacturer
Manufacturing Construction &
Comfortability & Usability
complexity Function principle
Functionality &
Workmanship
Performance
Features Safety
Product size
Service
Aesthetics Aesthetics
Rarity Rarity
Extraordinariness Extraordinariness
Symbolism Symbolism
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 43
Operationalization of Luxury Products
The Variety of possible Results
Heine, K., Phan, M., Trading-Up Mass-Market Goods to Luxury Products. Australasian Marketing Journal, Vol. 19, 2/2011, pp. 108-114.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 44
Operationalization of Luxury Products
Influencing the Associations about the Luxury Brand Characteristics by
Segment-specific Marketing-Mix Strategies
Extra- Symbolism
Price Quality Rarity Aesthetics
ordinariness (brand personality)
Product Price Distribution Communication
policy policy policy policy
Communication of the luxury
Quality leadership Superlative pricing strategy Selective distribution
brand personality
Iconic products Regular price increases Flagship stores Catwalk shows
Memberships in Super-superlative
Waiting lists Celebrity endorsement
recognized associations priced products
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 45
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 46
Definition of Luxury Products and Brands
The Definition of Luxury Products
• The operationalization relies on a literature analysis and an empirical study (as outlined in the paper). The
results suggest that consumers perceive that luxury products have six major characteristics including price,
quality, aesthetics, rarity, extraordinariness and symbolism (as explained above). In that way, the
operationalization helps to decide for most products if they are part of what is meant by the term "luxury
product" (see also Kromrey 2009, p. 110).
• The definition of luxury products can be summarized as follows:
Luxury products have more than necessary and ordinary characteristics
compared to other products of their category, which include their relatively high
level of price, quality, aesthetics, rarity, extraordinariness, and symbolic
meaning.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 47
Definition of Luxury Products and Brands
The Definition of Luxury Brands
• Luxury brands are highly associated with their core products.
• This is reflected by the existing definitions of luxury brands, which define luxury brands by specific
associations about product characteristics (e.g. Meffert and Lasslop 2003, p. 6; Büttner et al. 2006, p. 12;
Valtin 2004, p. 30).
• The essential characteristics of luxury products therefore correspond largely with those of luxury brands
and lead to the following definition:
Luxury brands are regarded as images in the minds of consumers that comprise
associations about a high level of price, quality, aesthetics, rarity and specialty.
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 48
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 49
Major Types of Luxury Products and Brands
The Relationships between Luxury Products and Brands
Luxury Brands
Luxury-branded
Products Non-Luxury
Luxury Products
Products
Luxury Products Non-Luxury Products
Non-Luxury-
branded Products
Non-Luxury Brands, but (at least) Luxury Product Brands
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 50
Major Types of Luxury Products and Brands
The Relationships between Luxury Products and Brands
Luxury Product Brands
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 51
Major Types of Luxury Products and Brands
Types of Luxury Brands by Level of Luxury, Business Volume and
Awareness
By Level of Luxury By Awareness By Business Volume
+ - -
Con-
Elite- noisseur Micro
level brands
Top-level Small-scale
Luxury brand brands
Star brands
Medium-level Medium-scale brands
+
Luxury brand
Large-scale brands
Entry-level
BIG player
luxury brand
- GIANT player +
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 52
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 53
Distinguishing Luxury Brands from similar Concepts
Categories of Luxury Brands
Price Setting Luxury
Inter- and
Intra-categorical Manufacturer‘s
Brand
Premium
Manufacturer‘s
Brand
Generic
Manufacturer‘s
Brand
Premium
Trade Brand
Trade Brand
Risk reduction and
information efficiency
Dominating Brand Benefit Ideational Benefit
Source: According to Meffert/Backhaus/Becker (2003) Luxusmarkenstrategie, p. 6; Heine, K., The Concept of Luxury Brands., TU Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff 54
Klaus Heine – The Concept of Luxury Brands 54
Distinguishing Luxury Brands from similar Concepts
Differentiation to Masstige („New Luxury“)
Price setting Examples
Inter- and
Inaccessible
Intra-categorial
Luxury
Manufactur-
er‘s Brand
Intermediary
Masstige
For the broader population:
Premium
Accessible
Manufacturer‘s
Brand
Risk reduction and
information efficiency Dominating Brand Benefit Ideational Benefit
Source: According to Meffert/Backhaus/Becker (2003) Luxusmarkenstrategie, p. 6; Heine, K., The Concept of Luxury Brands., TU Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff 55
Klaus Heine – The Concept of Luxury Brands 55
Distinguishing Luxury Brands from similar Concepts
Luxury Brands vs. Masstige Brands vs. Premium Brands
Product / Brand Characteristics Prestige
top
Luxury
brands
Masstige
brands
Premium
brands
Medium-
level
brands
low Prada
Price Quality Rarity Extra- Aesthetics Symbolism
ordinariness
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 56
Distinguishing Luxury Brands from similar Concepts
Luxury vs. Premium Products and Brands – Mercedes vs. Lexus
There is also an essential difference between these types of brands: while premium
brands focus especially on functional characteristics, luxury brands put much more effort
into creating symbolic meaning. For instance, Lexus entered the US market with the
objective of growing by taking customers away from Mercedes, which was identified as its
major competitor. Therefore, they took the Mercedes E Class as the model to overtake
and developed a car with a similar design and even superior technical features that was
only sold for about half of the price. Lexus generated high growth rates in the U.S.
However, they still focused very much on functionality and even emphasized their car`s
value-for-money, and also had no vision or story to tell – which clearly positions Lexus as a
non-luxury brand (Kapferer and Bastien 2009b, p. 316).
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 57
Agenda
• Basic Definition of Luxury
• Major Understandings of Luxury by Area of Research & Broad Definition
of Luxury Products
• Limiting the Scope of Luxury Products
• Operationalization of Luxury Products
• Definition of Luxury Products and Brands
• Major Types of Luxury Products and Brands
• Distinguishing Luxury Products and Brands from similar Concepts
• World Luxury Brand Directory
Heine, K., The Concept of Luxury Brands. In: Luxury Brand Management, No. 1, ISSN: 2193-1208, Technische Universität Berlin, www.conceptofluxurybrands.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 58
The World Luxury Brand Directory
Intensional vs. Extensional Definition
Intensional Definition ► Extensional Definition
by typical characteristics by identifying
such as high price all luxury brands
and superior quality in a directory
Heine, K. (2011) The World Luxury Brand Directory, ISSN: 2193-5440, Technische Universität Berlin, www.worldluxurybranddirectory.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 59
The World Luxury Brand Directory
Directory of Luxury Brands: www.WorldLuxuryBrandDirectory.com
The collection of luxury brands in a directory helps testing and enhancing the definitions of
luxury products and brands.
Heine, K. (2011) The World Luxury Brand Directory, ISSN: 2193-5440, Technische Universität Berlin, www.worldluxurybranddirectory.com.
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff
Klaus Heine – The Concept of Luxury Brands 60
Thank you! Questions?
Klaus.Heine@conceptofluxurybrands.com
Department of Marketing, Steinplatz 2, 10623 Berlin, Germany, Tel: +49.(0)30.314-29.922,, Klaus.Heine@conceptofluxurybrands.com, www.marketing.tu-berlin.de
Klaus Heine, TU Berlin, Lehrstuhl Marketing, Steinplatz 2, 10623 Berlin, Germany, Tel: +49.(0)30.314-29.922,, Klaus.Heine@conceptofluxurybrands.com, www.marketing-trommsdorff.de
Technische Universität Berlin
Department of Marketing Professor Dr. V. Trommsdorff