Several of the businesses who visit the Business & IP Centre are starting and growing luxury brands, in particular those in the fashion industry, but also those in other industries, such as food and drink. These small businesses are presented with a similar issue – how to keep up with the demands of running a luxury business without risking the luxury brand position. Like any business owner, luxury business owners want their brands to expand but because luxury brands are high quality, rare and premium priced this can present many obstacles.
Despite the economic recession in recent years, the luxury goods market remains buoyant and continues to grow. The luxury brand industry does not just refer to products like watches and jewellery, handbags, drinks (think Champagne!), but services too, such as travel, concierge, restaurants and life style management, to name a few.
The Luxury Strategy
As a result of working with businesses in this sector, the Business & IP Centre has recently acquired the book Kapferer on Luxury: How Luxury Brands Can Grow Yet Remain Rare (Kogan Page, 2015). Jean-Noël Kapferer is a thought leader on luxury brands strategy development and marketing and is also the co-author of an earlier book, The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands (Kogan Page, 2009).
In his earlier book Kapferer aims to do two things – firstly to define what a luxury brand is and secondly to provide a comprehensive guide to managing your luxury brand. Kapferer suggests that luxury brands are different in nature to other non-luxury brands and therefore require a more specialised strategy for management and marketing. So what is a luxury brand? Kapferer describes it as: “a different and global way of understanding a customer and of managing a business”.
He points out that “as it is with many concepts, so it is with luxury: everyone understands it, but nobody can agree on exactly what it means, or its contours, its frontiers or its members”.
Kapferer moves to outlining how you can develop a strategy for growing luxury brands:
- Understand the luxury fundamentals: Kapferer says that “Luxury is a culture, which means you have to understand it to be able to practice it with flair and spontaneity”. He also outlines the difference between premium brands and luxury brands: knowing the difference is key to your strategy, “Premium is not luxury”.
- How to manage luxury brands: Consider market size, brand equity, brand stretching, pricing, distribution, communication and finances.
- Consider your strategic perspectives: Kapferer outlines different luxury business models, how to enter the luxury market and then leave it; how to learn from the luxury industry, and how to make your luxury strategy sustainable.
The book gives various examples in each section, such as an example of brand stretching for Mont Blanc, or the business model example of the Louis Vuitton brand.
Kapferer on Luxury
The more recent book, Kapferer on Luxury, addresses the number one challenge of all major luxury brands today: how can these brands pursue their growth yet remain luxurious? How can you achieve growth and preserve rarity? This book consists of a collection of articles, published in various journals such as the European Business Review or Journal of Brand Strategy, specifically addressing the growth challenges for luxury, including:
- Sustaining the luxury dream: challenges and insights.
- Abundant rarity: the key to luxury growth.
- The artification of luxury: from artisans to artists.
- Specific issues and challenges: luxury after the crisis; the importance of non-delocalisation; internet and luxury, consumers’ psychology of luxury prices; sustainable luxury.
- The business side of luxury brands growth: the distinct business models of luxury brands.
Kapferer provides insight to luxury brands that exude exclusivity and prestige and examines economic trends as well as industry investors and great marketers. Not all businesses have reached the Mont Blanc or Louis Vuitton status and often need help to get there. Kapferer’s books are a must read for any luxury brand owner looking to overcome hurdles to achieve growth. His books are not only informative reads, but are also thought provoking, insightful and packed with real life examples. You don’t need to be a luxury brand owner to reap the benefits from Kapferer’s books, they give a unique view into an industry that seduces and fascinates us; a worthy read for any researcher or business owner.
Both books can now be found in the Business & IP Centre reading room.
Irini Efthimiadou on behalf of the Business & IP Centre