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Luxury goods

In economics, a luxury good (or upmarket good) is a good for which demand increases more than what is proportional as income rises, so that expenditures on the good become a more significant proportion of overall spending. Luxury goods are in contrast to necessity goods, where demand increases proportionally less than income.[1] Luxury goods is often used synonymously with superior goods.

Democratization of luxury. Also known as (from mass-prestige), is a marketing strategy that aims to make brands prestigious while retaining their affordability.[17]

masstige

: Consumers in some countries are becoming wealthier; thus, new markets are opening for luxury marketers.[18] Reports by consulting agencies like McKinsey predicted that East Asia would become the world's largest personal luxury goods market. China will consume half the global market value of luxury goods.[19][20]

Globalization

: Consolidation involves the growth of big companies and ownership of brands across many segments of luxury products. Examples include Kering, LVMH, and Richemont, which dominate the market in areas ranging from luxury drinks to fashion and cosmetics.[21]

Consolidation

Luxury brand collaborations. This demonstrates the potential of unexpected partnerships and co-branding opportunities between luxury brands and an unconventional partner seemingly at the opposite end of the design spectrum.[20] Collaborations include pairings of luxury brands like Fendi x Versace but also pairings with streetwear brands including skateboarding brand Supreme x LVMH, with celebrities such as Bad Bunny x Adidas, anime characters like Doraemon x Gucci, and now video game franchises like Fortnite x Balenciaga.[22] The collaborations are often limited edition collections.

marketing strategy

Luxury brands[edit]

The idea of a luxury brand is not necessarily a product or a price point, but a mindset where core values that are expressed by a brand are directly connected to the producer's dedication and alignment to perceptions of quality with its customers' values and aspirations.[36] Thus, it is these target customers, not the product, that make a luxury brand.[36] Brands considered luxury connect with their customers by communicating that they are at the top of their class or considered the best in their field.[37] Furthermore, these brands must deliver – in some meaningful way – measurably better performance.[37]


What consumers perceive as luxurious brands and products change over the years, but there appear to be three main drivers: (1) a high price, especially when compared to other brands within its segment; (2) limited supply, in that a brand may not need to be expensive, but it arguably should not be easily obtainable and contributing to the customers' feeling that they have something special; and (3) endorsement by celebrities, which can make a brand or particular products more appealing for consumers and thus more "luxurious" in their minds.[38] Two additional elements of luxury brands include special packaging and personalization.[38] These differentiating elements distance the brands from the mass market and thus provide them with a unique feeling and user experience as well as a special and memorable "luxury feel" for customers.[38]


Examples include LVMH, the largest luxury goods producer in the world with over fifty brands (including Louis Vuitton)[39] and sales of €42.6 billion in 2017,[40] Kering, which made €15.9 billion in revenue for a net income of €2.3 billion in 2019,[41] and Richemont.


The luxury brand concept is now so popular that it is used in almost every retail, manufacturing, and service sector.[42] New marketing concepts such as "mass-luxury" or "hyper luxury" further blur the definition of what is a luxury product, a luxury brand, or a luxury company.[42] Lately, luxury brands have extended their reach to young consumers through unconventional luxury brand collaborations in which luxury brands partner with non-luxury brands seemingly at the opposite spectrum of design, image, and value.[20] For example, luxury fashion houses partner with streetwear brands and video games.[43]

Chadha, Radha; Husband, Paul (2007). The cult of the luxury brand: inside Asia's love affair with luxury. Nicholas Brealey International.  9781904838050.

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Lapatin, Kenneth (2015). Luxus, The Sumptuous Arts of Greece and Rome. J. Paul Getty Museum.  9781606064221.

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Wiesing, Lambert (2019). A Philosophy of Luxury. Routledge.  9780367138417.

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