INSIDE LVMH｜How to Define Luxury?
Anne Michaut from HEC Paris tackles this question while sharing the 7 essential characteristics of luxury.
This article is a study note of INSIDE LVMH courses, which discusses the basic question: How to define luxury?
In the course, Anne Michaut, Associate Dean for Education Track and Pedagogy and the Director of the LVMH Academic Chair at HEC Paris, answers the question with 7 essential characteristics that could measure the ‘luxuriousness’ of a product.
▍7 essential characteristics of luxury goods
Luxury is said to be ‘the ordinary of extraordinary people, and the extraordinary of ordinary people.’
That is to say, luxury could be hard to define because the concept may appear relative and personal. In the course, Anne Michaut indicates that luxury is defined by the extraordinary, the exception, that differs people from person to person.
As for scholars, how they perceive luxury may be different. For sociologists, luxury encompasses a social stratification role, in which its function is to demonstrate forms of power. In terms of economists, definitions of luxury centre on expensive products or services, that price above their functional value.
As we could see from the concepts above, obviously, functional value is not the only form delivered by luxury. In the rapidly changing world, the idea of ‘new luxury’ appears.
If today’s possessions and status symbols are still important to luxury buyers, we are witnessing the rise of more sophistication in clients’ choices. Normally, customers demonstrate knowledge, passion, and values in what they are buying. Increasingly, clients achieve these factors through ‘experience’, rather than mere ‘possessions.’ To be more specific, no matter it’s objects or experience, there are seven concrete characteristics that we could define what luxury is.
- Quality: Refers to the long-lasting characteristics of luxury goods, craftsmanship may be one of the most significant factors, and it represents the standard of quality. However, it may also mean additional constraints: in terms of raw material selection, training, or by going beyond the necessary. For instance, Gold plated locks may need more gold than the law would commend to satisfy longevity expectations.
- Scarcity: Luxury brands go beyond the mere rarity of ingredients; craft has been adding qualitative rarity with limited editions and collections. For example, a blend of Cognac in a flask, which is made of noble material, is specifically designed for the occasion.
- Delivering experiential rewards: Luxury needs to be loaded with positive emotions and powerful brand associations to ignite an emotional connection. At times, even packaging could evoke emotions. Take the blue box of Tiffany as an example. In the advertisement, Tiffany emphasizes ‘blue is the colour of dreams.’ The box alone, and more specifically its colour, evokes strong emotions in consumers.
- Signed by brands: Beyond product artistry, the brand signature, a symbol of distinction and status, is also an essential element of luxury. Except for the brand logo, all iconic elements such as a pattern, a colour, a design, and raw material that is sufficiently proprietary could be recognized as symbolic dimensions of luxury.
- Controlled channels: Controlled channels are essential in luxury. Firstly, controlled channels lower the risks of counterfeiting and grey markets. Secondly, these channels help brands express their value both offline and online, which conveys, creates, and manages emotions and distinctions directly to the customers. And it links to the next characteristic.
- Personalized services: Controlled channels enable brands to develop rich experience delivery and to ‘explain’ the products to their consumers personally. These channels create the stage to express all the characteristics above mentioned, convey the luxuriousness, and reveal the elements behind the price of luxury goods.
- Price: For all these characteristics, price is uncorrelated with the sole functional performance of the offering. As for mature brands, the ‘dream’ created immensely contributes to the overall value delivered to customers. In terms of developing brands, however, considering a degree of correlation between the mere functional performance and the price is essential because the brand power and status are not yet built in the imagination of the customers.
To conclude, the course shows that: these seven characteristics are seen as those allowing the measurement of the ‘luxuriousness’ of an offering. Yet, the concept of luxury remains elusive and refers to different concepts. The business sector, incarnated by a few brands, which have shaped consumers’ experience of what luxury is, but also a business model and a certain way to operate with distinct management rules and principles.