Effect 7 a borderline identity

As has been extensively discussed, the change in the luxury scene raises several questions about the real meaning of luxury. It also queries the criteria for defining the brands that can currently be tagged as authentic luxury brands and what they represent for luxury consumers.

In the previous luxury market scene, luxury brands were meant for a specific niche consumer group and there were only a handful of brands that could immediately be identified as luxury brands. This was the era when a three-tier pyramid could easily be drawn with luxury and prestige brands placed at the top-end, aspirational fashion brands placed at the middle level and mass market and supermarket brands placed at the lower level, as shown in Figure 7.4. Each of the levels addressed a specific social class in the consumer society. However, today the picture has changed.

In the current luxury environment, the market structure has been diluted so much that the pyramid is no longer relevant. For example, it would be difficult to place high-end brands with lower-priced diffusion lines or brands that collaborate with mass-market brands on the pyramid. Also, it would be inappropriate to categorize premium-mass fashion brands like Zara, Topshop and Gap as 'supermarket brands'. Also, sophisticated premium brands like Furla and Longchamp would be lost on the pyramid. Despite the current irrelevancy of the luxury pyramid structure, the following crucial questions remain unanswered:

1 Have luxury brands become mass brands as a result of increased availability and access to luxury goods?

2 Are fashion brands becoming luxury brands through elevating their branding and marketing strategies to reflect premium appeal?

Hierarchical Structure Primark
Figure 7.4 The previous market hierarchy structure of the luxury goods sector in relation to customer strata in the society. This hierarchy has lost its relevance in the current market environment.

3 Where can the lines between luxury, prestige, aspirational, premium and mass fashion brands be drawn?

There are no black and white answers to these questions. However, to lessen the confusion, some definitions will be given.

Luxury and prestige brands represent the highest form of craftsmanship and product quality and command a staunch consumer loyalty base that is not affected by trends. These brands create and set the seasonal fashion trends and have the ability to retail an item for €20,000 and another for €300 to different consumer groups. They are the epitome of prestige and are capable of pulling all of their consumers with them wherever they are located. Brands in this group include Bvlgari and Hermès, among others. True luxury and prestige brands do not utilize mass-market strategies in order to become mass-market brands. Rather, they have recognized the changes in the luxury marketplace and are attuning their strategies accordingly, without sacrificing their core heritage and brand essence.

Premium brands are those brands that aspire to become luxury and prestige brands but their marketing mix strategies are more attuned to a mass market, albeit a luxury mass market. The brands in this group are also sometimes referred to as mass-premium brands, aspirational brands, mass-luxury brands, designer brands or simply high-end brands. The group of premium brands has a broad scope, which makes narrowing them down challenging. Several of the brands in this group also have different levels of operations. Consequently they have been categorized as follows:

(a) High premium brands, such as Calvin Klein, Tommy Hilfiger and Longchamp, among numerous others.

(b) Medium premium brands like Lacoste, Furla and Lanvin, among several others.

(c) Low premium brands are brands like Zara, H&M and Gap, among others. This group can no longer be considered as merely fashion brands, in the same sphere as supermarket brands such as Wal-Mart and Tesco, as a result of the elevation of their offerings and strategies. The brands in this group are playing a key role in the 'trading-down' phenomenon of luxury consumers.

There are also several 'luxury' brands that have adopted strategies utilized by premium brands including licensing and end-of-season sales. However, this factor doesn't make them premium brands as their overall corporate strategies reflect luxury and prestige status. At the same time, implementing mass-focused strategies without effective control could lead to the eventual loss of the brand cachet.

The premium fashion brands segment has arguably witnessed the greatest changes in the consumer market. They are also facing aggressive competition from the higher-priced luxury and prestige brands and the lower priced mass-fashion brands.

Mass-fashion brands on the other hand are those that dress the masses. A recent evolution brought about by competition has also created a significant change in the way this category is viewed. Although brands in this group include supermarket ranges such as Wal Mart, Carrefour, Tesco and Asda; and other brands like the U.K.'s Primark and France's Tati, these brands are effectively implementing differentiation and are currently developing strategies to elevate their offerings.

The difference between luxury brands and fashion brands is not only in the marketing mix aspects of product quality and pricing. It also applies to availability and exclusivity of the products. Fashion brands are for the mass market, whether the products are of high quality or not. Luxury brands remain for a distinct market although this market has broadened. They are defined by high quality, differentiation and precision in product design and manufacture.

A brand is either a luxury brand or it is not. There is no in-between. If a brand does not set out to target the high-end market, then it would be difficult for it to become a luxury brand as a result of all the factors identified so far in this chapter.

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