Can you sell to a wider audience and still be exclusive? Luxury brands walk a fine line when they look to attract new business. Luxury isn't just for the elite anymore.
As post-industrial economies drive the democratisation of high-end consumption, traditional "luxury" brands have been reaching out to a broader spectrum of society and finding innovative ways to appeal to an aspirational clientele. But has the boundary between ordinary and extraordinary begun to blur?
Luxury brands have felt increasingly compelled to try and leverage their brand equity to attract new consumers. Typical strategies have included introducing entry-level products, launching brand extensions and licensing. Many brands today are faced with a difficult conundrum.
While brand equity affords these types of growth strategies, too much mass availability and appeal can hurt their brand in the long run by diminishing its role as a status symbol.
Luxury brands walk this fine line between luxury and mass-market in order to generate revenues in the short term, but their ultimate goal is long-term growth.
First, appealing to a broader spectrum of society - and not just the super rich - can help a company drive up sales. That said, luxury firms are also hoping that their entry-level consumers mature into the higher-end offerings of the brand. Unfortunately, the second component of this type of strategy isn't always successful.
When luxury brands lose the mystique of 'exclusivity'
The first and most important consequence of a failed "affordable luxury" strategy is damage to brand equity.
Some top luxury brands have learned this the hard way. Burberry, Diane von Furstenberg and Pierre Cardin are examples of brands that have at some point in their histories over-developed entry-level offerings, mismanaged licensing and diluted their brand's luxury status.
Licensing is particularly dangerous when it is mismanaged as it can easily spiral out of control. When you could buy Pierre Cardin lighters on every street corner, the "exclusive" image of the brand was almost irreparably damaged. Similarly, after over-licensing in the 1970s and 80s, Diane von Furstenberg has had to slowly rebuild the luxury image of her brand almost from scratch.
The over development of entry-level products such as wallets, key chains, etc, have also had their negative effects on brand value.
Firms such as Louis Vuitton, Gucci and Burberry have in recent years been trying to amplify their reputations as true luxury retailers by limiting the use of "monogram" and concentrating on new designs, unique fabrics and limited edition products with higher price points.