Without branding, there can be no luxury. A bold statement, I agree, but one that is rooted in facts. When you decide to buy a gift, depending on how much you want to spend, you usually decide on a brand first and then the product. Or you may think of a product out of a particular brand. The distinction is blurry.
A great example is that of the automobile. At the turn of the century, there were very few cars because only the rich could afford them. A car was a luxury. But when car production was revolutionized and they became a commodity, how could one consider the car a luxury? That is where branding came in. You would like to drive a Mercedes or BMW if you would like to show your wealth and status. Or perhaps you would like a Ferrari or a Bugatti if you want to show you are filthy rich.
This can be seen in any luxury market segment. Consider fine wine. When you are in a restaurant and want to celebrate success, you would go for the most expensive wine. Unless you are well versed in the art of wine tasting and have a good grasp of the difference between good wine and bad, it would be safe to assume that the expensive wine is no different to the less expensive as far you or your guests are concerned. In this situation, you go for the expensive product because you want to establish status.
Even if there was a wine on that list that is much better than then one you chose, you would not go for it because in this situation, it is not the taste but a show of status that is on top of your mind.
Here expensive equates status. And it is branding more than anything that really differentiates the expensive wines from the cheaper ones. Over time, premium wine makers invest time, effort and money in quality, creativity and status that are then used to leverage the price.
This can be done in any business. If you can ensure your product/service is of high quality and then build brand equity, you can raise your prices which in turn will increase your margins and give you the power to take your business to the next level.
Slowly but surely the days of value being created by the actual quality of the service or product are numbered. We are moving into an era where value is created by the brand and what it stands for. The heritage, the brand story, the core values and other facets of the brand create a symbolic power that transcends all traditional benchmarks.
To illustrate the point above, consider a hand made pair of shoes that are made from a rare type of leather by an unknown master craftsman. These would be considered luxury and hence expensive. But would you buy them? Perhaps not. If these shoes are not Louis Vuitton or Prada, you would not consider them luxury and you would not invest in them. This is because, when you spend money on luxury, it is not just about the luxury experience for you but also more importantly the ability for you to display your status. If people can not recognize the status in the expensive product you wear, then how can they know your status?
This is also very true of clothing and fashion brands. If you are launching a clothing label or an online clothing website, then it is essential that you spend as much time as you would on the actual designs, material and manufacturing, if not more, on strategy and branding. With out a brand strategy, it would be quite difficult to penetrate the saturated market segment. It is not just enough to slap on a hastily designed logo on the label and launch it. There would be a terrible opportunity cost that will come back to haunt you.
Here are a few tips to help to help you prioritize your branding:
1) Make sure you think of your brand as living person. In fact, I would advice you to sit down and write down the personal attributes of your brand. What kind of a person would it be?
2) Make sure you attach heritage to your brand. Even if it is a new brand, you can look for and dig out heritage that transcends the brand. This could be from your life or perhaps in threads of life of your potential customers. This could be the geographic location – the root of your brand. Heritage is a powerful brand tool.
3) Make sure you do not fall into the trap of trying to target “everyone”. In desperation, most businesses, think of anyone with money and fall in a lose world view of their product/service as their target market. This is a deadly mistake. Decide on a core ideal customer and try hard to create distance between them and the rest of the world. This is the hallmark of a true luxury brand. If everyone has a Rolex watch, would it be desirable? It is because most people can not afford a Rolex that the people who spend so much on them justify the high price. It is not about the quality of the watch!
4) Make sure you think about your pricing carefully. Pricing can make or break a brand and if you do not educate yourself and pay attention to the importance of pricing, you could end up paying the price – literally! Furthermore resist the temptation to get involved in price wars with your competitors. Instead always strive to look for innovative ways you can differentiate your brand so that you are not dragged into price wars.
5) Make sure you think of the status of your brand. Always be mindful of how it appears and what message it gives it. Especially when times are tough, it is very essential to maintain the integrity of your brand and the perception of a luxury service or product. Do not be tempted to stoop down, offer discounts or change your core messaging in a way that displays your desperation. People do not buy out of kindness or sympathy! In fact your brand will die. if it is desperate!