Is a Luxury Brand Still “Luxurious” If Everyone Has Access To It?

In January 2014, I had a very rare, luxurious work trip to London that still seems like a dream. To avoid boring you with the details, I’ll give you some highlights – a private jet from Teterboro Airport in New Jersey to Luton Airport in London with a flight attendant that cooked a fresh omelet for breakfast, a Mercedes Benz with a driver to prevent me from getting lost, an overpriced luxury hotel room at the Covent Garden boutique hotel, and more delicious food and wine than I could eat or drink. Not bad, right?

Unfortunately, I got a severe stomach virus on the way home that sent me to the hospital (totally my luck). Yet, despite the nausea and vomiting (which was far from luxurious), this trip taught me the true meaning of luxury.

Luxury is something that is rare and not easy to access. It is something that brings a remarkable level of comfort and ease to your day. Naturally, after this trip I wanted more luxury. And, according to research, so do most people in our society (Kapferer, 2014).

A Dilemma for Luxury Marketers

This growing desire for luxury goods brings up an interesting dilemma in luxury marketing communications. If luxury brands market their product or service in a way that is appealing to a mass market instead of solely to luxury consumers, that can be a highly lucrative decision (Yeoman & McMahon-Beattie, 2014). However, it comes with great risk to the brand as it loses its exclusivity and thus, refers back to my original question: Is the brand still luxurious if everyone has access to it? The short answer is, no.

Exclusivity is a defining feature of luxury products (Yeoman & McMahon-Beattie, 2014). So, when everyone has access to a luxury item, the brand loses its once luxurious status (Yeoman & McMahon-Beattie, 2014).

3-seriesBMW SOJ Dealer Posters_Joy Is Maternal

BMWs for Everyone!

Let’s use BMW as an example. BMW is an iconic luxury car manufacture that is known for its German engineering and sleek design. Appropriately titled, the “Ultimate Driving Machine,” BMW has become a household name and an industry leader in the luxury car market. In 2014, BMW held 17.6% of the luxury car market share in the United States (“U.S. luxury car market,” 2015). Although their strong brand positioning and leading market share have increased profits for BMW, Yeoman & McMahon-Beattie (2014) claim that BMW is no longer a luxury vehicle but instead a “mainstream family car” (para. 4). As much as I love BMWs, I have to agree that with the increased number of them on the road, the brand has sadly lost the exclusive luxury status that it once had. The good news is that profits in the U.S. are certainly soaring for BMW. Again, this illustrates the dilemma that luxury brands are faced with: Do we mass-market to increase profits or do we maintain exclusivity to preserve our luxury brand image? Unfortunately, there is not a clear-cut answer.

So, the next time you encounter a luxury brand, take a minute to consider- is this a “real luxury” brand that has maintained its exclusivity, or a “mass-luxury” brand?

References

Kapferer, J. (2014). The future of luxury: Challenges and opportunities. The Journal of Brand Management, 21(9), 716-726. Retrieved from http://search.proquest.com.libproxy1.usc.edu/docview/1477321472?pq-origsite=summon&accountid=14749

U.S. luxury car market share in 2014, by brand. (2015). Retrieved from http://www.statista.com/statistics/287620/luxury-vehicles-united-states-premium-vehicle-market-share/

Yeoman, I., & McMahon-Beattie, U. (2014). Exclusivity: The future of luxury. Journal of Revenue and Pricing Management, 13(1), 12-22. doi:10.1057/rpm.2013.29

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11 Responses to Is a Luxury Brand Still “Luxurious” If Everyone Has Access To It?

  1. Jessica says:

    I had not thought about luxury like that before. It seems as if the ultimate goal of any retail organization would be to make money, but I can see why not appealing to the masses would make them even more money. As much as I love BMW as well, I agree it is definitely not a status symbol like it use to be (especially when my sixteen year old neighbor has one).

    However, I don’ t think this dilemma can ever be avoided when the brand offers multiple price points, high, average, and low. If the brand only carried high end cars like their i8 which starts at 135k there would be no way to appeal to the masses. I think by carrying multiple price points, it is their intent to sell to the masses.

    However, I asked my husband what he thought of the neighbor boys BMW and he said “Ehh, its only a 2 series, they start at 30k” as if the 30k price was “cheap.” So I guess it hasn’t lost all of its exclusivity yet!

  2. Stephen Aguayo says:

    Luxury automaker Lamborghini has also confirmed that it will be introducing a sports utility vehicle to its product line by 2018 to expand further its reach on younger clientele. So much for exclusivity hopefully now everyone will have access to a Lamborghini. The plan to compete with the likes of MBZ, BMW, and Range Rover. The Italian automaker has commented that the SUV will be manufactured in its headquarters but has not specified how much it would cost. Lamborghini also said it will be expanding its current factory site from about 871,000 square feet to about 1.7 million square meters, as well as adding 600 new employees.

  3. Jason says:

    Excellent points but I think deciding what is luxury and what isn’t is a little bit harder these days. Its true that BMW is now available to a lot more people than previously, but that’s because BMW and other luxury brands have made a decision to offer products that have the luxury name but not necessarily the full luxury treatment. For instance, a BMW 3 series Sedan starts at a sticker price of about $35,000, while a BMW 7 Series starts at $75,000. In this case, BMW has made a decision to compete with other Sedan’s in the marketplace by providing a much lower quality car than its top of the line luxury brand and just throwing a BMW symbol on the front of it.

  4. Jessica says:

    This is such a great post! It has been a large topic of conversation for my Jaguar group (as Jason here has just gone into). I think a great example of the dilution of luxury is within the clothing market.

    If you think back hundreds of years ago having gold jewelry was a status symbol that represented luxury. It was made with real gold which had to be hand crafted into a unique design. Now you can walk into H&M and get the same fake gold necklace for $4 for you and all your friends. There is no exclusivity and no luxury anymore and yet it is still meant to fake the same status as the original. There isn’t a difference now in the number of people that can afford the real deal gold necklaces of the world but now everyone has the ability to fake it.

  5. Yunhee says:

    I agree with the points you raised in your post. A brand certainly loses its luxury appeal if everyone has access to it and that’s why these days, Hermes bags seem to be all the rage because it’s pretty inaccessible to most. I actually think it’s great that luxury has become more accessible to a broader base of consumers but I certainly get your point!

  6. Ruqqayat says:

    Hi Kelly!

    Great post! This had me thinking about a debate I recently had with some friends. We were discussing designer bags. Bare with me, I know this sounds trivial but I promise it relates to the original topics. Recently Chanel increased its prices, which it has been doing every year, but it is now almost $6000 for the bag I want. I was exclaiming to my friends that I think it would be ridiculous to ever pay that for the bag, even if I had the money, isn’t that someones car down payment? My bestfriend responded with one simple reply “yea, its outrageous but it’d feel good to walk around knowing that I was a part of a special club not everyone has access to”. My point being, things ARE only luxurious if they remain exclusive. Being able to have access to perks and products which make you a member of an unspoken, exclusive club is half the fun of spending your money on those things!

    Great post Kelly!

    Rocky

  7. Lisa says:

    The bag comment is so true. I know Coach is not so luxurious as Chanel, but there was a time when women really felt that Coach was special. Today, they are everywhere, including TJ Maxx and Marshall’s at lower prices. DePillas (2013) poses the question is Coach really a luxury brand if they have an outlet store? Similarly, I see Louis Vuitton handbags everywhere now. Either they are not real or alot more people than I thought can afford the $1000 bag that I want. In our Jaguar group we are asking the question how to promote Jaguar and increase sales without going mass market like the BMW you mention in your post.

    Thanks.
    Lisa

    Reference:
    DePillis, L. (2013, October 23). Coach 22: Can a handbag be ‘luxury’ if everybody owns one? The Washington Post. Retrieved from http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/23/coach-22-can-a-handbag-be-luxury-if-everybody-owns-one/

  8. Christina says:

    Kelly, I recently experienced a somewhat similar phenomenon when I made the mistake of going to look at some model homes in a new luxury home development in my community. Every square inch of the experience of viewing a model home is tailored to make the potential buyer feel like they could be living there – from the decor to the smell of fresh baked cookies in the oven – after stepping inside, no other home will ever do. I came back to my own modest house (which I had no complaints about until I saw what life could be like on the other side) and now all I can think about is how my family must someday have one of those luxury homes. They’re not even in a location I consider desirable, but I was so transformed by the experience of “living in luxury” for a few brief hours on the tour that now I’m obsessed. OBSESSED!

  9. Hector says:

    Kelly,

    This is a very interesting idea to talk about — the idea that if everyone has access to a certain luxury brand, is it still luxurious? As I do agree that if the vast majority of consumers purchase and have access to a certain “luxury brand,” for example, Louis Vuitton, then it devalues the brand a bit, especially if the product is seen being used by everyday consumers. However, we must factor in other possibilities. Going back to my Louis Vuitton example, the perception of the vast majority of consumers owning Louis Vuitton products does not factor in how many of those consumers have fake products and how many have real products?

    On the discussion around the BMW brand, we might see a lot of BMW’s on the road, we might own them, but when you look at the larger U.S. market the luxury motorsport company only makes up of 2% of the U.S. car market (Statista, 2015). Also, UTA brand studio conducted research around what brands come to top of mind with the word “luxury” and BMW ranks 1st. (UTA Brand Studio, 2014). I’ve posted the link below for everyone to take a listen — it’s a whole podcast on the topic of luxury in the eyes of consumers.

    References:

    http://www.statista.com/statistics/343185/bmw-us-market-share/

    https://soundcloud.com/pointofattachment/03-the-true-meaning-of-luxury-part-i

  10. Lisa says:

    Hi Kelly!

    You brought up an interesting topic and I found myself nodding in agreement with all the insights in everyone’s posts. The concept of what determines luxury and whether or not a product or brand is still considered “luxurious” if everyone has access to it is somewhat of a gray area. While I believe that luxury brands lose a little of their exclusivity if mass numbers of consumers have access to it, I think we’re getting to a point as a consumer society where certain companies are having to restructure their brand’s status and what they offer in order to appeal to a much larger market segment. It almost puts luxury companies in between a rock and hard place. What it comes down to is luxury companies having to decide if mass marketing their brand and products is worth losing some aspect of exclusivity in order to increase their overall profits. For example, living in Las Vegas has the amenities of many high end retail outlet stores (such as Kate Spade, Michael Kors, Louis Vitton, etc). Some might question that such “luxury” brands being offered in such a discount fashion would take away from the exclusivity of the brand or products. But I have to disagree – if I can get a $500 purse for 60-75% off, it means I got a fabulous deal and that definitely doesn’t take anything away from the brand’s image or status. If anything, it makes me want to purchase more from this brand and recommend it to others.

    I did agree with some of the suggestions that were being made in terms of certain brands offering low, middle and high end options so that in some respect they still keep some sense of “luxury” to it, while also allowing the average consumer to be able to purchase their products. I’m not going to lie…if I was able to own a 3 Series BMW, I would totally consider myself a part of the “luxury car” club!

    • Lisa says:

      Forgot to put that this is Lisa Garcia (looks like there are two Lisa’s roaming through the program!)