Marketing of Luxury Items

Marketing refers to activities undertaken by any company to communicate with the customers and consumers, to create value, to satisfy their needs and wants, to promote the buying or selling of a product or service. Marketing further includes advertising, branding, market research, new product development, selling, and delivering products to consumers or other businesses.

Product, price, place, and promotion are the Four P's of marketing popularized by the Neil Borden in the 1950's. The Four P's collectively addresses the critical and essential issues require to plan or execute the different strategies for a product or service by any company.

Luxury goods are the category of goods that are not very essential to satisfy the basic needs of the consumers but are purchased due to the desires, status quo, and to reflect the association with prosperity. They are bought for several other reasons: to support self-worth and self-esteem, or for the product's quality and craftsmanship. A luxury good is a commodity that consumers demand more disproportionately as their incomes increase.

As per the Maslow's hierarchy of needs, which is a motivational theory in psychology and states that every person is capable and has the desire to move up the hierarchy toward a level of self-actualization. The luxury and premium segment products fall into the category of the esteem needs and self-actualization where most of the economically priced products are covered under the physiological needs of living beings.

Burberry, Cartier, Chanel, Fendi, Gucci, Hennessy, Hermès, Moët & Chandon, Rolex, & Louis Vuitton are the few examples of the leading companies’ deals into luxury goods. Rarity, Excellence, Expensiveness, Timelessness, Honest, Tailored, Pleasurable and Experience are few attributes of the premium and luxury products.

The demand for premium and Luxury goods is very sensitive to change in consumer income level because they have a high-income elasticity of demand. The greater is the elasticity in the demand, the greater the consumer response following a change in their income.

The premium and Luxury goods are exceptionally perceived with high quality and specifically designed for the target audiences. It is mandatory that Marketing & Brand managers remain conscious and concerned about positioning, corporate reputation, and brand communication not only because it builds brand loyalty and long term trust but also because product features appear more valuable, so consumers are willing to pay more.

Usually, the luxury products are launched with the exclusive channels of the company as per the budget allocated. But due to the change in the market structure and emerging of the large scale shopping Malls, the companies are occupying space in the retail sections to get better attention of the target audience. So, due to this, these companies like Apple, and ZARA, still prefer to sell luxury product through exclusive channels but the companies like Longines and Longevity selling their premium watches through Omni-channels.

The internet and e-commerce era has actually diluted the brick-Motar distribution channels. Most of the Luxury products with limited edition are now launched on their company website with special coupons to make customers feel special.

The companies who actually deals into the premium and luxury product segments, it is not only difficult for them to acquire the new customers but also difficult to retain the customers. The present surplus options in the market, the competition, sales promotion, discounts, and imitated products usually affect the point of purchase decision of any customer.

In fact the marketing plans of premium and luxury products are designed in a different way and with heavy budgets as compared to the economically priced products. Every aspect of the market plan for premium and luxury product segment is operationalised and outlined to outreach the target market.

The Marketing of Luxury items is very sensitive to the crisis raised in the market. So it is really important to channelize the communication pattern of the brand and related luxury product line. The customers are attached to the luxury brand as they want their personality and persona to be recognized with the brand. Marketing, branding and corporate reputation of the luxury products are not something that can be readily controlled by Managers or their companies, but it is definitely should be in their command and attention.

Sometimes, the perception related to luxury items resulted into the Price Quality Syndromes wherein the consumers are willing to pay more for premium and Luxury products with certain specific features and they want to be delivered by businesses with a good reputation. But any small change, decrease or discounts in the price of the premium and Luxury segment products is negatively perceived by the consumers. The consequences are the loss of customers, product value and prestige of the company.

At last, the present consumer is well aware of the market and related trends. Subsequently, it is very difficult of the Multi-National Companies to enter into the new markets or sustain their present market share in the premium and luxury product segment.

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