Luxury versus Ultra-Luxury: Clarifying the Disparity

Anne-Claude Wenger, CEO and Founder of Alston and Clayden, a Swiss strategic communications agency specialising in luxury, talks to Entrepreneur and Investor about the distinction between luxury and ultra-luxury brands and how they are marketed.

 

Sales of ultra-luxury or true luxury goods and services are booming like never before with the world’s richest people spending around $234 billion a year on things like yachts, private jets, jewellery and cars. And this trend is likely to continue as the number of incredibly wealthy individuals steadily increases.

When money is no object, the sky really is the limit and luckily for the mega rich, the ultra‐high‐end category is a no‐limit segment where all the craziest dreams can really come true.

The late Coco Chanel once stated, “The best things in life are free. The second best things are very, very expensive”. And she was absolutely right. Leading luxury brands understand that “true luxury” items are priced at a level that it is unaffordable to everyday consumers; and they are desperate to keep it that way.

But price is not the only determinant of ultra-luxury. In fact, it’s not even the most important factor.

True luxury is defined by timelessness, history, scarcity and social cachet. It is both mysterious and indefinable.

Commoditizing luxury brands and making them more accessible to the middle market puts them at risk of becoming ordinary, common and less desirable. Brands that become too accessible are less appealing to superrich buyers and they lose their exclusive cachet.

In today’s marketplace, ordinary, common, run-of-the-mill brands are increasingly using the term ultra-luxury, super luxury or premium luxury as a way of making their products sound better than they really are. Furthermore, terms like “luxury for less” or “affordable luxury” have also started popping up everywhere, which has created an even bigger problem for the true luxury brands.

More often than not, these brands don’t have the heritage, the rarity or the exclusivity. They don’t convey a unique story or sell aspirations like ultra-luxury brands have been doing for centuries.

As a result, the whole ultra-luxury segment has been diluted, meaning the bone fide ultra-luxury brands are losing the essence of what makes them unique, rare and exclusive. There is confusion in the marketplace between luxury ultra-luxury and that needs to be addressed.

The first problem is marketing. Marketing hype blurs the lines that separates the “luxury” from “ultra-luxury” making the whole segment rather hazy and of course, this is intentional. Marketing strategies are deliberately geared towards confusing and misleading consumers to sell their products and many of us are falling for it hook, line and sinker.

The second problem is how you define luxury. Definitions of “luxury” vary enormously and the term is highly subjective. Hence the emergence of the ultra-luxury segment.

At the ultra-luxury level, it’s the human dimension that makes the real difference. Ultra-luxury is never and has never been about the product. When it comes to branding, ultra-luxury brands have to be managed differently.

Most of us in the PR and Marketing world are familiar with the classic marketing strategy: a unique and differentiated brand positioning, and a strategy that aims to steal market share from competition.

However, the same principles don’t apply to ultra-luxury brands. You may as well tear up the rule book and start again because managing an ultra-luxury brand requires taking things in the opposite direction.

Luxury brands cannot become ultra-luxury brands simply by raising their prices, and luxury brands should not attempt to broaden their appeal into the luxury market, or they risk losing the very exclusivity which is part of their luxury appeal.

Positioning, a marketing tool that involves differentiating a product or service offering from what already exists or is already offered by competitors, has no place in ultra-luxury branding. Luxury doesn’t meet a need or solve a problem, and so it is intrinsically wrong to position an ultra-luxury brand based on how it compares to its competitors.

Luxury consumers aren’t interested in more features giving better value for money. Luxury consumers want to know about a brand’s heritage, prestige and uniqueness. It’s identity that counts, rather than a competitive edge.

What luxury sells is excitement. Think about the launch of any new iPhone model and how Apple is able to create such buzz around product launches. Personal experiences are also key. Inviting select customers into your world and allowing them to experience the brand helps build a strong connection with your product. Porsche does this to great effect by allowing certain customers to pick up their new car straight off the assembly line in Germany.

Lastly, don’t forget the story – it’s the most powerful tool you have. Coco Chanel came up with the little black dress, bobbed hair, hugely popular perfumes and the most successful fashion brand of all time – but she also invented herself, cultivating the myth of her own life with the same ingenuity as her brand. Chanel actively keeps the myths associated with Coco alive and these myths feed the brand to this day.