Deck 1

Sophistication, exclusivity, rarity, high quality, noble, artistic, creative, eccentric, valuable, dream, inaccessibility, strong aesthetics, excellence, niche, crafty, strong brands, authorial, desire, status, sensorial, human, privilege, charismatic, iconic, traditional, high service.

A strong human component, inspiration from art, tradition, heritage, emotional creation, focus on quality over quantity, multisensory experiences, strong aesthetic components, craftsmanship, rarity, exclusivity, and nobility.

Luxury is spirited, elevated, privileged, exceptional, focuses on product excellence and beauty, communicates an imaginary territory, sells a dream, has a high price compared to functional equivalents, and values personal relationships and service.

Luxury is described as "the opposite of necessity”

Status, distinction, dream, and pleasure

€1.5 trillion

Sociological (representing and incarnating social stratification) and psychological (giving oneself pleasure and a dream of exception).

High visibility and high awareness combined with restricted access and low penetration.

The greater the reasonable inaccessibility, the greater the desire for the luxury product.

Luxury acts as a social marker by signifying rank and creating social stratification.

Luxury is not premium, fashion, or art, and maintains a hierarchy of absolute, aspirational, and accessible luxury

Anti-law #1: Forget about positioning, think identity only - Focuses on maintaining a unique and superlative brand identity rather than competing on positioning.

Anti-law #2: Do not look after the product that seduces too many people - Advises maintaining exclusivity and avoiding mass appeal to preserve brand uniqueness.

Anti-law #3: Make it difficult for your client to buy - Enhances product desirability by making it less accessible and thus more exclusive.

Anti-law #4: Do not pander to your customer’s wishes - Encourages brands to stay true to their vision and identity, resisting customer demands that do not align with the brand’s essence.

Anti-law #5: Luxury sets the price, price does not set luxury - Emphasizes that the brand’s value is determined by its identity and desirability, not by market prices.

Anti-law #6: Increase the average price to grow demand - Suggests that higher prices enhance exclusivity and desirability, aligning with luxury’s rarity.

Anti-law #7: Do not communicate to sell but to dream - Focuses on creating dreams and aspirations rather than direct sales pitches.

Anti-law #8: Communicate well beyond your target - Encourages broad communication to enhance brand awareness and aspiration, even beyond the immediate target audience.

Anti-law #9: Beware of celebrities - Advises careful use of celebrities to ensure the brand remains the focal point and is not overshadowed.

Anti-law #10: Do not look for consensus - Stresses maintaining the brand’s distinctiveness and avoiding dilution by catering to mass appeal.

The main thesis of the paper is that luxury brands are managing to grow by creating a sense of "abundant rarity," where they maintain the allure of exclusivity and high value despite increasing their presence and accessibility in global markets. This is achieved through tactics like virtual rarity, associating with art, and adopting elements of the fashion business model.

Bernard Arnault considers luxury to provide "luxurious margins" because the sector can charge high prices for its products, which appeal to the affluent class. Even in economic crises, high-end, fully priced luxury products continue to sell well, indicating strong profitability despite financial downturns.

Luxury sector growth is strongly correlated with GDP growth in emerging markets because rising GDP creates a middle class with disposable income and optimism. This new middle class tends to spend on luxury goods as symbols of status and self-achievement rather than saving for retirement, leading to increased demand for luxury products.

"Luxury as an absolute concept" refers to the idea that luxury evokes the lifestyles of the rich and powerful, symbolizing wealth, power, and social stratification. Historically, luxury was associated with the elite's ability to buy non-productive items as a display of rank and wealth. It transcends specific brands and is more about the notion of unattainable opulence.

"My luxury" refers to more personal, accessible luxury experiences or products that provide individuals with a sense of escape and self-reward. This can include smaller, more affordable luxury items like a designer lipstick, which still carry the prestige and emotional satisfaction associated with luxury but are within reach for more consumers.

Luxury syndicates like Comité Colbert and Altagamma act as representatives for the collective interests of luxury companies, setting criteria for membership and influencing how luxury is defined and perceived. They help compile data and forecasts for the luxury market, but their definitions can sometimes include brands not widely perceived as luxury, influencing market analysis and perception

Key principles of the luxury business model include:

• Not delocalizing production to maintain cultural and artisanal integrity.

• Communicating to build the dream, not just to sell products.

• Maintaining full control of the value chain and distribution.

• Avoiding licenses to ensure quality control.

• Always increasing average prices to enhance exclusivity.

• Developing direct, personalized relationships with clients.

Scarcity creates value by increasing perceived exclusivity and desirability. When demand exceeds supply, prices can be higher, and the value of the product increases in the eyes of consumers. This principle is used by luxury brands to maintain high prices and the allure of exclusivity.

"Qualitative rarity" refers to the perception of exclusivity and exceptional quality that goes beyond physical scarcity. It involves creating a sense of uniqueness through craftsmanship, cultural references, and high standards of production, even if the actual production numbers are not extremely limited. This helps maintain the luxury appeal without severely limiting availability.

Luxury brands create "virtual rarity" through limited editions, selective and exclusive distribution, and strategic communication that extends beyond their target audience to build the brand’s desirability and perceived exclusivity.

Designers in the luxury sector have transformed into star figures and artists, gaining recognition for their creative genius and personal brands. This shift emphasizes the artistic and intemporal nature of luxury products, positioning them as pieces of art and enhancing their desirability.

Luxury brands use communication to build and sustain their image by advertising beyond their target audience, using high-profile events and celebrity endorsements, and creating artistic and less explicit advertisements that add to the brand’s mystique and appeal.

The "new reality of Asia" has significant implications for the luxury market as the region's growing middle class and cultural values create a strong demand for luxury goods. In countries like Japan and China, owning luxury items serves as a status symbol and a way to fit in socially, driving high sales for well-known luxury brands.

The cult-like nature of luxury brands fosters strong emotional connections and loyalty among consumers. It creates a sense of belonging and elevates the brands to almost religious status, where consumers are willing to make significant sacrifices to own luxury items, which are seen as symbols of prestige and self-realization.

Luxury brands balance short-term growth with long-term brand equity by maintaining high prices, exclusive distribution, and focusing on creating supra-luxury products and experiences for elite consumers. They aim to expand their market while preserving the brand’s aura and desirability.

Kapferer advises entrepreneurs to position their brands as pieces of art, build strong ties with cultural elites, and communicate with exceptional style and detail. They should focus on creating qualitative rarity, convey a rich heritage, and treat products and communication as integrated aspects of the luxury experience.