What Is a Luxury Brand?
In economic terms, luxury products are those whose price/quality/service relationship is the highest on the markets or a product that can consistently command and justify a higher price than those with comparable functions and similar quality. There is always an argument for why some brands qualify as luxury and others are simply well known.
McKinsey defines luxury brands as those that “have constantly been able to justify a high price, i.e. significantly higher than the price of products with comparable tangible functions.” This strict economic explanation does not help explain how well-known brands are differentiated from luxury brands. A Jaguar is considered less expensive than a Porsche, but in terms of comparable tangible functions it has a much stronger luxury brand image than Porsche. For some reason, Porsche is fast and expensive, just not luxury. A Breitling watch is generally more expensive than a watch from Tiffany, Hermès, or Gucci, yet it is often perceived as prestigious, not luxurious.
Luxury used to belong to a few privileged few. Not any more. It’s no longer about simply fashion goods, wine, jewelry, handbags, and accessories. Luxury is transforming scores of markets. It comes in many forms, at many price levels, and through a variety of channels, no longer confined ...