A luxury brand is a brand that can be characterized by the level of high quality, high price, and exclusivity. Luxury brands are aesthetically pleasing, unique, and difficult to access even though they are not rare. It is identified that the demand for luxury brands increases with the rise of disposable income.
Luxury brands usually have a high-income elasticity of demand. As the people get more income, they will proportionately purchase more luxury products. Based on the income levels, luxury brands are considered as necessity goods and also as inferior goods.
With the increase of use in luxury products, more and more businesses are tending to create luxury brands. Luxury brands are mostly concentrating on the retail sector aiming particular target market with a higher disposable income.
From the point of the manufacturer, it is important to identify how to create a luxury brand and make it popular in the target market. Below mentioned are the five main steps to creating a luxury brand.
Steps to Create a Luxury Brand
01. Identify a niche market segment
The most fundamental step of creating a luxury brand is to diligently select a market segment that can be attracted by positioning the product. Since luxury products are built with the basis of offering a higher symbolic value and presented to a very selective consumer segment, it is important to identify the niche segment of affluent customers who will value the product offered by the brand.
When identifying a niche market, the business should focus on the symbolic value of the product either through an overall brand experience or via exclusive factors such as availability, price, exclusivity.
02. Position the product based on high levels of differentiation
As global brands usually strategize their competitive decisions, they generally follow strategies such as cost leadership or differentiation strategy. However, all luxury brands generally follow a differentiation strategy as uniqueness is highly important for the success of luxury products. However, it is identified that instead of merely concentrating on differentiation, luxury brands should concentrate on creating a differentiated brand experience.
Once the niche market is identified, the brand should position its products in the market with a high level of brand differentiation. This allows the customers to identify why the brand is worth being a luxury brand. This is identified as the basic stage of creating customer recognition, loyalty, key features unique to the brand as well as brand power. These features are mandatory to differentiate luxury brands and to create a more powerful, distinct, and focused effect on the target market.
03. Emphasize the symbolic value of the brand
The most important element of creating a successful luxury brand is the ability of the brand to communicate the symbolic value to the customers. Brands usually offer both functional value and symbolic value. the functional value indicates the value generates from the features and the potential uses of the brand. It indicates the value a customer can gain by using the products manufactured by the brand. The symbolic value is the value generated by the social standing of the brand. That is the extent to which the brand is perceived as an elite offering by the customers in the target market.
The symbolic value is important for luxury brands as many customers purchase the products only for the symbolic value. Luxury brands are mainly focusing on creating a sense of social standing for customers, it is important to create a symbolic value for the premium price they are willing to pay.
04. Create a perception of exclusivity in the brand
Just like the symbolic value of the brand, creating a perception of exclusivity is highly important for the brand. All luxury brands are striving to create a unique, exclusive value for their customers. Exclusivity can be built through prices, geographic availability of the products, limited supply, or barriers of possession. This provides a social standing for the customers who can purchase the product over the others.
05. Uncompromising delivery of brand promises to customers
When providing an actual product to the market, most manufacturers are facing challenges to deliver the brand promises through their products. It is highly important to deliver the qualities promised by the brand consistently as it is the main point in creating brand loyalty. Successful business organizations create supportive functional structures and implement strategies to ensure the delivery of brand promises through each product manufactured under the brand.