The Misunderstood Nature of Luxury Items: It’s Not All About the Price

Are you a Peloton fan like me?

According to Peloton’s annual review, Emma is my go-to gal. I’m obsessed with reclaiming the abs of my 20s. She’s good for that. When I’m in the mood for a bit more intensity, I turn to Callie’s classes.

Then there are the instructors who I truly believe are trying to kill me! Jess, Olivia, and Tunde — each seem to never feel any pain! Tunde, especially, seems to revel at punishing you, teasing you with one of her dances as she does.

I cast the Peloton app onto my big screen TV, which meant my mom ended up watching my workout sessions before her daily dose of Judge Judy. With us being Yoruba, Nigerian like Tunde, my mom would laugh when Tunde started one of her dances — while I’m left questioning my life choices.

My absolute favorite instructor, though, is Robin Arzon. She technically falls into the category of instructors trying to kill me, but she has a way of motivating you to see just how far you can go before you drop dead of a heart attack.

Robin is a prime example of what separates luxury marketing of luxury items from every other kind of marketing.

What’s my favorite saying?

The pursuit of luxury is a passionate endeavor.

Passion means emotions, and emotions motivate irrational behavior – like spending $1200 on a pair of Louboutin boots you’ll probably only wear three times because there’s only so much pain you can take.

Or allowing Robin’s inspirational words to irrationally push you into reaching your maximum heart rate.

As you stand there, sweat pouring down your body, gasping for air, debating if you need to call 911, here comes Robin telling you how awesome you are and inducting you into her Wolf Pack.  

And that makes you feel great! Makes you feel your near-death experience was worth it!

That is what buying a luxury item fundamentally means to luxury consumers.  Owning your item makes them feel on top of the world, particularly when they receive compliments and envious looks.

I’m not a fan of how so many people think  luxury is defined by pricing and exclusivity. Both are consequences of luxury items but are not what makes an item luxury.

Luxury begins first with the customer and how you want them to feel owning one of your products. How can you raise their heart rate at first sight?

Next comes your design and production, and here is where pricing plays a role. Quality craftmanship requires dedicated employees, as exemplified in my first Hermes deep dive. Which also involves fair wages.  Then we look at materials. Sourcing from the best producers adds to your cost of goods sold.

Most wholesale mark-ups on luxury items are roughly 2 to 3 times COGS, of which retailers then triple that price before presenting it to the consumer.

Does this clarify why cost is a consequence of luxury and not entirely a definition of it?

And as far as exclusivity goes, this is a consequence of price, but still doesn’t entirely define a luxury item. 

There are many customers who save up for months to buy a Louis Vuitton bag.  Those are the same aspirational customers who walk into an LV store beside a well-heeled customer coming in for their sixth luxury item that week.

So no, luxury isn’t just about exclusivity.  Because if you have the right amount of money, all doors open to you, even if only for a day.  And even then, that doesn’t guarantee access — as the wealthy still on Hermes’ waiting list for a Birken will tell you.

Which brings us back to emotions and the irrationality of it all.

Tell me, how excited do you think a customer on Rolex’s notorious waiting list feels when they finally get THE CALL to say they now have the honor of giving Rolex their hard-earned money?

When you’re designing your messaging to attract luxury consumers, focus on emotions.

I’m sure someone out there would argue you need to highlight some luxury elements in your marketing. Yes and no.

Case in point, Patek Phillipe’s longstanding message at the core of all their campaigns:

“You never actually own a Patek Philippe, you merely look after it for the next generation.”

Brilliant in its simplicity as it draws on the emotion of creating legacy.

Questions? Let me know!

KEY TAKEAWAYS FOR MARKETING LUXURY ITEMS

1. Luxury Items Go Beyond Price Tags and Elite Circles: Luxury isn’t only about high prices and exclusivity. It’s the emotional experience and feeling of owning a luxury item that is key to luxury marketing.
2. Effective Luxury Marketing Elicits Emotion-Driven Purchases: The emotional appeal of luxury items is a key driver in the luxury market – whether it’s the pain of wearing high-heeled shoes from an immensely popular designer or the satisfaction from a high-intensity workout on a very expensive machine.
3. It’s All About the Feelings: Luxury begins with how customers feel about a product, not just its price or exclusivity. True luxury is born from the experiences and emotions that a product can evoke, far outweighing the significance of its price tag or exclusivity.
4. Cost as a Consequence, Not a Definition, of Luxury Items: The high cost of luxury goods is a result of their quality, craftsmanship, and production processes, rather than the defining feature of luxury. Or simply put, quality comes before the luxury label.
5. Exclusivity as a Byproduct, Not a Benchmark, of Luxury Items: Exclusivity is a natural outcome of high pricing but should not be the sole defining factor of luxury. Luxury is more accessible to a broader audience than is often perceived.
6. Chocolate Consumption and Luxury Consumption Have the Same Motivators: Tapping into customers’ emotions is far more effective than focusing solely on pricing and the illusion of exclusivity.