Affordability and the Reshaping of Luxury
Is the concept of affordable luxury in branding redefining luxury?
Historically, luxury has been about exclusive access. Limited availability. Not everyone could have it. The thing that consumers buy, own and have in order to keep up with and surpass their neighbors.
Luxury has never been about things people need, but things people want. Luxury is what people use to define and influence perceptions about themselves. Daydreams. Fantasies. Why spend $6,000 on an engagement ring (the average cost in the U.S. according to one resource) when you could aim for a ring from Harry Winston that starts at more than $23,000? Need a picnic basket? Rolls-Royce will sell you one—installed in your Phantom coupe—for $46,000.
How does the concept of luxury fit into a world of inclusivity? Affordability is seemingly incongruous with exclusivity.
Yet, affordability (sometimes accessibility) is influencing luxury.
It’s finding where consumer’s needs and wants converge. Need proof? Google “affordable luxury” and see how many companies currently use that term to build a brand and win an audience. In 2011, an economist predicted a boom in “small luxuries”: affordable consumer goods linked to quality brands. Products like the iPad. Imported beer. Tiffany’s cufflinks. Although “affordable” price points for luxury brands may be relative, high-end brands find themselves dipping into the waters of new markets.
In fashion, affordable luxury in branding was dubbed the “phenomenon of our time” and it generated substantial profits for companies taking this approach:
Kors fought through bankruptcy in the Nineties; [Tory] Burch was, back then, just another well-heeled Manhattanite working in fashion PR. Maybe she had dreams of her own brand? Maybe not. She only founded it in 2004; a decade later, it was worth £1.92bn. Meanwhile, the Michael Kors brand is now worth £12.8bn. That’s £12.8bn built not on Michael Kors’ mainline – with its £6,000 leather coats or £2,000 sundresses in fil coupé organza – but on accessible stuff, like a £230 watch, or a £315 bag.
The branding concept of affordability certainly isn’t foolproof, even for Kors or Spade, as countered in this article, which questions whether affordable luxury in branding has a limited lifespan. Luxury has often been viewed with “heritage” and stability, whereas its affordable counterparts are more volatile and can change at the whim of the market. The key differences are pricing and positioning, and will help determine an affordable luxury brand’s success.
So what does this mean for “affordability”?
Affordability means more consumers, more sales, greater revenue, more profit. Regardless of whether the perception of “luxury” has changed or because consumers want accessibility, here are some key points for affordable luxury in branding:
- Be visible and distribute quality consistently. Consider Chanel No. 5: same quality, widely marketed, same display as the parent brand. Another recognizable example of brand consistency and visibility, identified in this list, is DropBox!
- Be clear about how you made it affordable: did you save on production costs? Let the consumer know. Don’t let them fill in the gaps and assume you cut corners on quality.
- Don’t forget the realities of your target consumer. As one analyst noted when analyzing the housing market, “We can brand a marketplace as ‘affordable’ whenever we want. It’s just that real live customers are the ones who put us into business (or not) based on how well we deliver on the promise of that brand.” In other words, don’t focus solely on numbers. Consumers’ perception drives the success of your brand. Want the perception of affordability? Deliver. Deliver. Deliver.
- You can always raise prices, but lowering them is tricky. The one thing to remember is to never undermine your brand value with off brand pricing. See point #2 for best practices around the justifications for your lower pricing.
“Affordable luxury” in branding will never replace true luxury, but it can make the perception of luxury accessible.
The market of consumers is varied and diverse. Your brand(s) target a specific audience or multiple audiences – but not every audience. Whether your brand is luxury, affordability, or some combination of the two, identify your target, understand the perception you want to create and how it meets what the people want from you, and deliver on that perception consistently.