The Luxury Strategy. Break the Rules of Marketing to Build Luxury Brands
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Transcript of The Luxury Strategy. Break the Rules of Marketing to Build Luxury Brands
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THE LUXURY STRATEGYTHE LUXURY STRATEGYTHE LUXURY STRATEGYTHE LUXURY STRATEGY
Break the rules of marketing Break the rules of marketing to build luxury brandsto build luxury brands
Prof JeanProf Jean--Noël KAPFERERNoël KAPFERERHEC P iHEC P iHEC Paris HEC Paris
April 19 , 2010April 19 , 2010
©Jean-Noël Kapferer HEC Paris
p ,p ,
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PlanPlanCopyright JN KapfererCopyright JN Kapferer
•• The luxury business growthThe luxury business growth•• The luxury business growthThe luxury business growth
•• A growing market confusionA growing market confusion•• A growing market confusionA growing market confusion
•• The question of luxury definitionThe question of luxury definition•• The question of luxury definition The question of luxury definition
U d t di th ifi lU d t di th ifi l•• Understanding the specific rules Understanding the specific rules of luxury managementof luxury managementof luxury managementof luxury management
©Jean-Noël Kapferer HEC Paris
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Luxury market is growingLuxury market is growingCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
Its highest perspective is in theIts highest perspective is in theIts highest perspective is in the Its highest perspective is in the BRIC countries BRIC countries
©Jean-Noël Kapferer HEC Paris
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Why does this market grow ?Why does this market grow ?There are more very rich peopleThere are more very rich peopleThere are more very rich people There are more very rich people
--Oct. 2009 : 130 Chinese billionairesOct. 2009 : 130 Chinese billionaires $$$$
--Forbes Feb 2010 : 1000 billionnairesForbes Feb 2010 : 1000 billionnaires
--The CLEWI index goes up , much The CLEWI index goes up , much g pg pmore than the regular price index more than the regular price index
©Jean-Noël Kapferer HEC Paris
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The gap grows between The gap grows between extraordinary and ordinary peopleextraordinary and ordinary people
©Jean-Noël Kapferer HEC Paris
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Why does this market grow ?Why does this market grow ?Copyright JN KapfererCopyright JN Kapferer
The democratization of luxuryThe democratization of luxury-- economic growth : middle class feels economic growth : middle class feels optimistic , is richer and wants to trade up optimistic , is richer and wants to trade up p , pp , p
-- women work and marry later women work and marry later
--« you are what you wear »« you are what you wear »
--access pleasure through shoppingaccess pleasure through shopping mallsmalls
©Jean-Noël Kapferer HEC Paris
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Luxury is correlated to GDP growthLuxury is correlated to GDP growthLuxury is correlated to GDP growthLuxury is correlated to GDP growth
©Jean-Noël Kapferer HEC Paris
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Why does this market grow ?Why does this market grow ?Copyright JN KapfererCopyright JN Kapferer
Because the mass wants to own aBecause the mass wants to own aBecause the mass wants to own a Because the mass wants to own a bit of what symbolizes the better bit of what symbolizes the better life of the happy few life of the happy few -- economic growth makes you go beyond economic growth makes you go beyond needs and liberates your aspirations needs and liberates your aspirations y py p
-- Luxury is consumption at its best : it Luxury is consumption at its best : it delivers rare intense emotions ( love , delivers rare intense emotions ( love , power, pleasure, pride, reward, social sign)power, pleasure, pride, reward, social sign)
©Jean-Noël Kapferer HEC Paris
p , p , p , , g )p , p , p , , g )
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Why does this market grow ?Why does this market grow ?Copyright JN KapfererCopyright JN Kapferer
Because people like luxuryBecause people like luxuryBecause people like luxury Because people like luxury
©Jean-Noël Kapferer HEC Paris
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People like luxuryPeople like luxuryCopyright JN KapfererCopyright JN Kapferer
1 t 10 IPSOS WLT
China 8.2China 8.2 HKHK 6.36.31 to 10 ; source IPSOS WLT
China 8.2 China 8.2 HK HK 6.36.3
Mexico 8 0Mexico 8 0 RussiaRussia 6 16 1Mexico 8.0Mexico 8.0 Russia Russia 6.16.1
India 7 3India 7 3 Italy 6 1Italy 6 1India 7.3India 7.3 Italy 6.1Italy 6.1
UK 7 3UK 7 3 Germ 6 1Germ 6 1UK 7.3UK 7.3 Germ 6.1Germ 6.1
USA 6 8 F 5 7USA 6 8 F 5 7USA 6.8 France 5.7USA 6.8 France 5.7
K 6 4K 6 4 J 5 6J 5 6©Jean-Noël Kapferer HEC Paris
Korea 6.4Korea 6.4 Japan 5.6Japan 5.6
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Why does this market grow ?Why does this market grow ?Copyright JN KapfererCopyright JN Kapferer
Why people like luxuryWhy people like luxuryWhy people like luxury Why people like luxury --It elevates them It elevates them
--It gives them pleasure, beauty ,style in lifeIt gives them pleasure, beauty ,style in life
--It gives them products with meaning , with It gives them products with meaning , with high quality out of the ordinaryhigh quality out of the ordinaryhigh quality, out of the ordinary , high quality, out of the ordinary , --With prestigious brands, known as visas With prestigious brands, known as visas of social distinction.of social distinction.
Saving the face becoming a personSaving the face becoming a person©Jean-Noël Kapferer HEC Paris
--Saving the face , becoming a person Saving the face , becoming a person
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Luxury is in dangerLuxury is in dangerCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
The middle class growth in manyThe middle class growth in manyThe middle class growth in many The middle class growth in many countries is a business opportunity countries is a business opportunity for luxury and for luxury and also a great dangeralso a great danger
To capture this huge demand massTo capture this huge demand massTo capture this huge demand , mass To capture this huge demand , mass brands imitate luxury , mimick its codesbrands imitate luxury , mimick its codes
How will luxury show its difference ,and How will luxury show its difference ,and
©Jean-Noël Kapferer HEC Paris
avoid running too after volume ?avoid running too after volume ?
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Confusion in the marketConfusion in the marketCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
Main Street brands imitate HighMain Street brands imitate HighMain Street brands imitate High Main Street brands imitate High Street brands , creating confusion Street brands , creating confusion between luxury and non luxurybetween luxury and non luxury
Today many mainstream brands useToday many mainstream brands useToday , many mainstream brands use Today , many mainstream brands use the codes of luxury (small series , top the codes of luxury (small series , top models ) : frontiers seem porousmodels ) : frontiers seem porous
©Jean-Noël Kapferer HEC Paris
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Unclear frontiersUnclear frontiers
©Jean-Noël Kapferer HEC Paris
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Unclear frontiersUnclear frontiersCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
Chanel’s worldly known designerChanel’s worldly known designerChanel s worldly known designer Chanel s worldly known designer Karl Lagerfeld partners with H&MKarl Lagerfeld partners with H&M
©Jean-Noël Kapferer HEC Paris
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Unclear frontiersUnclear frontiers
©Jean-Noël Kapferer HEC Paris
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Unclear frontiersUnclear frontiersUnclear frontiersUnclear frontiers
©Jean-Noël Kapferer HEC Paris
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Unclear frontiersUnclear frontiersCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
ZARA is a low cost producer butZARA is a low cost producer butZARA is a low cost producer but ZARA is a low cost producer but its stores do not look low costits stores do not look low cost
©Jean-Noël Kapferer HEC Paris
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Confusion in the marketConfusion in the marketCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
A lot of new terms come out everyA lot of new terms come out everyA lot of new terms come out every A lot of new terms come out every day adding to the confusionday adding to the confusion--new luxurynew luxury
--mass prestigemass prestige
--mass luxurymass luxury
--trading uptrading up
©Jean-Noël Kapferer HEC Paris--premiumizationpremiumization
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New terms add confusionNew terms add confusionNew terms add confusionNew terms add confusion
©Jean-Noël Kapferer HEC Paris
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Confusion:luxury or premium?Confusion:luxury or premium?
©Jean-Noël Kapferer HEC Paris
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Key source of confusionKey source of confusionyy
LuxuryLuxuryPrice
Premium
Brand
Mass Qualities
©Jean-Noël Kapferer HEC Paris
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L i t “ f i ”L i t “ f i ”Luxury is not “more of premium”Luxury is not “more of premium”Luxury
Price
Premium
Brand
Mass Qualities
©Jean-Noël Kapferer HEC Paris
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L i ifiL i ifiLuxury is specificLuxury is specificLuxury is not more of premium , or Luxury is not more of premium , or beyond premium or more expensive beyond premium or more expensive y p py p pthan premium : it is elsewhere ,than premium : it is elsewhere ,
Luxury is Janus: two indissociable Luxury is Janus: two indissociable facesfacesfacesfaces–– A A sociological facesociological face : it represents ,and : it represents ,and
bli l i t i l t tifi tibli l i t i l t tifi tipublicly incarnates social stratificationpublicly incarnates social stratification–– A A psychological facepsychological face : giving oneself: giving oneself a a
l d d f til d d f ti©Jean-Noël Kapferer HEC Paris
pleasure and dream of exceptionpleasure and dream of exception
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A turning pointA turning pointCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
Today, all these porous frontiersToday, all these porous frontiersToday, all these porous frontiers Today, all these porous frontiers recreate recreate a need of clear social a need of clear social markers of the latent verticalmarkers of the latent verticalsocial hierarchysocial hierarchysocial hierarchy…social hierarchy…
especially in soespecially in so called open orcalled open or… especially in so… especially in so--called open or called open or “classless” societies“classless” societies
©Jean-Noël Kapferer HEC Paris
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A turning pointA turning pointCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
Stripes and stars are backStripes and stars are backStripes and stars are backStripes and stars are back
©Jean-Noël Kapferer HEC Paris
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Status for everyday lifeStatus for everyday life
©Jean-Noël Kapferer HEC Paris
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What is luxury after all ?What is luxury after all ?COPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
©Jean-Noël Kapferer HEC Paris
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This is surely not luxuryThis is surely not luxury
©Jean-Noël Kapferer HEC Paris
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This is not luxury eitherThis is not luxury either
©Jean-Noël Kapferer HEC Paris
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Is this luxury ?Is this luxury ?
©Jean-Noël Kapferer HEC Paris
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Are they all luxury brands ?Are they all luxury brands ?
©Jean-Noël Kapferer HEC Paris
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What is luxury after all ?What is luxury after all ?COPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
No commonly agreed definitionNo commonly agreed definitionNo commonly agreed definition No commonly agreed definition that clearly separates it from super that clearly separates it from super premium or even mass prestige premium or even mass prestige
©Jean-Noël Kapferer HEC Paris
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What definition for luxury?What definition for luxury?What is luxury ?What is luxury ?
Traditionally the word luxuryTraditionally the word luxury applies to tangible goods , suggesting superior materials and designs sold in an upscale retaildesigns sold in an upscale retail environment
Bain & co .©Jean-Noël Kapferer HEC Paris
Bain & co .
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What definition for luxury?What definition for luxury?What is luxury ?What is luxury ?What is luxury ?What is luxury ?
«« Exclusivity premium pricesExclusivity premium prices«« Exclusivity, premium prices , Exclusivity, premium prices , image and status which combine image and status which combine ggto make them more desirable for to make them more desirable for
th th f tith th f tireasons other than function reasons other than function »»
T J kT J k©Jean-Noël Kapferer HEC Paris
T.JacksonT.Jackson
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What is luxury after all ?What is luxury after all ?COPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
What is luxury ?What is luxury ?What is luxury ? What is luxury ?
Another definitionAnother definitionAnother definition Another definition « Expensive rare objects with an « Expensive rare objects with an p jp jimage of good taste »image of good taste »
©Jean-Noël Kapferer HEC Paris
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What is luxury after all ?What is luxury after all ?COPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
Need to distinguishNeed to distinguishNeed to distinguishNeed to distinguish«« LuxuryLuxury » ( absolute meaning ) from » ( absolute meaning ) from LuxuryLuxury ( absolute meaning ) from ( absolute meaning ) from the happy few to the man in the street the happy few to the man in the street
«« A LuxuryA Luxury » ( relative meaning ) for a » ( relative meaning ) for a specific group trading up for morespecific group trading up for morespecific group trading up for more specific group trading up for more quality and prestige ,not the happy fewquality and prestige ,not the happy few
«« My LuxuryMy Luxury » ( purely individual )» ( purely individual )
©Jean-Noël Kapferer HEC Paris
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What is luxury after all ?What is luxury after all ?
Ab l t lAb l t l«« Absolute luxuryAbsolute luxury »: a consensus»: a consensus
Categories and famousCategories and famous brands held in the worldbrands held in the world as symbols of luxury
©Jean-Noël Kapferer HEC Paris
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©Jean-Noël Kapferer HEC Paris
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©Jean-Noël Kapferer HEC Paris
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©Jean-Noël Kapferer HEC Paris
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What is luxury after all ?What is luxury after all ?COPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
«« A LuxuryA Luxury » is a relative statement» is a relative statement«« A LuxuryA Luxury » is a relative statement» is a relative statement
F C h iF C h iFor some consumers , Coach is «For some consumers , Coach is « a a luxuryluxury », it gives them a feeling of extra », it gives them a feeling of extra yy , g g, g gquality , of prestige, above that of quality , of prestige, above that of ordinary bags Same for Lancelordinary bags Same for Lancelordinary bags . Same for Lancel , …ordinary bags . Same for Lancel , …
But the «But the « happy fewhappy few » disagree» disagree©Jean-Noël Kapferer HEC Paris
But the «But the « happy fewhappy few » disagree.» disagree.
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“ A Luxury “ is relative“ A Luxury “ is relative A Luxury is relative A Luxury is relative
In India « a luxury » is drinkable water for a majority of people but golden taps for a
©Jean-Noël Kapferer HEC Paris
minority
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What is luxury after all ?What is luxury after all ?COPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
«« My LuxuryMy Luxury » is very private» is very private«« My LuxuryMy Luxury » is very private» is very private
«« My luxuryMy luxury » is not «» is not « your luxuryyour luxury »»«« My luxuryMy luxury » is not «» is not « your luxuryyour luxury »»
What is rare and priceless for me may What is rare and priceless for me may p yp ynot be the same for you. «not be the same for you. « My luxuryMy luxury » » does not imply social comparison : it isdoes not imply social comparison : it isdoes not imply social comparison : it is does not imply social comparison : it is intimate and intimate and does not create a marketdoes not create a market
©Jean-Noël Kapferer HEC Paris
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Understanding luxuryUnderstanding luxuryCopyright JN KapfererCopyright JN Kapferer
HOW ECONOMISTS DEFINE LUXURYHOW ECONOMISTS DEFINE LUXURY
©Jean-Noël Kapferer HEC Paris
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Understanding luxuryUnderstanding luxuryCopyright JN KapfererCopyright JN Kapferer
HOW ECONOMISTS DEFINE LUXURYHOW ECONOMISTS DEFINE LUXURYPRICEPRICE
©Jean-Noël Kapferer HEC Paris
FUNCTIONAL BENEFITS
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Understanding luxuryUnderstanding luxuryCopyright JN KapfererCopyright JN Kapferer
HOW ECONOMISTS DEFINE LUXURYHOW ECONOMISTS DEFINE LUXURYPRICEPRICE
PremiumPremiumPremiumPremium
©Jean-Noël Kapferer HEC Paris
FUNCTIONAL BENEFITS
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Understanding luxuryUnderstanding luxuryCopyright JN KapfererCopyright JN Kapferer
HOW ECONOMISTS DEFINE LUXURYHOW ECONOMISTS DEFINE LUXURYPRICEPRICE
LuxuryLuxury
PremiumPremium
yy
©Jean-Noël Kapferer HEC Paris
FUNCTIONAL BENEFITS
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Understanding luxuryUnderstanding luxuryCopyright JN KapfererCopyright JN Kapferer
HOW ECONOMISTS DEFINE LUXURYHOW ECONOMISTS DEFINE LUXURYPRICEPRICE
LuxuryLuxuryArtArt
PremiumPremium
yy
PremiumPremium
FashionFashion
FUNCTIONAL BENEFITS
©Jean-Noël Kapferer HEC Paris
FUNCTIONAL BENEFITS
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Go beyond functionGo beyond functionCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
art for art ?art for art ?art for art ?art for art ?
©Jean-Noël Kapferer HEC Paris
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Luxury is close to artLuxury is close to artLuxury is close to artLuxury is close to art
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Luxury cultivates the artsLuxury cultivates the artsCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
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Understanding luxuryUnderstanding luxurycopy right J.N. Kapferercopy right J.N. Kapferer
What does Etymology say about What does Etymology say about the essence of luxury ?the essence of luxury ?the essence of luxury ?the essence of luxury ?
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Understanding luxuryUnderstanding luxurycopy right J.N. Kapferercopy right J.N. Kapferer
What does Etymology say about What does Etymology say about the essence of luxury ?the essence of luxury ?the essence of luxury ?the essence of luxury ?
LUXUSLUXUSLUXUSLUXUSL ti dL ti d l til ti lt f ilt f iLatin word «Latin word « luxatio luxatio », result of going », result of going apart , making a leap , apart , making a leap , a big gapa big gapp , g p ,p , g p , g g pg g p
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What chinese etymology saysWhat chinese etymology says
Big people / Lot of peopleBig people / Lot of people©Jean-Noël Kapferer HEC Paris
Big people / Lot of people Big people / Lot of people
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What indian etymology saysWhat indian etymology says
sanskrit : vitasarsanskrit : vitasarsanskrit : vitasar sanskrit : vitasar To dazzle , to impress To dazzle , to impress
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Understanding luxuryUnderstanding luxuryCOPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
What History saysWhat History saysWhat History saysWhat History says
The business of luxury goods hasThe business of luxury goods hasThe business of luxury goods has The business of luxury goods has been created by the collapse of the been created by the collapse of the y py paristocratic societies where strict aristocratic societies where strict
l hibit d th diff i fl hibit d th diff i frules prohibited the diffusion of rules prohibited the diffusion of luxury signs and goods (etiquette)luxury signs and goods (etiquette)
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luxury signs and goods (etiquette)luxury signs and goods (etiquette)
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Understanding luxuryUnderstanding luxury
What History saysWhat History saysWhat History saysWhat History says
By making it accessible luxuryBy making it accessible luxuryBy making it accessible, luxury By making it accessible, luxury business has grown on the basis business has grown on the basis ggof the drive for social imitation of the drive for social imitation
d th d ti i ht td th d ti i ht tand the democratic right to and the democratic right to happiness and hedonismhappiness and hedonism
©Jean-Noël Kapferer HEC Paris
happiness and hedonismhappiness and hedonism
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Understanding luxuryUnderstanding luxury
What is new today ?What is new today ?What is new today ?What is new today ?
Thi l ti h ti l t d thThi l ti h ti l t d thThis evolution has stimulated the This evolution has stimulated the consumption of luxury productsconsumption of luxury productsconsumption of luxury products consumption of luxury products but the central sociological but the central sociological function (signaling the social function (signaling the social stratification )stratification ) has been losthas been lost
©Jean-Noël Kapferer HEC Paris
stratification ) stratification ) has been losthas been lost
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Why luxury ?Why luxury ?COPY RIGHT J.N. KAPFERERCOPY RIGHT J.N. KAPFERER
A clear marker of a social gapA clear marker of a social gapA clear marker of a social gap A clear marker of a social gap YesterdayYesterday TodayTodayYesterdayYesterday TodayToday
AristocracyAristocracy MeritocracyMeritocracyyy yyAn obligationAn obligation Reward by Reward by demonstratedemonstrate signing one’ssigning one’sdemonstrate demonstrate signing one’s signing one’s your inherited rankyour inherited rank successsuccessyy
Noblesse obligeNoblesse oblige and accessing and accessing
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EtiquetteEtiquette elit pleasureselit pleasures
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RECREATING THE GAPRECREATING THE GAP
P i i l f l tP i i l f l tPrinciples of luxury managementPrinciples of luxury management
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Luxury : reLuxury : re--create the gapcreate the gapLuxury : reLuxury : re create the gapcreate the gap
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Luxury fashion premiumLuxury fashion premiumLuxury , fashion, premiumLuxury , fashion, premiumLuxuryLuxuryLuxuryLuxury
Social elevationTimelessS lf di ti ti
PricelessHedonism
Self distinction SuperlativeGiftDreamDream
Tribal differentiation Performances / Price
F hi P i
Tribal differentiationImitation Ephemeral
Performances / Price Rational InvestmentComparative
Seduction Realism
©Jean-Noël Kapferer HEC Paris
Fashion PremiumFrivolous Seriousness