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Luxury or premium? Ce n’est pas la même chose


Like many terms once used to denote very specific notions, the word “luxury” today is applied indiscriminately to anything expensive. Understanding the difference between premium and luxury can make or break your brand.

From Ciroc to Cadillac, more brands than ever like to think of themselves as players in the luxury market. But are they really? Can a rearview camera, extra leather and premium price transform a small truck into a luxury vehicle?

What is the difference between luxury and premium? Are there different degrees of luxury? Or is it something you either are or not?

In time, marketers who can’t quite answer these questions will find themselves unable to sustain the healthy margins of luxury and instead competing on price and features.

To help shed some light on the issue, here are 7 key observations from the world’s profitable brands:

  1. Luxury dominates: it is consumed to elevate us, and therefore it can’t be “our peer”. It treats us with utmost respect, but always keeping its distance.
  2. Like art, luxury is driven by its creator’s inspiration, not by consumer demand. It doesn’t follow consumer tastes, it creates them.
  3. Luxury needs to cater to “those who know”, who understand the subtleties, appreciate the craft, revel in the myth. The others will follow by imitation, but without a core of passionate connaisseurs (the proper terms for someone who “knows”), a luxury brand is destined to disappear as such.
  4. Luxury is both eternal and ephemeral: Created 1921, No.5 is still Chanel’s best selling fragrance. but sprinkles of disruption can help design stay relevant (Stephen Sprouse inspired graffiti on LV’s bags)
  5. Luxury doesn’t speak in USPs. It is not a product, a price, a set of features. It is a UNIVERSE defined by carefully groomed ingredients like its history (since 1876), its creator (Gabrielle Chanel), its craftsmen and their attention to detail, its myths (Cliquot overcoming Napoleon’s blockade to ensure supply to Russia’s imperial court), visual cues (Louis Vuitton’s LV) and stories told among users and connaisseurs (Panarea watches used by Italian submariners in WWII.)
  6. Luxury brands focus on excelling at 3 things: product, distribution and communications, so that consumers forget about the fourth: price.
  7. Luxury seeks to fuel desire, not sales: employees at LV stores do not earn a commission on their sales. Luxury never advertises price, but if it must be disclosed: it’s $15,000 and never $14,990.

But perhaps a more colorful way to define luxury is spelling out what it’s not. In the words of Coco Chanel: “Luxury lies not in richness and ornateness but in the absence of vulgarity”.

Mademoiselle, chapeau.

Chaco Papers are executive summaries of extensive research conducted to inform our work for various projects. If you would like to learn more about this or any other Paper contact papers@chaco.cc.  The content above was itself informed by “Luxe Oblige” by V. Bastien and JN, Kapferer
PREV LINDA LEE, CMO CAMPBELL’S.
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