Building a luxury brand marketing strategy is not easy. You’re targeting a niche audience, incentivizing them to make a significant investment in a product that is not a necessity. This means you have to go deeper than product features to create something that sells. So you definitely don’t want to be making these luxury brand marketing mistakes.
Whether your luxury brand has recently jumped on the ecommerce bandwagon or has been in the game for a long time, your branding is what gets you noticed and sets you apart in the market. Distinguishing yourself becomes even tougher when you’re a luxury brand because you’re selling high value products and competing with those selling similar products for low value.
So as a business, you aren’t just competing for attention, but also proving your worth: this is where your branding can make or break your success. After working with hundreds of luxury brands, here are some of the common mistakes we found that can kill your luxury business.
7 luxury brand marketing mistakes that is destroying your reputation and sales
Not pricing your products right
When it comes to luxury brands, pricing can probably be one of your best marketing tools. Customers consider pricing as a strong indicator of what the brand is about and build their perception of the brand based on it.
Pricing mistake # 1: Pricing your luxury products too low
Although the law of demand states that low pricing attracts more purchases, the complete opposite is true for luxury products. However, luxury product prices stay unaffected by supply and demand forces. Infact, when it comes to luxury products, higher prices are perceived to carry greater value and this fuels a rise in their demand.
Luxury brands need to price higher than what the market expects, to push up its perceived value. When people pay for a luxury product, they are paying for more than production costs, the materials used or the effort that went into creating the product. They pay for exclusivity, prestige and uniqueness which are intangible assets of the brand and bring with them an Added Luxury Value (ALV). Added luxury value includes several factors like:
- Quality, refinement, and performance
These are the qualities that make high-end consumers perceive the product as one-of-its-kind and make them willing to pay for it.
However, when luxury brands price their products too low based on cost and margin expectations, consumers perceive a lack of ALV and end up not buying from the brand.
Pricing mistake # 2: Pricing your luxury products based on competition
Competitive pricing is a common pricing strategy used by all brands. However, it may not be effective in the case of luxury brands.
A brand’s perceived value is a huge driving force in the luxury sector. When you alter your prices in tandem with your competitor’s, you build the perception of having the same brand value as your competitor’s. This not only affects the brand’s true value but also erodes its appeal in the mind of its customers. This is because lowering prices in response to your competitor’s pricing tends to diminish the value of the products and services in the customer’s mind. This, in turn, reduces the seller’s power to maintain profitable prices in the long run.
A solution to this is Value-Added Pricing. This is a common response to tackle a competitor’s lower-priced products. In value-added pricing, you do not lower your own prices but in fact provide value-added features to your product to justify the higher price. These value-added features are meant to provide customers with a product or service that are of higher value and allow the business to charge customers a higher price compared to their competitors.
Pricing mistake # 3: Using charm pricing method resulting in uneven pricing
Charm pricing (also known as psychological pricing) is a common pricing tactic used by companies to trigger an emotional response in customers and drive them to take action. Using charm pricing, companies set their product’s prices at odd numbers, making customers perceive the products to be cheaper and psychologically convince them to buy their products.
Charm pricing tactics like pricing your product $4997 instead of $5000 is a very common practice among brands. And it will probably incite you to do so as well.
This strategy doesn’t work for luxury products as high-paying customers don’t need to be “tricked” into thinking they are spending less for the product. If you are a luxury brand, your pricing should be bold, assertive and direct.
Consumers buying from luxury brands consider their purchases as investments. They are confident and empowered enough to pay the full price of the product and value their purchase more than saving some money on it. Being bold and assertive about your pricing equates your products with quality and makes the value of their investment clear. Your customer base is smart enough to know when you’re using psychological pricing tactics.
Not having a clearly defined brand strategy
A brand holds an identity that consumers choose to align themselves with, and is more than just a name and logo. Consumers seek out luxury brands because they are synonymous with class, exclusivity, material wealth, and status, ideas that they like to associate themselves with. Purchasing from a luxury brand makes it a part of their identity.
Rolex masters the branding game by creating Copy that captures Its Brand Voice and Personality
Therefore, brand storytelling in luxury becomes extremely important and acts as the key driver of the brand’s perceived value. A brand’s story has the power to impact its sales and drive revenues. A common mistake made by luxury brands when they tell their story is being too vague in their brand story.
Going for something like “we have mastered handmade craftsmanship” is irrelevant to a consumer who is seeking out a reason to buy from a brand.
Your brand storytelling will be deemed successful if it drives an added luxury value (ALV) to your brand. Take your time to define what you stand for, what makes your products unique, who your target customer is, what do you value the most, what style you want associated with your brand. To engage and interest your customer with your brand story, you need to be able to define what your brand does the best compared to anyone else in the market.
Understand that unlike mass-produced products, luxury products reflect the luxury value of your brand instead of features and specifications. Keeping this mind, you craft your brand story based on what feelings you wish to invoke within your customer.
Trying to widen your customer base through entry-level products
One of the most common mistakes luxury brands make is trying to expand their customer base by introducing entry level products. They do so by offering a lower-priced product line in an attempt to capture a different target segment.
This move ends up hurting the luxury brand as it’s now no longer known for its exclusivity.. Buyers who shopped from their high-end product line start to believe that their purchase is devalued because now the brand is no more positioned for luxury-only products and becomes affordable by anybody. They stray away from their brand identity and often suffer great financial losses because of this.
For instance, when a luxury fashion brand decides to launch a more accessible streetwear collection to provide “affordable luxury”, they may witness growth in the form of sales in the beginning. But eventually they lose their perception as a luxury brand as customers stop buying from the top-end line.
Not leveraging FOMO to increase brand desirability
FOMO is shaping the luxury market now more than ever. Brands worldwide leverage FOMO to play with customer psychology and drive huge sales in short periods of time.
The Exclusive access
Luxury brands associate with exclusivity and often use scarcity as a tactic to push for that exclusivity. They are fueling demand by creating limited-edition products and deliberately limiting inventory to create a sense of urgency and hype up demand.
For example, Louis Vuitton launches limited-edition products from time to time to reinforce a desire to own a scarcely available product. These items become must-haves and elevate an owner’s status.
Brands leverage anticipation buildups and social media hypes to heighten their brand image. Exclusive partnerships like Louis Vuitton x NBA or Gucci x Balenciaga are more about improving brand equity than driving sales. Infact sales automatically rise with such partnerships, with the most in-demand pieces selling out instantly.
Another example was the hype created by the collaboration of streetwear label Supreme and the LVMH-owned luggage brand Rimowa which led to their special edition red aluminium case getting sold out in 16 seconds in 2018.
Loyalty rewards are a great way to offer preferential treatments to your loyal customers and lock them into brand relationships. Tiered loyalty programs like Sephora’s Pink, White, Black, and Gold levels incentivize customers to spend more in anticipation of higher value rewards.
Some luxury brands like Clarin’s platinum level also offer experiential benefits for more high-end customers like beauty workshops, complementary luxury face and body treatment and exclusive invitations to VIP events.
Not giving your customers an unforgettable shopping experience
While luxury brands nail their in-store experience, they are often slow to adopt innovative online tech to elevate their online experience as well. A research by Klarna revealed that almost half of shoppers who buy luxury items found they could not get the same luxury experience online as in-store. When luxury brands don’t provide an unforgettable online experience, they are missing out on significant revenue.
Moreover, when online shoppers pay for high-priced luxury products, it is human nature to want to feel more on the expensive side during their shopping experience. With digital platforms being limited to visual and auditory stimuli, businesses need to be innovative in digitally amping up the looks and feel of their luxury products.
If your online store site does not reinforce your brand and does not offer a luxurious shopping experience (basically, the user experience on your site is bare minimum and doesn’t scream LUXURY), you’ll lose out on a huge revenue stream driven by online shoppers. If you want your visitors to have an unforgettable shopping experience, leverage online tech to provide them virtual try-ons, product customizations etc.
Tiffany & Co’s Engagement Ring Finder app allows customers to virtually try on a whole slew of engagement rings on your fingers and find the perfect fit and style
Quickly jumping on trends
Brands often chase viral social media trends in an attempt to gain visibility. While jumping on a trending idea can accelerate your business (give, you do it right), it may not be the right move if you’re a luxury brand.
When it comes to trend-setting, luxury brands are the ones to set trends and the rest follow. Luxury brand marketing is synonymous with staying cool, calm and collected whereas viral trend-chasing is an anxious form of marketing.
Chasing viral trends without thinking about whether they align with your brand messaging or not shows that your brand lacks confidence and is in a rush to attract customers. All of which is not how a luxury brand should be perceived.
Using templates rather than curated designs
Nothing destroys a luxury brand’s perception than commonly used templates (whether it’s for graphics, website, content or video) that you’ve seen before. A good luxury branding strategy will include customized templates for their marketing activities to give a one-of-a-kind look and feel to their customer.
Every element of your luxury brand should be curated to reflect your brand’s vision, tone and aesthetic. Creating a clear, actionable luxury brand strategy will attract your target audience and build your reputation. While this can be an expensive investment, it will reap you benefits in the long run.
Here’s an example – right from the cover to the video, Gucci is careful about all the elements they put to use for their luxury brand marketing:
Are you making these luxury brand marketing mistakes?
If you’re making the above mistakes with your luxury brand, it is time to modify it. While building your branding strategy, it is essential to not lose sight of your target audience: the elite who are ready to shell out thousands of dollars to acquire quality, status, uniqueness and an experience that you offer.
Luxury brand marketing is an evolving process. While your branding strategy should remain constant across all marketing verticals, it is important to continue to evolve it as you grow. You will learn new things from your customers and your market will change; so make sure you’re adapting to it!
Not sure where your luxury branding and luxury brand marketing strategy stands?
Reach out to us for an audit and consultation.