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8 Elements to Consider to Understand a Luxury Product

Updated: Apr 13

The traditional marketing mix model of the four P's, namely product, price, place, and promotion, is a great foundation to understand luxury, but it requires a few adjustments. First, we need to extend the model to the now classic 8 P's by adding people, processes, physical evidence, and planet… But each one of these dimensions also needs to be refined to better capture the unique characteristics of the luxury industry. In this series of 8 articles, we dive deep into the definition of luxury and its strategic implications, starting with Product.


The Essence of a Luxury “Product”


The definition of a luxury “Product” extends beyond just the item or service. In the context of luxury hospitality for example, the product is a multifaceted concept that encompasses the decor, location, and the breadth of services offered. The location is particularly important: Being located on the Champs-Élysées in Paris or overlooking Central Park in New York is obviously an integral part of the Product itself. But for guests, even more important than the characteristics of the Product or its location is the experience of staying there… Experience, while stemming from the product, encompasses more than the product itself. Take for example the experience of owning a luxury car… It is not limited to the car itself, it includes the experience of buying it, the personalisation, the wait, the excitement of the delivery, and the pleasure every time you drive it of course. It is ultimately part of the Product, or rather an emanation of its exceptional characteristics, but in the field of luxury, we will consider the experience in its own right. A major difference with the Product is that the experience is subjective and personal, it can therefore be improved and enhanced through personalisation and special attention that would not be possible outside of luxury. To reflect this specificity and to keep the P’s intact, we will name this dimension the Perceived experience.


The Allure of Pride


Now, if you’ve ever driven an expensive car, you know that there is another part of the experience that is special, and that’s the looks you get... Your experience with a luxury car extends to the pleasure of having the keys in your pocket or displayed on a table at lunch, and even to the car’s app on your phone. Same when you are entering a luxury hotel, or casually mentioning you are staying there, there is a feel to it, a kind of pleasurable enhancement of the ego, a thrill… You see, the feeling of owning a complex and powerful product, or of using a refined and exclusive service, is something special. It is an emanation of the experience as the experience itself is an emanation of the Product. But it is strong and very important in luxury, so we will name it and with a straight P this time: We’ll call it Pride. That gives us a trio of concepts to better encapsulate the holistic dimension of the luxury product or service: Product, Perceived experience, and Pride. These are refinements but necessary ones because of the diversity of the luxury industry: When you consider a product such as a suit, a car, or a phone, you set a frame of characteristics, features, and purpose that are enough to describe them, but they are insufficient for luxury products. Consider this: What are the most important characteristics of luxury cars? Are they the same as for your regular Toyota? What are the required features of a $10,000 dress? What is the purpose of a $1 million phone? Perceived experience and Pride partly answer these questions. But there is another dimension to consider…


Unveiling Luxury's Spectrum


It is important to grasp the subtle nuances that distinguish varying levels of luxury, and also the interesting question of “Where does it start?” You can think of the levels of luxury as related to their price range: A Porsche is definitely a luxury car, but not in the same price range as a Buggati. And even in the same brand, the levels can vary greatly: Take a Cartier love bracelet, it is a beautiful luxury product but clearly not in the same category as a Panthère bracelet - a piece of high jewelry covered in diamonds - which is more than a hundred times more expensive. While it would be easy to reduce the level to the price range, the price is actually a consequence of the level of luxury, not the other way round, and we should therefore consider it as a dimension in itself. We will call it Power first because it starts with a P, let’s be honest; But it is also linked to the power of the brand and the power of the object in itself and its impact on people...


Luxury is a spectrum, and the level of luxury, or Power, is a continuum. In the hotel industry for example, this is exemplified by the numerous rating systems and their nuances. While all five-star hotels represent a high level of quality, there are huge differences within the category: Consider a five-star hotel at the airport for example, compared to a five-star trendy hotel in Ibiza, compared to the Savoy or the Ritz… Doesn’t feel the same, does it? A great rating system to exemplify these differences is the Michelin-star distinction for restaurants: A one Michelin-star restaurant is said to be exceptional in its category, and in my opinion, that is where luxury starts. A two-star restaurant is 'worth a detour', and a three-star is 'worth the journey'.


This three-level scale is also effective for categorizing hotels: The highest tier isn't just about being a five-star property; it's about being a destination in itself, a place worth traveling to for its own merits. When a new luxury property opens, it usually goes through such a period where media coverage and the inherent novelty of the opening drives guests from all over the world, interested in discovering the latest trends, architectural prowess and innovations. The hotel is therefore ‘worth the journey’. For three Michelin-star restaurants, this stays true in time as travelers usually organize their journey around the gastronomic experience, adding a tour of the surrounding area to complement the trip to the restaurant, not the other way round. Many international guests would never have visited that region were it not for the three Michelin stars... Now, we can further refine this concept of Power to better encapsulate the broad spectrum or levels of luxury, and research can help.


Deciphering Luxury Through Seven Key Characteristics


A research study from 2012 - http://dx.doi.org/10.1057/bm.2012.11 - identified seven key characteristics that define a luxury product or service: qualitative, elitist, creative, unique, distinct, refined, and strong. Each dimension plays an important role in shaping the luxury experience, contributing to the overall perception and value of a luxury brand or product, and defining its actual level of luxury. We will review each one of these seven dimensions with the help of an example, the Burj Al Arab hotel in Dubai, often acclaimed as the most luxurious hotel in the world... 


Qualitative

Quality is almost a synonym for luxury. With an investment of one billion dollars, the Burj Al Arab exemplifies what luxury can cost. This investment is reflected in every aspect of the hotel, from its construction to its operations. It is a commitment to quality that ensures each guest's experience is nothing short of extraordinary. Quality is also made evident in the hotel's online ratings, almost perfect... Quality is non-negotiable in the luxury industry, and we are talking about the incomparable, extraordinary, and time-resistant level of quality that makes luxury truly exceptional.


Elitist

The Burj Al Arab stands as a towering example of elitism, literally meaning that few people can afford it. This dimension is perfectly illustrated by the hotel's pricing, with rates rarely starting below 1000 Euros a night. But the elitist aspect is further underscored by the fact that the hotel only offers suites, no rooms, demonstrating a high level of exclusivity for all guests. Access to the hotel is also restricted by its position on an artificial island; and one usually needs a reservation to enter the grounds. The elitist approach to luxury is about creating an environment where customers feel special. Here, it is the product or service that showcases your belonging to the happy few.


Creative

In terms of creativity, the Burj Al Arab is a standout. Its unique architectural design, resembling a huge sail between the desert and the sea, is visually striking. The hotel's artificial beach adds to the technical prowess, offering a unique blend of nature and human ingenuity. In luxury hospitality, creativity is about offering experiences that are not just luxurious but also imaginative and unexpected, which is precisely what the Burj Al Arab achieves with its distinctive design and services. Creativity is a must-have in luxury because it is what sets it apart, what makes a luxury product akin to a piece of art, rather than a mass-produced object. The artistic, hand-made or tailored aspect of a luxury product or service is essential because it adds value beyond the classic production-cost approach, which in turns justifies the price premium.


Unique

The uniqueness of the Burj Al Arab is evident in its situation and design. And with only 200 keys, the hotel ensures a level of exclusivity that is rare in Dubai. Interestingly, the hotel offers a reception on each floor, which adds to the unique aspect of the guest experience, making it more intimate and tailored. Standing as the world's tallest hotel when it was built, the Burj Al Arab was indeed unique. And it has therefore become iconic, one of the few iconic hotels in the world actually, and it is today totally part of the identity of the destination, Dubai. The uniqueness of luxury products is a psychological dilemma, akin to the suspension of disbelief in storytelling. Because luxury products and services are clearly not unique, a sense of uniqueness must be instilled somehow. We talk about relative uniqueness, where one accepts to be “One of” the only ones to possess this item or enjoy this service, instead of the one, which would be the case for a piece of Art for example..


Distinctive

Distinctiveness in luxury means that something adds to your image, shows who you are… It is perfectly encapsulated by the Burj Al Arab’s name, as staying there is in itself a statement of wealth; but is it gracefully enhanced by its impressive fleet of Rolls-Royce. The use of Rolls-Royce cars for guest transportation is a prime example of how the hotel differentiates itself from others. It's the kind of detail that leaves a lasting impression, creating an experience that is not just luxurious but also memorable. Something distinctive sets you apart, and it means it has to show. This dimension is linked to the dimension of Pride as seen before, and it is highly personal and psychological. Consumers of luxury products must agree that the product or service they buy actually adds to their quality as an individual, to their own distinctiveness.


Refined

Refinement at the Burj Al Arab is seen in the opulent, attractive, and dazzling décor, but also in the exceptional level of service offered. The hotel’s décor, rich in gold accents, adds to the refined atmosphere, ensuring that every aspect of a guest's stay is steeped in luxury and elegance. And with a staggering staff-to-room ratio of 8 employees per suite resulting in a total of 1600 employees, the hotel exemplifies refined service. This level of staffing ensures that every guest's needs are anticipated and catered to with meticulous attention. Refinement is linked to creativity but it goes beyond the creative dimension to express a particular attention to detail, especially important in luxury service and in hospitality. A high level of refinement also implies a high level of personalization of the product or service, and it is only possible with the adequate processes and resources, including staff, which at least in hospitality, justifies the premium cost.


Strong

This final quality has a special flavor to us as it is directly linked to the dimension of Power and actually named “powerful” in the original research. But strength means that a product or service is known and respected, or for a brand, that it is admired and resilient. Power is the resulting characteristic of all these qualities. Strength is again vividly illustrated by the Burj Al Arab's iconic architecture and how famous it is, a luxury brand or product needs to be known as a leader in its domain. The hotel's sail-shaped structure, resilient against the desert winds and standing on its artificial island, symbolizes strength. The hotel's strength is further underscored by its association with Sheikh Mohammed bin Rashid Al Maktoum who drove the project to completion, adding to its prestige and status. The hotel commands recognition and respect as its name alone in Dubai is synonymous with luxury and exclusivity. In the world of luxury, this kind of strength extends beyond the physical; it is about the prestige and influence the brand holds in people's minds, shaping the perception and commanding respect for guests and owners.


Conclusion: The Quintessence of Luxury

To encapsulate the complexities of luxury, we have extended the definition of Product in the marketing mix with three additional dimensions: Perceived experience, Pride, and Power. Perceived experience is a description of the luxury experience for someone, emphasizing the individual and subjective nature of this dimension. Pride relates to the particular feeling of ego enhancement that consuming luxury provides, and how important it is to be able to share it. Power, finally, captures the importance of considering the different levels of luxury, defined through seven essential characteristics: elitist, creative, unique, distinct, refined, qualitative, and strong.


For luxury brands, the actionable insights from this framework include enhancing the Perceived experience and cultivating Pride in ownership, which naturally amplify a product’s appeal and foster a community of brand advocates. The immediate benefits are significant: improvements in Perceived experience, Pride, or Power directly enhance a product's luxury perception, leading to reduced price-sensitivity, increased word-of-mouth, media, and social media coverage, and VIP’s and influencers’ attention. In essence, optimizing the dimensions of Product, Perceived experience, Pride, and Power allows luxury brands to redefine excellence, ensuring their enduring relevance and success in this very competitive market.



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