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Advancements in Luxury Management and why Research is so Important

10th September 2018 | Benjamin Berghaus

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Luxury is an indulgence – not only by itself, but also as a subject for work or research. I’d argue that today is a great time to work yourself into the field of luxury research (research on consumer, managerial and organizational behaviour related to the market), but that has not always been the case. Allow me to share my perspective on when I first started my research in luxury. There were three distinct problems: 

1. Luxury seemed an ill-defined subject, and ill-defined subjects do not necessarily lend themselves for preparing project proposals.

2. Luxury was doing better than most other sectors and this success invited the reasonable objections to focus on those areas of the management field that actually provide challenges.

3. The jury was still out on whether luxury businesses needed a different kind of management than other businesses. Critics pointed out that luxury was merely a marketing strategy decision, which was well within the bounds of established management insight. 

These are factors that can easily dissuade someone from conducting luxury research; if you cannot easily define it, if the phenomenon does not provide much hand-wringing and head-scratching, and if you are not entirely sure that the subject has been captured from a reasonably similar angle, you’re probably advised to steer clear.

However, this is the wrong recommendation. Here’s why these three reasons have changed: while the definitions remain wonderfully challenging, there’s now a community engaged to forge them; the luxury industry as finding its headwinds in the past years; and the discussion on whether luxury is different from traditional managerial challenges remains open. 

The management of luxury has advanced beyond marketing and branding questions

Today, there are luxury-focused conferences, and a growing number of explicitly luxury-focused papers admitted to high-ranking academic journals. A diverse community has now emerged from a range of different disciplines – not only management specialists but also historians, psychologists, sociologists, economists and design experts. Where the engagement for luxury research has previously been limited, there is now a field of highly engaged scientists and the infrastructure to establish a flourishing luxury research community. 

While in 2010 the luxury market outpaced almost every other sector with double-digit growth, the impact of the financial crises of 2008 and 2009 was still felt. Although the shocks to the luxury market originated elsewhere, structural weaknesses slowly crept into the luxury industry through growth yields, the expectation of more growth and failure to deliver, commercial performance and brand assets. Growth in China became increasingly difficult – with or without Hong Kong’s crisis or Xi Jinping’s crackdown on corruption – and other parts of the world became harder, as third-tier markets proved less fertile. Meanwhile, previous growth created expectations that became even harder to meet. How can you avoid jeopardizing the successful image of growth without risking the prestige of luxury distinction? 

Arguably, luxury built its own set of problems by essentially outperforming its own foundation for profitability. However, there are still ample opportunities and demand for research on marketing strategy, organizational tactics and consumer insight, to help steer the delicate construct of commercial creativity today.

How does luxury management differ from other types of management?

Many organizations will argue that catering to the luxury market is not very different from managing any other organization. Yet, the key value in luxury marketing resides in generating something better – rather than just by being more efficient. 

Nowadays, the market environment is different: luxury brands find themselves in positions where generating positive narratives is more difficult. Luxury brands run the risk of feeling old-fashioned when struggling to adjust to rapidly changing consumer preferences, and their growth impetus is restricted by having already tapped into most markets, thus needing to prioritize the penetration of markets – a goal that requires entirely different skills. 

Now, it becomes more obvious that managing luxury brands is different from managing brands in the main market of corresponding sectors: luxury brands don’t sell products - they sell expectations, experiences, and continuity. In the main market, those who are agile in transformation are being heralded; in the luxury market, those who transform or attempt agility, are at risk of being ejected from brand Olympus into mainstream market Valhalla, where it becomes a ‘sell-out premium’ if not ‘short-lived fashionable brand’.

Thus, we should look at organizations that do not only operate in markets that work differently but also require seemingly different approaches and solutions to different challenges. Whereas for most businesses, there is one way to go keel-up – simply failing to be profitable for too long - luxury businesses can exit the market by either failing commercially or failing to be a luxury brand. 

The need for luxury research today

Luxury today is not only a reasonable but a required research field. While it is reasonable to ask for as much integration as possible in existing theoretical frames, the luxury market provides many unique challenges that require counter-intuitive solutions. It is possible that bridges between luxury-specific findings and general managerial theory will be found, but you need bridgeheads before you can build those bridges.

By integrating these perspectives, it’s clear that there has never been a better time to do luxury research – or at least as good a time as when Veblen wrote his legendary rant on the upper class. What differentiates our times from his, is that we can build upon community-based research infrastructures, an attentive managerial audience, and the inspiring challenge of the management of luxury to identify worthwhile perspectives to improve luxury management completely.

To engage the subject, our recently updated second edition of The Management of Luxury can provide you with a first glimpse of the versatility of management challenges and instances of peculiar consumer behaviour. This book can get you started and help you find your bearings when deciding where to start your research project and which challenges to take on.


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