Luxury, Prestige or Premium: Where Does Your Product Fit?
Luxury is one of those things that’s hard to define, but everyone knows it when they see it.
We each have our own sense of a luxury item or a luxury experience, and it varies widely from person to person. One person’s luxury may be another’s waste.
People use different names for luxury. Words like ‘prestige’ and ‘premium’ are seemingly interchangeable with 'luxury'. However, they are different, as you’ll soon find out.
Even experts in the luxury industry can’t agree on a single definition of luxury. Most definitions include two attributes: expensive and exclusive. For example, a very high-priced item within a category of goods is generally seen as a luxury.
Others define it this way: You’re a luxury company if your peers say you are. Luxury is in the eye of the beholder. While a bit ambiguous, there’s a lot of truth to it. Who better to decide if you’re a luxury brand than your competitors?
Here are the typical dictionary definitions (from Merriam-Webster Online):
- A condition of abundance or great ease and comfort.
- Something adding to pleasure or comfort, but not absolutely necessary.
- An indulgence in something that provides pleasure, satisfaction or ease.
- In economics, a luxury good is a good for which demand increases more than proportionally as income rises, so that expenditures on the good become a greater proportion of overall spending.
But for most people, the single distinguishing aspect of luxury is this: guilt. We all feel a sense of indulgence, almost shame, when we consume something much more expensive than we normally pay.
Of course, along with that guilt comes a sense of pleasure, perhaps even immense pleasure and satisfaction. That’s the whole point!
And that is where we get into trouble when we extend the notion of luxury outside the traditional world of luxury goods. If you associate luxury with Gucci handbags, Cartier watches, and Bugatti cars, you’re in bounds. But tag it to something like a bulldozer and you’ll get strange looks. Who would want (and pay for) a luxury version of something designed to move dirt?
That’s a good question, but not the right question. The right question is: what if a bulldozer manufacturer such as John Deere or Caterpillar had an extreme performance version of their mainstay product, a version so remarkable that it would turn heads, unique in its design, materials and manufacture process, involving only the world’s most competent engineers and scientists, and unlike anything else in the market? Almost gilded, so to speak?
Well, that question is what I address in my latest book, Adding Prestige to Your Portfolio. I describe a detailed process to take any product or service and transform it into a luxury version.
There are many important reasons to do this. Simply put, creating an extremely high-end version of your product or service raises the bar in everything you do. The point is not necessarily to sell a lot of them, but rather to create a new benchmark by which everything you do will be measured.
Doing this is saying to the market, “Hey, if we can build a ‘gilded’ bulldozer, imagine how good the rest of our products, services and processes are!”
There are more potential benefits from adding a luxury version to your portfolio:
- Build new competencies: Creating a luxury option in your portfolio will force you to acquire new skills, knowledge and behaviours.
- Enhance Recruiting and Retention: A high-end, prestige product or service draws attention from talented would-be employees, and it helps retain the talent you have now.
- Energize Your Product and Service Development: Adding prestige will lead you to new performance opportunities, new designs and perhaps new materials sourcing.
- Strengthen Your Supply Chain and Distribution: Along with a prestige offering comes a new supply chain and distribution mindset. How do we do the best job in the industry servicing our customers?
- Build Competitive Muscle and Grow: Extending your product and service offering opens up new markets and gives current customers opportunities to spend more with you.
Despite these benefits, many will resist the notion of luxury and avoid associating with it because of that single, distinguishing feature of luxury mentioned earlier: guilt.
Businesspeople in non-traditional sectors and categories shun the idea of buying an item considered a luxury. That is where the prestige comes in.
Think of prestige as luxury without the guilt. A prestige item is every bit as rare, exclusive and expensive as a luxury good, but without the negative baggage associated with luxury.
“Consuming luxury is wasteful and irrational,” some will say. Prestige, on the other hand, gives us a way to express luxury-like sentiments with items to convey they are acceptable to consume- that taking advantage of these goods and services is not wasteful or irrational, but in fact prudent and savvy.
Where does premium fit in? I think of premium as a step above the ordinary version of a product or service, but a step right below the luxury and prestige versions.
Companies tend to intermingle them in their marketing campaigns. Look at Lexus or Mercedes. Are their cars luxury goods? Premium? Prestigious? Perhaps a little of all three? Now you start to see why consumers are confused.
I like to think of a luxury good and a prestige good as the same in terms of their qualities: masterful solutions, best performing in their category, rare and exclusive.
Calling something prestige outside of the traditional luxury sector lets you get away with creating or consuming such a remarkable product without the guilt normally associated with the extravagances of traditional luxury goods. It tends to legitimize luxury for those who shun it.
Semantics aside, all companies should stop and consider prestige and luxury as a growth strategy, a way to add value both internally and externally, and a compelling way to make the firm more competitive.
Adding prestige to your portfolio is building muscle. It’s building brainpower. And it’s building brand power – a way to put your reputation far ahead of your competition and solidly in the hearts and minds of your customers.
Would you buy a gilded bulldozer? Probably not. Would you buy a regular bulldozer from a company that had the capability to build such a marvellous machine?
That is the right question.