Leveraging Luxury Brands: Prevailing Trends and Research Challenges

2016 
IntroductionAlthough luxury branding has become extremely important, it is a seriously under-leveraged area within the current brand management research (Uggla, 2014). In the 18th century, sociological acceptance of luxury was enabled through the advent of liberalism (Smith, 1776). Several trends, such as the division between luxury and morality (Hume, 1752), the emergence of the bourgeoisie after the Industrial Revolution, the increased independence and emancipation of women, and the trend towards general democratization (Kapferer and Bastien, 2009), converged to create an emergent market for luxury goods, thus creating and reiterating a process of social stratification among customers and segments in a market (Kapferer, 1991 and 1997; and Dubois and Paternault, 1995).According to Keller (2009), luxury branding is in many ways one of the purest examples of branding that exists within the realm of strategic marketing and "Luxury brands are perhaps one of the purest examples of branding, as the brand and its image are often key competitive advantages to create enormous value and wealth for organizations" (Keller, 2009).In general, a luxury brand has a deeper and richer extended brand identity as compared to more mundane brands (Aaker, 2004). It also has a more subtle brand personality and stronger brand credibility and brand integrity (Berthon et al., 2009; Lopez, 2015; and Seo et al., 2015).Furthermore, distinct segments as well as blurred segments appear within the market (Dall and Lacroix, 2003). For instance, casual and accessible luxury has become a major trend. If Zara is a price/value brand from the Inditex Group, Massimo Dutti is a casual luxury brand representing accessible luxury at a totally different price tier as compared to authentic luxury brands such as Louis Vuitton and Hermes. A distinction may also be made between ultra-premium brands and luxury brands-Lexus cars versus Koenigsegg (a Swedish high performance sports car brand), or Lamborghini representing a very different and extreme brand positioning.Five broad sectors have emerged in the mature luxury market: perfumes, jewelry, designer homeware, hotel and gastronomy (Chevalier and Mazzalovo, 2012). Within luxury branding, there are a number of trade-offs at the strategic, tactic, financial and organizational levels that can be hard to overcome and reconcile, such as retaining versus acquiring customers, brand expansion versus fortification, product performance versus brand image, points of parity and points of difference (Keller, 2009).This is a conceptual paper developed around emergent trends in luxury brand strategy in general, and is also related to brand relevant themes such as brand portfolio strategy. In addition, crucial research challenges for brand portfolio management are outlined and discussed at the end of the paper.In the following, four of the major strategic and research challenges of luxury branding, i.e., country cannibalization, make-and-buy brand portfolios, luxury partner branding and old luxury brand leveraging, are discussed.Country CannibalizationCountry cannibalization refers to the strategy of capitalizing on a country at the expense of another at the strategic, tactical or implementation level of the marketing process. For example, Armani Exchange uses a different tactical approach to marketing in the US in its sales process. Armani Exchange New York's sales personnel send messages to customers from the cashiers who helped them with the selection of the apparel - a push strategy rather than a pull strategy, which is much more congruent with the brand identity of Armani Exchange (Uggla, 2014).Country cannibalization of luxury brands also implies other facets, attributes and values. For instance, the country of origin for a luxury brand can add more (or less) value in a specific category through brand extension. To quote an example, brand extension into furniture is much more congruent with the brand identity of Lamborghini and Ferrari as Italian country of origin brands, than the brand identity of Mercedes. …
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