Premium vs. Luxury
Lately, I have been thinking of a couple luxury themes I’d like to explore in my posts. They center around a couple main questions:
- How can a brand communicate luxury through pricing?
- Should pricing emote a sense of selectivity or should it be strategically welcoming to a larger group, yet segmented in the facilitation of the consumer experience?
- What is the difference between “premium” and “luxury” as contextual product categories?
- Do luxury marketers and business practitioners need to gain formal academic training in luxury branding or is working experience the best way to improve your mettle in this industry?
Eric Pesola is a good friend of mine from business school (and hopefully someone I’ll work with in the future). He’s always thinking and reading interesting stuff, which he passes over to yours truly. Below is an article he sent me discussing the divergence between the premium and luxury auto segments.
As I said to him in my reply:
Thanks a bunch for this article. It is very engaging. I’ve been thinking a lot about the difference between premium and luxury… It seems like today’s premium was yesterday’s luxury. I’m starting to see a class [product] continuum going first from Luxury (which has ultra, super, accessible, aspirational and so many variants) to Premium, and then Commodity (or everyday goods). So far, the main factors that I think can move a product from one group to another are pricing and branding. At the higher tiers I think you can seal your position with exclusivity, limited distribution (or scarcity), and innovation (presenting the old in a novel way). Thanks so much for sharing this article. It got me thinking, and I think it’s worthy of a post on my blog.
My thoughts are not yet solidified on this question of premium versus luxury, but at the least I’m thinking about this seriously. I’ll let you know when I refine this thought. In the meantime, check out this other article from Luxury Society summarizing the thoughts of Jean-Noël Kapferer (co-author of The Luxury Strategy). I think it holds good insight on the answer(s) to this profound question in the business of luxury.