The 4 Ps of Luxury Branding

By Kate Lister on 1 December 2010 (Updated 5 January 2011) 0 comments
Photo: rolfbodmer

Thanks to luxury branding, our startup aviation sightseeing business became the oldest and largest in the U.S. by the time we sold the company a few years ago.

Initially, our open-cockpit biplane flights were priced to serve a broad market — something for everyone — but we read that some people simply want the "best of the best," and that resonated. On a regular basis people would call and ask for our best flight. Choosing our most expensive offering, they'd create their own luxury experience with the addition of a limo, roses, champagne, or even diamonds in several cases. So we put together an assortment of exclusive flights.

The Sunset Snuggler would take off an hour before sundown and as the sun slipped over the horizon, we'd climb and watch it set again. Few people can enjoy two sunsets in one day. Not exclusive enough? Our Great Gatsby Fly/Dine paired the sunset flight with dinner at a local five star restaurant. Still not over-the-top enough? How 'bout our Lucky Bastard, a biplane ride plus an air combat mission plus thrills in a WW2 warbird, with leather jacket and silk scarf included. It wasn't our bestselling flight, but as the price went up so did profit. Before long we were pondering the advantages (and complications) of adding a vintage limousine to our stable of rare machines.

Just because our 1920s flying machines pre-dated the well-known Four Ps of marketing, that didn't mean we could ignore them. In fact, what we found was luxury branding almost turns them on their heads.

Product

Driving cost out of a product by accepting adequate quality may work for a mass-market brand, but luxury branding is built on a foundation of quality, even if it means a higher price. A mediocre high-priced product will never achieve luxury status.

We had to be sure our luxury flights were the best available — and that meant the sunset flight was limited to one per day. The jacket had to be a WW2 design made from supple calfskin. Dinner couldn't be just anywhere; it had to be at the extraordinary Vivace restaurant in the Four Seasons (now Hyatt) Aviara Resort. And dinner couldn't just be whatever was on the menu. The chef and manager put together a special selection and displayed the choices in a unique leather menu with an embossed art deco airplane design.

Simply ensuring quality and uniqueness isn't the only product consideration. Imitations have to be avoided. If a comparable experience is available everywhere, the cachet is lost. Limitations help create a luxury brand, too. If every flight could include a jacket and meal, the uniqueness would evaporate. Accommodating special requests, such as roses or champagne, add to the perception of pampering and luxury. Personalization, engraving a name on a product or in our case greeting a guest by name, helped make the difference between an airplane ride and a luxury experience.

Price

Generally, low prices are considered key to product success, but luxury brands are priced high.

If some people aren't complaining about your prices, it's said, they aren't high enough. That may be true for general market products and services, but luxury products are, at least in part, defined by their higher price. Still, trust is key to luxury brands, and if your prices are perceived to be artificially high the strategy will backfire.

Bargain sales and discounts are antithetical to the concept of a luxury brand. If a quality product is worth the price, then how can that price be reduced without sacrificing quality? To ensure people understand your devotion to quality, don't give them reason to believe you're willing to compromise it.

Another way luxury brands engender trust is to avoid odd prices. A five hundred dollar flight priced at $499.99 sends a mixed message. If we've succeeded in communicating that our product is of such high quality that it's worth the price, trying to trick a customer into thinking it costs less is insulting and defeats the purpose.

Place

In the general market, the premise is that broad distribution achieves the greatest sales. However, limited distribution increases perceived exclusivity — an important component of a luxury brand.

If location, location, location is the formula for general market success, limited prime location is key to luxury branding. Louis Vuitton, Gucci, Chanel, Rolex, and Cartier don't have locations on Rodeo Drive in Beverley Hills, Bond Street in London, the Ginza in Tokyo, and the Champs-Élysées in Paris because of their success. They're successful because that's where they put their stores.

Promotion

High-volume mass advertising and hard-sell verbiage may work for general products, but for luxury brands, image ads and targeted publicity convey the right message.

Our vintage biplanes and the flights were inherently easy to promote because they were unusual, colorful, and fun. Their Roaring Twenties history — one was used by a Chicago detective agency to transport gangster-sniffing bloodhounds — added to their appeal. Reading about the flights in upscale golf and travel magazines not only added to the perception of luxury, they subtly endorsed the brand as no advertisement could.

Some Observations

Research from the Harvard Business Review shows that a luxury brand's profitability will increase with perceived premium value, "but only if the brand is extended into product categories adjacent to the core brand." We might have succeeded with a brand of luxury auto tours, but probably wouldn't have had much success selling premium wine.

Loyalty is key in the luxury market, so make it the basis of your strategy. It's more expensive to attract a customer than to keep one; that's why loyalty is so important. Margin allows you to "pamper" your customers so that they don't go to another brand. Nordstrom famously accepted a returned set of tires even though the department store doesn't sell automotive products.

Luxury brands have huge net margins, close to 80 percent, but the risks are immense because success or failure is based on an elusive, irrational, unpredictable, intangible asset — the brand.

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