Luxury Market Essay
The modern understanding of a brand is consumer and identity oriented. Accordingly, brands are regarded as images in the minds of consumers and other target groups (Esch 2010, p. 22), which are designed by companies to identify their products (Kotler et al. 2009, p. 425). Luxury brands are highly associated with their core products (Kapferer 2008, p. 193). This is reflected by the larger part of the existing definitions of luxury brands, which refer to specific associations about product characteristics (e. g.Meffert and Lasslop 2003, p. 6).
The constitutive characteristics of luxury products therefore correspond largely with those of luxury brands, which leads to the following definition: Luxury brands are regarded as images in the minds of consumers that comprise associations about a high level of price, quality, aesthetics, rarity, extraordinariness and a high degree of non-functional associations. There are explanations of these principles: Price: The brand offers products which belong to the most expensive products of their category.
Quality: The brand offers everlasting top-of-the-line products, which won’t be disposed of even after long utilization or defect, but rather repaired and which often even gain in value over time. Aesthetics: The brand behaves like a chic and vain dandy, who would never leave the house in less than perfect style. Whenever and wherever the brand is seen, it embodies a world of beauty and elegance. Rarity: In contrast to mass-market brands, the brand needs to limit its production and tries not to disclose its (high) sales numbers.
The brand plays hard to get and is not available at all times or places. Extraordinariness: The brand has a mind and style of its own and its products offer a “kick” and surprise with the “expected unexpected. ” Symbolism: The brand stands for “the best from the best for the best”; its charisma fills the room, and regardless of whether it is of a conspicuous or understated nature, deep inside, it is swollen with pride. However, luxury products have more than necessary and ordinary characteristics compared to other products of their category.
Much research suggests that, the quality of luxury brands notwithstanding, consumers typically consume such brands in the service of numerous important social goals. Functional theories of attitudes (Katz 1960) suggest that attitudes serve a number of psychological functions, such as helping people organize and structure their environment (the knowledge function) and maintain their self-esteem (the ego defense function).
Attitudes also serve important social functions such as allowing self-expression (a value-expressive function) and facilitating self-presentation (a social-adjustive function). Attitudes serving a social-adjustive function (i. e. , social adjustive attitudes) help people maintain relationships (DeBono 1987). Vertu is good proof for this theory: It is a British manufacturer and retailer of luxury mobile phones established by Finnish mobile-phone manufacturer Nokia as a wholly owned subsidiary in 1998. In October 2012 Nokia sold Vertu to private equity group EQT VI.
Vertu has sold about 370,000 handsets in the past 10 years, about as many phones as Apple sells every day, According to The Economist, the concept was to market phones explicitly as fashion accessories, with the idea “IF YOU can spend $20,000 on a watch, why not on a mobile phone? ” Vertu has created a niche for high-priced handsets that are desired for the name and the quality of the manufacturing. Some models sell for tens of thousands of pounds. In 2006 the most expensive model it had ever made was the Signature Cobra, at ? 213,000 ($310,000); the most expensive 2006 regular model was the Signature Diamond at ?
55,000 ($83,000). It was designed with gold and diamonds. All Vertu’s handsets come with a sapphire screen, with an inlaid ruby button that taps. They are sold through an emphasis on craftsmanship, style and service, but, as experts says, the technology has been poor in the past compared with rivals in a market where innovation is normally the key differentiator. Recently Vertu has announced its first Android smartphone. Vertu Ti starts at $9,600, with a more expensive rose gold-trimmed model that sells for a whopping $19,900. The hardware is only the best, including a 3.
7-inch sapphire crystal screen, which resists the impact of a 200 g steel ball dropped from a height of one metre. As strong as steel, yet half the weight, vertu’s forged grade 5 titanium case is polished to an immaculate finish. It is powered by red 8-megapixel rear camera capable of 1080p video capture, and a dual-core 1,7 GHz processor. As company suggests each phone is handmade in England by a single craftsman who put its name to it. The smartphone is swathed in luxurious calf leather. Carefully selected for its exquisite feel and natural grain from one of Europe’s oldest tanneries.
Featuring uplink noise cancellation software to improve the clarity of every call made. The ringtones are performed by the London Symhony Orchestra, including a new collection themed on English birdsong. Nevertheless, as ABCNews wrote, by $9,600 won’t buy you the latest version of Android; the Ti is launching with Android 4. 0 software, which dates from 2011 (the current version is Android 4. 2). “Though this is not Vertu’s most expensive phone to date, the company claims it is definitely the most powerful.
Not that we don’t think $10K is worth it, but you can always get the Google’s latest Nexus 4,with the latest version of Android and a quad-core processor, for $299”, – wrote FT. Massimiliano Pogliani, chief executive of Vertu, does not even regard Vertu as a phone company, but rather an upmarket brand that happens to provide a “mobile luxury communication experience”. “It’s important to understand this is a luxury phone,” he says. “Any luxury item is something that you don’t really need so you always have a choice to spend your money on this or something else.
“We don’t want to compete with mass-produced smartphones; that is not our arena. My competitors are a night at the Four Seasons, a bottle of Bordeaux wine. It’s an experiential luxury for people who don’t want the same smartphone as everyone else like they don’t have the same watch or same vacation. ” The reflect of brand’s philosophy is smartphones’ service “Vertu life” , which provides unparalleled access to invitation-only events, complimentary entry to the most exclusive private members’ clubs and closed-door shopping experiences for The World’s most iconic fashion brands.
VIP packages contains major International sporting events such as: The World Cup Finals, Champions League, The Open Championship, Formula 1, Ashes Cricket, Ascot and Wimbledon. As well as exclusive access to unique experiences at high-profile exhibitions, red carpet events and performances such as: Cannes Film Festival, Venice Biennale, opening and festival nights at La Scala, The Royal Opera London, Glyndebourne performances. It is perhaps no surprise that the main market for Vertu phones remains Asia, where the British heritage carries weight, followed by the Middle East and then Russia.
The US, Mr Pogliani says, has been resistant to the virtues of Vertu in the past, but he says that the new range of lower-priced phones could open a larger market among wealthy Americans. On the other hand luxury brand is not always seductive for outlining someone’s social status, it is also because of its quality; Hypnos might be served as an example, which is a British family bed-making company. Peter Keen, chairman, is the fourth generation to run the business. In fact Hypnos has been practicing and perfecting the art of making luxury beds by hand since Edwardian days.
Company’s philosophy and commitment focuses on the pursuit of perfection and the delivery of a deep, energising night’s sleep, helping to fulfill dreams for a healthy and enjoyable life. Hypnos’ master craftsmen continue to use traditional, time-honoured skills that have been passed down from generation to generation to create an authentic piece of Great British Furniture, they put every spring in the own pocket. Thanks to this technology, Hypnos mattress takes individual body shape and become one of the most comfortable beds in the world.
Company uses the finest natural materials like wool, silver, cotton, cashmere and silk which regulate body temperature. As an advantage and illustration of confidence in the quality and durability of Hypnos beds, company gives to consumers 10 year guarantee. Despite of these qualities and suggestion that a human spend a third of its life asleep therefore it is efficient to buy luxury mattress it would be rather complex to assure consumers to pay extra tens of thousand pounds in it (one piece costs 50 thousand pounds while the ordinary’s price does not exceed 3 thousands of pounds).
But Hypnos has some fascinating and snobbish actives: the company is the only bed manufacturer to supply the British Royal Family. A Royal Warrant from Queen Elizabeth II provides Hypnos with a ‘mark’ of excellence and reinforces Hypnos’ reputation for the best of British quality. So the luxury brand mattresses are widely represented in the most luxurious homes and hotels across the world. Bibliography Kotler et al. 2009, Marketing Management Pearson Esch, F. -R.
(2010): Strategie und Technik der Markenfuhrung, 6. aktualisierte und erweiterte Aufl. , Vahlen Verlag, Munchen. Jean-Noel Kapferer The New Strategic Brand Management, Kogan Page Publishers, 2008 Heribert Meffert, Ingo Lasslop, Luxusmarkenstrategie, Wiss. Ges. fur Marketing und Unternehmensfuhrung, 2003 http://www. conceptofluxurybrands. com/concept/luxury-brands-definition Katz, Daniel (1960), “The Functional Approach to the Study of attitudes”, Public Opinion DeBono, Kenneth G.
(1987), “Investigating the Social Adjustive and Value Expressive Functions of Attitudes: Implications for Persuasion Processes,” Journal of Personality and Social for Persuasion Processes,” Journal of Personality and Social Psychology, 52 (2), 279-287. Heine, K. (2012) Luxury Brand Management, Technische Universitat Berlin, ISSN: 2193-1208, www. luxury-brand-management. com. http://www. economist. com/node/1596073 http://abcnews. go. com/blogs/technology/2013/02/an-android-phone-that-starts-at-9600-vertus-ti-launches/ http://www. ft. com/intl/cms/s/0/7e860504-4725-11e3-b4d3-00144feabdc0. html#axzz2mvq3xC60 www. vertu. com www. hypnosbads. com.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 15 February 2017
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