How to go global as a luxury brand
Updated: Jun 14, 2019
It is no longer a secret that consumers use brands to define their identities as well as to signal power and achievement. It is also known that luxury brands serve that purpose because they offer psychological gains to consumers. Luxury is not, however, a very easy concept to define. It usually depends on personal and cultural interpretations. Generally speaking, luxury brands "entail the highest level of quality and are thus premium priced" (Fuchs and colleagues, 2013). More than that, luxury brands are characterized by having a magic aura, they express exclusivity, sophistication and high social status.
Luxury brands are also global. They serve a niche market, but they have a worldwide presence. That said, should luxury brands have standardized brand strategies or should it be adapted to different cultures? In theory, luxury brands must entail rarity as a prime characteristic. Such rarity concept dates from a time when quality resources and specialized workmanship were rare assets. Thus, the “old-school" luxury was indeed a crafted (handmade) rare piece. “Old-school” because luxury has passed through some transformations over the ages. Do not get me wrong here, luxury pieces are still very unique and made out of the highest quality materials, however, it is becoming increasingly more available. That means that the technological environment has enabled luxury items to have a worldwide presence through communication and distribution channels.
The large availability is one of the biggest challenges that luxury brand managers could face. On one hand, luxury brands (as any other brand) will only increase loyalty and relationship with consumers if they have high awareness and recognition. On the other hand, higher availability could hurt their exclusivity image. Consequently, that could lead to a decrease in perceived value, a decrease in sales and bad evaluations.
Fitting this problem to an example, one could observe strategies used by luxury brands entering the Chinese market. According to a group of researchers, China is an emerging luxury market that has the potential to be explored. Yet, there are cultural characteristics that could represent entry barriers to luxury brands. For instance, according to the research, there is a psychological distance between Chinese consumers and the luxury brand’s country of origin.
As a way to solve this issue, researchers suggest that luxury brands should mix standardization and localization elements when entering the Chinese market. They suggest strategies such as:
(i) Hong Kong as a starting point: They argue that Hong Kong is the bridge between China and the ocident.
(ii) Physical locations (experiential activities): According to their research, an effective manner to create brand awareness is through in-store PR experiential activities. They argue that personal contact increases awareness while “educating” the new consumers. This personalized customer services should increase brand loyalty.
(iii) Mixing localization and standardization: Over-localization can lead to a decrease in perceived value. Besides, it can cause confusion between the brand country of origin and the proposed communication in China. To solve that, a luxury brand manager should mix localization and standardization strategies so that key brand elements are maintained worldwide.
Fuchs, C., Prandelli, E., Schreier, M., & Dahl, D. W. (2013). All that is users might not be gold: How labeling products as user designed backfires in the context of luxury fashion brands. Journal of Marketing, 77(5), 75-91.
Liu, S., Perry, P., Moore, C., & Warnaby, G. (2016). The standardization-localization dilemma of brand communications for luxury fashion retailers' internationalization into China. Journal of Business Research, 69(1), 357-364.
This article was written and translated in partnership with Ponte do Marketing, a project developed by Brazilian researchers aiming to transform relevant and current academic marketing research into accessible and useful content.