There is no more pure form of marketing than luxury brand marketing: This is an industry where customers' perceptions drive everything. One false step and the fall from shoppers' most-desired lists can be swift and brutal.
Luxury products—clothes, handbags, shoes, and jewelry—might be well made, but they're not difficult to make. The entirety of the business rests on keeping shoppers convinced that the brand name alone is worth paying extra for.
So, who is best at it?
Each year, market research company Millward Brown ranks the top 10 luxury brands globally, based on "brand value." The company's BrandZ model takes into account a brand's dollar earnings, its potential future earnings, and the quality of the brand in the mind of the consumer, to arrive at a final "brand value," expressed in dollars.
We've put that information together with a description of the marketing plan for each brand: Now you'll know why you wear the labels you wear. Each brand's story is coupled with a fantastic photo of a loyal customer of that label, culled from Flickr.
- NOTE: Millward Brown's ranking information is published above each photo, the marketing history is published below each photo.
10. Burberry. Brand value: $4 billion, up 21%
The Burberry tale is oft-told: Once upon a time it was a stuffy brand that made raincoats for Britain's upper classes. Then, in the 1990s, it reinvented itself with a full range of clothes, all trimmed in the Burberry plaid. The company saw £1.9 billion in revenues last year. The company has continued to expand its range, now offering a Burberry Body fragrance extension and the Burberry Prorsum high-end clothing collection.
The company also prides itself on its digital marketing. Its web site has a click-to-chat function and the stores carry iPads for customers who want to browse via screen.
One note of caution: Burberry said growth in China is slowing in its last financial update.
9. Moet & Chandon $4.2 billion, down 8%
Moet parent LVMH controls 1,697 hectares of the Champagne growing region in France, according to its annual report. Its champagne brands include Moet & Chandon, Dom Perignon, Veuve Cliquot and Krug, and together they form 18.3 percent of the global market. Good luck competing with Moet—the French regulatory agency that controls Champagne places annual caps on its production.
Thus LVMH is essentially grandfathered into the region, and competitors can't enter unless the company sells. It's a classic barriers-to-competition situation created by government regulation. (Prosecco and Cava are often just as good as champagne—but people want to celebrate special occasions with "the real thing.")
It is not surprising that €1.8 billion of LVMH's revenues come mostly from champagne.
8. Hennessy. Brand value: $4.6 billion, down 8%
The Hennessy story is all about the barriers to competition that can be erected after you've established a dominant market position—assuming you did that more than a century ago. Hennessy has been the top cognac brand since 1890 and now has a 41.1 percent share of the market. LVMH's cognac unit, part of its Diageo drinks division, booked €1.7 million in revenues last year. (Its brand value may be declining because its market share is also: Two years prior, Hennessy had a more than 50 percent share by bottles sold.)
Good luck finding an inroad into this market: Hennessy owns 177 hectares of the cognac growing region, and actually reduced that acreage in 1999 by 60 hectares in a scheme to pay farmers to grow other types of wine grapes, its annual report says.
See the rest of the story at Business Insider
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