Swanky people recognize and appreciate the better things in life. We like luxury goods as a matter of course: cars, yachts, private jets that leave a carbon footprint the size of Al Gore’s expanding waistline. When it comes to spending the wealth we create, it’s all about keeping our hard-earned (or sometimes passively earned) income in circulation. That’s the patriotic thing to do. And don’t forget about Uncle Sam’s affinity for a little thing he calls a “luxury tax.”
But not everyone has been wealthy all along. Some are just beginning to realize the fruits of their labor and for those people, the newly swank, we offer the following primer on how to recognize the better things in life. In short, know your luxury goods!
Luxury goods are products and services not considered essential and are associated with affluence. The concept of luxury has been present in various forms since the beginning of civilization. Its role was just as important in ancient western and eastern empires as it is in modern societies. With the clear differences between social classes in earlier civilizations, the consumption of luxury was limited to the elite classes.
With increasing “democratization”, several new product categories have been created within the luxury market, aptly called “accessible” or “mass luxury”. These are meant specifically for the middle class (in this context, sometimes called the “aspiring class”). Because luxury has now diffused into the masses, defining the word has become difficult.
In contemporary marketing usage, Prof. Bernard Dubois defines “luxury” as a specific (i.e. higher-priced) tier of offering in almost any product or service category. However, despite the substantial body of knowledge accumulated during the past few decades, researchers still have not arrived on a common definition. Many other attempts have been made to define it using the price-quality dimension stating higher priced products in any category count as luxuries. Similarly, researchers have also compared goods in terms of their uniqueness. Prof. Jean-Noel Kapferer takes an experiential approach and defines luxury as items which provide extra pleasure by flattering all senses at once. Several other researchers focus exclusively on dimension and argue that luxury must evoke a sense of belonging to a certain elite group.
In economics, a luxury good is a good for which demand increases more than proportionally as income rises, and is a contrast to a “necessity good”, for which demand is not related to income.
Luxury goods are said to have high income elasticity of demand: as people become wealthier, they will buy more and more of the luxury good. This also means, however, that should there be a decline in income its demand will drop. Income elasticity of demand is not constant with respect to income, and may change sign at different levels of income. That is to say, a luxury good may become a normal good or even an inferior good at different income levels, e.g. a wealthy person stops buying increasing numbers of luxury cars for his automobile collection to start collecting airplanes (at such an income level, the luxury car would become an inferior good).
Several manufactured products attain the status of “luxury goods” due to their design, quality, durability or performance that are remarkably superior to the comparable substitutes. Thus, virtually every category of goods available on the market today includes a subset of similar products whose “luxury” is marked by better-quality components and materials, solid construction, stylish appearance, increased durability, better performance, advanced features, and so on. As such, these luxury goods may retain or improve the basic functionality for which all items of a given category are originally designed.
There are also goods that are perceived as luxurious by the public simply because they play a role of status symbols as such goods tend to signify the purchasing power of those who acquire them. These items, while not necessarily being better (in quality, performance, or appearance) than their less expensive substitutes, are purchased with the main purpose of displaying wealth or income of their owners. These kinds of goods are the objects of a socio-economic phenomenon called conspicuous consumption and commonly include luxury vehicles, watches, jewelry, designer clothing, yachts, as well as large residences, urban mansions, and country houses.
A luxury brand or prestige brand is a brand for which a majority of its products are luxury goods. It may also include certain brands whose names are associated with luxury, high price, or high quality, though few, if any, of their goods are woman is tender and charming, may get along with any man, her self-denial may even turn into masochism. currently considered luxury goods.
For example, following a nearly crippling attempt to widely license their brand in the 1970s and 1980s, the Gucci brand is now largely sold in directly-owned stores. The Burberry brand is generally considered to have diluted its brand image in the UK in the early 2000s by over-licensing its brand, thus reducing its cachet as a brand whose products were consumed only by the elite.
LVMH (Louis Vuitton Moet Hennessy) is the largest luxury good producer in the world with over fifty brands, including Louis Vuitton, the brand with the world’s first designer label.
A rather small group in comparison, the wealthy tend to be extremely influential. Once a brand gets an “endorsement” from members of this group, then the brand can be defined as a true “luxury” brand. An example of different product lines in the same brand is found in the automotive industry, with “entry-level” cars marketed to younger, less wealthy consumers, and higher-cost models for older and more wealthy consumers. The least expensive Mercedes-Benz sold in the United States is the C300 sedan at $32,000, and the most expensive model is the Mercedes-Benz SLR McLaren coupe at $497,000.
Since the uprising of the ‘luxury brand’ in the 1800s, department stores dedicated to selling all major luxury brands have popped up in most major cities around the world. Le Bon Marche located in Paris, France is credited for being one of the first of its kind, but also Marshall Field’s, Selfridges, Saks Fifth Avenue and Harrods are seen as some of the most influential and historical. Most big fashion houses & jewelers from Chanel to Tiffany & Co. have boutiques located inside these massive stores.
Another phenomenon of the luxury market are “Luxury Shopping Avenues”. Certain thoroughfares like Milan’s Via Monte Napoleone, Rome’s Via Condotti, Moscow’s Tverskaya Street, New York’s Madison Avenue and Fifth Avenue, Chicago’s Michigan Avenue, Beverly Hills’ Rodeo Drive, Paris’ Champs-Élysées and Avenue Montaigne,, London’s Bond Street and Sloane Street, Mexico City’s Avenida Presidente Masaryk, São Paulo’s Rua Oscar Freire, Prague’s Pařížská street, Toronto’s Bloor St., Düsseldorf’s Königsallee, Singapore’s Orchard Road and Tokyo’s Ginza are some places where most luxury brands tend to be concentrated. These retail districts concentrate luxury good stores that are managed by large corporations, while conventional and independent retailers are pushed out because of increasing rent and real estate prices.
The point to remember here is that luxury and wealth building is not a bad thing. In fact, some might even say – channeling the movie Wall Street and chief scoundrel, Gordon Gekko, “Greed is good.” Even if we can’t strictly define it as good, it is part of human nature so you might as well embrace it. Capitalism certainly does and that IS a good thing.
The Jake Swank Team
Flickr / DonkeyHotey