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Capturing and maintaining the essence of luxury in the dynamic global marketplace

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Capturing and maintaining the essence of luxury in the dynamic global marketplace

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CAPTURING AND MAINTAINING THE ESSENCE OF LUXURY IN THE
DYNAMIC GLOBAL MARKETPLACE

by

Jessica Marie de los Santos

A Thesis Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRATEGIC PUBLIC RELATIONS)

May 2009

Copyright 2009 Jessica Marie de los Santos
ii

Table of Contents

List of Figures iii
Abstract iv
Preface v
Introduction 1
Chapter 1: Literature Review 5
A. The Culture Code – Clotaire Rapaille 5
B. The DNA of Luxury – Walpole and the Added Value Agency 8
C. Rethinking Brand Management 12
D. Branding: A Critical-Historical Evaluation 15
E. Brand Research 17
F. Key Luxury Brand Industries 19

Chapter 2: Case Studies and Analysis 23
A. Jaguar: A Cat with Nine Lives? 23
B. Michael Kors: Just Can’t Get Enough 30
C. Dubai: Keeping it Destination Paradise 36
D. Ritz Carlton: Where Luxury Service is Essential 44

Chapter 3: The Luxury Index 50

Chapter 4: The Loyalty Formula 54

Chapter 5: Where PR Practitioners Go From Here 57

Glossary 60

References 62

Appendices
A. Interview with Brenda Lynch 66
B. Interview with Sascha Strauss 70

iii

List of Figures

Figure 1: BRANDZ, Top 100 in 2006 50

Figure 2: BRANDZ, Top 100 in 2007 50

iv

Abstract

The purpose of this manuscript is to discuss how the field of public relations has evolved
to incorporate a variety of communication practices, specifically brand management. It
concentrates on the particular area of luxury branding, and utilizes a case studies
approach to illustrate this phenomena in several different industries. It includes a
thorough review of a multiple studies regarding brand management and consumer
communication strategies. The case studies highlight the high-end areas of fashion,
automotive, travel and hospitality industries, and are evaluated from a strategic
perspective that analyzes the successes and failures of various communication methods.
Overall, this thesis emphasizes the heightening importance of customization and
experience for the luxury audience, and concludes with recommendations on how public
relations practitioners can be more effective to their respective audiences, both presently
and in the future.

v

Preface

“Why do I need to know how the watch market is doing? I’m in the business of luxury.”
- Patrick Heiniger, CEO, Rolex

Heiniger summarizes the thinking of luxury brand managers who are beginning to
strategize communication for success in the market. Branding occurs in every aspect of
daily life. It is not just relevant to a product, but also plays a role in marketing services,
places, people and experiences. A successful brand will ignite emotion in its target
audience, and it is not about the specific name that the actual product/service is known
by, but rather the promise that it delivers. This successful brand promise will both change
perception and influence preference.

According to the American Marketing Association (AMA), brand is defined as “a name,
term, sign, symbol, design or combination of them intended to identify the goods and
services of one seller or group of sellers and to differentiate them from those other
sellers.”
1
This definition fails to place enough emphasis on the emotion that a brand
communicates. Branding is no longer just about awareness, but connecting with
consumers and creating a strong loyalty base. The brand must be communicated through
every aspect of the entity; to do so the brand must be researched, defined and built for
that goal. A personality can then represent that entity and become an asset in building a
relationship with the target market.

1
Lake, Laura. “What is Branding and How Important is it to your Marketing Strategy?”
about.com:Marketing. 2008. http://marketing.about.com/cs/brandmktg/a/whatisbranding.htm

vi

A branding phenomenon that has recently swept the global stage and demonstrated this
conceptual evolution of an entity is Michael Phelps, the eight-time gold medal swimming
champion of the 2008 Beijing Olympics. He became a media sensation in 2004; then
early in the 2008 Games, it became clear that he had the opportunity to be the first athlete
ever to win eight gold medals in a single Olympics. Phelps was able to conjure intense
emotion in viewers who watched, and furthermore, connected with the American public
at home, who witnessed him reaching for the “impossible” and succeeding. Michael
Phelps is a brand of the American dream – you cannot buy him at a store or render his
services, but he is still a brand. He is a representation of achievement; he invokes a sense
of pride and an image of success in every consumer connected with him. Phelps
illustrates a brand’s ability to powerfully influence perceptions and behavior in
consumers, and nowhere is this more evident than in the area of luxury goods and
services

1

Introduction
In today’s global economy, organizations must employ a branding strategy that
maximizes profits and eventually increases shareholder return. These strategies will differ
depending on the industry and product/service they represent. This thesis focuses on one
dynamic arena of branding: luxury.

Several critical factors separate luxury from all other markets: product, pricing,
promotion, distribution, definition, decision making and brand drivers. Changes in any of
these elements can drastically alter a brand’s viability as a “luxury item.” To avoid this
consequence and maintain a brand’s “luxury status,” it is imperative to both know one’s
market and implement strong, consistent messaging to that market. This becomes
difficult because people become luxury consumers for different reasons. Those who see
luxury as “functional” believe it serves a purpose in their lives; it is a necessity. Others
see this category as a “reward,” and purchase the product because they believe they
deserve it. Finally, there are those consumers who simply give in to “indulgence” – they
are luxury consumers because they want to be and because it makes them feel good; they
often make a spur-of-the-moment purchase.
2

A key component of this thesis is to understand the difference between a luxury and a
premium brand. In the consumer realm, the definition of luxury can encompass a variety
of characteristics, as it seems to vary from person to person. In the past, luxury was seen
on the basis of things and the value that audiences associated with those things. Now,

2
Khanna, Samit and Ashish Mansharamani. “Marketing of Luxury Brands.”
http://www.brandchannel.com/images/papers/297_Luxury_Branding_India.pdf

2

luxury is often defined as “an expression of individuality, through the unique and highly
personal experience that luxuries provide…a means to personal aspirations.”
3
However,
from the public relations practitioner’s or brand strategist’s point of view, the luxury level
is an exclusive one, and has more stringent quotas than the average consumer believes.
Luxury brands are inaccessible, but not impossible. Brands in this category include
Prada, Gucci and Louis Vuitton, which are extremely high priced, but still available to
those who can afford them. Consumer loyalty rather than awareness becomes much more
critical in the branding strategy. Brands that cater to the masses and are attainable are
considered premium brands, such as Polo Ralph Lauren, DKNY and Calvin Klein. These
products/services may be expensive, but not ludicrous, and there is a larger market for
them than there is for the luxury items. This comparison that highlights the “exclusivity
factor” of luxury is critical to understanding the brand management of this category.

The change from “old luxury” to “new luxury,” as well as the evolution of branding over
the past century, is significant in understanding how that genre continues to flourish
today. In the past, luxury was characterized by attributes, qualities and features of the
actual products. In the consumer world, it was a competition; whoever had the most
valuable things won. The higher the price the more appeal; as a result that brand owner
earned privileged status and prestige.

As the middle class became richer, the luxury market became more accessible to a larger
audience. As a result, brands had to re-position themselves to attract the new, niche

3
Graham, Patricia, and Marcus Matthews. “The Changing Face of Luxury.” Knowledge Networks.
http://www.knowledgenetworks.com/know/2004/spring/1-1_graham.html

3

luxury market that was employing a different way of thinking than those of “old luxury.”
The “new luxury” audience grew from Baby Boomers, who saw luxury as needing to be
“consumer centric,” where the target audience would be presented with a product/service
that caters to enhancing personal experience. In the case of Starbucks, for instance, the
company leveraged the experience of entering the store, ordering a personalized beverage
and providing a space away from the chaos of life, so that the company could connect
with its audience. Starbucks marketers enhanced a somewhat mundane activity and its
success allowed them to implement premium pricing because consumers were attracted
to the experience.

Luxury is no longer only about the thing; it’s now about how that consumer feels when
using it and how it differentiates them from everyone else because the experience is
unique as their own.
4
Brenda Lynch, senior vice president at The Rogers Group and an
expert in global branding, stated in an interview that, “Style must be created on their own
terms. They live for the [luxury] brand because it does something for them. It’s about
personalization, mixing and matching to their liking.”
5

During the past decade as 20 and 30-somethings have gained more personal wealth, they
have carved out a new “personal experience” luxury niche. According to Paula Danziger
of Unity Marketing, this particular audience, the GenXers and Millenials, find themselves
in an unstable and potentially recessive economy, but will be the face of the young
affluents who want to partake in that “exclusive personal experience” that luxury

4
Danziger, Pam. Unity Marketing. 2005.

5
Lynch, Brenda. Interview. September 24, 2008.

4

provides.
6
There is a formula behind branding a luxury concept that enables it to prevail
in such an economy, and it is a critical tool for public relations specialists and brand
strategists alike to understand and apply to reach this up-and-coming market and maintain
a powerful voice in luxury brand management. The blueprint for this strategy involves
knowing one’s audience, both current and potential, and connecting with individuals on a
personal level, through brand experience, promise and loyalty.

6
Danziger, Paula. “The Ascent of the Young Affluents.” Unity Marketing. 2005.

5

Chapter 1: Literature Review
The following studies have been explored to understand the realm of luxury branding,
both historical and current. Each gives a unique perspective on the definition of luxury –
both domestically and internationally – and how a brand manager must strategically
position its [client] in the global market so that it may continue to develop a strong, loyal
relationship with its consumers. Furthermore, they provide insight into the future of
luxury brand management, specifically in acknowledging the rise of the new luxury
market and what the individuals in those specific audiences are looking for.

A. The Culture Code – Clotaire Rapaille
Marketing expert Clotaire Rapaille, originally from Paris, is a world-renowned specialist
in consumer culture and personal adviser to high-ranking CEOs and Fortune 100
companies. He has dedicated his career to understanding why people live and buy the
way they do, and has assisted a multitude of companies in branding their products or
services in the most appealing and successful ways. Furthermore, he has adapted his
studies to understand branding on a global scale so that these organizations can improve
the bottom line in all target markets.

In 2006, Rapaille produced a study, The Culture Code, which outlined his methodologies
and results for various industries, including luxury. His main premise: the key to reaching
your target audience is to be on code. Rapaille proposes that each product/service
category can be associated with a specific code that brand strategists must appeal to in
order to be successful in the market. These codes are determined by Rapaille through an

6

unorthodox focus group or “discovery session” that allows him to ascertain which
experiences consumers associate with specific products. Additionally, these codes will
often vary from country to country. By understanding a product’s code, communicators
can develop and deliver more effective messaging to target audiences. The coding
methodology works on products/services tested anywhere in the world.
7

Understanding the luxury market involves several different product components that are
critical to this industry as a whole. First, it is important to identify how consumers
associate with the concept of money. Most audiences in America will conclude that the
working class is motivated solely by money and that our country’s culture has become
overwhelmed with greed. The more money we have, the “better off” we are. Rapaille
argues that this isn’t entirely true; the code for money is proof, meaning that it is a
measurement of our success. We associate it with validation of our position in the world,
and when we allow ourselves to indulge in an expensive brand; we have proven to
ourselves and others that we earned this position.

A second area that is critical in the luxury industry is quality. This is probably one of the
most difficult areas to assign a clear, functional characterization because it varies from
consumer to consumer. Many brand strategists will try to emphasize the quality of their
product or service, but often miss the target on what their audiences visualize quality to
be. The automobile manufacturer, Audi, has a tagline that speaks very clearly to its
audiences: “Truth in Engineering.” This communicates the brand’s focus on the
performance and quality of the product. Rapaille examined the difference between

7
Rapaille, Clotaire. The Culture Code. Broadway Books: New York. 2006.

7

American and Japanese definitions of quality. He found Americans associated quality
with functionality or “it works” (as the code) while the Japanese had a much more
exalted characterization, “close to perfection.” Rapaille furthered this by coding
Americans for the concept of perfection, which ironically turned out to be “death.” This
was because the American mindset doesn’t see perfection as an obtainable reality; there
is always room for improvement. That is why “high quality” and “perfection” can remain
miles apart. Brand strategists must realize that, though they can position their
product/service to be flawless, if it is not functional, it will not attract the American
audience.

Also important in the luxury industry is the actual shopping experience. The act of
purchasing products/services of higher caliber (and price) can be mystifying, but Rapaille
offers an explanation. Shopping is not only a practical activity that allows consumers to
acquire products for themselves and their families; rather, Rapaille found that the code
for shopping is “reconnecting with life.” It’s an emotional activity, one that ignites
uplifting joy and provides the consumer with a reward. It is often a social experience and
it taps into the adolescent qualities of American culture, where adults can ‘go out and
play’ (159). Brand strategists can work with retailers to influence the experience of
consumers. Shopping is not the same as buying; it plays a larger role in consumer
personalization, specifically in the luxury market, influencing whether or not that
consumer will make a purchase decision.

8

Finally, Rapaille examines the concept of luxury, and the former three branding
components come full circle. Through his “discovery sessions,” it was apparent that
representations of luxury were different among consumers, but there was some key,
thematic messaging that remained consistent. Responses such as “I know I deserve it”
and “getting something back for all my hard work” revealed the consumer association of
luxury with accomplishment. As a result, Rapaille codes luxury with “military stripes.”
Indulging in the luxury realm illustrates our rank in American culture, and he
acknowledges that there can be different levels. This can be viewed by brand strategists
as the difference between the “luxury” and “premium” consumer. To establish one’s
brand in the niche luxury market, it is imperative to associate it with having the most
“stripes” among all those in the product/service category. Rapaille also points out that
luxury is progressive, and once a product/service is available to the masses, it is no longer
considered a luxury.

B. The DNA of Luxury: Walpole and the Added Value Agency
Walpole (WPP) is an agency comprised of 100 of Britain’s most prestigious companies
and provides a forum for these organizations to exchange ideas and practices that
heighten the business developments in the UK. They have recently expanded their
network to work with brands aspiring to be categorized as “luxury” and have the capacity
and ambition to do so. In 2005, WPP commissioned a brand specialty, Added Value, to
conduct market research on the luxury industry. Specifically, they were urged to classify
luxury consumers and what they were looking for in a brand, as well as how a luxury
brand might become successful in the global market.

9

One of the most critical elements of a luxury brand is that it remains compelling to its
target audience. If it doesn’t draw them in from the beginning, the brand’s attempt to
build a consumer relationship will be futile. Brand managers must learn their audiences
through research and evaluation. It is important to avoid falling into a “rear-view mirror
syndrome” – focusing on the average market will net yesterday’s brand. Therefore, a
brand manager must focus on tomorrow’s image maker to achieve the most forward-
thinking, consumer-relevant brand.
8

Added Value discovered that the over-arching element behind a luxury purchase is that it
makes people feel more desirable. Though this may seem elementary, the underlying
principles that point to this concept are much more intricate. There are six features to
luxury: heroic myth, exquisite product, iconic communication, carefully engineered
celebrity, ultra-selective distribution, and the power of “cool.” These elements describe
how luxury consumers need to see their brand as representations of extraordinary history
and indisputable value. Also, “iconic communication” refers to how luxury consumers
are intrigued by the elaborate advertising and branding of the luxury market.
Additionally, these characteristics delineate the significance of what it means to be
“cool.” Luxury consumers are still drawn by celebrity and what is the “now.” Jeffrey
Kalinsky, president of the Council of Fashion Designers of America, puts it plainly, “You
can have as much pedigree and integrity as you like, but if it ain’t cool, it won’t sell…”
Out of all of these, three kery ideas should be kept in mind: 1) consumers must believe

8
Walpole and Added-Value Agency. “Cracking the Luxury Code: The DNA of Luxury.” 2007.

10

that the brand has an extraordinary history, 2) the product/service has genuine value and
3) reflects forward thinking.

Additionally, Added Value found that it is worth a brand manager’s investment to
understand the four different types of luxury clients. First, there are the people who show:
these individuals are status driven, and will do whatever it takes to satisfy their perceived
“audience.” They believe that purchasing luxury is a indicator of their personal success,
and the more successful the brand, the more appealing it is to this audience. Trendsetters
who are supporters of the Missoni brand fall into this type of clientele. The entire Missoni
line is full of bold colors, extravagant designs and exemplify the concept that “the louder
the better,” which is what this type of consumer lives for.

The second group is the people who can’t be shown up. They are much more reserved
than the former group and they look to luxury for confidence building, but not
exuberance. They believe that respect from their peers will be inevitable if they show that
they take part in an established genre in products and services. Those in this category
would be attracted to a brand like Burberry, which has both an established and classic
look, without clamoring for attention.

The next group is those who show they know. Much like “those who show,” this group is
status driven, but differs because they take pride in having sufficient knowledge about
what they are buying. They don’t necessarily appreciate luxury more, but they believe
their knowledge of the brand serves as a rationalization to acquire it. A typical example

11

of this consumer would be a woman who loves top-designer fashion, and purchases heels
by Hermés rather than Guccis, because she has the knowledge to appreciate a less
obvious yet well-established luxury brand.

Lastly, there are the consumers who know. These people are fascinated by luxury simply
because it is luxury. They indulge in the brands they like, and they feel a genuine
connection with those brands. They don’t typically care what others think, and place an
indisputable appreciation on whatever brands they own. Walpole offers a great example
about luxury malt whiskey drinkers; people in this category will have both a small,
obscure batch from a faraway island as well as a bottle of Glenfiddich, one of the world’s
most famous malt whiskeys. This type of connoisseur feels as though they are the luxury
brand.

What may be the most essential luxury brand management finding from Added Value is
the power of identity and reputation. The firm tested the launch of a new luxury brand
watch from China, Kang Xi. The watch was named after Emperor Kang Xi, who ruled
China from 1662 to 1722. It encompassed qualities that would feed into the “heroic
myth” concept, through its precise craftsmanship and “therapeutic energy” of precious
stones. The agency established product, price, PR and place of distribution in accordance
with luxury status criteria. The $10K watch was advertised with Johnny Depp as the
spokesmodel and was sold only at four holistic spas deep in the Middle Kingdom. The
Kang Xi failed miserably.

12

On a global scale, there were different reasons why Kang Xi was received poorly. In
modern Shanghai, the concept of luxury is quite foreign; it is largely an industrial locale.
Russians wanted to know more about the mechanism; the Japanese were turned off by the
Chinese heritage; Londoners were on the fence, as were Americans, who thought if it was
supported by the right sources it could possibly be a new trend. Overall, it was clear:
there was a strong indifference because there was no reputation or identity that the watch
could draw upon. In consumers’ eyes, it was just another brand. There was nothing to
associate it with, no loyalties. Event ultra-cool Johnny Depp couldn’t establish an identity
for the brand.

The Added Value research was conclusive: brand managers must develop both a product
reputation and secure consumer loyalty if their product/service is to succeed in the luxury
realm.

C. Rethinking Brand Management
Chris Macrae, from Brand Transparency (UK) and Mark David Uncles, a professor of
marketing at the University of New South Wales, Australia, collaborated on the article
“Rethinking Brand Management” for the Journal of Product and Brand Management
(1997). This journal is a bi-monthly publication that provides highly respected
information regarding brand strategy. Specifically, this article explains an innovative
approach to brand management for professionals to implement within their organizations.
This method combines critical elements of brand strategy and incorporates them into
three distinct phases.

13

In the evolving world of brand management, the authors suggest there are seven areas of
focus for brand managers: First, is brand strength, where brand managers must learn and
understand the equity of their brand in the marketplace and leverage it to their best
advantage. Also, having a world-class culture within a brand requires innovation and
vision that leads that brand to a number one standing. “Glocal” branding enables an
alignment between global ambition and local operations. There is also a need for seeded
marketing channels, which focuses on optimal use of communication methods to reach
the intended audiences. Service smart integration highlights the importance behind
consumer relations and the inherent link to sales and profit. Developing and
understanding the brand architecture also remains a key element to brand management,
as it efficiently guides managers in constructing strategies for multiple brands. Finally,
brand organizing leads managers to implement processes that encourage teamwork and
integration, which overall promotes brand optimization. To attain these goals, Macrae et
al. formulated an all-encompassing model, “brand chartering,” that enables brand
managers to consider all sides of brand management, isolate crucial issues and advise on
where immediate action should be taken (67).

Macrae et al. divide this strategy into three key phases; the first is creating and
communicating the brand. To do this effectively, managers must understand the essence,
identity and heritage (68) of the brand. Signs and symbols that leverage the brand’s
essence rather then destroy it are critical. Managers must work diligently to provide and
maintain a relationship between the brand and its consumers, so that a heritage can be

14

created and add to the brand’s longevity. There also is a need to innovate and “refresh” a
brand at different intervals, so that it may evolve with the consumer. A brand that has
been successful at achieving this is Apple. Along with the evolution of the Apple logo
itself, the brand has developed into a forerunner in both design and technology.
Simultaneously, it has managed to acquire a strong consumer following who truly
connect with the personality of the brand.

The next phase delineated by Macrae et al. is managing the brand organization,
specifically in providing consistent messaging of brand quality and value. They deem it
necessary to include every department so that the entire company will “breathe the
brand.” Virgin is a terrific example of how a company can emulate its brand’s promise in
a majority of its ventures. In each industry that Richard Branson has taken Virgin into, he
has given it his signature style and embodied the motto, “We think differently here.”
Everything about Virgin is different – from the multimedia experience in each store to the
extravagant comfort and style for passengers on their airplanes. Consumers associate the
quality of Virgin’s products and endeavors based on their faith in the brand promise, and
the fact that Richard Branson delivers almost every time.

The final phase of brand chartering involves directing and structuring the brand. At this
stage, detailed attention to executive management and organization-wide abilities is
given, as well as the ability of the organization to adapt to an evolving environment, i.e.,
a globalized economy. Brands cannot always operate the same way across the globe, and
it is important for brand managers to grasp this concept early on so that their brand may

15

be ready for expansion when the time comes. Being ready for these changes should be
part of a brand manager’s leadership skills, and they will become a key asset when it is
necessary to connect the whole of the company (employees, shareholders and consumers)
to the brand and its message. Salvatore Ferragamo started as a family-run firm in Italy,
and was successfully transformed into a publicly owned business. Ferragamo has
maintained its luxury status, keeping its core brand essence while catering to an
international audience.

D. Branding: A Critical-Historical Evaluation
Branding strategy dates back to 1870, where post-Civil War business owners realized that
branded goods offered an incredible opportunity for growth within the market. This,
paired with a new wave of American consumerism, generated a top-level focus on
branding and advertising. Executive management in brands such as Heinz and Coca-Cola
were committed to being key players in the branding strategy, widely involved in
promotion, distribution and advertising that eventually led to international successes.
9

There was a considerable amount of resistance though; branding was a communication
revolution for that time frame, and as with any type of “change;” there would always be
counterarguments to overcome. There were still consumers who preferred the local
retailers over innovation and some retailers were in favor of both the profit margin and
reputation of unbranded goods. However, over time it became apparent that branding was
a positive business strategy and it was adopted by many firms.

9
Low, George S. and Ronald A. Fullerton. “Brands, Brand Management, and the Brand Manager System:
A Critical-Historical Evaluation.” Journal of Marketing Research. May 1994.

16

From 1915–1929, branding relied on the functional brand manager system. These
positions were held by specially trained, salaried individuals who were responsible for
maintaining company viability as the visionary founders attended to new products or
expansions. Branding became systematic and based on knowledge which proved to be
more effective for brand management, however cooperation between managers was often
a problem. Additionally, separating a single brand and/or product from others in the firm
was a difficult task. This business strategy would soon need a revamp to place more
responsibility on individual brand managers. Furthermore, the era of the Great
Depression was difficult on all manufacturers; Harvard Professor Harry Tosdal observed,
“…there is an increasing emphasis on product planning and product research…so as to
meet the needs and wants of consumers…in order to make products which are easier to
sell.”
10
The upcoming implementation of specified brand managers would help solve this
problem and bolster the branding industry for decades to come.

With a jump start from the post-WWII economic boom, a definitive brand manager
system evolved. Household income in American families had doubled since the ‘40s to a
little more than $3k per year, and was up to an average of $5K by 1960.
11
In addition, the
size of the middle class was growing. Consumerism was exploding nationwide, and
businesses found it more effective to place individuals in charge of single brands.
Companies such as Procter & Gamble (P&G) were growing at an incredible pace,

10
Low, George S. and Ronald A. Fullerton. “Brands, Brand Management, and the Brand Manager System:
A Critical-Historical Evaluation.” Journal of Marketing Research. May 1994.pg 181.

11
The People History. “News, Events, Technology, Prices and Popular Culture: 1950.”
http://www.thepeoplehistory.com/1950s.html

17

expanding into the international market. At the time, P&G already had more than 30
different brands of soap and was introducing new products into the market each year,
including Crest, Pampers, Downy, Crisco and Tide – which was the leading laundry
product by 1950 and the primary source of funding for P&G’s growth.
12
To efficiently
sell more than one product, it became critical to have managers responsible for specific
brands, which proved to coordinate better with corporate strategy, organizational
structure and overall marketing needs. Top-level executives realized that having these
people devote 100% of their time to building and maintaining a brand would be a critical
element to that brand’s success.

E. Brand Research
Branding professionals have often shared generally accepted practices for the evolving
industry that have contributed to a better understanding of brand strategy. Publications
such as BrandWeek keep brand managers apprised of new trends. But the luxury market
requires a special sensitivity that transcends simple “best practices.”

A significant factor behind branding for the luxury market is to keep in mind the
psychology of the consumer. A mental element draws in the consumer and plays an
effective role in motivating what otherwise seems like an illogical sense of loyalty. By
participating in the luxury market, consumers build their self-esteem, prestige and sense
of high status through “experiencing the exclusive.” This perceived, intangible benefit to
the particular audience is critical for brand strategists to understand so that they can

12
Procter and Gamble: A Company History.
http://www.pg.com/translations/history_pdf/english_history.pdf

18

create the “experience” consumers are looking for. The brand must connect with the
consumers’ psychology, which, in turn, will encourage them to purchase because they
will be in-tune with the most important division of luxury – the emotional, experiential
realm.
13

Brand managers focus on the isolation of the product/service from all others in the
relative category. This can be done in a variety of ways, including language, positioning
and celebrity reinforcement. Luxury designers like Vera Wang adorn their websites with
vocabulary like “fearless, bold, captivating, and confident.” Tiffany’s & Co.’s messaging
states, “Some style is legendary.” Positioning a product/service in an exclusive light can
capture an audience, and an endorsement by a well-known celebrity can provide
validation. James Bond enthusiasts will automatically point to the Aston Martin or
Omega watch as iconic representations of his character, and this type of recognition can
be invaluable to a luxury brand. It is about creating a brand that is extraordinary – not
because it is expensive, but because of its individuality and uniqueness. By relying on the
psychological factors that give way to the emotional appeal of the brand, strategists can
strengthen loyalty by differentiating the brand from all the rest, so that the buyer feels
“special” within a global audience of consumers.

Messaging for luxury brands is one of the most important elements of the entire strategy.
Above all, the strategist must remember that luxury means different things to different
people. As demonstrated earlier, consumers participate in the luxury market for different

13
Danziger, Pam. Let Them Eat Cake: Marketing Luxury to the Masses – as well as the Classes. Dearborn
Trade, 2005.

19

reasons. Those who see luxury as a functional part of life need messaging that highlights
product quality and is information-intensive. Others who understand luxury purchasing to
be a reward require messages that communicate “acceptable exclusivity” so that
consumers can feel as though they have rightfully earned the luxury status label. Finally,
those consumers who perceive luxury as an indulgence call for an emotional approach, in
which the unique and exciting qualities of a product need to be emphasized.
14
Each of
these reasons requires different types of messaging, so knowing the target audience
becomes critical. For example, Lamborghini connects with the audience seeking a reward
with the message, “Every weapon needs a master,” highlighting the superior “skill”
required to own and drive such a vehicle. All of these messaging types help align the
overall brand strategy that resonates with the psychology of the consumer.

F. Key Luxury Brand Industries
For the purpose of this thesis, emphasis is placed on four target industries that have a
prominent place in the luxury category: automobiles, travel, fashion and service.
Regardless of the sector, it is important for brand managers to understand and cater to the
different needs of the clientele. There are brands that are able to do this successfully and
others that have unfortunately suffered by ignoring the characteristics of an evolving
market.

The automotive industry is a classic example of an industry that adjusts for the various
tastes of the market by creating different, niche vehicles under one umbrella brand. More

14
Khanna, Samit and Ashish Mansharamani. “Marketing of Luxury Brands.”
http://www.brandchannel.com/images/papers/297_Luxury_Branding_India.pdf

20

and more brands are taking advantage of the lucrative luxury audience by establishing a
premiere label separate from a line of vehicles that cater to the average driver. For
instance, the average consumer is probably unaware that Lamborghini is owned by VW;
however, the sporty luxury car sold a record of 2100 vehicles worldwide in 2006, which
is 30% more than the year prior.
15
Additionally, the company paired up with Versace to
created the Murcielago LP640 Roadster; this illustrates that, even when the price tag goes
up, if a brand is successful in its strategy, people may be even more inclined to indulge.

The travel industry requires a similar focus on product differentiation. The brand
manager isn’t selling a product; he/she is selling an experience, and that is a promise that
the brand must deliver to ensure a repeat customer. Word-of-mouth can be one of the
biggest advertising tools for this industry, but only if customers are applauding the brand.
The brand manager must be cognizant of the idea that for, the customer, leisure travel is
more than an escape from the daily routine. It is about engaging emotional touch points
and, as a result, both the message and its delivery must fulfill the needs of “indulgence”
to be successful. Especially critical in this industry is the use of media; both positive and
negative portrayals available to the public can be highly influential during the decision-
making process of where to travel. Not too long ago, St. Tropez was the most popular
luxury destination in the travel industry, until soon the average middle class traveler
could afford to go there;
16
for true luxury aficionados, St. Tropez has developed a passé
reputation, and they are looking elsewhere for “new” decadence and distinction.

15
Reed, John. “Automobiles: Life is Sweet – and becoming Sweeter!” The Financial Times. June 4, 2007.

16
Floto, Jennifer. Associate Professor, University of Southern California. October 2008.

21

Fashion is a fixture of the luxury class. From runway shows to boutiques to what the
hottest celebrity is wearing, identity and self worth have long been measured by brands. It
is important for brand managers to know that audiences don’t generally commit to luxury
labels from the beginning; it is a process, which supports the claim that luxury consumers
are created through loyalty. For example, the Chanel brand has recently regained footing
in the luxury market with its signature little black dress, tweed coats, aromatic perfumes
and designer shades. Audiences who knew Chanel in the 1950s remember its strategy of
focusing on fantasy, highlighting the power of sexuality without being distasteful, which
targeted a mature female audience.
17
However, as the brand reinvigorates its heritage and
brand promise, it understands the importance of targeting a younger audience so that it
can create a loyal consumer base, and does so using the faces of Keira Knightley and
Emma Watson to endorse the brand.
18
Each of these celebrity icons can relate to a young
audience and will help establish the Chanel brand within that group to provide a
foundation for consumer loyalty. According to the book called, The Cult of the Luxury
Brand, there are five stages in the spread of luxury: subjugation, the start of money, the
desire to show off, the need to conform and finally, a way of life.
19
At each of these
intervals, the brand must always be able to provide the experience that the consumer is
looking for to maintain his/her loyalty.

17
Reichert, Tom. “The Erotic History of Advertising.” Advertising Educational Foundation. 2003.
http://www.aef.com/on_campus/classroom/book_excerpts/data/2476

18
Boshoff, Alison. “Worth 8 Million [British pounds] and preparing to be the face of Chanel, Emma
Watson is a girl with a Magic Touch.” The Daily Mail. July 12, 2007.
http://www.dailymail.co.uk/tvshowbiz/article-467822/Worth-8m-preparing-face-Chanel-Emma-Watson-
girl-magic-touch.html

19
Chadha, Radha and Paul Husband. The Cult of the Luxury Brand. Excerpt from Businessline.com.
November 2006.
http://www.thehindubusinessline.com/catalyst/2006/11/09/stories/2006110900110200.htm

22

The emphasis on the “luxury touch” in the service industry is becoming increasingly
popular and heavily desired by the luxury consumer. When a product and/or entity is
enveloped by luxury-style service, it automatically differentiates the brand from all others
in the category. The service is about creating a customer-centric culture, with a rigorous
selection process in staffing so that employees understand that a commitment to quality
service will increase consumer loyalty and, once again, distinguish the brand. Service
employees must constantly be retrained on what it means to provide “luxury service” and
it would benefit the company to also implement a reward system for employees based on
giving customer-centric behavior. Regardless of whether it is good times or bad, luxury
service is an essential commitment because it is the culture of the company.

23

Chapter 2: Case Studies & Analysis
The author has selected specific cases regarding Jaguar, Dubai, Michael Kors and the
Ritz Carlton to demonstrate the luxury branding theory in these four industries.

A. Case Study: Jaguar: A Cat with Nine Lives?

Organization History
Originating as a landmark of British luxury among all automobile brands, Jaguar has
faced many challenges over the last few decades. For the last 18 years, the brand has
operated under the umbrella of Ford Motor Company and has been losing loyalists ever
since. Ford’s ownership had a huge impact on both the style of the car as well as the
market that it was reaching. Prior to the acquisition, Jaguar had an elite following, and to
own a Jag was to be in the realm of exclusive luxury. Not too long after Ford took over,
the shape of the car changed, there were modifications to the jaguar hood emblem (which
is not even present on the 2009 model) and the prices began to decrease so that the car
would be affordable for a larger market. Furthermore, Ford implemented a mass-market
branding strategy that turned those in the niche luxury audience off because it cheapened
the perceived value of the car.

This past year, Jaguar was sold once again to Tata Motors of India, one of the largest car
manufacturers in Asia. Under the new ownership, Jaguar is positioned to re-enter the
luxury market, focusing on Porsche as an industry standard to meet and surpass. The
question is – is it too late? Has Jaguar consumer loyalty decreased so much that there is
no regaining its luxury status?

24

Industry Overview
Validation as a quality brand in the luxury automotive industry can be difficult to obtain,
especially when that brand is managed under an umbrella company. There are some
success stories in this industry; Fiat, which grossed over $86 billion in 2007, owns 85%
of the luxury brand sports car, Ferrari (North America), which alone contributed about
$27 million that same year. Porsche Automobil Holding SE, responsible for the four
models of the luxury brand (Boxster, 911, Cayenne SUV and the Cayman S) grossed
about $10 billion in 2007.
20
Rolls Royce, another limited-model brand, brought in $14
billion.
21
The critical element for the automotive industry is that brand loyalty is relative
to a brand’s mainstay in the market. If the brand loses that loyalty, it is a) difficult to
regain and b) can have devastating effects on the brand’s ongoing success.

Competitive Analysis
Jaguar primarily competes with Mercedes-Benz, BMW and Audi. However, due to a loss
in consumer loyalty after a redesign by Ford, Jaguar’s sales numbers have decreased;
Ford’s 2005 annual report stated a $89 million loss for the Premiere Auto Group
(comprised of Jaguar and Land Rover),
22
and they have continued to lose money, to the
tune of $327 million in 2006.
23
It is widely agreed in the branding industry that

20
These figures were extracted from 2007 Hoover’s reports at www.hoovers.com.

21
This is a 2006 net estimate from Hoover’s reports.

22
Ford Motor Company. Annual Report. 2005.

23
Mymediaford.com; 2006 Fourth QT and Full Year Results.

25

Mercedes-Benz and BMW have some of the strongest consumer loyalty bases in the
entire automotive group.
24

Challenge/Opportunity
In 1989, Ford was faced with a huge challenge: to improve manufacturing efficiency and
quality without losing the consumer base. Unfortunately, Ford was not able to accomplish
either so that Jaguar would continue to be a premiere, money-making brand. Instead, the
company contributed to the brand’s downfall in the consumer arena, which was reflected
in repeated quarterly losses.
25

Tata Motors is one of the largest companies in Asia, and its recent acquisition from Ford
of both Jaguar and Land Rover will further develop its portfolio of more than 90
companies in seven main business sectors: chemicals, communication and IT, consumer
products, energy, engineering, materials and services. In 2007, the group netted
approximately $28.5 billion.
26
Tata Sons, the holding company responsible for Jaguar,
now has the opportunity, as well as the resources, to turn this brand around. Tata officials
have the chance to re-position it as, once again, a luxury automobile that consumers
would be privileged to own.

24
Voelcker, John. “Jaguar takes Leap Forward with New Design.” Conde Nast Portfolio.com. July 18,
2008. http://today.msnbc.msn.com/id/25521403/

25
“Ford Ramps up Quarterly Loss, hires Strategic Adviser.” Turkish Press. August 3, 2006.
http://www.turkishpress.com/news.asp?id=136039

26
Information retrieved under “Tata Group” at www.hoovers.com.

26

Point of View
The assessment of Jaguar as a luxury brand will be taken from the point of view of a
potential and/or current luxury brand manager. This case will be analyzed with
comparisons of Ford’s unsuccessful branding strategies to the potential positive outcomes
of Tata Motors’ new ownership.

Execution
a. Ford
Upon acquiring Jaguar in 1989, Ford implemented several key strategies and tactics to
reach specific goals pertaining to the brand. First, Ford officials wanted to drastically
improve the engineering quality (a chronic problem in early Jaguars) as well as increase
manufacturing efficiency to cut costs.
27
In addition, management wanted to expand sales
to actively compete with European volume leaders BMW and Mercedes-Benz by
attempting to add new models to the Jaguar line, none of which sold well. Furthermore,
they enacted a mass-marketing branding strategy that turned off many loyalists as it
relied on the slogan “Built to Perform.” This completely misses the profile of a Jaguar
buyer, who seeks sleek design and style, not performance or muscle. Lastly, the
messaging remained inconsistent throughout the years of Ford’s ownership.

b. Tata Motors
The new owners of Jaguar envision a fresh start for the brand, beginning with a complete
overhaul of the business model. Tata officials plan to mirror Porsche, with modest

27
“Ford Ramps up Quarterly Loss, hires Strategic Adviser.” Turkish Press. August 3, 2006.
http://www.turkishpress.com/news.asp?id=136039

27

volume production of a high performance vehicle.
28
In addition, Tata is going to focus on
the brand’s heritage and keeping its traditional identity intact. However, the manufacturer
is putting a new spin on Jaguar to reach a different audience: Tata wants a radical
rendition of the brand, to pique the interest of 35-50 year old consumer.
29
This could be
risky if Jaguar wants to return to the “luxury” category, but if it brings back a high price
tag and exclusive, experiential features – Jaguar may return a victor.

Analysis
Despite the financial loss by Jaguar in the past few years, a survey from J.D. Powers did
offer some positive feedback. Jaguar was ranked number one for dealership experience,
first in the Sales Satisfaction Index (21 points higher than closest competitor, Cadillac)
and fourth in the Customer Service Index.
30
Since the new luxury audience is paying
closer attention to the experience they associate with a brand, this is good news for
Jaguar, who should leverage this intangible concept to continue distinguishing the brand.

Furthermore, Jaguar is abandoning the previous years’ emphasis on performance and re-
directing its audience to the improved design of the vehicle. The terminology used for the
online site includes phrases such as, “dramatic design in motion” and “hand

28
Williamson, Richard. “Check out the 2009 Jaguar XF.” Scripps News. May 22, 2008.
http://www.scrippsnews.com/node/33423

29
Voelcker, John. “Jaguar takes Leap Forward with New Design.” Conde Nast Portfolio.com. July 18,
2008. http://today.msnbc.msn.com/id/25521403/

30
Halvorson, Bengt. “Top 10 Luxury Car Companies with the Best Dealerships.” Forbes Autos. 2007.
http://www.forbesautos.com/advice/toptens/best-luxury-dealers-2007.html

28

craftsmanship, innovative technology & timeless design.”
31
In each of these, primary
importance is placed on design, with an added benefit of superior performance for those
in the audience who need that validation. Jaguar is beginning to reinvigorate its brand’s
heritage, both through messaging and experience.

Brand strategist and managing director of Innovation Protocol, Sascha Strauss,
commented on both the professional strategy and personal experience with Jaguar. A new
owner of the 2008 XKR Portfolio Edition, Strauss claims that Jaguar is beginning to
reflect the characteristics and traditions of the old 1940s models, which is what
enthusiasts have missed the most. Strauss wanted to experience the exclusive aura and
prestige that he had always associated with the original brand. Interestingly enough, he is
the owner of a special edition car; there are only 125 in the United States and he admitted
that he would have never bought one of the $30k models. Instead, his XKR Portfolio is
priced starting at $150k, which increases with each specific customization that is
available to the buyer.
32
When asked about the acquisition by Tata, Strauss stated, “Tata
will bring Jaguar back to its heritage. Jaguar’s previous mass-audience strategy has done
nothing for the brand, and as a brilliant car manager, Tata will eliminate all that Ford has
done. I predict within four years, there will be nothing of the ‘Ford Taurus’ look to the
Jaguar.”
33

31
www.jaguar.com

32
Alina, Simona. “2008 Jaguar XK and XKR.” Topspeed.com. June 12, 2007.
http://www.topspeed.com/cars/jaguar/2008-jaguar-xk-and-xkr-ar37594.html

33
Strauss, Sascha. Interview. September 29, 2008.

29

With regard to the studies by Rapaille in The Culture Code, Jaguar’s brand can be
analyzed on several levels. With Ford, the focus on performance was trying to highlight
what Ford wants to be known for: quality. Rapaille’s reference that quality among
Americans means that “it works” is not what Jaguar consumers are concerned about. The
luxury status or “military stripes” that Rapaille connects luxury with is what that
audience is looking for, which is why aficionados like Sascha Strauss are intrigued by a
Portfolio Edition vehicle. There is an unspoken element to that car that emphasizes “I’ve
earned this Jaguar, and this is proof.” Again, in line with Rapaille’s theory, proof is the
code for “money” among luxury consumers, and a high-priced Jaguar is the proof those
consumers are looking for to show the rest of the world. Cheaper models are not “proof.”
In the end, Rapaille equates shopping with “reconnecting with life” and describes the
importance of the entire experience. With Jaguar’s renewed focus on the experience the
car can bring, and aligning that vision across all departments including the dealerships,
Jaguar could achieve the turn-around it’s looking for.

30

B. Case Study: Michael Kors: Just Can’t Get Enough

Organization History
Michael Kors is a high-end, American fashion designer with more than 25 years of
experience. His style has embodied classic, Park Avenue couture that is all-American and
emphasizes the versatility of practical clothing. He has managed to glamorize the
working woman in an essential and current physique, supporting a classic mainstay in a
trend-driven industry. He has often been quoted as stating that “Everyone wants to look
35, regardless if they are 22 and they want to look more sophisticated or they are 55 and
want to look younger.”
34
Design commentators assert that his product embodies the idea
that “Wear my clothes and you can live the practical, fawn-colored, great American
Dream.”
35
In the last five years, he has gained increased fame through his role as a biting
and witty judge on “Project Runway,” giving his clothing line both a face and personality
for the mainstream.

Industry Overview
Fashion devotees expect designers to produce a “wow” factor, one that will capture the
eyes of everyone, from celebrities to stay-at-home moms. Luxury designers have the
ability to shock audiences; they don’t need to sell to the middle class, but they don’t mind
grabbing their attention. For years, designers have relied on seasonal runway shows to
demonstrate their new collections and mark their territory on the fashion map. It’s a
world where innovation often wins, unless of course, brand loyalty trumps all. Last year,

34
Betts, Kate. “The Making of an Icon.” Time Magazine. August 30, 2004.
http://www.time.com/time/magazine/article/0,9171,689449,00.html

35
Patner, Josh. “Michael Kors: He’s a Great Project Runway Judge. But is he a Great American Designer?”
slate.com. October 18, 2008. http://www.slate.com/id/2151659/

31

less popular luxury designers such as Armani and Fendi grossed in about $4 billion each;
Chanel and Cartier each netted approximately $7 billion; and Louis Vuitton led the pack
with an estimated $22 billion.
36

Competitive Analysis
Kors is considered “the last man standing” in his specific genre of fashion, which is
derived from the 1940s fashion idol Claire McCaredell. She was famous for her
“practical sportswear” that emphasized good sense with glamour.
37
Currently, Kors
competes with fashion king Ralph Lauren and design guru Marc Jacobs for the same
audiences. To be at the level of these two long-time designers, Kors must continue to
reinvent his classic pieces, but not lose the chic, classic edge for which he is so widely
known.

Challenge/Opportunity
Kors is faced with an interesting dynamic, both a challenge and an opportunity. Gaining
financial backing from money moguls Chou & Silas in 2003, Kors was given an
opportunity to expand his line with two of the leaders in the brand extension industry.
Additionally, being a part of the hit reality show, Project Runway, gave him the
opportunity to capitalize on the media and become one of the most prominent faces of
fashion. However, Kors does face a tough challenge: he must balance his lower-priced
line with his top-tier collection and retain his reputation as a premiere designer.

36
Millward Brown Optimor. 2007 Brandz: Top 100 Most Powerful Brands.

37
Patner, Josh. “Michael Kors: He’s a Great Project Runway Judge. But is he a Great American Designer?”
slate.com. October 18, 2006. http://www.slate.com/id/2151659/

32

Point of View
This analysis will be given from the perspective of a brand manager, calculating whether
or not Kors’ decision to implement brand extension strategies was in his best interest,
both financially and reputation-wise. Can Kors psychologically tap into the minds of the
luxury consumer while quickly becoming the face of mainstream fashion and media?

Execution
In the early ‘90s, Kors was forced to file Chapter 11 as the grunge set was no longer
interested in his traditional line of clothing. In 2003, Kors was acquired by Chou & Silas,
who were responsible for making Tommy Hilfiger a household name. They projected a
$1 billion dollar company by the end of year, and the first move was to make Kors
accessible to the masses, so that more people could enjoy his clothing.
38
It wasn’t long
before new brands – Kors Michael Kors and Michael Michael Kors – were developed,
along with a men’s clothing line.

Soon, Michael Kors was everywhere. His lower-priced lines were available at Macy’s,
Nordstrom’s and Bloomingdales, though luxury consumers could still purchase his top-
tier clothing at his flagship stores or Bergdorf Goodman. His witty yet sharp personality
on Project Runway charmed audiences across the nation and people began to associate
his persona with his clothing, and sales began to increase. The lower-priced line was not
doing as well as expected though, and the men’s line ended up losing money. In 2006, he
decided to mix the stores – he believed that people wanted to shop where they could wear

38
Betts, Kate. “The Making of an Icon.” Time Magazine. August 30, 2004.
http://www.time.com/time/magazine/article/0,9171,689449,00.html

33

couture and denim together –so all the collections became available in the same space.
With over $600 million in wholesale revenues and 60 stores worldwide, Kors has
established himself as an accomplished designer and is well on his way to achieving Silas
& Chou’s dreams. However, it remains to be determined whether or not he can still call
his brand “luxury.”

Analysis
As previously stated, one of the key elements of shopping for luxury is the experience it
provides for the consumer; in fact, 82% of women surveyed expect luxury brands to be
“highly responsive” to their personal request. In addition, 70% of luxury consumers shop
an average 14.5 times per month and spend 60% more than the average shopper.
39
These
percentages are critical to any designer, including Michael Kors. In 2007, Michael Kors
(the Collection) grossed about $8.8 million, while his competitor, Marc Jacobs, gained
just under $5 million. However, Jacobs is a subsidiary of Louis-Vuitton-Moet-Hennessey
(LVMH), the largest luxury conglomerate, which grossed about $24 billion in 2007, a
25% increase from 2006.
40

These figures reflect Michael Kors’ ability to remain a viable competitor in the fashion
industry, as well as a warning sign of what he is up against. From 2006-2007, there was a
20% increase within the luxury category for brand value,
41
which demonstrates an

39
Baker, Stacey. “The Global Branding Report: 2007 Edition.” About Publishing, Ltd.
http://www.brandkeys.com/news/press/2007.BrandingReview.pdf

40
Information extracted from respective companies at www.hoovers.com

41
Brown, Millward. “2007 BrandZ: Top 100 Most Powerful Brands.”

34

opportunity for Michael Kors to take hold of the market and become one of the leaders in
the industry. However, it is apparent that he needs more than a charming personality on
“Project Runway” to do so. Furthermore, his brand extension strategy may need to be
revised, so that there is a clear separation from each clothing line that satisfies the luxury
consumer’s need to be different. The average, middle-class consumer is attracted to the
personality he brings to his “affordable” clothes, but he is simultaneously separating
himself from true luxury, like Louis Vuitton or Hermes. Bernard Arnault, CEO and
founder of LVMH summarizes luxury as, “A myth, an exquisite product, some sex, at an
unreasonable price and constant innovation.”
42

Attributing Macrae et al.’s “brand chartering” strategy to the Michael Kors case, the
designer can determine that he is struggling in the final phase of directing and structuring
the brand. He has already succeeded in communicating his personality and philosophy
through his brand, as well as having those sentiments reinforced through different
product lines and his television appearances. Kors must now pay closer attention to the
evolving environment his brand has entered, and be sure to align the brand message with
his newly developed audiences. The luxury collection must remain exclusive and
“special” for that particular audience, so that they do not feel that Kors has sold out to the
mainstream by implementing a brand extension strategy. As Sascha Strauss, expert brand
strategist and managing director of Innovation Protocol, explains it, “If you can justify
the expense to extend, you can justify the expense to build anew.”
43
If Michael Kors
wants to grow and reach alternative audiences, perhaps it would benefit taking heed to

42
“Cracking the Luxury Code: The DNA of Luxury.” Walpole Agency and Added-Value.

43
Strauss, Sascha. Interview. September 29, 2008.

35

this statement and build other product lines from scratch that aren’t dependent on the
Michael Kors persona.

36

C. Case Study: Dubai: Keeping it Destination Paradise

Organization History
Dubai is located in the heart of the United Arab Emirates, and is a unique travel
destination. It marks an open gate to the Middle East, North Africa and the Indian sub-
continent and has recently transformed into an investment-driven economy that is
becoming one of the fastest growing international commercial centers in the world. It has
also become an escape from reality for the ridiculously wealthy, and to say that you have
vacationed in this Middle Eastern hot spot is to say that you are a luxury consumer who
can travel in style.

Industry Overview
This case encompasses two industries simultaneously: tourism and destination branding.
Luxury in tourism is all about personal experience; a German survey concluded that
66.9% of respondents admitted that traveling in luxury provides an escape from daily
routines. Additionally, people travel to see the far corners of the world to tell others about
it, as it increases their feelings of achievement and prestige.

Destination branding is “…combining all things associated with the ‘place’ that
collaborate under one brand. Its aim is to capture the essence of the destination in a
unified manner and can be consumed simultaneously at a symbolic and experiential
level.”
44
This idea is complicated because consumers are first and foremost individuals,
and therefore will interpret destination brands differently. The brand strategist wants to

44
Morrison, Alastair and Donald J. Anderson. “Destination Branding.” Purdue University. June 10, 2002.

37

generate a positive emotional response from her/his audience, while also actively
addressing the characteristics and qualities of the location s/he is highlighting.

Competitive Analysis
Unfortunately, Dubai’s range of competition is extensive; any tropical paradise, stylish
destination or un-trodden ground will give Dubai a run for its money. The Fiji Islands,
Italy, the Greek Isles, Costa Rica, Bali, Shanghai and Barcelona are all seen as examples
of vacation hot spots and, though each has something different to offer, they all rely on at
least one common denominator: a specifically branded experience. For example, the
Italian Visitor’s Bureau has masterfully branded the gastronomic, wine and historical
aspects of the country to attract mainstream and luxury travelers.

Challenge/Opportunity
The challenge for Dubai is to differentiate itself from all the rest, and deliver the promise
of experience. The city-state is still a young brand, with plenty of room to grow, but also
room to fail. It has many visible aspects to build on, including excellent quality of life, a
city of superior commerce, world-class real estate and brilliant infrastructure. These
things can make or break Dubai; it is up to brand strategists to capture the essence of this
area and bring it at full face value to consumers across the globe.

Sadly, the current political environment that Dubai harvests will threaten the city-state’s
ability to brand itself as a utopia destination. Dubai is controlled by a single ruler, one
who traditionally comes to political power through family and wealth. Presently, this

38

title belongs to Shaikh Mohammed Bin Rashid Al Maktoum, who faced charges in 2006
(later dismissed) of encouraging the abduction and enslavement of thousands of boys for
use as jockeys in camel races.
45
In addition, there has been extraordinary secrecy in the
corporate arena, where on the surface individuals are quick to defer any implications of
ulterior strategic motives, but weary to answer the serious questions. In one case, the
chairman of one of Dubai’s largest investment funds refused to disclose the value or the
rate of return on what he managed, and shunned the question of doing business with
Israel.
46
Furthermore, there is a complete lack of labor laws protecting women, children
and foreigners. Homosexuality and displays of heterosexuality are considered criminal
offenses.
47
With such disregard for basic civil rights and corporate practices that
countries in Western Europe as well as America are naturally privy to, it will be
extremely difficult for Dubai to gain success in branding itself as an international oasis.

Point of View
The assessment of Dubai as a luxury brand in tourism will be taken from the point of
view of a potential and/or current luxury brand manager. This case will analyze the brand
strategies implemented to stimulate brand “buzz” and increase status as well as sales.
Furthermore, it will determine whether or not Dubai can live up to its reputation as a
luxury hot spot, and the obstacles it will have to overcome in this ever-changing industry.

45
Kotler, Jonathan. Associate professor at the University of Southern California. October 1, 2008.

46
Harding, James. “Dubai Starts to Get Message.” Times Online. November 1, 2007.
http://business.timesonline.co.uk/tol/business/columnists/article2781504.ece

47
Judd, Terri and Nikolina Sajn. “Briton Faces Jail for Sex on Dubai Beach.” The Independent. July 10,
2008. http://www.independent.co.uk/news/world/middle-east/briton-faces-jail-for-sex-on-dubai-beach-
863918.html

39

Execution
Branding Dubai as the leading travel spot in the world has not been easy. Shaikh
Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE as
well as Ruler of Dubai, has sought to brand Dubai as a modern, global, capitalist
powerhouse that thrives on innovation and excitement. Brand strategists are busy
promoting Dubai all over the world, with the lure of stunning attractions such as Burj Al
Arab, The World (a man-made archipelago of 300 islands), The Mall of Arabia and the
Palm Trilogy. Strategically speaking, Dubai is relying on the leverage associated with its
convenient location and is marketing itself as one of the best connected cities in the
world.

However, with these strategies come challenges, some that Dubai has yet to confront but
which could potentially hinder its growth in the future. The city-state needs to adapt
international systems and processes to operate on a global scale at an efficient level. Also,
there needs to be more calculated human resources management, including a focus on
streamlining labor laws with those of the rest of the world. Dubai officials must address
the Western concerns about safely traveling to the Middle East and apprehension about
Islamic cultural restrictions.

Analysis
Dubai continues to shock the world with its increased popularity and continuous
economic growth – an average of 17% per year, as of 2006, which is twice as fast as

40

China and four times as fast as the United States.
48
What’s more, is that much of this
economic growth is attributed to the non-oil sector, giving analysts evidence that this tiny
area may be a substantial world player in the future. In 2007, the non-oil sector, which
includes finance, real estate, tourism and hospitality, marked 65% of the GDP and
grossed about $124 billion, a 21% increase from 2006.
49
In a year’s time, the number of
hotel guests increased by 31% to 4.7 million (2002), illustrating Dubai’s magnetism and
continued popularity.

The first wave of branding Dubai involved extravagant visual campaigns, with bright,
bold colors and images of a vacation paradise on colossal billboards that littered
highways, airports and city centers. The idea was to create a buzz – and that it did, but
along the way came confusion. There was not enough emphasis from the beginning on
what made Dubai different—people confused names and translations. Audiences could
recollect the pictures of Dubai’s landmarks, but the names escaped them; hardly any
traveler could pinpoint exactly where Dubai was. They were enamored by the glamour
and prestige that the city-state seemed to embody, but unclear of the essential brand
identity that Dubai intended.
50
An established identity that is commonly recognizable is
critical in destination branding, as it maintains the distinguished profile of the locale and
keeps audiences on board with the vision. It is not only about the visual attraction –

48
Gregory, James. “Building the Dubai Brand.” Corebrand. January 9, 2006.
http://www.corebrand.com/index2.php?option=com_content&do_pdf=1&id=48

49
“Dubai – City of Continuing Growth.” Emerging Market Reports: Global Investments, Ltd. October 23,
2007. http://www.myglobalinvestments.com/index.cfm?scn=marketreportsdetail&article_ID=14

50
Javed, Naseem. “Dubai Must Seek Brand Recognition.” Gulf News. February 24, 2008.
http://www.gulfnews.com/business/Comment_and_Analysis/10192239.html

41

audiences must be able to connect with what the destination is known for, is striving to be
and how this differentiates the brand.

Burj Al Arab is the first seven-star hotel in the world and has been the luxury icon of
Dubai for the past several years. Suite rates are $15,000 a night and transportation from
the mainland is by Rolls Royce.
51
However, the identity of this hotel is often mistaken for
the Burj Dubai Tower – opening in 2009, which will be the largest skyscraper in the
world.
52
There has not been enough emphasis on the components which make up Dubai,
which will have to be adjusted in the next step of the branding strategy so that the city-
state will continue to attract travelers.

A pertinent question for Dubai marketers is whether or not Dubai is becoming a
spectacle. There has been so much leverage attributed to the equity of other brands
endorsing Dubai that there is little that Dubai can call its own – except that it has brought
all these prestigious names under one roof. Its metro line, run by the Roads and Transport
authority, is auctioning off 23 lines for “naming rights” and 250 companies have applied,
with logos already developed.
53
Tiger Woods has his own community golf course.
Armani joined a hotel architect to build a 20-story luxury hotel. The endorsements seem
endless, and yet nothing distinguishes Dubai’s own brand identity.

51
Jones, Rhys. “Building Dubai’s Image.” Gulf News. January 16, 2007.
http://archive.gulfnews.com/articles/07/01/16/10097040.html

52
www.dubaitourism.ae

53
“Branding Dubai.” The Financial Times. April 18, 2008. http://www.ft.com/cms/s/0/6f6a6c74-0d72-
11dd-b90a-0000779fd2ac.html?nclick_check=1

42

These luxury brands act as qualifiers for Dubai as a prominent destination. If these labels
lose their value or prestige, than a decline would be expected in the value of Dubai as it
has made these brands its identity. Some experts, such as Sascha Strauss, find the city-
state’s viability to be in question: “Perhaps I’m pessimistic, but it just seems like hype. I
see it happening in an apocalyptic sense, where in 50 years everything will just crumble.
The branding highlights the shock and awe of luxury – what happens when the next big
thing comes?”
54
Others believe that success of Dubai is dependent on timing; Peter J.
Cooper (2006) of ME Info argues, “…some of the greatest cities in world history derived
from the epicenters of trading empires. This can be the destiny of Dubai.”
55
However,
this skepticism may include valid assertions; the branding of Dubai should be
implemented and invested over the long term for it to maintain its status as a desired
destination. Furthermore, constant monitoring and evaluation will remain critical in
determining whether or not the brand identity is developing.

Despite the success that these luxury brands add to the development of Dubai as a
destination hotspot, the traditional cultural practices and politics are having an effect on
the city-state’s image. In the last year, several different cases have surfaced where
tourists have been charged, found guilty and imprisoned for various petty “crimes.” Early
February 2008 a British tourist, Keith Brown, was imprisoned for four years after 0.003
grams of cannabis was found stuck to the sole of his shoe. In the same month, another
tourist was forced to sign an Arabic document without the provision of a translator and

54
Strauss, Sascha. Interview. September 29, 2008.

55
Cooper, Peter J. “Why Dubai? Anatomy of a business success story.” ME Info: The Ultimate Middle
East business resource. October 2006. http://www.ameinfo.com/28046.html

43

imprisoned for one month for the possession of melatonin jet lag tablets.
56
Most recently,
two British tourists were arrested and are on trial for having sex on Dubai’s Jumeirah
Beach. Kissing in public is illegal in Dubai, let alone intercourse, and what’s more, it is
illegal to have sex outside of marriage or to be drunk in public. If both of these
individuals are found guilty of these “crimes,” they could face up to six years in jail.
57

Though these scenarios may seem absurd to those who are unfamiliar with such -
traditional customs, officials in Dubai stand strongly behind what they believe in and
have practiced for years. The laws may seem overly strict and unjust, but they are explicit
in the community, and Dubai representatives believe that any tourist who is planning on
spending a substantial amount of time in the city-state should familiarize themselves with
these cultural practices prior to the trip.
58
It is perceived as rude and disrespectful to
display such a lack of awareness, and officials take these aforementioned offenses very
seriously and will continue to do so. As a result, there is a chance that Dubai’s reputation
and luxury brand status will be irrevocably tarnished, and so in the coming years it may
become critical for Dubai to allow for evolution to maintain a running pace with its
international counterparts. Such setbacks are typically unfamiliar territory for a luxury
brand, however in Dubai’s case could be detrimental to its success.

56
“Tourists Warned of UAE Drug Laws.” BBC News. February 8, 2008.
http://news.bbc.co.uk/2/hi/uk_news/7234786.stm

57
Judd, Terri and Nikolina Sajn. “Briton Faces jail for Sex on Dubai Beach.” The Independent. July 10,
2008. http://www.independent.co.uk/news/world/middle-east/briton-faces-jail-for-sex-on-dubai-beach-
863918.html

58
Haslam, Chris. “Dubai Beach Arrest Tip of the Iceberg.” Times Online. September 7, 2008.
http://www.timesonline.co.uk/tol/travel/news/article4681573.ece

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D. Case Study: Ritz Carlton: Where Luxury Service is Essential

Organization History
The first Ritz hotel was founded in 1898 in Paris by Swiss hotelier Cesar Ritz, and since
then has become the acknowledged gold standard in the hospitality industry. There are 72
hotels worldwide in 24 different countries, employing approximately 38,000 who share
an unwavering commitment to outstanding guest service. The Ritz Carlton’s motto is
“We are ladies and gentlemen serving ladies and gentleman.”
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Each employee illustrates
this mission statement through every act of service provided by the hotel, from the
executive level to housekeeping. It embodies what the Ritz Carlton stands for, and is seen
throughout the company.

Industry/Category Overview
The Ritz Carlton designates itself in the service industry, specifically in luxury hotelier
services. The organization is operated to serve guests with the best service,
accommodations and experience that a hotel of luxury caliber can provide. A luxury hotel
setting is emphasized throughout the buildings. The front lobbies are intentionally smaller
than most so that the staff may provide a more personalized service to its guests. The
wait-staff is clad in formal attire, exquisite fresh flowers adorn the public spaces and
gourmet cuisine is provided by the chefs who have studied under the famous Chef
Escoffier. It has remained the forerunner in this industry, and has set the expectations for
luxury consumers.

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www.ritzcarlton.com

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Competitive Analysis
Though the Ritz Carlton may be seen as one of the best players in hotel services, it still
faces viable competitors. The Four Seasons, Hyatt, Westin and Fairmont Hotels and
Resorts are all top-quality firms that receive an exceptional amount of praise, much like
the Ritz. Each of these companies provides excellent, competitive services such as spa
treatments, No Luggage Required programs, “home-style cooking” and state-of-the art
accommodations. Constant innovation within this industry mandates the raising of the
bar.

Challenge/Opportunity
In an industry with many choices for consumers, Ritz Carlton had to distinguish its brand
as an alternative that doesn’t compare to the rest. Ritz Carlton representatives had to
combine superlative hotel facilities with impeccable guest service to create an unrivaled
experience.

Point of View
The assessment of the Ritz Carlton as a luxury brand is taken from the point of view of a
potential and/or current luxury brand manager. This case will be analyzed with
comparisons to current branding strategies used by these professionals, and measured by
a constructed methodology that seeks to validate the success of this brand.

46

Execution
a. Strategies
1. Selective staffing: the Ritz Carlton’s employment strategy includes rigorous
interviews complete with personality/character analysis. Furthermore, Ritz Carlton
employees receive an intricate, mandatory orientation, which instills the Ritz Carlton
philosophy in each employee. This philosophy is reinforced through monthly and
quarterly workshops. Employees are taught to speak eloquently, with each guest request
answered by “My pleasure.” Immediate guest satisfaction is an employee’s primary
concern, and they are given the liberty to make that possible in any way they see fit.
Within the first year of employment, each employee must participate in approximately
200 hours of training to ensure that he/she is qualified and conditioned to provide superb
service, which the chain designates The 20 Basics.
2. The Gold Standard: This is the actual standard set by the Ritz Carlton to which
each employee must adhere. It includes the 20 Basics, a set of quotas that all employees
must learn, memorize and internalize. The underlying themes are:
a. Define and refine
b. Empower through trust
c. It’s not about you
d. Deliver wow!
e. Leave a lasting footprint.
3. Community: The Ritz Carlton does not just limit itself to guest services within
the hotel; hotel managers are also active players within local communities. For example,
on one occasion a 12-year-old little girl was diagnosed with a fatal strain of cancer and

47

the Ritz Carlton made her dreams come true by hosting her very own prom, as her one
regret was that she would miss it. Her tragic condition was relayed to an employee at the
Ritz Carlton through a family friend, and that employee took it to management. In the
end, the Ritz Carlton put on a wonderful event, and commemorated her birthday the year
after she passed. That employee still keeps in touch with the family.
60
This scenario
illustrates the company’s commitment to excellence, both inside and outside of the
workplace, and the true value it places on leadership.

b. Challenges
The Ritz Carlton also has faced changes in leadership, financial threats during economic
downturns, viable competitors and ever-changing customer needs. Over the past 90 years,
the Ritz Carlton has succeeded against these odds; not by cutting corners and “limiting”
the customer’s experience, but instead, by finding ways to become a more efficient
company that can still serve clients better than any competitor. For example, several
years ago, the Ritz implemented a “cultural shift” that created a fresh, contemporary feel
for the hotel. Based on customer surveys, Ritz management realized that the consumer
base had changed and the traditional formalities could turn this new audience away. The
Ritz adhered to the need for innovation, but never lost the classic, luxury-style service it
was known for.

60
The Ritz Carlton Experience. http://www.mcgraw-
hill.com.sg/professional/assets/0071548335_Michelli_ch01_r1.pdf

48

Analysis
In the last century, the Ritz Carlton has relied heavily on word-of-mouth marketing to
influence audiences’ perceptions and convince them that this is a premier hotel that
exudes every luxury quality the industry can provide. According to Bruce Himelstein, the
vice president of marketing, the company’s reputation is comprised of “…the brand
equity that has built up over the years, obviously, and a lot of it is defined by the service
we offer.”
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This strategy, combined with the eloquent hotel motto, mandates that the service at Ritz
Carlton be the best, and there continues to be an increase in yearly earnings. The Ritz
Carlton is owned by Marriott, a hotel conglomerate that earns about $13 billion per year.
The luxury subsidiary is comprised of the Ritz and Bvalgari (which has only two hotels)
and brought in $1.4 billion in 2006, a 7% increase from 2005. The luxury subsidiary
continued to grow even more in 2007 with an 11% increase in revenues to almost $1.6
billion.
62
One of its largest competitors, the Four Seasons, only brought in $253.4 million
in 2006, but the Hilton Hotels grossed a total, of $8.1 billion.
63

Marriott’s acquisition of the Ritz Carlton has not tarnished its reputation even though its
holding company also has economy-conscious hotels in its portfolio. In fact, Five Star
Alliance Hotels named both Ritz Carlton-Dubai and Hotel Ritz (Paris) among the top 50

61
Buss, Dale. “Branding, a Job Well Done.” Brandchannel.com. October 25, 2005.
http://www.brandchannel.com/start1.asp?fa_id=286

62
1998-2007 Hotel Statistics. Marriott International, Inc.

63
Information extracted from www.hoovers.com

49

hotels in the world. In the same survey, the Four Seasons was recognized for locations in
New York, Dublin and Paris. The Ritz Carlton surpassed the Four Seasons only in the
last five years of a JD & Powers Survey that named the hotel “Highest in Guest
Satisfaction in Luxury Hotel Chains” for 2003.
64
As of 2007, The Ritz Carlton is still the
only hotel to receive the prestigious Malcolm Baldridge National Quality Award, doing
so twice.
65
It has managed to survive acquisition by a major conglomerate and continue
to hold its place as a top, luxury hotel, wary of competitors that continuously raise the bar
but never compromising the brand’s integrity to surpass them. The Ritz Carlton must
continue to deliver its brand’s promise of personalized service and the “luxury touch” to
maintain its position at the top and provide the experience the luxury traveler is seeking.

64
Lampton, Bill. “Birth of the Ritz-Carlton Mystique.” Expert Magazine. 2003.
http://www.expertmagazine.com/EMOnline/RC/part1.htm

65
Ritz Carlton’s Human Resource Management Practices and Work Culture: The Foundation of an
Exceptional Service Organization.
http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization%20Behavi
or/Ritz-Carlton%20Work%20Culture%20Service%20Organization-HRM%20Case%20Studies.htm

Chapter 3: The Luxury Index
The following tables and analyses
luxury environment and the implications for
Figure 1: BRANDZ, Top 100 in 2006
Figure 2: BRANDZ, Top 100 in 2007

66
Brown, Millward. 2006 BrandZ: Top 100 Most Powerful Brands.
http://www.millwardbrown.com/Sites/optimor/Media/Pdfs/en/BrandZ/BrandZ
67
Brown, Millward. 2007 BrandZ: Top
Luxury Index
and analyses are provided by the author to illustrate the
luxury environment and the implications for the brands within it.
BRANDZ, Top 100 in 2006
66

BRANDZ, Top 100 in 2007
67

Brown, Millward. 2006 BrandZ: Top 100 Most Powerful Brands.
http://www.millwardbrown.com/Sites/optimor/Media/Pdfs/en/BrandZ/BrandZ-2006-Top100Brands.pdf
Brown, Millward. 2007 BrandZ: Top 100 Most Powerful Brands.
50
are provided by the author to illustrate the trends in the

Top100Brands.pdf

51

An annual study produced by Millward Brown (BrandZ), “Top 100 Brands,” breaks
brands down by category and highlights several key elements worth noting, specifically
in the luxury category. The parent company of BrandZ, WPP agency, sent these findings
to publications such as Forbes. The brands were ranked based on the calculated brand
value, which is found through a formula that balances intangible earnings, brand
contribution (the share of earnings from a product/service’s most loyal users) and market
value. From 2006 to 2007, the top ten luxury brands have not changed; the only
difference being that Rolex lost two spots in 2007 due to a decrease in brand value. Also,
it is interesting to see that 50% of these are owned by conglomerate LVMH, and the 20%
increase in brand value of the luxury industry revolves around the growth of the same ten
brands. A slightly different survey
68
conducted by Forbes asked luxury brand lovers to
rate their favorite brands, and the results were as follows:
1. Gucci
2. Chanel
3. Calvin Klein
4. Louis Vuitton
5. Christian Dior
6. Versace
7. Armani
8. Ralph Lauren
9. Prada
10. Yves Saint Laurent

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Ruiz, Nicola. “World’s Most Desirable Luxury Brands.” Forbes.com.
http://www.forbes.com/forbeslife/2008/03/25/brand-luxury-desirable-forbeslife-cx_nr_0325style.html

52

This list is far different from those brands categorized by brand value. In fact, there are
still those who would argue that Calvin Klein and Ralph Lauren are not luxury brands
any longer. This means several things for designers like Michael Kors: though he may be
a long way from outdoing the luxury guru LVMH in revenues, if he continues to position
his brand in sync with audience needs he may find himself on a top ten list in Forbes in
the future. Although revenues do play a significant role in a brand’s value in the
marketplace, public perception remains a highly influential quality impacting any luxury
brand’s overall status.

Each year, the Luxury Institute, a New York-based research and ratings firm, conducts a
survey to determine the top luxury brand in the automotive industry. The Institute
monitors industry trends, best practices and consumer rankings for high-net worth
individuals and companies. The audience surveyed is what the Institute deems to be “true
luxury” as they have an average net worth of $3.1 million, an average income over
$256k, own 70% of all the wealth in the U.S. and as consumers of luxury goods are
responsible for 80% of the industry’s profits.
69

The luxury car survey is one of the most influential analyses for luxury brand managers
as it provides consumer insight from the niche market of ultra-luxury consumers. The
survey includes twelve brands: Acura, Audi, BMW, Cadillac, Infiniti, Jaguar, Land
Rover, Lexus, Lincoln, Mercedes-Benz, Porsche and Volvo. For the past four years,

69
www.luxuryintstitute.com

53

Porsche has been voted number one.
70
In 2006, it sold almost 97,000 vehicles, a 9.5%
increase from 2005.
71
Until 2008, second place was attributed to Mercedes, however this
year Lexus was voted as superior. Lexus was also rated number one for customer
experience, again highlighting the importance of the personal satisfaction a consumer can
achieve through a brand. Jaguar has continued to move its way up the ladder, and landed
the number five spot in 2008, just behind competitor BMW.
72

One of the key components to Porsche’s success is its outstanding commitment to the
core brand and its values. Other luxury brands have been affected by changes in
management or consumer culture, and as a result, their brands have been tainted. Porsche
enthusiasts, however, commented that Porsche “…has always been a high-end car with
design and elegance, and represents an accomplished person.” This belief plays into
Rapaille’s culture code theories that illustrate how people associate true luxury (Porsche)
with a sense of military achievement or “stripes.” Further, the above statement reflects a
believed correlation between “high-end” and superior design. Porsche embodies what is
luxury; as the CEO of the Luxury Institute Milton Pedraza puts it: “[Porsche] is an
automobile that never loses its way on the luxury highway, even at high speeds.”
73

70
,
33
“Luxury Institute Survey: Wealthy Consumers Rate Porsche, Mercedes and Lexus Most Prestigious
Luxury Auto Brands of 2007.” Marketwire. April 2007.
http://findarticles.com/p/articles/mi_pwwi/is_2001_March_12/ai_n18781071

71
Reed, John. “Automobiles: Life is Sweet – and becoming Sweeter!” The Financial Times. June 4, 2007.

72
“Porsche Named Top Prestigious Luxury Automobile Brand for 2008 by Luxury Institute – Again!”
Businesswire. May 15, 2008. http://www.luxuryinstitute.com/doclib/doclib.cgi/0/0/2008

54

Chapter 4: The Loyalty Formula
As the case studies indicate, the field of communication for all luxury products is not
defined by a single strategy. Public relations and marketing professionals are utilizing
other resources to effectively reach their target audiences, and one type of message might
not work for everyone. For years, there have been two dominant techniques to brand
strategy: the push method and the pull method.

If a brand employed a push strategy, typically this involved the company soliciting
retailers to advertise its product by participating in in-store promotions. In essence,
consumers are ‘pushed’ to purchase the product due to the way it is presented. This
usually came in the form of in-store sampling, assisted shelf maintenance, window trims,
store posters, etc. Additionally, ‘push’ strategies relied heavily on targeted
advertisements and word of mouth marketing.

On the other hand, the pull strategy builds desire for a product, directly or indirectly, to
motivate audiences to purchase. This method often requires a long-term strategy that
includes high spending on repeat advertising and exposure to attract and entice
consumers. Advertising campaigns will typically include multiple outlets from billboards
to product brochures and bus boards to magazines. Phrases such as “for a limited time
only” or “50% off this week” are used often to create a sense of increased time-limited
value. These efforts were supplemented by publicity and large-scale events, all designed
to increase brand exposure. Consumers were literally bombarded with media and
messaging in hopes they would eventually break down and make a purchase. This type of

55

messaging generated higher consumer demand and both retailers and manufacturers were
able to reap the rewards.
74

However, an evolving market requires branding strategies that are current and can play
into the wants and needs of audiences. Push and pull strategies are fading, and this is
especially noticeable in the luxury category. Luxury brand strategists are realizing that in
the long run, this will not help build or strengthen their brand. Instead, they need to
strengthen the relationship between the consumer and the brand.

These relationships are introduced through brand “experiences.” When consumers are
able to connect with the brand on an intimate level, they begin to formulate a bond that
can be maintained indefinitely if the brand provides a rewarding experience on each
encounter. The experience is often characterized by the delivery of the brand’s promise,
which in turn engages a consumer’s trust and starts to put ‘deposits’ in their ‘loyalty
bank.’ Luxury consumers want the brand to communicate how it will differentiate them
from the rest, and provide the layer of exclusivity they desire. This specialization
enhances the consumer’s perceived brand experience and, as a result, strengthens their
loyalty to it.

As demonstrated throughout this thesis, creating and maintaining brand loyalty is not an
easy task, but it is absolutely essential in today’s market. These individuals are

74
“Push Marketing Versus Pull Marketing.” Morebusiness.com. August 14, 2006.
http://www.morebusiness.com/running_your_business/marketing/ah_pushpull.brc

56

trendsetters and attract different audiences in a new direction.
75
This is a quality that no
advertisement can possess, but one that every brand wishes it had. Loyalty in the luxury
realm is maintained by brands which retain their original attributes, but also weave in
important brand innovation. As long as they don’t lose their brand personality, their
audience should continue to purchase.

75
Khanna, Samit and Ashish Mansharamani. “Marketing of Luxury Brands.”
http://www.brandchannel.com/images/papers/297_Luxury_Branding_India.pdf

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Chapter 5: Where PR Practitioners Go From Here
It’s important for public relations practitioners to note that the luxury industry is
evolving, and not just from “old” to “new” luxury; the audience is evolving as well.
Before, it was common for strategists to believe that they did not need to ask the
consumer what it is they wanted, rather they would tell them what the should have. Brand
strategists now listen to what their consumers are saying, and products/services are being
marketed accordingly. Further, luxury providers are pushing towards personalization, so
that not only do they place consumers in the exclusive “luxury” realm, but they aim to
make each individual consumer experience unique.

Every luxury brand department will have a critical decision to make in the future about
what is more important: maintaining their luxury brand status or earning the most profit
from their brand. However, brands such as Michael Kors that choose to indulge in brand
extension must understand that they are risking losing their luxury title. At that point,
they will have disregarded the exclusivity factor that loyal consumers had so been drawn
to in the first place. Though wider audiences can ultimately lead to larger profits, the
brand has simultaneously lost something invaluable: consumer loyalty.

Consumer loyalty is critical to a brand’s success in the luxury industry, and it is the role
of the communicator to ensure this relationship through a cohesive brand strategy. For
Jaguar, though the brand has suffered tremendously in the past few decades, it is reviving
enthusiasts’ loyalty by communicating Jaguar’s original brand essence of design and

58

elegance. If the brand is successful in tapping back into the loyalties of its original
consumer base, it may have a chance to once again restore its luxury status.

Most importantly, communicators for the luxury industry must be wary of the emerging
market. Right now, luxury consumers include the “Baby Boomer” generation, who are
responsible for encouraging the global luxury explosion. These individuals were
considered the ‘me-generation’ who wanted a shot at all products/services. As this
audience continues to grow older, a new luxury market is emerging.

The young, affluent generation of the Millenials and GenXers will require the brand
strategists’ full attention in the next several years. This shift will highlight the “instant
gratification” generation that is willing to both buy and spend more than their
predecessors; it is likely that that this generation was introduced to “affluent living” at a
much younger age than the Baby Boomers were.
76
However, this advantage comes with
its obstacles: this audience is far more consumer-savvy than their parents were, and as a
result will participate in the luxury market with a more discretionary eye. Brand
awareness is no longer in question: they value the experience a brand can provide; this
includes quality, price/value and overall satisfaction with a product.

With the alarming efficiency of technology and new media, trends will come and go at
exponentially faster rates – even on a global level. Communicators will need to master
social media as well as their audiences to reach them in the most effective manner. They

76
Danziger, Pam. “The Ascent of the Young Affluents: The Future of the Global Luxury Market.” Unity
Marketing 2005.

59

will have to anticipate the ‘want-it-all’ mentality or their brand can disappear in an
instant, both in the actual and virtual markets. There are a few years left before this group
takes the reins of luxury consumerism, but it is not something to set aside for a later date.
It is absolutely imperative that to survive in this dynamic market, brand managers must
start planning for the future. If not, they might as well plan for their demise.

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Glossary of Terms
(For the purpose of this thesis, the provided terms will be used and defined as follows)
Brand: A brand is an identity that is attributed to a person, place, company, product, etc.
which enables audiences to accurately recognize and differentiate them from competitors.

Luxury: The highest category of goods and/or services that is exclusively accessible to
an audience of prestigious status and elevated lifestyles.

Luxury brand: The first-rate identity created for products, goods, places, etc. that puts
them in the luxury category; a mechanism for validation of status.

Premium: a product and/or service category that is considered of “high status” yet
remains accessible to a mass audience.

Consumer: an individual in the public arena who can be influenced in both perception
and behavior by branding and communication strategies.

Baby Boomer: Typically born between mid 1940s and the early 1960s; as a group, they
represent almost 20% of the American public (about 79 million); This particular
generation was not afraid to rebel against the society. They loved rock music, young
males grew their hair long, young activists engaged in large-scale protests, increased
illegal drug use, and experienced a sexual revolution. Today, they are seen as healthier
than their parents and expected to live well into their 80s.
77

GenXer: Typically born between 1964-1986; Generation-Xers are characterized as
having a high affinity for technology and being computer and Internet proficient,
skeptical about advertising claims, fast spending, and more impressed by personal style
than designer price tags.
78

Millenial: a term used to refer to the generation, born from 1986 onward, brought up
using digital technology and mass media; the children of the Baby Boomers, often
referred to as Generation Y.
79

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Keltsch, Steven. Next Life Builder. “Baby Boomer Defined and their Impact on Society.”
http://www.nextlifebuilder.com/index.html

78
Link Magazine: “Marketing Madness: A Postmortem for Generation X.” 1997.
79
www.dictionary.com

61

Brand Manager: Individual with strategic and tactical responsibility for a brand,
including responsibility for brand’s identity and position, maintaining that identity by
securing needed investments and making sure that all media efforts are consistent with
the identity.
80

Niche Market: A specific audience of the consumer market that is attracted to a
particular brand, style or quality of a product.

Niche Luxury Market: A specialized segment of consumer audiences prone to
indulging the luxury market that brand managers and communicators direct messaging to.

Destination branding: A strategy used to create an identity for a location, usually
somewhere for travel or vacation purposes. It communicates the promise of a specific
destination that identifies with consumers’ emotional and psychological needs.

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Aker, Dan. Building Strong Brands. The Free Press: New York, NY. 1996.

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Appendix A: Interview Transcript

Interviewee: Brenda Lynch, SVP, The Rogers Group and adjunct professor at the
University of Southern California.

1. What is your working definition of a ‘luxury brand’? What characteristics and/or
standards do these brands comprise?
Well, I think there are lots of components to luxury, but to narrow it down, I believe luxury
can be defined in one of three ways: a) style – where it is a badge, so one can say, “I’m a
Prada girl.” b) indulgence – where consumers feel they are really special and that they
deserve luxury as a treat. c) affluence – the consumer sentiment that they live in a different
class than all the rest. A good example of this last one is eco-friendly, which is becoming the
ultimate in luxury. New moms can buy $65 onesies for their baby (which they will grow out
of within a few months) that is made entirely by environmentally-friendly materials.

Here’s the thing; we live in what they call an hourglass economy, where the super affluent
are at the top, the small middle class, and the rest of us are at the bottom. Indulging in luxury
feeds out ways of being self conscious, and signifies we have made it. However, luxury must
constantly redefine itself to stay special. Premium will always try to take it and move down
the hourglass and as a result, luxury has to once again, redefine. Here is the ultimate
oxymoron: mass-market exclusivity.

2. What is your professional experience with luxury branding?
I worked with Bosch & Thermador, which is more so a premium mass market according to
your definitions.

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3. What strategies are critical to a luxury brand manager in order to effectively reach
the international market? How do these strategies vary from region to region?
Luxury brands are so insular with a core audience that is very small. As a premium mass
marketer, you have to know where you stand in relation to the luxury brands. Premium mass
market is aspirational; you pull from the luxury realm what’s best for your market.
Sometimes luxury brands come out with things that are not “street ready.” It’s a one-of-a-
kind vs. limited edition; luxury vs. functionality.

What I’ve found over the years is that the super affluent are more alike internationally – they
are world travelers and they are experience. Take Dubai for example. These are seen as the
islands of paradise. But their hotels are not Dubai inns that are looking for local business.
They are working on an international level, and depend on that success to keep them in
business.

4. What are some of the challenges and pitfalls of a luxury brand?
The biggest challenge is building the brand and not losing to mainstream. As soon as it goes
mainstream, the luxury consumer audience will move on and it is extremely difficult to bring
them back. It is important to remember the essence of the brand lies at the core – stay true to
that. If a brand owner is distracted by ego, monetary profits can really hurt a luxury brand.

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5. How do brands maintain a higher level of ‘luxury status’ in comparison to the
mainstream if they decide to take on a brand extension strategy?
It all depends on the brand reputation. Take Tommy Hilfiger for example. He has different
versions, different styles. He justifies it by saying that these different looks can cater to larger
audiences, and that he still has his high-end following. That he may, but he definitely diluted
his brand as soon as he took on the mass market.

Here is something to consider regarding Michael Kors – is he publicly traded? If not, then
more so to stay true to your brand. Once there are too many partners, interests are diverted,
money takes over and you end up making compromises. It is very hard to come back from
and keep your core audiences with you.

6. What do you consider the profile of a luxury consumer to be?
I would say there are three things to keep in mind:
a. classic vs. fad: the value has to stay. It cannot be considered a “last year” trend.
b. Style must be created on their own terms. They live for the brand because it
does something for them. It’s about personalization, mixing and matching to their
liking.
c. Even in today’s market, luxury consumers are seeing a growing responsibility
in philanthropic duties, individually and for companies. They want to see more
alignment with “giving back.”

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7. What would you recommend luxury brand managers of be conscious for the future
emerging audience?
I would advise that the Internet is catching up and it’s becoming scary. Take for instance
Ideeli. This is a “members only” site online. It is only catered to the shopping, trendsetting
women of the country. What’s more is that it is by invite only. This site finds you and asks
you to be a part of their world. That is elite, and it’s online, and more of the luxury audience
is getting involved.

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Appendix B: Interview Transcript
Interviewee: Sascha Strauss, Managing Director of Innovation Protocol™ and adjunct
professor at the University of Southern California.

1. What is your working definition of a ‘luxury brand’? What characteristics and/or
standards do these brands comprise?

Luxury brands are: inaccessible to the masses, limited distribution, premium pricing, and
sustained value. It is beyond functionality – the item that is luxurious is only produced for a
specific amount of time. An item is no longer luxurious if it is the same year after year.
Owners care so much about perception, that the manufacturer of that luxury good takes
action to keep from masses.

For example, look at Ferrari. Now that is ultimate brand loyalty. You cannot buy a brand new
model Ferrari without having owned one previously. You must show proof of owning a used
Ferrari or having the last model to be allowed to purchase a new model. It doesn’t matter
how much money you have, it’s about brand loyalty.

2. What strategies are critical to a luxury brand manager in order to effectively reach
the international market? How do these strategies vary from region to region?
It’s important to note the difference between branding premium v. luxury – the people
buying the luxury good can be named; they can be identified. Particular audiences are made
aware these products exist – not made mass public accessible. Your promise is tailored
accordingly. The brand acts as it were one of them, a like minded individual rather than a
company trying to sell a product.

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Luxury is not a household name. Most people should not be familiar with it. What’s
incredible is that branding strategy should be alienating – which is a technique that is almost
never used for any other market. But for luxury, the branding should confuse and not make
sense to the average consumer. That is because the luxury market will understand, they will
relate and that’s what the luxury brand manager is looking for.

The problem with the international market is that to be successful there has to be perception
that the luxury good has significance in the country of origin. An interesting example uses
Russia. At this time, there is a large audience in Russia that is extremely wealthy and is
spending that money in the car market. There are a variety of ultra-luxury cars that these
individuals could afford, however they are purchasing Bentleys. Why? Because of the
significance of a Bentley in the United States. That is what Russia wants to emulate, and so
the relevance between the Bentley and the U.S. is what’s important.

Also, the more skill attributed to the country of origin and the manufacturing process, the
more luxurious the brand is perceived. For example, look at Ferrari again. It would be
cheaper for them to manufacture in other places besides Italy. However, the skill set
attributed to the Italian automaker would lose value if it were done in any place besides Italy.
On the contrary, there is Ford. There is not a whole lot of luxurious qualities Ford could ever
possess, and its country of origin is the good old U.S.

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3. What are some of the challenges and pitfalls of a luxury brand?
I see three main challenges to luxury branding:
a. You need access to the audience. When you qualify as a “luxury audience” you are
practically inaccessible as it is. Luxury brand managers have to find a clever way to reach
these individuals.
b. True luxury has no competition, so you can only perform a relative competitive
analysis.
c. There is no validation mechanism; you can’t test it and fix it. Instead, you have to build
it and hope it works.

Also, it’s important to note that luxury will distract and/or insult people who don’t get it.
People will rationalize not wanting it by insulting the particular brand. Often I’ll sit at cafes
in Beverly Hills in this specific area where some of the most incredible cars drive by. I’ll
often just take note of what those around me are saying. Often, you’ll here “Oh that car is just
obnoxiously ugly,” which is that internal rationalization for someone who doesn’t get it.

4. How do they maintain a higher level of ‘luxury status’ in comparison to the
mainstream when developing a brand extension strategy? Is it possible?
If you can justify the expense to extend, you can justify the expense to build anew. Extension
to monetize assets is not worth compromising the brand. The relationship becomes
compromised between the market and the brand. Part of luxury is not to have a choice, it is
about the manufacturer’s vision. For example, take Rolls Royce. They only have three or
four vehicle models because that is what the manufacturer envisions a Royce to be. It does

73

not want to cater to the likings of everyone. In essence, he is stating “…this is what I see as
luxury, and you either agree with me or you don’t. But this is the extent of my brand.”

5. What do you consider the profile of a luxury consumer to be?
Three things I think are key of a luxury consumer are:
a. 100% of the daily necessities of life are not considered in their finances.
b. Everything they acquire does not compromise their living space.
c. They have the power to choose.

6. Is there a distinction between male and females buyers?
I would say males tend to be more mechanical, and are interested in luxury boats, planes,
watches and cars. Women are more interested in decorative accents to their lifestyle, such as
the home, jewelry, fashion or the interior of the car.

7. How has the idea of luxury changed over the last decade?
Branding is an element of self expression. Before, access to that genre was evidence. Now, it
is all about customization. A popular tagline these days in the luxury industry is “Customized
to taste.”

8. What do you think luxury brand managers should be conscious of for the future?
With a new consumer-savvy audience on the rise, I think it becomes just as important to
share the process with consumes in addition to keeping that genre inaccessible. This will

74

provide a greater sense of ownership to that next generation. “Building” or customizing is a
process and will provide a brand experience.

In the boating industry, it is no longer about luxury yachts. The latest craze are adventure
boats. This shift puts aesthetics on the back burner, and allows consumers instead to ponder,
“what can this do for me?” These adventure boats are clunky and industrial, but it doesn’t
matter. It’s the experience.

I agree with the concept that luxury is Darwinian, meaning that it should keep it’s core,
original attributes yet develop with the innovations of the time. Take for instance a home. If
it is repainted, is it the same house? Yes. If the roof is removed, and hardwood floors are put
in, is it the same? Yes. The house exists in the same space originally created, and until that
space changes, that house remains the same as it started. The same goes for luxury. Look at
Ferrari again. Ferrari is still made in Italy; it still comes in red, yellow and black. Though
there is not a single component of the model car that exists from its beginnings, its core,
original attributes still exist. The house has changed, but the lot has not.

9. In the last few months, you became an owner of a Jaguar. What brought you to this
brand?
I have been a Land Rover enthusiast since I was a kid, I’ve owned three prior to the Jag. I
shifted because I was in the market for a sports car, and although Jag has lost its luxury
prestige in the past couple decades, it still remains as one of the original luxury sports car

75

manufacturers. True car enthusiasts see the original Jag as something special and
exclusive – I wanted to know that aura and experience.

10. With the brand being compromised by Ford, how do you explain this exclusivity
factor when there is now a Jag available for just around $30k?
It’s important to note the only reason why I can partake in that exclusivity factor is because
of the type of Jag I bought. It is the 2008 XKR Portfolio Edition. It reflects the original from
the 1940s/50s and there are only 125 in the whole U.S. The fact that I am driving a car that
most people won’t see a second time is invaluable to me. I would never buy any of the other
lines. This is Jaguar trying to regain its footing in the luxury realm.

11. What do you think of the new acquisition by TaTa?
Tata acquired the brand for the sole purpose of making exclusive again. TaTa is a brilliant
car manager that increases revenue year after year, and I predict that in four years not a single
element of the Ford Jaguar will be there. TaTa will bring Jag back to its heritage. The $30K
lines will not be available – TaTa does not make a Ford Taurus, so they will make sure the
Jaguar does not emulate it whatsoever. This line that Ford created for the masses – it has
done no good for the brand.

In about four years’ time, people will look at what TaTa has done and say, “Now that’s a Jag.
What it has always been and what it should be.”

76

12. Any comments about the branding of Dubai?
The thing about Dubai is that no one actually wants to live there – it’s incredibly hot, its in
the Middle East and really, what is there to do? The branding of it highlights the shock and
awe in luxury value. People go just to say they’ve been. I don’t know if it is going to last
though, it may just be a phase. I’m slightly skeptic, so I tend to think in apocalyptic terms
and that in 50 years it will begin to crumble.

In branding the destination though, it’s important to note that they leverage the equity of
other luxury brands to develop the area and qualify it. For example, Tiger Woods has
developed a golf course there, along with a hotel. There is a 20-story hotel designed by
Armani – what does Armani know about hotel construction? Probably not a whole lot, but he
brings in that luxury element. The islands off the coast – there are only two ways to get there
– by submarine or Rolls Royce. Sure, there may be other methods that one could technically
use, but they don’t allow it. It’s all about branding Dubai as a hub for all these luxury
elements.

Abstract (if available)

Abstract The purpose of this manuscript is to discuss how the field of public relations has evolved to incorporate a variety of communication practices, specifically brand management. It concentrates on the particular area of luxury branding, and utilizes a case studies approach to illustrate this phenomena in several different industries. It includes a thorough review of multiple studies regarding brand management and consumer communication strategies. The case studies highlight the high-end areas of fashion, automotive, travel and hospitality industries, and are evaluated from a strategic perspective that analyzes the successes and failures of various communication methods. Overall, this thesis emphasizes the heightening importance of customization and experience for the luxury audience, and concludes with recommendations on how public relations practitioners can be more effective to their respective audiences, both presently and in the future.

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6ix Gods: Drake, OVO and the rebranding of Toronto

Asset Metadata

Creator Santos, Jessica Marie de los (author)

Core Title Capturing and maintaining the essence of luxury in the dynamic global marketplace

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 03/31/2009

Defense Date 01/14/2009

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag affluent,brand experience,brand management,branding,class,communication strategies,consumer loyalty,customization,Dubai,future audiences,history of branding,history of luxury,how to communicate luxury,Jaguar,language of luxury,luxury,luxury branding,luxury experience,luxury fashion,luxury hospitality,luxury travel,luxury trends,luxury vehicles,Michael Kors,OAI-PMH Harvest,premium vs. luxury,Public Relations,Ritz Carlton

Place Name Dubai (city or populated place), USA (countries)

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Floto, Jennifer D. (committee chair), Durbin, Daniel (committee member), Kotler, Jonathan (committee member)

Creator Email jdelossa@usc.edu,jdls8992@yahoo.com

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m2040

Unique identifier UC1184328

Identifier etd-Santos-2614 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-213230 (legacy record id),usctheses-m2040 (legacy record id)

Legacy Identifier etd-Santos-2614.pdf

Dmrecord 213230

Document Type Thesis

Rights Santos, Jessica Marie de los

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu