Consumer Aspirations And Luxury Brand Management

“Human needs or, in this case, consumer needs are the basis of all modern marketing. Needs are the essence of the marketing concept” (Schiffman, 2008). Maslow’s hierarchy of needs is a well-known theory in psychology that can help marketers better understand consumer needs. So, what is Maslow’s hierarchy of needs?

Abraham Maslow suggested in his 1943 paper “A Theory of Human Motivation” that a triangular diagram showing the hierarchy of needs is divided into five levels: “At the bottom are the basic needs for food, water, and air. Then, above them is the need for safety, security, and protection. After these needs have been met, an individual needs love, affection, and friendship. When these have been satisfied, an individual may seek status and self-respect and, finally, the need for self-actualization or self-fulfillment at the top of the pyramid” (Schiffman, 2008). This explanation shows that people will focus on the higher needs only when the lowest needs are satisfied. Differences in need priorities can influence consumer behavior in different ways. Through Maslow’s hierarchy of needs, we can see that people naturally move to the next when one level is fulfilled.

In social psychology, these psychological needs are called “aspirations or life goals” (Kasser and Ryan, 1993, 1996). Since aspirations are related to fundamental psychological needs acting as motives for action, they have direct effects on an individual’s behavior, which over time tends to be consistent with the goals that she/he pursues (Sheldon et al., 2004; Pyszczynski et al., 2004; Sheldon, 2004; Kasser and Ryan, 1993, 1996; Kim et al., 2003). Two main types of aspirations have been identified: intrinsic and extrinsic. Intrinsic goals are internally oriented and are therefore driven by “autonomous reasons,” meaning that individuals pursue these goals because of the satisfaction, enjoyment, or personal meaning derived from their attainment. People who pursue extrinsic goals tend to be concerned about how they are perceived by others and by a desire to receive their praise and rewards. Therefore, Aspirations are thought to influence motivation and behavior (Kasser & Ryan, 1996; Kim et al., 2003; Sheldon et al., 2004).

Many people buy goods for what they symbolize. Dubois (1993) claims that purchasing luxury goods represents an extreme form of expressing one’s values. Therefore, luxury companies should explore the brand values they want to represent and their customers’ value systems to manage their brands more effectively.

Brand Identity And Symbolism

How do we define a brand? A brand encapsulates identity, origin, specificity, and difference. It evokes this information concentrated in a word or a sign. “A brand is essentially a seller’s promise to consistently deliver a specific set of features, benefits, and services to the buyers. The best brands convey a quality warranty” (Keller, 2003). Also, according to the definitions made by Keller (2003), brand names help to communicate quality and evoke specific knowledge structures associated with the brand. So, by these extrinsic cues, “strong brand names can reduce consumer anxiety and simplify the shopping process.” Much research has shown that brands are the symbolic and expressive component of products; functional benefits are primarily related to product attributes, whereas symbolic benefits are mostly related to brand name attributes in consumers’ minds. As Kapferer (1997) stated: “Products cannot speak for themselves: the brand is what gives them meaning and speaks for them. It creates a resonance with them that builds and reinforces brand identity”.

Symbolic representation of a brand has reached its peak in luxury goods in the form of status and prestige. Amaldoss and Jain (2005) claim that consumers purchase luxury goods for symbolic content, such as status and prestige, rather than functionality. It is also interesting how customers are trading up to aspirational new luxury goods and trading down to products and services that are less important to them (Yeoman & McMahon-Beattie, 2005). To marketers, communicating a clear brand image and message to customers is crucial to successful brand management. What qualities does a luxury good encompass? Jackson (2004) proposes the following as the core characteristics of luxury products: “…exclusivity, premium prices, image and status which combine to make them more desirable for reasons other than function” (p. 158).

Brand Management Fundamentals

By understanding the dynamics of the served market, marketers can better manage luxury brands. With the abundance of luxury brands on the market, it is significant for a brand to differentiate itself and have identifiable attributes and recognized identity. The research suggests that a luxury brand needs to develop nine key elements to build and maintain a successful luxury brand, and they are: 1) Clear brand identity; 2) Luxury communications Strategy; 3) Product integrity; 4) Brand signature; 5) Prestige price: 6) Exclusivity; 7) Luxury heritage; 8) Environment and consumption Experience; 9) Luxury culture (Fionda & Moore, 2008). Table 1 demonstrates all nine key components of a luxury brand. Companies put various levels of emphasis on each of the nine key elements. To maintain luxury status, all nine elements must be operated simultaneously (Fionda & Moore, 2008).

A clear brand identity and defined brand values communicate a message to a consumer. A brand image/identity helps to build brand loyalty. According to Keller (2003), the nature of the relationship can be described in two dimensions: intensity and activity. Intensity refers to the strength of attachment and sense of community experienced by the consumer. Keller (2003) describes how deeply loyalty toward the product or organization is felt.

On the other hand, activity relates to acting upon it and executing loyalty. In other words, what forms is this brand loyalty reflected in everyday consumption situations and consumer behavior? According to Keller (2003), brand loyalty can be defined as “a deeply held commitment to rebuy or patronize a preferred product or service consistently in the future” and is characterized by a refrain from switching to other alternatives. Delivering a satisfying product that fulfills expectations is crucial and a prerequisite for building loyalty. Brand imagery refers to a product's extrinsic characteristics and aims at clients' psychological and social needs. It includes more intangible properties, such as personality and values, perceptions of typical user profiles or purchase situations, history, heritage, and experiences.

Before implementing an advertising campaign, marketers need to define what values they want to represent. For example, consumers who are intrinsically oriented tend to avoid luxury brands. Given that most advertising campaigns promote luxury brands based on purely extrinsic values, luxury marketers may neglect consumers primarily driven by intrinsic values. Although quality and hedonism are usually associated with inherent values, whereas exclusivity and prestige are instead identified with extrinsic values, they are not contradictory or incompatible (Vigneron & Johnson, 2004). As a result, when combining both values, marketers can gain the attention of the two audiences and expand the overall intended market size for luxury goods.

Luxury Brands Case Analysis

The three major luxury companies that have achieved long-term brand success are Gucci, Louis Vuitton, and Hermès. Their success can be attributed to their quality of service, brand image, retail environment, and management structure, yet above all, they can combine these factors to create an exclusive experience (Carroll, 2011). The table below demonstrates how these companies became what they are today by focusing on unique product features and images, brand imagery, retail environment, and distribution channels.

Table 1. Comparison of Gucci, Louis Vuitton and Hermès

Louis Vuitton records an operating margin of 45%, whilst the industry average is only 25% for luxury accessories (Carroll, 2011). Bernard Arnault, the chief executive officer (CEO) of LVMH, emphasizes the significance of corporate identity, culture, and spirit and indicates the importance of creative excellence in luxury brand development. Over recent years, the brand has tried to modernize its image by utilizing the talents of young designers and artists to rejuvenate some of its products' image whilst maintaining the classic designs. This reinvention has attracted younger buyers to the brand. However, no designer for Louis Vuitton has eclipsed the powerful brand image of Louis Vuitton itself, unlike other design brands.

Louis Vuitton stands out from its peers through its relentless focus on product quality. All products are extensively tested to ensure they can withstand wear and tear and have no imperfections. A Louis Vuitton bag is never reduced in price; there are no sale periods. The company offers customized products such as personal engraving on hand luggage pieces, boosting its appeal further. Furthermore, the company sponsors elite sporting events such as yachting and motorsport. This is done to match the audience of the sponsorship property with the brand's target audience (Carroll, 2011).

Gucci's strengths are its established brand image and international presence. It also can control its distribution channels. This is part of Gucci’s defensive strategy in the chain value, which is to capture the value added instead of giving it to intermediaries such as suppliers and retailers. The company has also increased the number of its directly operated stores (DOS) as part of its defensive strategy of taking more control of the distribution process. The 2003 figure showed that DOS accounted for 61.3% of revenues compared to a much lower 32.5% in 1999. (SWOT Analysis of Gucci, 2011). Another of Gucci's strengths is its aggressive strategy, which it accomplishes through diversification and communication. Gucci changed its strategy from carrying a single brand to branching into a multi-brand group, and other conglomerates like Louis Vuitton and Prada have adopted this strategy. This strategy allows the brand's positioning in the industry to differ depending on the number of brands and business segments the company wants to compete in. This idea is behind focus (mono-brand) versus diversification (multi-brand). Gucci Group has over 10 brands, including Gucci, Yves Saint Laurent, YSL Beauté, and Sergio Rossi.

Some brands, like Hermes, a key rival, create even greater exclusivity by having a three-year waiting list before one of their handcrafted bags can be obtained. These bags add to their appeal. Hermes is an exception to the brand consolidation trend. The company generates nearly all its sales (95%+) from its namesake brand. Hermes has acquired companies faster than other luxury goods houses; acquisitions are targeted to fill out product offerings (e.g., crystal ware) and are often re-branded as Hermes.

In the luxury industry, nearly every company relies on Japanese consumers at home and abroad. According to Deutsche Bank, Japanese consumers accounted for 24 percent of all luxury goods sales in 2010, compared with 22 percent in Europe, 20 percent in North America, 19 percent in China, and 15 percent in other markets. Hermès, the Gucci Group, and LVMH Moët Hennessey Louis Vuitton derived 9 to 19 percent of total sales from Japan last year (Alderman, 2011).

Since Louis Vuitton entered the Japanese market in 1968, it has become the country's most popular luxury brand, with a 28 percent share. LV's key success in Japan is mainly attributed to the appropriate balance between keeping the brand globalized and localizing it in certain areas for the Japanese (International Marketing Management, 2011). Gucci, Louis Vuitton, and Hermès succeed in the luxury market. Each brand has a clear identity that does not overlap with other luxury brands. This brand clarity allows these brands to stay relevant to their consumers’ aspirations, motivating them to stay loyal and continue to purchase despite the economic instabilities.

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