The Ultimate Love Story: Luxury and Philanthropy


The previous article in this series addresses concerns I had about starting another non-profit. Finally, the answer hit me:

Gucci. Vera Wang. Giorgio Armani.

These luxury brands rely on consumer perception to rationalize their exorbitant costs. Rappers make a living promoting these brands to poor people. Rich people keep them in business. And the world keeps spinning; American dream in tow.

Why then is it acceptable for these companies to charge sky-high prices for an arguably small margin of product superiority? Skipping past the marketing R&D and branding conversation, there’s one primary difference.
These products provide tangible value to the consumer. That value? They provide an experience. A feeling. How? Well, apparently there’s a feeling associated with luxury.

Does Luxury Need “Reasonable” Pricing?

No. That would be awful. Seriously.

A recent paper on social psychology revealed an interesting insight into the world of why we buy luxury brands:

Interestingly, we demonstrate that the feeling which motivates a desire for luxury purchases (accomplishment, or what is termed “authentic pride”) is very different from the feeling that one derives from displaying those same products (snobbery, or what is called “hubristic pride”). In other words, the same emotion (pride) operates in two different ways. These findings shed new light on why consumers purchase luxury brands, highlighting a paradox: these purchases are sought out of heightened feelings of accomplishment (and not arrogance), but they instead signal arrogance to others (rather than accomplishment).

All of this gives the insight that people buy luxury because of the feeling achievement associated with the product. It’s a boon to the existentialist search for purpose in a consumption driven society. #deep

Stay The Hell Away From The Guilt Tax

Always provide a value to your customers. Period.

The absolute worst way to interpret this article is:

“Oh! We can sell $10 T-shirts for $80 and say it’s for a good cause. See, Alec, they get the value of the shirt. The increased price makes it seem like a ‘luxury’ product. And we have enough margin to be able to reinvest in a “real need”!

That is called a “guilt tax” and it’s ridiculous. Since the crash in ‘08, the number one quality people value in a company is trust. This is why you’ve seen an upward trend in transparency to the extent that BufferApp posted their salaries online for everyone to see.

More Important: Integrity or Nobility?

People hate being tricked. Hate it. They love leaders and brands with conviction. They love it when people follow their word. We as a society respect integrity.

Let’s talk about a leader in low-cost luxury products for a moment…

Starbucks

Recently, Starbucks did a noble thing. All over little pictures began populating circular tables across the U.S. The signs read, “our baristas take care of you. We’re taking care of them.”

This is their college plan advocacy. And honestly, the “what” of it is great. The problem lies in the “how”:

“As details dribbled out about the Starbucks College Achievement Plan, however, it became clear that the program is neither as generous as it was made to sound, nor as beneficial to students. Criticism flowed soon after, much of it from the academic world.”

The simple fact is that Mr. Schultz is actively achieving his goal. They are helping low income partners (workers) attend college. Additionally, Starbucks was — for a quick moment — achieving their goal of supporting the population of part-time students in its vast army of coffee experts.

Starbucks Howard Schultz hugs 17-year employee Erica, who can now finish her four-year degree, paid for by the company’s new College Achievement plan. Source: http://www.forbes.com/sites/barbarathau/2014/06/17/starbucks-big-plan-to-fund-employees-college-education-hatched-by-self-described-class-underdogs/

I have no doubt that this is a very personal thing for Mr. Schultz. His embrace here seems heartfelt. However, let’s not mince words. This is as much a marketing effort as it is a philanthropic venture.

Inches From A Grand Slam

As misguided as the execution may have been, they created a tangible result. It is an incredibly large corporate gesture that shows what the for-profit company is capable of doing. By leveraging partnerships on an enterprise level, they are capable of producing a swell of college graduates. The best part? Offering this actually bolstered their brand.

Well, for a moment anyway. Until the backlash of hidden details arose.

Transparency would have resolved the majority of the negative press. People bought into it because of the result. And they were moved by the nobility of the gesture. However, when the nobility was stripped (i.e. people found out Starbucks wasn’t actually paying for tuition), people began to question the result as well. So close. Swing and a miss.

Tying It All Together

WonderBus is selling exclusive products (one of the essential corner stones of luxury) to consumers that have the means and desire to distinguish themselves. If you can afford to pay a monthly subscription fee for products that make you look great, you’ve made it. You’re doing great. And you should feel great because your looking great is helping others thrive. And that is the message that we’re going to deliver to customers.

If I could describe everything written above in a single sentence? Efficient philanthropy meets low-cost luxury.


Now that we’ve addressed some issues facing the non-profit sector and the perks of luxury, it’s time to wrap up this series. This is the secret behind the secret: the WonderBus model for creating a profitable and sustainable business model for 1st and 3rd world countries.

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