The Psychology of Luxury Brands

In a downturning economy, nearly all business sectors suffer and companies large and small find themselves looking for ways to downsize, or at least implement measures in order to survive. This is rarely the case for the luxury goods industry. Even during a drawn out recession, luxury market segments seem to be impervious to any negative financial impact, whatsoever. While hoards of failed businesses drop out of sight into obscurity, how is it that other commerce entities, for example, in the luxury fashion, fine arts, luxury cars and others in high end commodities outlast them and even top perform? Why do consumers continue to purchase items that are, in fact, not necessary even when they, too, are afflicted by a weak economy?

1. Social Status — People wearing expensive designer fashion have a tendency to want to be associated with a certain class of people. On that same note, people driving Lamborghinis have a statement to make, “I’m wealthy and not afraid to show it!” Their self-identity plays a significant role here and being tied to expensive brands can represent who people are, in their judgement.

2. Brand Loyalty — Oftentimes, people are particularly pleased with the consistency of quality and craftsmanship from specific brands and that level of mastery can’t be found elsewhere. As a result, they become loyal return customers. For example, someone may have bought an Armani suit for business purposes even though it posed a borderline financial hardship, but in the end, the suit fit perfectly, helped business in a myriad of ways and lasted many years. Will that consumer buy another Armani suit in the future? Surely.

3. Product Quality — More than ever before, the quality of so many products has diminished exponentially. This is especially true during economic woes, and also with the increasing use of cheaper materials like plastic, which is now pervasive in fabrics, automobiles, etc. The luxury goods sector generally maintains their high level of quality products and consumers dedicated to luxury items are sincerely appreciative of this.

4. Value — Art collectors will pay millions of dollars (or euros etc.) for a painting, sculpture or other fine art piece. It may not be the ideal time for most people to be making such extravagant purchases, but while these people appreciate fine art and have no qualms about spending exorbitant amounts for a Picasso, an equivalent to buying a castle in western Europe, they understand the value and rarity of this work. They also clearly know that its value augments in time.

5. Buying Experience — The “old-fashioned” luxury goods buying method has lasted to this day, even with the advent of online internet shopping. Many loyal luxury brand consumers love the experience of purchasing in-person, in brick and mortar shops. For example, who wouldn’t love shopping along the Champs Elysee in Paris, one of the most beautiful and famous shopping boulevards in the world, and purchasing a lovely Louis Vuitton handbag? The CEO of LVMH, Bernard Arnault, knows his customers well because he’s made sure they are handled impeccably. Once customers enter the store, they are treated like royalty. The experience of shopping at Louis Vuitton is truly an enjoyable experience. Customers are approached with nonjudgmental enthusiasm, which of course, fosters a positive environment making it genuinely conducive to encouraging a willingness to purchase.

There will always be individuals from a wide array of socioeconomic, religious and political backgrounds who are drawn to luxury goods even during an unfavorable economic decline. Their intentions, attitudes and their behavior toward luxury purchasing are for reasons as diverse as their personal situations.