“Some people think luxury is the opposite of poverty. It is not. It is the opposite of vulgarity.”

On the most basic level, luxury brands must have three fundamental things.

1. Heritage
2. Self Expressive Benefit and
3. Scarcity, which = High Price/ High Margin.

But what does it really mean to have heritage? what does it mean to have a self expressive benefit? and in a world of increasing abundance for those who are seeing the equity upside of these winner take all economic times — what does it really mean to create or articulate the element of scarcity?

Heritage

20th Century Heritage

Heritage is defined as “denoting a traditional brand or product regarded as emblematic of fine craftsmanship”. Most think of heritage as having a long history, and while that is true, it is also a reflection of the time and effort put into the quality of the product or service that the brand is selling. Simply, heritage can be split in two —

1. 20th century heritage

Epitomized by time & effort in the craftsmanship with the founding family being closely tied to the brand origin. A perfect example of 20th century heritage is Hermès.

and

2. 21st century heritage

Epitomized by a complex coordination of high quality craftsmanship at every touch point, both and externally (vertical integration). Orchestrated by an iconic founder. A perfect example of 21st century heritage is Tesla.

21st Century Heritage

Self Expressive Benefit

Self expressive benefit is what the purchases we make say about who we are.

Self expressive benefits are those ever so intangible moments when you buy a product and you stand up a bit taller or walk a little bit smoother for no “real” reason. Luxury brands are the very best in the world at this and it is very thoughtfully done through a deep understanding of the status signals that brand associations create. The tangible result of very thoughtful and strong self expressive benefit is the ability to create exceptional price points with wonderful margins and it allows what the product or service says about you as a person to transcend border lines. (Four Seasons)

What does owning a rolex say about me as a person? Do I share the same qualities as Roger Federer because of my purchase?

Benefits Of Self Expressive Benefits

Image Property Of L2 Inc/Scott Galloway

Self expressive benifits are the most potent when brands apeal to our ability to reproduce.

Scarcity

Biggest & Most Expensive Luxury On The Decline

In the past, space and money were the scarce resources. Thus, representation of expansive space or the explicit show of wealth was culturally aspirational.

Certainly this is still true today, but to a much lesser degree.

Culturally, many have figured out the outdated signifiers of prestige — the right watch, the right neighborhood. But now, as we continuously see cultural shifts taking place with advancements in technology. These signifiers are becoming less and less potent to the ever elusive quality of admiration from others. Why buy a Rolls Royce when you can hire a private driver (uber).

Thus, while money and space remain important in the realm of luxury — time and privacy have begun to take over. The holy grail for the luxury brand today is the creation of quality time and the construction of privacy.

Providing The Scarce Resource Of Time x Privacy

With regards to time, it means giving those interacting with your brand the absolute most out of their time at every interaction of the experience, it means conveying the lifestyle of someone who has “the luxury of time” to do as they please, and it means never wasting someones time.

With regards to privacy, it means always airing on the side of personal and digital space.

Why?

The western world has a concentration of wealth that is becoming evermore zero sum. The wealthy are and will be making enormous amounts of money, and there purchasing power will heavily air on the side of luxury products. In emerging markets the middle class is getting larger and larger — to the point where their needs are moving past just that of buying products to help them sustain the demands of life. Rather, they will be buying products and services to tell the world who they are and what they believe in — a la self expressive benefit. The bread and butter of a well built luxury brand.

So, when the world gets twisted as it will with the emergence of new technologies like we have seen in the last decade — three types of brands win.

Technology brands that provide abundance to a once scarce resource (Google, Facebook, Airbnb,Uber,Amazon),

Brands that copy existing product market fit in emerging markets (Globalization),

and last but not least Luxury Brands.