Sonalika Grover May 04, 2019

The Holy Grail of Luxury BRIDGE 5

Generation Z is the generation that refuses to pay an extra dollar for a grilled sandwich.

Generation Z is also the generation that will gaily empty its bank account on a Birkin. The

world of luxury has existed since the 1830s and continues to evolve and captivate us even

today. From designer handbags, fragrances, accessories, garments and what not, continuous

consumption has been driving luxury brands since decades. Today, purchasing a luxury good

is more common than buying grocery at Trader Joe’s. The physical appeal of luxury goods is

undeniable – the leather is genuine, the shoes are chic, but the price tag is often uninviting.

Unless you’ve got a promising placement or remarkable saving habits, luxury consumer

goods will hamper your credit card eventually.

Following the well renowned Oxford Dictionary, a luxurious good can be defined as

“Extremely comfortable or elegant, especially when involving great expense.” But what 1

truly makes this great expense worth it when comfortable and elegant alternatives are

available at much more affordable prices? This is a question that can have a great deal of

possible answers.

First, economics is the only subject where consumers are considered to be rational. As of

April 04, 2019, the national debt of the United States was $22.03 trillion. This fact clearly 2

depicts how consumers don’t always act in the best of their financial interests. Luxury goods

are a great example of how irrational we can be as consumers; a decent and sturdy handbag

"Luxurious | Definition of Luxurious in English by Oxford Dictionaries," Oxford Dictionaries | 1

English, , accessed May 08, 2019, https://en.oxforddictionaries.com/definition/luxurious.

"National Debt of the United States," Wikipedia, May 08, 2019, , accessed May 08, 2019, https://2

en.wikipedia.org/wiki/National_debt_of_the_United_States.

can be purchased for $40, yet people will still spend thousands of dollars to buy a handbag

with a branded logo. It's always been this way and consumers' desires to own the finer things

in life will likely never change. This is also the reason why luxury consumers would rather

pass the faux $30 Louis Vuitton handbags on the street to pay $1000 for an authentic one:

Despite appearing the same, as can be seen

in the picture, the owner will never have the

satisfaction of owning an authentic luxury

handbag. This not only reveals the

irrationality of consumers, but also a desire for prestigious goods in their wardrobes.

Another aspect of this can be the way consumers tend to overlook the disadvantages of a

product when it comes to brand names. Take Apple Inc., for instance. Consumers hold their

breaths for upgraded models and have

immense brand commitment even though

MacBooks and iPhones aren’t proven to be

technologically unique or superior and hardly

have additional features in new releases. In fact,

Samsung has been proven to manufacture

phones with greater and unique features and

Microsoft Corp. and Xiaomi manufacture phones at a much cheaper price point. Nevertheless,

Apple seems to break sales records year after year. As can be seen in the graph , Samsung’s 3

mobile business is only half the size of Apple’s.

Jeff Dunn, "Samsung Introduced 10 times as Many Phones as Apple Last Year, but Its Mobile 3

Division Made Half as Much Revenue," Business Insider, February 28, 2017, , accessed May 09, 2019, https://www.businessinsider.com/samsung-vs-apple-galaxy-iphone-smartphone-revenue-chart-2017-2.

Another way to look at this is that since many perceive non-luxury goods as inferior,

they are quick to pick out the flaws in those products. When talking about a cheap foreign car

that needs repairs, it’s often regarded a piece of grotty junk; on the other hand, a Mercedes

Benz that needs repairs is just suffering from wear and tear. It’s almost as if consumers make

excuses to justify their exorbitant purchases.

Some argue that higher priced goods are made of better quality materials. A typical Louis

Vuitton bag is made out of costly and rare materials such as top-quality leather, boa,

crocodile, lambskin and camel skin. Fakes are made from pleather and vinyl; they may feel

rough and stiff. A real Louis Vuitton is smooth and feels soft. But in the world of fast 4

fashion, new collections every month and trends that change faster than seasons, what does

the owner have to do with quality if he/she only has to use the product twice or thrice until a

new collection comes out? Go to any upscale shopping district in any major city in the world

these days and you'll likely see exactly the same merchandise and brands for sale -- Calvin

Klein, Ralph Lauren, Dolce & Gabbana, Chanel, etc. Most of their stuff is made with the

same value-chain efficiencies and by the same production sources that supply Wal-Mart and

Target. 5

According to a study published by the Journal of Experimental Social Psychology, low self-

esteem is another big factor in whether a person will buy luxury goods that he may not be

able to afford. For consumers living pay-check to pay-check, a luxury good can go a long 6

way in increasing self-esteem or providing a sense of belonging. With marketing departments

Keshni, "Our Guide to Louis Vuitton Leather and Canvas," The Blog, March 15, 2019, , accessed 4

May 09, 2019, https://www.tradesy.com/blog/our-guide-to-authentic-louis-vuitton-leather-and-canvas/.

Dana Thomas, Deluxe: How Luxury Lost Its Luster (New York: Penguin Press, 2008).5

@bradrtuttle, Brad Tuttle. "Psych Study: When You're Bummed, You're More Likely to Buy." Time. 6

May 07, 2010. Accessed May 09, 2019. http://business.time.com/2010/05/07/study-low-self-esteem-makes-you-more-likely-to-buy-luxury-goods/.

creating a need for luxury goods and the rise of online shopping, a $700 watch is just a click

away. Luxury goods are the ultimate retail therapy, and fortunately for luxury brands, e-

commerce has made them easily accessible for ‘binge shopping’ when you’re feeling blue.

This also works the other way round for some consumers. A sense of accomplishment is

yet another reason why some people buy luxury goods. They want to reward themselves for

their hard work by treating themselves to something they typically can't afford. Researchers

at Yale have determined that this quest for authenticity develops early in childhood. A study

that tried to convince children that a cloning machine had produced their favorite item found

that most children refused to accept the duplicate as identical. It turns out that the

sentimentality of the item – the memory or pride or feeling that comes from having purchased

a genuine luxury good – is part of the reason that we seek authenticity. Simply put, treating 7

yourself to fake Jimmy Choos would be like not having treated yourself at all.

People buy luxury goods for a variety of reasons, all of which are related to the strong

emotions that we attach to expensive material goods. Whether we are financially stable or

not, we will often purchase luxury items to show off our status or income, or gain acceptance

from others and to reward ourselves for an accomplishment.

Even though these patterns of consumer behaviour have been observed for decades, luxury

brands are thriving than ever before in 2019. Kering, the umbrella brand of Gucci, Yves Saint

Laurent, Bottega Veneta, Balenciaga and Alexander McQueen to name a few, recorded

consolidated revenue of €13,665.2 million in 2018 – an increase of 26.3% on the previous

"How Gucci Bag Ruined a Friendship | All'avantgarde," Allavantgarde, October 28, 2018, , 7

accessed May 09, 2019, https://allavantgarde.com/how-gucci-bag-ruined-a-friendship/.

year. What has made luxury goods more aspirational than ever? Social Media Marketing 8

offers to the audience, engagement and the propensity to talk and influence others. Therefore,

it is not surprising that social media and luxury goods have become inseparable bedfellows.

Social Media is a platform where people of all ages, all countries and all backgrounds,

connect. 40% of luxury purchases are influenced by what consumers see online, and their

interactions with a brand. With millions of conversations occurring daily on social media, the

impact of social networks and online channels on a luxury brand’s visibility and reputation

cannot be understated. Often we are scrolling through Instagram when we see a Sponsored

Ad that takes us directly to the page of the brand. This is advertising brought to our homes

and personal spaces.

Not only the marketing departments of brands, but scrolling through the posts of users from

our own following, wearing latest collections on Instagram make us want to have these

luxurious goods on our feeds too. Often, we find ourselves feeling more ecstatic to post a

picture with our new handbag, rather than the physical aspect of carrying it or owning it

itself.

Branded content posted on brand pages

revealed Instagram was the king of

engagement for luxury goods,

accounting for 93% of total interactions

earned. On top of that, the average

Pidgeon, Emily. "Gucci, Dior and YSL among Luxury Brands Booming across Globe." The CEO 8

Magazine. February 28, 2019. Accessed May 09, 2019. https://www.theceomagazine.com/business/finance/luxury-brands-booming-across-globe/.

engagement rate for a branded posts on Instagram during the period studied was 30%, far

higher than the 2% of average engagement earned on Facebook and Twitter posts. 9

Being an influencer is an occupation that has come into existence through the lens of Social

Media and is often a full-fledged position on Instagram. But how are influencers able to

sustain a high quality lifestyle just through social media? It is through brands that often reach

out to these influencers with paid promotions, free stays and complementary luxury goods.

The comments section of these influencers is mostly where luxury goods attain their hall of

fame.

The stunning celebrities on social media unconsciously speak to you, telling you that their

way of life and material possessions such as the expensive garments and accessories they

wear can make you just as stunning and help you grow to be part of their world. Jennifer

Lopez, Kate Moss, Scarlett Johansson, Diane Kruger, and Uma

Thurman have all embodied the Louis Vuitton female: suitable,

elusive, changeable, and elegant, according to style and season.

Luxury brands have turned into illusions of our aspirational

lifestyles, of status and exclusivity. We aspire to luxury for

recognition, acceptance, status and prestige. Advertisements,

social media campaigns, influencers and celebrity brand ambassadors boost these brands in

creating these illusions. A brand now will only remain successful if it is promoted properly on

social media. Influencers have more access to the consumers than the brands themselves, and

with unlimited new developments, there’s no telling where social media platforms will take

"93% of Consumer Engagement with Luxury Brands Happens on Instagram," Digimind, December 9

07, 2018, , accessed May 09, 2019, https://www.digimind.com/news/press-releases/93-of-consumer-engagement-with-luxury-brands-happens-on-instagram/.

brands next. Marketing and advertising a brand are two of the most important facets that

drive a brand to build a positive relationship with the consumer, grow and obtain success.

BIBLIOGRAPHY

"Luxurious | Definition of Luxurious in English by Oxford Dictionaries." Oxford Dictionaries |

English. Accessed May 08, 2019. https://en.oxforddictionaries.com/definition/luxurious.

"National Debt of the United States." Wikipedia. May 08, 2019. Accessed May 08, 2019. https://

en.wikipedia.org/wiki/National_debt_of_the_United_States.

Dunn, Jeff. "Samsung Introduced 10 times as Many Phones as Apple Last Year, but Its Mobile

Division Made Half as Much Revenue." Business Insider. February 28, 2017. Accessed May 09, 2019.

https://www.businessinsider.com/samsung-vs-apple-galaxy-iphone-smartphone-revenue-chart-2017-2.

Keshni. "Our Guide to Louis Vuitton Leather and Canvas." The Blog. March 15, 2019. Accessed May

09, 2019. https://www.tradesy.com/blog/our-guide-to-authentic-louis-vuitton-leather-and-canvas/.

Thomas, Dana. Deluxe: How Luxury Lost Its Luster. New York: Penguin Press, 2008.

"How Gucci Bag Ruined a Friendship | All'avantgarde." Allavantgarde. October 28, 2018. Accessed

May 09, 2019. https://allavantgarde.com/how-gucci-bag-ruined-a-friendship/.

Pidgeon, Emily. "Gucci, Dior and YSL among Luxury Brands Booming across Globe." The CEO

Magazine. February 28, 2019. Accessed May 09, 2019. https://www.theceomagazine.com/business/

finance/luxury-brands-booming-across-globe/.

@bradrtuttle, Brad Tuttle. "Psych Study: When You're Bummed, You're More Likely to Buy." Time.

May 07, 2010. Accessed May 09, 2019. http://business.time.com/2010/05/07/study-low-self-esteem-

makes-you-more-likely-to-buy-luxury-goods/.

"93% of Consumer Engagement with Luxury Brands Happens on Instagram." Digimind. December

07, 2018. Accessed May 09, 2019. https://www.digimind.com/news/press-releases/93-of-consumer-

engagement-with-luxury-brands-happens-on-instagram/.