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Luxury Brand Pricing Strategy: Consistency is the Key to Success
The essence of luxury brand pricing strategy lies beyond merely striking a balance between exclusivity and accessibility; it also involves mntning uniformity across diverse global markets and product portfolios. The price tag attached to products from luxury brands must embody the core messaging of the brand: quality, heritage, and exclusivity.
This is in contrast with premium brands that are avlable at prices accessible to those willing to pay them. Luxury, however, revolves around being part of an exclusive community - be it through high- offerings or affordable entry-level items.
Transparency in pricing has become a cornerstone for retning customers within the luxury brand ecosystem, according to Lyle Maltz, Director at Kantar Consulting. Luxury brands are now responding to millennial consumers who value trust most over anything else, he elaborates. When it comes to pricing, this means transparency. Mntning consistency in pricing helps reinforce trust and authenticity, as well as upholding the essence of the brand.
Consistency
In a globalized marketplace where tax differences and currency fluctuations prevl, luxury brands must ensure their pricing remns consistent to minimize perceived discrepancies in value across different local markets, thereby preserving their reputation.
A notable example occurred when Chanel faced depreciation of the Euro in 2015. This made European prices more attractive to Chinese consumers who consequently made mass purchases in Europe. As a result, Chanel adjusted its prices globally to reflect currency fluctuations and discourage such trips. However, this move was confusing for the brand's customer base overall and risked damaging perceptions about perceived value differences across regions.
Maltz explns: This strategy of inconsistency was detrimental as it contradicted the allure that luxury brands m to mntn. Following Chanel’s effort to bring prices in line globally post the incident, their brand's value recovered.
Digital Landscape
The increasing significance of digital channels and online product avlability means luxury brands must also adhere to consistent pricing strategies.
A report by Contactlab and Exane BNP Paribas Online Offer Dive Pricing Landscape, May 2017 found that consumers who purchase luxury goods both online and in-store sp around 50 more annually compared to those shopping exclusively offline.
The report further revealed that many luxury brands are now striving to harmonize pricing between their physical stores and online platforms while expanding the range of products avlable online. This battle to retn exclusivity amidst personal relationships with customers who prefer digital channels sees luxury brands ramp up their online product offering, increasing it by 27, says Maltz.
For instance, Dolce Gabbana saw reductions in both median and entry price points making its products more accessible while Tiffany increased them significantly. As a result, the latter became less exclusive to certn consumer segments.
Pure Luxury vs. Diffusion Lines
In contrast to pure luxury brands, diffusion lines offer alternatives that don't replace primary luxury offerings but complement them. Vera Wang's White by Vera Wang range exemplifies this strategy successfully with clear messages communicated to consumers about fabric quality differences and intentions towards the mn luxury line.
Similarly, Prada was able to introduce a line of bags made from nylon instead of leather while mntning brand integrity through a well-defined narrative. Both cases underscored that the focus must be on reinforcing the brand rather than compromising its core values for pricing purposes.
In , when considering both pure luxury and entry-level products under a single brand umbrella, consistency remns pivotal in shaping customer perceptions about value and quality. As Maltz summarizes: It's not just about the prices within brands; it's also about how these prices align with their values. Brand identity is paramount and pricing strategy is merely one component of that.
Credited Images:
Serge Kutuzov, London Scout, Unsplash
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Luxury Brand Consistent Pricing Strategy Global Market Price Uniformity Importance Transparency in High End Brand Pricing Digital Channel Luxury Product Alignment Exclusivity vs Accessibility: Pricing Balance Pure Luxury versus Diffusion Line Prices