8 Elements to Consider to Understand a Luxury Product

The traditional marketing mix model of the four P's, namely product, price, place, and promotion, is a great foundation to understand luxury, but it requires a few adjustments. First, we need to extend the model to the now classic 8 P's by adding people, processes, physical evidence, and planet… But each one of these dimensions also needs to be refined to better capture the unique characteristics of the luxury industry. In this series of 8 articles, we dive deep into the definition of luxury and its strategic implications, starting with Product.

The Essence of a Luxury “Product”

The definition of a luxury “Product” extends beyond just the item or service. In the context of luxury hospitality for example, the product is a multifaceted concept that encompasses the decor, location, and the breadth of services offered. The location is particularly important: Being located on the Champs-élysées in Paris or overlooking Central Park in New York is obviously an integral part of the Product itself. But for guests, even more important than the characteristics of the Product or its location is the experience of staying there… Experience, while stemming from the product, encompasses more than the product itself. Take for example the experience of owning a luxury car… It is not limited to the car itself, it includes the experience of buying it, the personalisation, the wait, the excitement of the delivery, and the pleasure every time you drive it of course. It is ultimately part of the Product, or rather an emanation of its exceptional characteristics, but in the field of luxury, we will consider the experience in its own right. A major difference with the Product is that the experience is subjective and personal, it can therefore be improved and enhanced through personalisation and special attention that would not be possible outside of luxury. To reflect this specificity and to keep the P’s intact, we will name this dimension the Perceived experience.

The Allure of Pride

Now, if you’ve ever driven an expensive car, you know that there is another part of the experience that is special, and that’s the looks you get... Your experience with a luxury car extends to the pleasure of having the keys in your pocket or displayed on a table at lunch, and even to the car’s app on your phone. Same when you are entering a luxury hotel, or casually mentioning you are staying there, there is a feel to it, a kind of pleasurable enhancement of the ego, a thrill… You see, the feeling of owning a complex and powerful product, or of using a refined and exclusive service, is something special. It is an emanation of the experience as the experience itself is an emanation of the Product. But it is strong and very important in luxury, so we will name it and with a straight P this time: We’ll call it Pride. That gives us a trio of concepts to better encapsulate the holistic dimension of the luxury product or service: Product, Perceived experience, and Pride. These are refinements but necessary ones because of the diversity of the luxury industry: When you consider a product such as a suit, a car, or a phone, you set a frame of characteristics, features, and purpose that are enough to describe them, but they are insufficient for luxury products. Consider this: What are the most important characteristics of luxury cars? Are they the same as for your regular Toyota? What are the required features of a $10,000 dress? What is the purpose of a $1 million phone? Perceived experience and Pride partly answer these questions. But there is another dimension to consider…

Unveiling Luxury's Spectrum

It is important to grasp the subtle nuances that distinguish varying levels of luxury, and also the interesting question of “Where does it start?” You can think of the levels of luxury as related to their price range: A Porsche is definitely a luxury car, but not in the same price range as a Buggati. And even in the same brand, the levels can vary greatly: Take a Cartier love bracelet, it is a beautiful luxury product but clearly not in the same category as a Panthère bracelet - a piece of high jewelry covered in diamonds - which is more than a hundred times more expensive. While it would be easy to reduce the level to the price range, the price is actually a consequence of the level of luxury, not the other way round, and we should therefore consider it as a dimension in itself. We will call it Power first because it starts with a P, let’s be honest; But it is also linked to the power of the brand and the power of the object in itself and its impact on people...

Luxury is a spectrum, and the level of luxury, or Power, is a continuum. In the hotel industry for example, this is exemplified by the numerous rating systems and their nuances. While all five-star hotels represent a high level of quality, there are huge differences within the category: Consider a five-star hotel at the airport for example, compared to a five-star trendy hotel in Ibiza, compared to the Savoy or the Ritz… Doesn’t feel the same, does it? A great rating system to exemplify these differences is the Michelin-star distinction for restaurants: A one Michelin-star restaurant is said to be exceptional in its category, and in my opinion, that is where luxury starts. A two-star restaurant is 'worth a detour', and a three-star is 'worth the journey'.

This three-level scale is also effective for categorizing hotels, and the Michelin Guide actually just introduced it a new system of Keys : The highest tier, three keys, isn't just about being an exceptional five-star property anymore; it is about being a destination in itself, a place worth traveling to for its own merits. When a new luxury property opens, it usually goes through such a period where media coverage and the inherent novelty of the opening drives guests from all over the world, interested in discovering the latest trends, architectural prowess and innovations. The hotel is therefore ‘worth the journey’. For three Michelin-star restaurants, this stays true in time as travelers usually organize their journey around the gastronomic experience, adding a tour of the surrounding area to complement the trip to the restaurant, not the other way round. Many international guests would never have visited that region were it not for the three Michelin stars...

Conclusion: The Quintessence of Luxury

To encapsulate the complexities of luxury, we have extended the definition of Product in the marketing mix with three additional dimensions: Perceived experience, Pride, and Power. Perceived experience is a description of the luxury experience for someone, emphasizing the individual and subjective nature of this dimension. Pride relates to the particular feeling of ego enhancement that consuming luxury provides, and how important it is to be able to share it. Power, finally, captures the importance of considering the different levels of luxury.

For luxury brands, the actionable insights from this framework include enhancing the Perceived experience and cultivating Pride in ownership, which naturally amplify a product’s appeal and foster a community of brand advocates. The immediate benefits are significant: improvements in Perceived experience, Pride, or Power directly enhance a product's luxury perception, leading to reduced price-sensitivity, increased word-of-mouth, media, and social media coverage, and VIP’s and influencers’ attention. In essence, optimizing the dimensions of Product, Perceived experience, Pride, and Power allows luxury brands to redefine excellence, ensuring their enduring relevance and success in this very competitive market.