Lyle Maltz, a Director with Kantar Vermeer, WPP's global marketing consultancy, says that quality always will be essential to luxury, but now emotional value and a strong, personalised relationship with consumers are of paramount importance in the new luxury world.
"Today's customer seeks goods and experiences that project positive statements about who they are and who they desire to be," he writes in a Warc Best Practice paper, entitled How to Build a Luxury Brand.
"Customer-centricity is more important than ever, as the consumer's own brand is just as crucial as the brands those consumers buy and wear," he continues.
"What their apparel, accessory, beauty, car and even coffee choices say about them has become just as significant as what the brands themselves represent."
The traditional luxury model has been challenged further with the rise of digital platforms, social mobility, the emergence of "affordable luxury" and the particular preferences of millennial shoppers.
Maltz goes on to explain that Kantar Vermeer works each year with Kantar Millward Brown and WPP to produce the BrandZ report, a listing of the top 100 brands in the world, and the research has helped to identify the key tactics required to build a successful luxury brand.
He says heritage is a key element, especially for younger consumers, and that luxury brands should work on communicating their backstory to make consumers feel more connected and to establish trust.
"But while brand history offers a solid foundation and purpose, it is also necessary for luxury brands to establish their relevance in the modern and future worlds," Maltz advises.
For example, Hermès does not hide its equestrian heritage, but extends that symbol of quality to its products, ranging from high quality scarves to wearable technology.
Thirdly, brands should create an icon, going beyond a logo, to represent their story and which are instantly recognisable to others while making a statement about the consumer. According to Maltz, Canada Goose's iconic parka and the Cartier Love Bracelet are good examples of this approach.
Building a luxury brand also requires interacting with a broad spectrum of consumers and communicating with them via channels that they prefer. This might include video content, such as the live-streaming of fashion shows or behind-the-scenes footage.
Luxury brands should also recognise that philanthropy and charitable giving have emerged as essential elements of a luxury brand's image and serve to highlight brand values.
Maltz highlights a sixth element, centred around creating unique experiences for consumers. "Many luxury labels are investing in a digitised, in-store experience replete with all the modern digital trappings to engage with affluent customers of discriminating tastes," he says.
Finally, he recommends that brands invest in their staff to ensure they remain happy, motivated and willing to translate love of the brand to the customer.
Data sourced from Warc