Three tiers of luxury

As the luxury industry reverts to business as usual after several years of stellar growth, marketers need to be aware of how the market has changed more than ever, with differing tiers and younger buyers.

Writing in Luxury Daily, Daymon Bruck, chief creative officer and partner at The O Group, also notes that “many luxury brands and their businesses practices have become more intent on commercialization and democratization: what was once a rare and exclusive category of goods and services is now more commonplace and obtainable”.

What it means

It doesn’t make sense to talk of a single “luxury” sector when considering how to market brands and drive consumer engagement. At one end of the market is the “commonplace and obtainable”, at the other is the “truly special and unique”. The O Group identifies three tiers of luxury brands and audiences, each with unique rules, associations with status and customer strategies. 

Three tiers

• Standard Luxury. Buyers are typically in the top 5-10% of household income and ready to pay for quality and exceptional service. Brands are synonymous with a general concept of luxury, and appeal to both a higher tier of luxury consumers and emerging aspirational customers alike. 

• High Luxury. Buyers are in the top 1%. The brands operating here are inspirational and offer lasting value and cultural relevance. They too will modulate their offerings to maximise reach while maintaining their luxury status, but a first-class experience creates a much clearer dividing line between them and a standard luxury brand.

• Ultra Luxury. Buyers are in the top 0.1% and are willing to pay for something truly special and unique: exclusivity is important to them. Brands at this tier do not compromise and are not looking to attract buyers from lower tiers.

Sourced from Luxury Daily