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Many luxury brands are currently leaving significant revenue untapped because they lack the ability to price effectively. This is due in part to their focus on product design and quality, without adequately creating cultural capital that elevates the perception of value among clients willing to pay premium prices.
The mn reason for pricing misalignment often lies in a mismatch between what customers perceive as the value created by the brand versus its actual asking price. The cornerstone of building this cultural capital is strong, compelling brand storytelling.
A true luxury brand must clearly articulate its emotional positioning and role within its customer's life to foster desire and exclusivity. Unfortunately, many brands mistakenly view storytelling as an advertising tool delegated to marketing departments rather than a strategic initiative that involves the entire leadership team. It should be understood that these values are defined from the perspective of the client, not internally.
Rolex serves as a shining example of brand storytelling excellence in this industry. Rolex watches transc being mere mechanical timepieces; they symbolize exceptional achievements and the dedication behind thembe it in art, music, exploration, sports, business, or politics. Wearing a Rolex watch becomes an embodiment of remarkable accomplishmentsa reward for hard work.
Partnerships with renowned figures like pop star Michael Buble and Chinese pianist Yuja Wang further illustrate this brand's commitment to celebrating extraordinary feats through its timepieces. The GMT Master family was designed for pilots in the jet age when traveling across time zones became feasible, while the Submariner pays homage to deep sea exploration, and the Daytona is celebrated among race car drivers.
The consistency of storytelling around Rolex's core values of achievement and dedication is unparalleled. This contributes significantly to their status as highly desirable luxury goods despite being mass-produced.
Many other brands struggle with pricing strategies that fl to capture their true value potential due to a reliance on a cost-plus model, which overlooks the emotional dimensions of luxury consumption. Others adopt competitive benchmarking for pricing, placing themselves in a price range grid relative to competitors without clear strategic rationale.
Pricing decisions must consider how they affect brand perceptiontoo low risks associating lower quality with your product while too high can alienate potential customers who cannot justify its value. Balancing these factors ensures that luxury products are priced competitively while reflecting their premium status and exclusivity.
The true value of a luxury brand lies primarily in ALV Added Luxury Value. In some cases, this component could be thousands of times greater than tangible assets like product quality or design alone. This underscores the importance of having a compelling client-centric narrative to justify disproportionately high pricing.
In summary, a successful pricing strategy for luxury brands hinges on their ability to craft and communicate an engaging brand story that its target audience. Prioritizing this aspect is crucial when addressing challenges in setting appropriate prices.
the author's viewpoint.
Daniel Langer, recognized as one of the “Global Top Five Luxury Influencers to Watch,” leads equitea luxury and lifestyle brand strategy firmand serves as an executive professor for luxury strategy and pricing at Pepperdine University. His expertise exts to consulting leading global luxury brands, writing best-selling luxury management books, delivering keynote speeches worldwide, and hosting luxury-focused workshops on topics like the future of luxury and disruption in Europe, USA, Asia.
Connect with him:
LinkedIn: https:www.linkedin.comindrlanger,
Instagram: @equitebrands @thedaniellanger
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