The psychology behind why people buy luxury brands is a fascinating topic. I aim to break it down so you can understand why people buy and if you run a luxury brand, how understanding your audience will help you create a stronger brand.
I have been working in luxury for many years and fortunate enough to have worked for many premium and luxury brands like Cartier, Westfield, Porsche & F1 and consulted for many more lesser known but equally impressive businesses within luxury.
Clients come to ikon as we understand an affluent audience so I hope you find this useful.
One of the biggest drivers for consumers is brand perception and what it means to the person buying a luxury product. Often a purchase demonstrates status signalling behaviour, whether that’s to show others with visual markings of the brand on the product, carrying the bag of the brand around or even people closer to you knowing you shop at that particular brand.
People identify with a brand and this represents who they are as a person. If you look at most successful luxury brands, they have been building this perception for decades, it doesn’t often happen overnight and you have to try and carefully manage that perception.
If you look at Burberry, it went through a phase of being associated with ‘chav’ culture so it needed to re-invent the brand and try to distance itself from this association.
I have always found it interesting how luxury plays out in public as I am interested in luxury for the quality, craft and attention to detail. For me, it’s about working with brands that are the pinnacle of design using the best artisans, the best materials, the best designers. But for some, luxury is materialistic.
Often people buy luxury for the social status. To buy a brand with the logo highly visible to socially signal they have wealth and can afford it. Sometimes that is not always the case and the negative effect of luxury is that some consumers will aspire to own luxury goods that can’t afford it and then get into a lot of debt because of it. This is unavoidable as people will always aspire to want more than they have.
The one thing true luxury brands do best is creating exclusivity. Often that is based on the price being out of reach for most means the ones who can afford it feel like they have bought something rare. Even pricing luxury is an art form, the perception of high price is often associated with high value and high quality but this is not always the case.
Consumers with less experience in luxury that are typically from lower socioeconomic tiers, prefer ‘loud’ luxury products with more prominent brand identifiers like a Louis Vuitton logo pattern bag. They want to flaunt their luxury goods as they want people to think they have money. In contrast, those with greater expertise prefer ‘quiet’ luxury products with less prominent (or no) identifiers. The people in the know can sense it’s of a certain quality that they don’t have to shout about it.
This is because non-experts seek to be affiliated with more affluent groups, whereas true luxury buyers seek to dissociate themselves from the mainstream. They know they have enough money not to prove anything to anyone.
The main driver behind most kinds of luxury product purchases is the need to make themselves or others feel good. Whether you are buying for yourself to give you a boost or buying for others as a gift.
Another driver for some can be monetary. It may cost you a lot to buy a luxury product but if you buy the right product, it can actually increase in value over time so you have an appreciating asset to sell in the future. ikon was approached to work with Cult Wines who can help you build a portfolio of fine wines with the aim of it being an investment that makes you money over time.
Who wouldn’t want to buy a product that sells for more than you bought it for?
The Need for Uniqueness - Everyone deep down wants to feel like they are unique. Purely being able to afford luxury goods puts you in the minority of people who can afford the goods in the first instance so the likelihood of many people owning what you have is already quite low.
Signalling and Status - As we have mentioned before, buying a Porsche can be a status symbol for a man. Buying a Cartier watch may be a status symbol for a woman. Both are purchased for their self worth but also to be associated with the history of a brand. What woman would not feel special in buying from a brand that has a rich history in selling to royalty.
Building the Self and Self-Narrative - Old luxury was very much about wealth, being ostentatious but with changing consumer demands, new luxury is still about being aspirational but also feeling more reachable. It’s becoming more inclusive and less stuffy. Just because people want nice things, doesn’t mean they have to behave in a way to appear aloof.
Luxury brands appeal to consumers on a psychological level by providing a sense of status, self-esteem, identity, experiential value, emotional appeal, and brand loyalty. It’s the stories that are created by brands that consumers buy into often to reflect their sense of identity.
The real luxury experts are not just experts on luxury products, brands and lifestyles, but essentially, they understand human behaviour and the psychological desires to communicate to an audience to get them to buy from you.
For a deeper understanding of the psychology of human desires, look at Maslow and his hierarchy of needs theory.
Self-expression in luxury is a way for individuals to communicate who they are and what they value to others, and it can be a powerful tool for building personal relationships and creating a sense of identity and belonging.
If you look at brands like Vivienne Westwood, her brand is about punk culture and the rebellious nature of that movement. You can see this come across in her clothes and her brand. She is an antagonist and that’s how she expresses herself. It’s the same for the consumers who buy from her, they identify with what she stands for and that forms a person’s self expression of themselves to the world.
Brands often think that consumers remain loyal after buying from them but loyalty only really happens when you create an amazing product and service, you are embedded in their mind as a brand you can trust over and over again. If you do prove yourself time and time again to deliver on your promise, it can be very difficult for other brands to dislodge this perception in your mind and convince you to change.
Creating brand loyalty takes time and often this needs to be nurtured through loyalty programs that gives back to your most devoted customers. This could in the way of exclusive access to products, member-only events, previews of new styles. Anything to strengthen brand affinity and keep people engaged so they keep coming back.
As we shift to a new age of being more socially aware with brands not just in the luxury space, certain brands are leading the way in being more conscious in how they make their products, who makes them and if they are paid fairly.
From Stella McCartney banning fur and leather goods and experimenting with materials like mycelium (the fungus mushrooms are made of) and even car brands like Polestar, who are one, driving the electric revolution but also using found plastics in their car interiors.
Typically luxury buyers are very discerning, well educated and are responsible members of society so associating with brands that are not only luxury but socially conscious can tap into the buyers’ self identity and taps into social signalling that they want to be associated with these kinds of brands to their friends and peers. Younger consumers are starting to act a lot more responsible in relation to the global climate crisis and they want to believe in brands that take this seriously.
Within branding and marketing, everything is built on perception. There is a renowned quote by Marty Neumeier that “A brand isn’t what you say it is, it’s what they say it is”.
In this case, your job if you are a part of marketing a luxury brand is to help build and control that perception in people’s minds.
If you let people decide what to think, it could be a very different narrative to the one you are trying to control. This is why marketing and advertising plays a critical role in shaping luxury brand perception.
Luxury consumers pay premium prices for luxury goods, but the modern luxury consumer needs these prices to be justified. You can’t just charge a high price and call it luxury.
As a high-end agency, ikon specialises in helping build the right perception of your brand. From how it’s perceived in the strategy and thinking behind why people should care. Down to how you visually look different to your competitors which gives you a better chance of standing out and consumers buying from you. The story you tell and how you articulate it can make or break your brand.
Whether you need advice, strategy or implementation, we would love to hear from you.