1 Introduction

Luxury as is the case with most abstract notions has a somewhat floating and mercurial character. It has undergone considerable changes during the last centuries (Kapferer 2008; Lasslop 2005; Valtin 2008) and there are good reasons for supposing that the concept will be subject to changes in the future as well. Luxury finds its expression in tangible products or services and there is a huge industry which caters to the needs of those who can afford the ultimate in price and quality. We will try and analyse the ways and means with which luxury goods succeed in finding or defending their position in this highly competitive market (Strauss 2011: online). In order to better understand the concept of luxury in our time it is useful to highlight some historical and economic factors which have contributed to the shaping of our present-day perception without attempting an in-depth historical or sociological analysis.

1.1 An Approach to the Concept of Luxury

1.1.1 Historical Development of Luxury

Throughout the course of history the conceptualization of luxury has varied according to social developments and economic and political circumstances of a given time (Lasslop 2005: 472). The basic guideline however, of what has mostly been considered luxury, is that it is beyond everyday necessities, in some ways unnecessary, often exaggerated and superfluous (Sombart 1992: 85). Thus, the demonstration of luxury is often seen as a pronounced and deliberate contrast to existing social norms and patterns of behaviour and it is not amazing that it has often been subject to severe moral and ethical criticism:

“No other moral or social issue is as unclarified as that of luxury, andwhat behaviour toward it can be considered to be well befit” (Kambli1890 preface, cit. in Valtin 2008: 248).

Etymologically, the term luxury derives from the Latin luxus and luxuria both referring to  the  deviation  from  the  normal  measure  (Valtin  2008:  248).[1]   Classical  Christian theology narrowed luxuria,  lechery or lust mainly to the sexual context giving the notion a severely negative meaning - even considering it one of the seven deadly sins (Newhauser 2007: 239) (cf. Figure 1).

Figure 1 The Seven Deadly Sins: Luxuria (Pieter Bruegel the Elder 1558; (http://elizabethanliterarystudies.files.wordpress.com/2011/04/pieter_bruegel_the_elder-_the_seven_deadly_sins_or_the_seven_vices_-_avarice1.jpg)

In Europe in the 17th and 18th century moral and philosophical doctrines underlined the negative connotation of luxury and used the term to describe the immoderate consumption of the dominating social classes. Nobility was considered to use luxury as a means to express power and to mark the social difference between their class and the rising bourgeoisie. Luxury was associated to excessiveness, swank and outrageousness despising and condemning it as immoral and indecent (Lasslop 2005: 472).

The industrial revolution of the 18th and 19th centuries brought about the advance of mass production leading eventually to the growing prosperity of a larger part of the population. Formerly inaccessible products became more affordable, and a gradual change towards a more positive attitude to luxury ensued. The accessibility of luxury goods   entailing   the   “secularisation   of   luxury”   assured   that   these   goods   were increasingly valued and associated with good taste, intelligence and elegance. Luxury got more and dissociated from moral considerations and thus lost a good part of its bad reputa
tion (Lasslop 2005: 472; Pätzmann/ Frank 2004: 32).

1.1.2 The Relativity of Luxury

The changing concept of luxury in the course of the years illustrates that luxury is not an absolute but a subjective as well as a relative term (Kapferer 2008: 96; Valtin 2008: 248). Its perception is closely related - in fact is a function of the prevailing social and economic  living  conditions.  To  get  a  grip  on  the  notion  of  luxury  it  is  therefore necessary not only to select a given point in time but also to choose a definite socio- economic context as point of departure for analysis. Automobiles, for example, were considered luxury goods in western countries sixty years ago but today have largely become ordinary consumer goods which are mostly taken for granted - apart from a few highly  expensive  and  exclusive  brands.  This  example  illustrates  what  Lasslop  and others call the “democratization of luxury” (Lasslop 2005: 470; Tanneeru 2006: online; Valtin 2008: 249). With the spread of the product, its price diminishing, it becomes available to more and more individuals and loses its exclusivity and consequently its luxury status. This development applies to a well-defined social and historical context and cannot be transferred to other contexts. In most of the developing regions in Africa or Asia for example where the average income in many countries is extremely low, automobiles in general are still highly expensive and as very few people can afford them, are luxury goods for the overwhelming majority of the population. As luxury can only be evaluated in proportion to the degree of affluence which serves as the basis for analysis there is not much sense in comparing the notion of luxury in Third World countries to that in the western world. In fact, luxury is as relativ
e a notion as are wealth and poverty.

In addition to social and historical conditions the subjective character of luxury has to be  considered.  Again  it  reflects  -  this  time  on  a  personal  basis  -  the  individual’s economic status. For a homeless person in Los Angeles, luxury might mean to have a warm place to sleep at night, whereas a movie star might see luxury in the purchase of a new $ 32 million villa in Beverly Hills.

1.1.3 Target and Outline of Work

Jean-Noël Kapferer, the internationally recognized authority on branding and one of the most  influential  brand  experts  in  the  world,  has  summarized  the  huge  range  of definitions proposed by a large number of authors:

“There  is no single definition of luxury. Most of them do refer to well crafted, hedonistic and aesthetic objects, priced excessively above their functional utility, sold in exclusive stores delivering personal service and unique consumer experience, most often from a brand with history, heritage,  the whole delivering a  rare  feeling of exclusivity” (Kapferer 2011: online).

For Kapferer (2011: online) modern luxury is characterized by a shift from absolute to relative luxury: Thanks to the industrial revolution and the corresponding rise of the standard of living everyone can have access to power with the benefits of a hedonistic lifestyle  surrounded  by  exquisite  products.  Formerly  inaccessible  products  become more affordable and are in principle available to everyone. The possession of these goods (e.g. cars) per se is no aspect of distinction anymore. According to Kapferer the question of luxury then is no longer to have or not to have but r
ather what to have. The quality of the product, its ideal value and the brand become more and more relevant:

“At the early beginning of the 20th century living in a mansion, with the latest comfort, driving a car,  going skiing where in themselves sign of luxury […]. No brand was needed at that time: this absolute luxury was by essence conspicuous, visible by all, walking in the streets of New York, or London or Paris or along the wharfs” [sic] (Kapferer 2011: online).

It is quite evident that Kapferer’s definitions of “absolute and relative luxury” only make sense if applied to a coherent socio-economic context. The background of Kapferer’s analysis is the affluent western society where indeed the need for status has spurred the significance of well-known and visible brands.

The overall aim of the present thesis is to take up this idea and to analyse in what ways luxury brands distance themselves from ordinary brands and how some of them find their place in the luxury market while others fail. From there we will try to draw some conclusions on the requirements of successful luxury brand management.

For the sake of conceptual clarity it will first of all be necessary to make a clear cut distinction between luxury and premium products - a task not frequently undertaken in current literature. The reason for this being that the differentiation between premium and luxury goods cannot only be achieved by comparing the products themselves but has to take into account the social function of the respective product. The distinction, difficult as it may be, is compulsory however, as the management of luxury brands differs considerably from the management of premium brands as a more comprehensive analysis will demonstrate....