Luxury Brands During Times of Recession
Luxury brands during times of recession
A question of survival
Universally, luxury items are considered to be items of great prestigious value, and their possession has satisfied people worldwide. In the last three decades particularly, consumers have enjoyed a higher level of disposable income than ever before, and as a result luxury brands have prospered greatly. However, in times of economic crisis luxury brands face the challenge of having their brands perceived value becoming dangerously vulnerable (Silverstein, 2008). It is during these times that luxury brand managers need to re-evaluate their strategies and tactics, to ensure their brand maintains the desired image and perseveres through tough financial times. Now more relevant than ever, due to the current global recession, managers and owners of luxury brands must understand that during these times are opportunities to grow and strengthen their brand. Well established brands that consumers perceive to represent quality and value can actually benefit from an economy in recession (Buss, 2002). During a recession, luxury brands can aid their success not by reducing their price points– which most likely will have a negative effect on the brand – but by adapting their product line. By appealing to middle class consumers who still want to afford entry level items of luxury during an economic crisis, luxury brands can increase their target market and profit in the long term.
In the past, luxury brands have been defined as those brands for which the mere use or display of a particular branded product brings about perceived prestige and status for the consumer, apart from any functional utility (Grossman & Shapiro, 1988). More recently, Phau and Prendergast (2001) articulated that luxury brands “evoke exclusivity, have a well known brand identity, enjoy high brand awareness and perceived quality, and retain sales levels and customer loyalty”. Recently the notion of a “new luxury” has appeared
A question of survival
Universally, luxury items are considered to be items of great prestigious value, and their possession has satisfied people worldwide. In the last three decades particularly, consumers have enjoyed a higher level of disposable income than ever before, and as a result luxury brands have prospered greatly. However, in times of economic crisis luxury brands face the challenge of having their brands perceived value becoming dangerously vulnerable (Silverstein, 2008). It is during these times that luxury brand managers need to re-evaluate their strategies and tactics, to ensure their brand maintains the desired image and perseveres through tough financial times. Now more relevant than ever, due to the current global recession, managers and owners of luxury brands must understand that during these times are opportunities to grow and strengthen their brand. Well established brands that consumers perceive to represent quality and value can actually benefit from an economy in recession (Buss, 2002). During a recession, luxury brands can aid their success not by reducing their price points– which most likely will have a negative effect on the brand – but by adapting their product line. By appealing to middle class consumers who still want to afford entry level items of luxury during an economic crisis, luxury brands can increase their target market and profit in the long term.
In the past, luxury brands have been defined as those brands for which the mere use or display of a particular branded product brings about perceived prestige and status for the consumer, apart from any functional utility (Grossman & Shapiro, 1988). More recently, Phau and Prendergast (2001) articulated that luxury brands “evoke exclusivity, have a well known brand identity, enjoy high brand awareness and perceived quality, and retain sales levels and customer loyalty”. Recently the notion of a “new luxury” has appeared