Luxury brands defy rationality.

Paying tens of thousands of dollars for a handbag or millions of dollars for a car isn't a financial or functional decision. It's an emotional one. These brands understand the psychological triggers that can motivate people to buy seemingly impractical goods.

Luxury brands also profit from the implication that their sophistication is inherent, or effortless (and therefore worth having). But the truth is the most successful luxury brands have created this illusion via powerful marketing strategies. Here are six of their secrets.

1) They sell a lifestyle.

Luxury brands don't capitalize on their products' functionality or try to market themselves as a "good deal." No one can make the argument that a $40,000 Rolex watch is somehow more practical than a Timex. But luxury brands don't care about practicality. Instead, a person who purchases luxury goods does so to make a statement about who he or she is. Luxury products imply that the person who owns them is powerful, wealthy, sophisticated, and a member of an elite group. That's what people are buying into--a personal identity that declares, "I, unlike many people, am extraordinary."

2) They rely on quality over quantity.

An emphasis on quality serves several functions: It feeds into the illusion of superiority mentioned above; it implicitly justifies the high cost of luxury goods; and it highlights the story of how a product came to be. The product is positioned as the unique creation of a particular brand, which personalizes the brand-customer relationship.

In contrast, if a product is mass-produced and can be purchased at virtually any store, then the story becomes much less meaningful (and therefore harder to sell at high prices).

3) They let their products do the selling.

Apple's "Shot on iPhone 6" ad campaign is a great example of this concept. The company invited customers to submit their photos for the chance to be featured in magazines, newspapers, billboards, etc. worldwide. Instead of coming up with glitzy copy, Apple let the quality of the product speak for itself. It's the epitome of "show, don't tell."

In general, most luxury brand advertisements rely on simplicity over wordiness. They consistently depict highly visual, sensual imagery of their products. This connects with customers on an emotional level and fuels desire for the lifestyle presented in each ad.

4) They make buying the product part of the experience.

Because luxury branding hinges on the idea of exclusivity, personalizing the purchasing experience is key. Buying a luxury good isn't merely a transaction of funds. It's an entry point into the lifestyle promised by the brand. Therefore the best brands encourage their customer service team to build personal relationships with customers. This both individualizes the experience and helps ensure a smooth purchasing process, which builds brand loyalty.

5) They create a passionate community of buyers.

Prioritizing quality customer experiences at every stage of consumer engagement (as described above) creates dedicated customers. Strong branding is also critical to this process. Luxury brands ensure that at every touch point with customers, the brand conveys its distinctness and values. This emphasizes the idea that people who engage with the brand are members of an elite club. The most successful brands create an enthusiastic audience for their product even among people who are unable to afford it, but fantasize about the lifestyle it promotes.

6) They use scarcity to their advantage.

Whether actual or perceived, scarcity can drive demand for a product. If people can purchase a product anywhere, then there's no rational reason to buy right now. In contrast, limited availability motivates people to jump on a trend. Similarly, having to join a waitlist for a product increases excitement for actually owning it. Scarcity also maintains the illusion of exclusivity. And selective distribution has the added benefit of allowing the brand to control its message at every stage of customer interaction.

Final Thoughts

The appeal of luxury goods extends far beyond the product. By hyping a particular lifestyle, emphasizing personalized, high-quality products and service, and capitalizing on a sense of exclusivity, brands have developed a formula by which they create customers who are more than willing to pay the price for luxury.

Published on: Aug 12, 2015