How can a company transform its product from a simple trademark into a brand and then an icon? A hint could come from the idea that “products are bought, brands are chosen,” but, still, how can even that middle status be reached?
Enter “Economics 101” taught at business schools. Take the luxury industry as a model. Magazine advertising should be used to stimulate sales, and TV advertising to increase prices on luxury items as if they were simultaneously in a demand and supply economy model.
However, it is not generally understood why the luxury brands don’t boost their standing with the demand-side economic principle. By boosting the interest of particular items with limited supply, prices would increase. To avoid the often-repeated maxim that luxury brands don’t want to be associated with pedestrian consumer products, their marketing strategy should focus only on items that the average consumer cannot afford to buy, such as the least expensive Hermes’ Birkin bag (its cheapest version is sold for $12,100). This way, magazines would be used to stimulate sales, and television to increase prices.
In addition, luxury brands that are not in the category of “ultra-luxury” sell consumer products (like neckties, perfumes, gloves, umbrellas, and other accessories) that would benefit from TV advertising, as it would both generate sales and create demand for their high-end products, which due to their limited output, would increase prices.
At this point, brands have to lure back middle-class consumers to jump-start growth. A report from Boston-based business consultant Bain & Company indicated that
the luxury industry has lost 50 million customers since 2022, partly, it said, because hefty price increases put their goods out of reach for aspirational customers.
Clearly, the luxury sector has to create demand with TV advertising, while generating sales with a supply-side marketing campaign with print media. More detailed information will be found in the June Issue of VideoAge, now available online and in print.
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