How brands turn tiny bottles, metal collars, and fancy logos into status symbols
Have you ever looked at a piece of bent metal and thought, “Why does this cost as much as a decent used car?”
No? Just me?
Recently, I stumbled across a Ferrari metal collar online. It cost $2,500. It looked like someone picked up a sheet of basic aluminum, bent it aggressively, painted it Rosso Corsa red, and said, “Yep, that’ll be two grand and a half, please.”
It made me genuinely sit down and ask: Why the fuck would anyone pay that?
Well, welcome to a niche little world called luxury marketing, which apparently means we add a ridiculous price tag to ordinary items and watch everyone scramble to buy them.
Joking.
Well… mostly.
Luxury marketing has three main pillars that conveniently work together to gaslight you into thinking that a tiny bottle of perfume = a down payment for a prime city apartment is a completely reasonable thing to pay for.
The three main pillars of luxury marketing are: I know those sound like really scary terms, but trust me, I’m going to hold your hand and explain how they collectively gaslight you.
(Disclaimer: I’m not a marketing person. All of this has come from research papers and articles I’ve read, plus whatever marginal bits I actually understood from them. 😭)
Illusion of Scarcity
→ General Idea
When you think something you want is about to sell out, you’re more likely to impulsively buy it, even if you haven’t stopped to think about the pros and cons yet. You see something you like, notice that there is very little stock left, and suddenly you’re buying it without thinking about whether you actually need it or not.
That’s essentially what the illusion of scarcity is: less availability, more wanting, quicker decisions, more impulsive buying, more urgency, and ultimately, more sales.
→ What is the Illusion of Scarcity?
The illusion of scarcity refers to the tactic of creating a perception that a product or service is in limited supply when, in reality, it might not be.
It plays on the psychological principle that people are more likely to desire something they believe is running out or hard to obtain.
→ Psychology Behind It!
- FOMO [Fear of Missing Out]
It compels people to take action when they believe they might miss out on something valuable or desirable.
The illusion of scarcity uses this fear to make customers more likely to buy to avoid the regret of missing out.
- Loss Aversion
People are more motivated by the prospect of avoiding loss rather than gaining something.
The illusion of scarcity creates a sense of potential loss. Consumers fear losing the opportunity to purchase the product or service. This fear of loss motivates consumers more than the desire to gain, pushing them to act quickly.
- Social Proof
When a consumer sees that a product is in limited stock or others are purchasing it quickly, they are more likely to believe the product is valuable and worth buying. The perception is reinforced by the idea that if others are scrambling to buy it, it must be worth having.
(Shameless advertisement: I talk more about this in my July edition, where I talked about how Red Bull used this tactic in the trash can myth. For more info, click here — July Edition.)
Perceived Social Status
In luxury marketing, people aren’t just buying the product; they are buying the perceived social status that the said product provides them with.
In emerging markets (such as the BRIC nations, i.e., Brazil, Russia, India, and China), it was observed that logo-flashy or more easily recognised luxury goods are more widely sought after by people, as they felt the need to separate themselves from the masses and perceive a higher social status, like Look at me, I am richer as compared to you, which is why I am higher on the social ladder as compared to you and make themselves stand out.
Meanwhile, mature markets (such as the United States, Italy, and France) were observed to be moving towards more subtle, less flashy luxury items which aren’t very easily recognisable by someone who doesn’t know about it because they tend to do it for (so-called) internalised-luxury consumption. The term refers to the perception of purchasing luxury goods for themselves or to express themselves better and to integrate themselves into a certain social group.
Mature market, in the above context, refers to markets that have reached a certain equilibrium and are characterised by modest growth.
An emerging market, in the above context, refers to markets that have a chronic shortage of resources and are characterised by inadequate infrastructure but also yield impressive economic growth.
So, in mature markets, people are moving towards a more subtle display of luxury, such as minimalistic or no logos, or a higher emphasis on the craftsmanship of the product. While emerging markets move more towards flashy, easily recognisable logos or/and patterns.
Yet in general, both aren’t buying the product for the utilitarian purpose of the product, but rather are purchasing the product or service to display a certain social status and separate themselves from the masses, such as: I am different from you; I have a higher perceived social status than you; and I’m richer than you, and I have a certain expensiveness that you lack and am living a certain level of luxurious lifestyle that you cannot attain.
Luxury marketing emphasizes the item's perceived social status. And consumers invest in it as they associate a certain sense of self-importance and a separation from the masses and their supposed (*air quotes*) superior social status with the ownership of the product, and therefore are willing to invest more in products that are marketed as a luxury, with the illusion of scarcity, than what might be the actual justified cost of the product solely based on utility if it wasn’t marketed as a luxury good or service.
Mythology of Heritage
Heritage is a crucial part of a luxury brand, as it needs to have a modern aspect for the current society yet, at the same time, have a certain historical aspect to it.
It adds an association of depth, authenticity, and credibility to the brand's perceived value and can result in increased brand loyalty and a willingness to accept higher prices.
It marks within itself the strategic cultivation of the brand’s origins, traditions, and values over time. As Heritage builds on permanence, prestige, and authenticity, it gives luxury consumers a narrative and a mythology to associate themselves with, linking back to how they view their perceived social status increasing with consumption of luxury brands’ goods and/or services.
