Is the luxury sector shielded against the effects of the crisis? What is accurate and what is misleading about the categorisation of brands as “premium", “luxury", “high-end", and so on? These were some of the questions addressed by Josep M. Galí (Lic&MBA ‘84), Associate Professor in the Department of Marketing Management at ESADE. Professor Galí answered these key questions – which the managers of luxury companies often ask themselves – by using clear examples.
Professor Galí began by noting that “all companies can learn a lot from the luxury sector". He reviewed the origins of the concept of luxury, which, as a “social phenomenon that helps us to understand how society is evolving", has for many years attracted the attention of both anthropologists and psychologists. “It is important that we understand the luxury market, since it has certain peculiarities in terms of management", he added.
Professor Galí explained that the driving force behind the luxury market is “a passion for doing extraordinary things", citing the example of a luxury car called Tramontana. He went on to discuss the close links of luxury to innovation and superior performance, as well as to beauty and aesthetics in a post-aesthetic world, which are also key drivers of the market.
“With luxury", Professor Galí said, “you can’t get by with half-truths". He closed the topic of luxury automobiles by highlighting the importance of dialogue with the invested transitional object: “It is an instrument seen as having the attributes of vitality, life and power. It is a beloved object, but also one that is mutilated with excitement. Its emotional power is unleashed gradually, and its omnipresence leads to conformism and to alienating mimicry".
Professor Galí then turned his attention to a new model of luxury that requires an insight – that is, “an in-depth comprehension that makes it possible to understand trends". The context of this model, he noted, is a very mixed-up, transitioning society that gives rise to two kinds of motivators: aspirational and inspirational luxury. The former, according to Professor Galí, “is based on mimicry, the desire to be like by having things like", whereas the latter is based on “internalisation, being what you are and finding yourself through products".
The professor also discussed some consequences of the current situation in the luxury market, for example, the fact that there are many highly inspired initiatives that cannot be transformed into sustainable business structures. This leads to what Professor Galí called the “sins of luxury", which include the loss of passion, a love of profit, haste, the forcing of the market, and the extension of brands without foundation.
Management advice
Towards the end of his talk, Professor Galí reviewed some of the keys to managing luxury companies: forget about positioning, since luxury is not to be compared; do not succumb to customers’ demands; do not automatically respond to increases in demand; protect clients from non-clients; understand that the luxury sets the price, not the other way around; and introduce your clients to the world of art.
Programme:
Josep M. Galí (Lic&MBA 84), Associate Professor in the Department of Marketing Management at ESADE, will be leading a new Refresher Programme.
Is the luxury sector shielded from the crisis? Will we see a return to the show-off boom, or structural changes in consumption habits? Is there democratisation in the consumption of luxury products? How can we reconcile the demands of the market with our passion for top quality? What is true and what is confused about how we categorise brands as premium, luxury, high-end, etc.? How can we manage the especially intense dual tensions of the luxury market? What can we learn from the market and the companies in the luxury sector?
These are just some of the key issues that the managers of companies in the luxury sector must address, and which will be analysed in detail at this upcoming refresher session.
