All That Glitters is... Value-driven, actually
One slip from the manufacturers and the luxury industry is staggering! How did we get here?
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If you’ve been spending a large chunk of your time on TikTok (no judgement, it’s research!), then you’ll have witnessed first hand the most unintentionally hilarious, but most substantial critical hit on an entire industry thing we’ve seen in decades.
Chinese manufacturers, most prominently those who supply global luxury giants, have revealed some scalding hot goss:
“You can actually buy your favourite $78 000 bag luxury bag from us, exactly the same, for like $1 200 lol. Email us here.”
Luxury industry non-adherents are crowing their “I told you so’s” from the highest points on the internet, pointing and cackling at the ‘brand-billboards’ (there’s a different term for this, but let’s choose kindness) wearing their head-to-toe label clothes and toting their ‘long-term investments’, now newly-revealed as just ordinary, needlessly expensive luggage.
How on earth did people get seduced by this siren-song?
Well as it turns out, the luxury industry has been leveraging the Principles of Value the entire time. Beat for beat, letter by letter!
Let me demonstrate.
You see, the luxury industry made bank because:
Fully understood the true Value needs of its customer base
From its very inception the luxury industry, as a collective, fully understood the true Value needs of its customer base.
The notion of Value needs comes from Principle 1 of the Principles of Value, which coincidentally gives us a really neat definition for Value:
Value means providing your offering, to a client or stakeholder in a way that is meaningful to them
In this instance, would-be luxe consumers have an itch to scratch: they really really like fancy things. One would think that acquiring them would be their Value need, but that’s not so: having them is simply not enough.
They want to be the only people to have the fancy thing, and more: they want to be one of only a few people who have the fancy thing. Exclusivity.
That’s not all! These same people hunger for the finer things that money can buy, and have the need to signal to others that they can well-afford those things. ‘Flex culture’.
Luxury brands saw these true Value needs, and promptly identified an opportunity to craft offerings that met those needs.
And that was only the beginning!
Encouraged a narrative that went beyond their offering itself
Over time, luxury brands noted that it wasn’t enough to tell consumers that their products and offerings were luxe. The situation was further complicated by copy-cats and pretenders who’d shill their products under the promise of “oh dahhhling, get a load of this! It’s French, it’s chic!”
Which brings us to Principle 2 of the Principles of Value:
Value goes beyond your offering:
it includes any point(s) where you interact with your client or stakeholder, beyond them engaging your offering
What this amounts to is an understanding that the sales process is more than an exchange of goods, services and cash: it’s an experience! And if you can make that experience maximally enjoyable, or awe-inspiring even, for your client or stakeholders, they’re much more likely to make repeat investments, and larger investments with time.
To leverage this, players in the luxe industry played this principle up to the max: they became experts of the experience, Adventists of the adventure, connoisseurs of consumption.
They not only created dizzying products, they meticulously crafted a fantastical narrative about it:
they told the consumer what having the product meant,
instructed the consumer on what having it felt like,
let the consumer into the secret club by telling them what what having the product said about them, and what it said about those who don’t have it.
And they had this down to a science.
Don’t believe me? Think of a Birkin bag right now. EXACTLY.
Cornered the market on a very specific context
Principle 3 of the Principles of Value sets a very important precedent:
Value is contextual:
Understandings and attitudes of Value can change depending on who’s being spoken to about that Value
In short? Talk to an attendee of a party on a multi-million dollar estate and the attendee of small intimate church celebration and you’ll get vastly different definitions of Value. The definitions being different doesn’t mean either definition is invalid, but you must know, understand and cater to your audience’s specific definition.
Luxury companies took the time to understand what Value meant to the very specific people they’d be selling to, and made efforts to fully engage them.
By crafting offerings that singularly met their target customers’ Value definitions and needs, they cornered the market of people for whom the aforementioned points would matter the most, and who would be most receptive to the strategies for each point, and effectively shut out any non-luxe competitors by relentlessly catering to their target’s needs.
This all was working for such a long time too, and had it not been for the suppliers coming forward, this would have continued to persist.
So why did things shake and break as completely as they have now?
Why did it get disrupted?
Well, simply? The “illusion” broke!
Much of what the luxury industry leveraged was based on perception, and not any demonstrable, cold hard Value that was based in anything tangible.
And I specifically say tangible and not real, because until the manufacturers came forward, consumers by and large bought into the perception of Value from luxury brands, so it was real.
In the next edition, I’ll be going into how exactly enterprises can dodge the bullet that the luxe industry took from this experience!
Watching this trade tête-à-tête has been… nothing short of a journey!
I myself have never been big on luxury brands, and as such have been lucky enough to not get caught in the crossfire; have you?
What do you think about all this? Let me know in the comments!
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