Rethinking Exclusivity In Luxury Markets

Buyers of luxury fashion can be passionate, even territorial, about the brands they shell out for.

It’s about status, exclusivity and self-identity, Maryland Smith’s Yajin Wang explains. And the attachment runs deep.

It creates a tension for designers. How can they seek out new consumers, new markets and grow their brand, while preserving the exclusivity its devoted fan base adores?

Wang has long studied the way consumers interact with high-end designers labels, how those fashions affect the way their users shop and behave.

In her research, Wang finds that consumers forge a strong personal connection to the luxury brands they wear and feel threatened when the labels worn by people they perceive as dissimilar to them, based on demographic, identities or economic status. They even feel compelled to abandon the label they love as a result.

Established, professional women, for example, will contemplate abandoning a fashion brand when they see their elite labels on the arms of bling-wearing teens and club-going twentysomethings. “It loses that exclusivity and their special ties with the brand,” Wang says.

Wang’s new research, to be published in a forthcoming Journal of Marketing Research, shows that luxury brands can maintain the loyalty of their high-end customers by creating a high-end line-within-a-line that preserves those customers’ status as a member of the elite.

“Our research is the first to examine how different consumer segments respond to dissimilar users. We focus on consumers with strong self-brand connections, who are especially important as they are often a brand’s most loyal consumers.”

Six studies conducted by Wang and co-author Deborah Roedder John of the University of Minnesota find that consumers with strong connections to a brand actually prefer to upgrade to a more exclusive product line, rather than abandoning a designer altogether.

“Their response,” Wang says, “is actually to purchase more of the brand’s products, but to limit themselves to the more exclusive, higher-end products.”

She says brands can work to retain their elite customers, even as they pursue a wider customer base that spans income levels, by offering more exclusive products, such as new collections and limited editions.

Brands are beginning to do just that. The Coach leather goods company, for example, sells more than 150 different handbags at prices ranging from $150 to $1500, with more exclusive items sold only at its flagship stores, and more affordable ones sold at outlet stores and elsewhere.

Louis Vuitton, meanwhile, recently opened its first Haute Maroquinerie store in the United States, which allows customers to design handbags with more than 40,000 possible combinations of leathers, sizes and colors. To maintain exclusivity, the products become more difficult to attain, instead of easier, and that’s slightly counterintuitive as brands generally seek to serve VIP customers with more convenience.

“Our findings have important implications for marketing managers,” the authors say.

Concerns about what happens to a label’s cache as the brand looks to attract a broader customer base are pronounced in the luxury segment. In recent years, status brands  such as Louis Vuitton and Burberry, have expanded their price tiers and distribution to make their products more accessible to groups such as teens and young adults.

But to be successful, Wang says, high-end designers must dote upon its faithful consumers, even as it looks to entice new entrants.

Read more: Up, up, and away: Upgrading as a Response to Dissimilar Brand Users is forthcoming in the Journal of Marketing Research.