I.5. Distinguishing Luxury Products and Brands from similar Concepts

 

I.5.1. Premium Products and Brands

Luxury products and brands can be distinguished from the premium segment by their constitutive characteristics. As discussed above, the major characteristics can be considered as dimensions ranging from a minimum level that is also necessary for non-luxury brands to a maximum level that corresponds to the highest form of luxury. As demonstrated in figure 1, premium brands rate higher on these dimensions than medium-level brands, but still well below luxury brands. While premium brands still remain down-to-earth and cannot lose sight of the value-for-money ratio, luxury brands are reaching exceedingly reasonable levels in the major luxury dimensions, and some of them even work on topping the current top-of-top luxury level. The differentiation between luxury and premium brands is mainly a matter of degree, which makes it difficult to draw a clear line, especially between top premium brands and entry-level luxury brands. 

However, there is also an essential difference between these types of brands: while premium brands focus especially on functional characteristics, luxury brands put much more effort into creating symbolic meaning. For instance, Lexus entered the US market with the objective of growing by taking customers away from Mercedes, which was identified as its major competitor. Therefore, they took the Mercedes E Class as the model to overtake and developed a car with a similar design and even superior technical features that was only sold for about half of the price. Lexus generated high growth rates in the U.S. However, they still focused very much on functionality and even emphasized their car`s value-for-money, and also had no vision or story to tell – which clearly positions Lexus as a non-luxury brand (Kapferer and Bastien 2009b, p. 316).

 

Luxury Brands vs. Premium and Masstige Brands

Luxury Brands vs. Premium and Masstige Brands