I.2.3. The Managerial Understanding of Luxury

 

The managerial understanding represents the smallest scope of luxury. The major difference separating it from the micro-economic perspective is that the managerial understanding of luxury does not usually refer to entire product categories, but only to the best products of a category, or to products with certain characteristics. Accordingly, products that fall within the managerial scope of luxury

Luxury products correspond to the managerial understanding and the smallest scope of luxury, comprising all products which exceed what is necessary and ordinary compared to the other products of their category.

 

The definition of luxury brands is closely linked to the definition of luxury products and usually refers to specific associations about their products’ characteristics. Accordingly, the broad definition of luxury brands is summarized as follows:

Luxury brands are associated with products which exceed what is necessary and ordinary compared to the other products of their category.

 

These definitions allow one to state some typical examples of luxury products and brands including Louis Vuitton bags and Rolls-Royce automobiles. For the sake of simplicity, the luxury product business will be referred to as the luxury industry.

The managerial scope of luxury becomes even clearer in comparison with the other understandings of luxury. This is not a horizontal differentiation (such as dog, cat and bird), but a vertical differentiation (such as dog, animal, living being), which refers to the relation between terms of different levels of abstraction (Eckes 1991, p. 120). As demonstrated in the figure below, luxury products constitute a subset of  luxury goods, which, in turn, form a subset of luxuries. This means that the characteristics of luxuries also apply, to a large extent, to luxury products (see also Hoffmann 1986, p. 31 et seqq.).

 

The Managerial Understanding of Luxury

The Managerial Understanding of Luxury