Understanding the challenges of luxury brands

Luxury brands stand out from other competitors because of their high prices: they command higher margins than mass-market rivals due to higher brand equity. They also offer distinctive aesthetic experiences that go beyond mere functionality: beautiful clothing or jewelry that is designed to convey a desirable image for consumers (and hence, raise brand equity).

These attractive products appeal to customers' aspirations for style and status. The typical consumer perceives luxury goods as just above their budget range but still within their reach and, therefore, desirable as a status symbol, as long as the brand successfully maintains its image. As a result, brand management is of unparalleled importance for luxury brands.

Brand management

While damage to one's business reputation is harmful in any industry, this is particularly the case for luxury brands, where brand image is the make-or-break quality of the business.

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