The word ‘luxury’ derives from the Latin word ‘luxus’ , which according to the Latin Oxford dictionary signifies ‘soft or extravagant living, indulgence’ and ‘sumptuousness, luxuriousness, opulence’ (Christodoulides, Michaelidou, & Li, 2008).
There are two aspects to consider when defining luxury, the psychological value and the value of the product/service itself. The psychological value of luxury comes from its function as a status symbol and from a highly involved consumption experience that is strongly congruent to a person’s self-concept. From a product perspective, luxury brands are frequently defined in terms of their excellent quality, high transaction value, distinctiveness, exclusivity and craftsmanship (Fionda & Moore, 2008).
In his paper on International Retail Marketing, T.B. Jackson proposes the following as the core characteristics of a luxury product: ‘… exclusivity, premium prices, image and status which combine to make them more desirable for reasons other than function’ (Jackson, 2004).
Dimitri Mortelmans, in his paper ‘The concept of luxury’, says there are three main characteristics in [a narrow] definition of luxury: extra value, high quality and exclusivity. The fourth, derived, characteristic is high price.
* Extra value – Extra value here is loosely defined to include design, aesthetic value any innovation or attribute that makes the product unique.
* High quality – Superior quality is an essential component of luxury products. Luxury products have been typically been associated with fine craftsmanship, precision and skill.
* Exclusivity – Exclusivity in luxury products comes from two factors: (a) the goods are made in limited quantity and distribution is strictly controlled. Haute couture began when royal tailors custom made garments that were made only for one user. Till date, products belonging to the highest category of luxury are made in scant quantities. It is also crucial to decide where all these products will be available in order to make them rare. (b) Luxury goods are typically priced so high that they automatically exclude a majority of the population from their target group.
In the world of luxury, rarity value sells, because it is the rarity that the customer wants to own. Owning such a product makes the consumer feel privileged to be part of a select group of people.
High price – When a product or service is superior in quality has extra value and also has to be exclusive, then the price automatically becomes high.
Traditionally, there were four principal categories of luxury goods: fashion (couture, ready-to-wear, and accessories), perfumes and cosmetics, wines and spirits and watches and jewellery. Today, luxury has expanded to include many more categories such as luxury automobiles, hospitality (hotels, tourism, airlines) private banking and home furnishings among others. Among these, the luxury fashion goods category accounts for the largest proportion of luxury goods sales (with a 42 per cent share in 2003) and also showed the strongest product category growth in 2007 (Fionda &
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