Explore this question, I will use the example of the Apple brand.
Apple merges technology and fashion in its smartwatch, allowing this computer company to now become a designer fashion brand of low- price-point products, with its most pricey piece being around $12,000.
Fashion is highly susceptible to trends and indeed how it keeps inventory moving. Some fashion designers such as Gucci are jumped on the bandwagon with their own Android smartwatch.
Within the real luxury watch industry there is a refusal by some of the elite brands such as Patek Philippe that question the wisdom of endangering established heritage luxury branding. They are wisely refusing to compromise their status by following tech trends of the lesser-quality brands.
Technology has played a big role in the luxury market, from jets that fly faster and with more fuel economy, jets that have movie theaters, stables, garages, and even waterfalls. Technology allows for the amazing features on yachts, where their amenities rival five-star hotels. Also, technology increases security at private banks, makes helicopters more comfortable and quiet, exotic cars faster and luxury automobiles able to supply extraordinary comforts. Often, the luxury market leads the way in developing new technology because they have the money and the need to constantly innovate.
There are two types of luxuries: the elite high-price-point luxuries such as the aforementioned that have exclusive ultra-high-net-worth consumers, and the lower- price-point luxuries including fashion, food, perfumes, cosmetics and skincare that are attainable by the middle classes.
I take issue with mass marketers that have declared Apple merchandise as luxury products. I understand if the general populace does not understand the difference between a premium product and a luxury product. But real luxury marketers will know. Most journalists are not specifically trained to understand the luxury market and unwittingly publish information that can be misleading. Often times, they do not know the industry definitions of different terms.
Apple products are mass-produced, mass-distributed and price-sensitive – the very definition of a mass product.
Mobile service providers will give you a free new iPhone if you switch to their service. Apple products are premium products that are the top of the mass market. The value/cost of the components in an Apple Watch are only about $80. Their competitors make a similar product.
Some Apple Watches have been dipped in gold to try and appear a luxury product, but you can put lipstick on a pig and it is still a pig. This analogy is not stating that Apple is not a good product. It is one of the best- regarded brands globally. What it means, is that Apple is a premium brand masquerading as a luxury one. Gold dipping a product that will be outdated because of its technology in a year is just a waste of gold.
The price point of Apple Watches is more suited to the aspirational affluent purchaser. Luxury marketing defines “affluent” as wealth range represented in data: individuals with $100,000 to $999,999 of liquid financial assets, or an annual household income over $75,000.
I see the technology/fashion market as huge. I think it will continue to grow. I think that it is very functional instead of fantastic. I can see an executive using the technology to enable her or him to go jogging and have access to more “stuff” from directions, to heart rate, to emails. But I do not see it replacing her or his Blancpain, Piaget, Roger Dubuis or Rolex.
I think that just like mobile phones started out the size of a shoe box and were something that only the very wealthy could afford, and now elementary-age school kids carry them, the Apple Watch will become even cheaper to produce and mainstream such as the mobile phone. Or like calculators use to be an investment of hundreds of dollars for college-bound students decades ago, they are now given away free with a tank of gas. I expect the Apple Watch and iPhone to be much the same. The value of the product is diminished to almost zero as soon as the next generation comes out.
Technology becomes mainstream fast. I do not see horologists abandoning the art of luxury watches. Luxury is not about the necessary, it is about the extraordinary.
The fact that the iProducts – computer, phone and watch – diminish in value in a short period of time, positions them as trends that change with each new generation. Trendy fashion is the mark of a premium product, not the more iconic status of a luxury product that retains, and even increases in value with time.
A used yacht that sold for $200 million may resell 10 years later for only $185 million. But it still retains the majority of its value. It is possible that it could sell for more. The new $65 million Gulfstream 650 jet is actually reselling for more than new purchase price from the factory because of the two-year waiting list.
Even within the lower-price-point luxuries such as fashion, Sotheby’s sold a crocodile Birkin handbag for more than $222,261 in 2015. The fact that Sotheby’s even has a designer handbag division proves that there is an intrinsic resale value.
A gold handmade Patek Philippe watch’s value increases with time. These are all signs of a luxury product.
Technology and luxury can merge, and certainly that is seen in the car, yacht and private jet industry. However, certain sectors must carefully evaluate if fusing the two will maintain the luxury brand’s integrity. Because technology, in the example of the Apple brand, is mass produced, mass distributed, price sensitive, subject to trends, and diminishes in value quickly, it is clearly a premium product – not a luxury one.
To catch up on Luxury Business Articles by International Luxury Marketing Expert Lorre White, published in CCI RIVIERA & MONACO NEWS – the leading international English Speaking News & Event source for Monaco & Riviera Region, please click on the Corporate Club International & CCI Riviera & Monaco News links below:
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In that case, we really shouldn’t feel rushed to get the latest and “greatest” gadget. I love this message. While I don’t have a designer watch, far from it with a pebble smart watch which I bought for the utility and battery life, I feel a touch more justified in not feeling I need to move from android to get an iPhone and iwatch. 😛
Not that my galaxy note 5 or pebble time are either considered luxury goods, but that’s beside the point.
Now, I can’t help but wonder. What sort of phones ARE luxury goods?
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