Why luxury brands really need to advertise

Economic activity in the major industrialised economies is starting to pick up. Demand for luxuries is reported to be rising, which is good news for advertising.

Luxuries tend to use a lot of advertising relative to their sales, and not just because they have the profit margins to allow it.

There is the view that fashion, cosmetic, and spirit brands advertise to build their “image”, their cool, their mystique. And this is partly true, symbolic consumption brands (ie when we buy them it symbolises something about ourselves to others) benefit from advertising telling other people what they mean. There is no point in buying X to look cool if no one else knows X is cool.

Some brands have managed to build “image” without advertising, but they usually end up running large advertising or publicity campaigns – it’s all very well being known by an “in crowd” but if you want to grow you need to reach more people.

And the advertising industry (and textbooks) tends to overplay this “image” reason for advertising. For competition between brands it matters little; competitive brands Prada, Armani, Versace are all cool (we all know what they mean) so now they advertise for other reasons.

Like all brands they largely advertise to build and refresh salience. To keep buyers thinking about them.

And even though luxuries are expensive they still need to reach a broad audience. Wealthy people may individually buy more, but there aren’t many wealthy people so (personal jets and luxury yachts aside) a huge volume of sales comes from everyday people occasionally buying your brand.

So media that only reaches wealthy people is of little advantage. And that’s why we all see a lot of advertising for cosmetics, perfume, scotch whisky, and fine wine.

Fortunately for us consumers these ads are a lot nicer to look at than the average ad.



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