brands pyramid

Passikoff:  The Great (Brand) Pyramid

We deal with all kinds of pyramids in life. As kids we had one of those front-of-the-school-room Food Pyramids – indicating how many servings of grains and fruit and meat we were expected to eat. Later, in grad school there was Maslow’s Hierarchy of Needs psychological pyramid, a classification system intended to reflect the universal needs of society as its base, then proceeding to more acquired emotions. At your first job you were probably exposed to the Organization pyramid (CEO on top, with you likely located someplace along the base). And then, there’s the legendary Great Pyramid of Giza, the world’s largest stone structure.

But the one I want to call to your attention today is the Fashion Pyramid. 

At its base is Mass Market fashion. Think Zenga or Uniqlo. The next layer up is called, Bridge, filling the gap between mass and high end. Like Diesel.  Next comes Diffusion – brands inspired by Ready-to-Wear but designed to appeal to a much wider audience at lower price points, but not cheap. Next level up is Prêt-à-Porter aka Ready-to-Wear, characterized by high degrees of creativity often embodying a designer’s vision. Like Gucci. And, at the very tip of the Fashion Pyramid is Haute Coureur, real luxury brands. Think Louis Vuitton and Chanel.

When it comes to these segments, they have one particularly interesting similarity and a perhaps-slightly-more interesting difference. Yes, yes, there’s a difference between spending $7.99 on a tee shirt from Uniqlo and a $135 on a Chanel tee. (Some of us – meaning me– would suggest that the Chanel tee shirt is simply an $7.99 tee with a $127.01 logo on it, but that’s for another column!)  No, the similarity is no matter which level of the Fashion pyramid you look at, the category drivers for the consumers’ Ideal appear in precisely the same order. Meaning consumers view, compare, and ultimately buy in precisely the exact same way. 

The BIG difference is as you move up the pyramid, from Mass Market to Diffusion all the way to HauteCoureur, consumers deal with the same category drivers except (drum roll, please) their expectations for those drivers increase exponentially.  And those expectations are critically important thing when it comes to engaging consumers and building loyalty. Oh, and getting folks to buy a $135 tee shirt. 

If you’re interested why those expectations play such an important part, you can look here or here. Or here. We’re big on measuring expectations. For the record, the one unequivocal reality when it comes to expectations is, no matter the category, the brand that best meets the expectations consumers hold for the drivers in that category, the one which describe their Ideal, WILL ALWAYS BE the brand with the most loyal customers. Axiomatically, the brand with the most loyal customers, generally has the most sales, and (egregious mismarketing notwithstanding) the most profits.

Oh, sure, there are tangible characteristics related to luxury brands that contribute to those much higher expectations. It’s a kind of marketing Möibus strip. Those include use of premium materials and components, attention to detail and craftsmanship, limited production runs and controlled distribution, a heritage (usually spanning decades although there are some brilliant contemporary luxury classics), and exceptional customer service. And, consequently, very high premium price points that consumers are very willing to pay.

To meet the Fashion Pyramid’s very highest expectations, luxury brands often invest heavily in craftsmanship, superior materials, and meticulous attention to detail. Thus, creating both a perception and reality related to higher quality versus to mass-market alternatives. Limited production runs and controlled distribution further enhance brand appeal. Luxury brands frequently have rich histories and compelling brand narratives. Storytelling is a way of illuminating high expectations. Consumers are drawn to the heritage, traditions, and stories behind these brands, which adds depth and emotional resonance to their products. Luxury brands typically offer a superior customer experience, including personalized service, exclusive events, and special privileges for loyal customers, all of which enhances overall perceived value of the brand. Which, again, justifies the higher price points.

Owning luxury items can signal social status, wealth, and success and a way to communicate socioeconomic standing and taste. This association with prestige and aspiration drives demand. Expectations, too. Others view luxury purchases as investments that retain or even appreciate value over time. Limited editions, rare designer collaborations, or iconic pieces can become collector’s items.

Expectations are driven by mostly-emotional values, which can really only be measured via psychological measures because luxury items often carry symbolic meanings beyond their functional use for consumers (see previous paragraph). They can signify personal achievements, cultural values, or membership in certain social groups or communities. They can trigger positive emotions such as pleasure, satisfaction, and self-esteem. Oh, and jealousy in others, if you’re into that. All psychological. All components of expectations. These emotional rewards reinforce consumers’ willingness to pay those premium prices luxury brands command. Enough to fuel a global luxury marketplace of $1.5 trillion.

And when one considers the backgrounds and offerings of luxury brands, the reasons for those extraordinarily high expectations begin to clarify. The top luxury brands (“top” being defined as highest incomes, highest loyalty levels, and best able to meet consumers’ ultra-high category expectations) are mostly foreign brands (“foreign” being defined as non-U.S. brands), which have been around a lot longer. Our top 10 include: 

  1. Louis Vuitton: Founded in 1854 and renown for its iconic monogram. The most recognizable and (based on its ability to meet expectations) one of the most influential fashion houses in the world.
  • Chanel: Founded in 1910 by Coco Chanel, the brand is magic when it comes to conjuring up timeless luxury via it’s Little Black Dress and iconic Chanel No. 5 perfume.
  • Hermes: Was established in 1837. Its iconic Birkin bag is emblematic of unparalleled craftsmanship and sophistication.
  • Gucci: The gold standard of Italian fashion. And sure, it’s now owned by a French holding company, celebrated for its interlocking gold GG monogram.
  • Dior: A relative newcomer to the luxury game, established in 1946, is renowned for its New Look silhouette and Sauvage (500 ml @ $8,200).
  • Rolex: Founded in 1905 in London, the brand pioneered the Oyster Perpetual, considered one of the world’s most aspirational brand.
  • Cartier: A paragon of luxury founded in Paris in 1847, known for its tank watch, love bracelet and 3-band wedding ring, the brand captures timeless elegance, superb design, and exceptional craftsmanship.
  • Prada: Established in 1913 and known for its exceptionally well-crafted leather goods. It protects its brand, its premium pricing, and its customer experience with 600 directly owned stores.
  • Saint Laurent: The luxury fashion house founded by Yves Saint Laurent in 1961, best known for the Le Smoking tuxedo jacket and rock-inspired, collections that transcend fashion trends.
  1. Versace: The “baby” of the luxury collection became synonymous with glamor and sexuality in 1978 with bold prints and iconic supermodels like Cindy Crawford.

Top U.S. luxury brands (same definition as above) are represented by:

  1. Tiffany & Co: Established in 1837. Think robin’s-egg blue boxes. That’s all one really needs to say, isn’t it?
  • Ralph Lauren: A leader on every Brand Keys list (see #12) and established in 1967, RL has become both a luxury and lifestyle brand operating over 500 directory-owned stores internationally.
  • Coach: A family-run, loft-based leather workshop founded in 1941, specializes in handbags, luggage, accessories, and ready-to-wear, while licensing its name to Luxottica eyewear and Paris-based Interparfums fragrances.
  • Tom Ford: Founded by its namesake in 2005 with a luxury line that features ready-to-wear and made-to-measure offerings.

So, there’s good news and bad news. The bad news is expectations move up every year. And that expansion isn’t exclusive to the luxury category, and every year there’s an awfully big gap between what consumers desire and what they see luxury brands delivering. 

The good news is that same gap can act as creative inspiration for luxury brands and designers looking to shape consumers aspirations and desires. 

And even better brand news, increased consumer spends.

Photo by Eugene Tkachenko on Unsplash

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