Luxury's Long Tail

The notion of luxury branding on a mass-marketing basis; or "new luxury" as some have termed it, certainly is working for traditional luxury brands like Ritz-Carlton as well as less likely prospects such as Whirlpool, with its deluxe, designer color, front-loading Neptune model line. Such brands succeed not just because they sell high quality products (for which consumers pay a premium), but also because they tap into what consumers want as much as what they need.

Most of all, they're unmistakable emblems of what economist Thorstein Veblen called "Conspicuous Consumption," a.k.a, the $6 venti iced caffe latte that wouldn't be worth the grounds used to make it if we didn't drink it from that logo-emblazoned cup.

It does seem, though, that when luxury marketing enters the mainstream it risks losing the properties that made it "luxury" to begin with.

Krispy Kreme doughnuts jump to mind. Inherently, the product had the cache of a luxury item (at least in terms of its calories); the ultra-moment of indulgence being when the neon "hot" sign lit up in the window, indicating fresh doughnuts. But now, the brand may be heading into Entenmanns supermarket doughnuts territory. K.K. is becoming a commodity so ordinary, you may just find it next to the antifreeze at your local Citgo.

What Krispy Kreme has forfeited is the exclusivity that used to give it that luxury aura. And aura is the operative word because, really, exclusivity is a kind of halo not necessarily easy to bottle and sell.

Exclusivity can mean not only that a brand is priced out of the reach of some, but also that it escapes the understanding of most; something BMW's Chris Bangle is learning the hard way. The carmaker's chief designer has prided himself on creating a look that only the most discerning motorist might appreciate. The problem is that a good chunk of BMW's faithful are being alienated by his over-ambitious and sometimes clumsy designs (what Beamer die-hards call the "bustle-butt" trunks of some new models, for example), pushing him back to the drawing board.

Chris Bangle does deserve credit for daring;and for his understanding that true luxury is more than just price, quality, and bling. It's also about individuality to the point of obscurity. Pure luxury isn't meant to appeal to the masses; in fact, contrary to Veblen's theory, it may be more desirable if most people don't even know the luxury exists.

Take The Scorcher;a bicycle USA Today described as "a Mona Lisa with spokes." Crafted to look like the kind of racing bikes the Wright Brothers designed before they moved on to flying machines. Only 100 were ever made, so Scorchers are now pretty pricey ($975 at the time of manufacture back in 1993, they now go $3,000 on eBay). So hard-to-get is the Scorcher that even Scot Nichol, its designer, couldn't score one. He does understand, though, what the bike means to those who do. "When you ride a Scorcher," he says, "you join a special club nobody knows exists. The Scorcher lives deep in your soul. It's a pure cycling experience and nothing else."

In a similar vein, Ben Serotta, founder of Serotta Bikes, has built a luxury bicycle business based on customizing the product down to the individual consumer, reports USA Today. Serotta's bikes, which sell for more than ten grand, are handcrafted and use high quality materials. And, says Serotta, they take "up to 40 man-hours to build -- more than a Mercedes-Benz." But these aren't the reasons the bikes cost so much. It's Serotta goes a step beyond by customizing each bike to the psychology, physiology, and biography of its rider. As he explains, "The best bike isn't best unless it's the best bike for the person we're building it for." Serotta admits his philosophy may not be the best business strategy: "It's not the short path to huge success," he says, noting that his meticulous approach limits production to just 12 bicycles per day.

Just 12 bikes a day. Ben Serotta most definitely did not attend the Starbucks school of "new luxury" marketing. When you look at things Ben's way, the future of luxury marketing takes on an entirely different dimension; micro-niche rather than mass market. In some categories, the collective power of these niche markets might eventually amount to more in the way of sales and profits than do traditional mass markets.