3.18.2013

Luxury, Exclusive or Just Ordinary?

In the time that I’ve spent in Ghana over the last few years, I’ve noticed an increase in the number of businesses positioning themselves as “exclusive”, providing goods and services to the luxury market. Some of this I know is a factor of the distribution of income in countries like Ghana. While the middle class is growing, there is still a significant gap between those classified as high income earners and the working class. As a result, certain types of goods and services are seen to go beyond the needs of daily life and as such become a “luxury” by default, catering to the needs of the upper class and charging prices to match.


What is it though that distinguishes “luxury” from “just plain ordinary”? Mercedes Benz is a luxury car, but I doubt that if I produced cars in my own garage and attempted to sell them at the same price I would be able to justify it.

Luxury brands are largely defined by the clientele that they serve and the “extra element” that they bring to the table. If you serve the high end market, you must be associated with quality. You can’t just use satin or cheap polyester to make dresses, you must use the best hand woven silk. This quality costs money and that is what your customers ultimately pay for.

Nordstrom for example has positioned itself as a high end retailer and provides a great example of a business that adds an “extra element”. Apart from selling designer labels (which other stores like TJ Maxx do), Nordstrom also sells a shopping experience. Their customer service is renowned among department stores and it is not uncommon for employees to hand deliver special order items to customers. Thus the “luxury” that Nordstrom’s customers pay for is a complete shopping experience.

Despite all of the prestige that comes with being a luxury brand, being ordinary or serving the broader market is by no means equivalent to failure. Walmart for example is infamous for its low price, no frills approach to sales, and yet it is one of the most successful and well recognized businesses in the world.

As you build your business it’s important to understand exactly where it is that you fit in and whether or not you’d rather be “luxury” or “just plain ordinary”.


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