The Luxury Strategy. The main content of this book wants to show us how big brands around the world make money. What strategies, methods, or techniques do they have that make all of you spend a huge amount of money to buy those luxury products without even realizing it? You all have probably known famous big brands like Louis Vuitton, or LV, Dior, or Dior, Givenchy, and Fendi, and so on. All these brands are under the same company umbrella called LVMH. In mid-2021, the founder and CEO of this luxury brand company, French billionaire Bernard Arnault, became the richest person in Europe. And he is the second richest person after Elon Musk, with a fortune of over 152 billion US dollars.
Do we wonder why a bag that costs only a few hundred dollars to produce is sold for tens of thousands of dollars, and people still line up to buy it non-stop? What are those people thinking, daring to spend so much money on these brand products? What strategies do those brand companies have? Regarding this question, many people have answered that it's because they have a good business plan. Some say it's because their products have high quality, while others say it's because of their good marketing and brand building. Of course, all these answers have their own reasons. Here, we are not going to analyze who is right and who is wrong. We are here to listen to the important content in this book together. The answer to this is in this very book. In fact, the main business activity of these big brands is to do only one thing: to create a brand that is special, excellent, strong, and different from others.
And it can stick in the minds of customers. So, whether it's production or marketing, it's just a tactic. Their main goal is to create a special brand that people all over the world can recognize and spend money on without any regrets. So, whether you are the owner of a small product that has just entered the market, or someone who is about to create your own brand that doesn't even have a name yet, this book is very useful for all of you. The two authors of this book are both people who have led and consulted for these big brand companies. The first author's name is Vincent Bastien, who was a CEO and COO of many big luxury brand companies. He led the famous brand Louis Vuitton to the international stage. The second author is Dr. Jean-Noël Kapferer, who is a famous researcher in this field and has provided consulting to many big brand owners around the world.
From here on, we will summarize the main content of this book in three parts and reveal to you all the secrets and techniques of building a brand by these big brand owners. Part one, we will talk a little about the definition of what luxury goods are. Part two, we will study a little about how those big brand companies make money and what business strategies they have that we should learn from. And part three, we will distinguish the differences between popular products, brand products, and luxury products. What are the differences between these three types of goods? Let's get to part one, what is called a luxury item? Before giving this definition, let me ask you all a little. What do you all think was the first luxury item in ancient times? In this book, it is written that luxury items in ancient times were objects that were buried with the dead to comfort their souls. For example, gems, jewelry, weapons, or horses. Or it could be something that can be understood as comforting the mind of the deceased to calm them.
Until this era, such customs are still seen. For this reason, we can predict that the special characteristic of a luxury item is its value in people's minds, not the value of the product itself. Therefore, a luxury item is not just an expensive thing, but it must be something that people value the most in their minds and can comfort their minds. We have seen all the activities of those big brands, whether it's advertising, design, or marketing. All of these focus on one thing, which is to connect with the emotions of their target customers. Whenever they think of a brand, they will remember and think of the stories or the identity behind those brands. This is what makes them special and different from others. So what kind of goods can be called luxury items? This book states that luxury items must meet the following six conditions. First, this item must have good enough quality.
How good? Its quality must be durable enough, giving the user a long-term feeling of satisfaction. This point is the difference between luxury brand goods and ordinary popular goods. Luxury brand goods require long-term storage or use. Popular items are for a short period only. Second, this item must be sold at a high price. How high? The price is much higher than other items with similar conditions. This is also the second special characteristic that makes luxury brand items very different from ordinary brand items. As for the difference between popular items, brand items, and luxury brand items, we will discuss it in detail in the third part of this summary. Third, besides durable products and extremely high prices, luxury brands don't just sell one product. They must provide excellent service to the users, allowing them to have a wonderful shopping experience. Fourth, luxury products must provide users with a special and unique feeling. Fifth, luxury goods cannot be sold just as they are produced. The number of sales must be limited, the sales location must be limited, and if there is a Limited Edition, it is even more special.
And sixth, behind these brands, there must be a story that makes people remember it forever. First, let's talk about how luxury brands make people feel special and different. For most product commercials, they always want to show the functions or special features of their products as much as possible. But for luxury brands, they don't really highlight this point. For example, the French luxury brand Dior, or Dior, once spent a huge amount of money on a short commercial. In that short video, there is a scene in a sports arena from ancient Greece, with a few athletes and models walking up and down the sports field. With the cheers of the fans and a clear blue sky under the hot sun. In this video of over a minute, there is no mention of their product at all. Only at the end of the video, the Dior logo is shown for only two seconds. Such a short time, let alone motivating people to want to buy it, those who don't know this brand can't even see the logo clearly. You must be wondering why Dior spent so much money on a commercial without advertising any of its functions or special features, and in the video, there is nothing related to the product they are selling.
What message do they really want to send to the users? Later, the director of that commercial explained that the female model wearing a long skirt but wearing sports shoes on the sports field meant that women can also be free and can do what they want to do. Appearing on the sports field shows courage. Wearing sports shoes shows freedom and flexibility. Wearing a skirt shows that she is still a woman. If it were you, after hearing these interpretations, how would you feel? At that time, after Dior released that commercial, in the comment box, two different groups of people were arguing with their opinions. The first group said the meaning was profound, while the second group said they still didn't understand. As for this commercial, there are many people who don't understand it. There are very few people who can understand the meaning of this commercial.
Among those who understood it, they can be divided into several other categories. Some of them are already fans of this brand, so they can understand it immediately. But there is another group of people who are the most interesting, they don't really understand it clearly, it's a bit vague. So they go to do more research on the information to understand this brand. This last group of people is the target customer that they want to capture. This is how those big luxury brands find their target customers. They don't attract the existing market. They create a new market for themselves. Attracting people to learn about the stories behind their brands. From the moment they first advertised, they have gathered a group of people who are curious, want to know, want to understand them, and have already gone to learn more about their brand. This is their special point.
Those luxury brands know very well that not many people understand them, and they don't want too many people to understand them either. Because there are very few people who can afford to buy their products. Let's summarize a little about the techniques of organizing and promoting their brand to target customers. First, they create a story or an event that is interesting, but not entirely clear. Those stories make a small group of people wonder and want to learn more. Making those stories stick in the minds of a small group of people. which makes them love it and have a special feeling that sticks in their minds more than other brands. As for this technique, those in the marketing field have probably heard of it. They usually don't advertise to people who have never known or heard of their products before. They only pay attention to a small group of people who might buy their products. It is completely opposite from a regular brand that advertises everywhere. Making more people know and hear about them. But you must remember that this is not an energy drink. Energy drinks can be advertised everywhere to everyone, on TV or on the streets, etc. But for luxury brands, they have to refine their target customers first and market to them directly. We already know that the path that those luxury brands have taken is a reverse advertising approach. The same goes for sales. They don't display a lot of products for sale and not sell them all. They set a sales limit in a certain area or during a specific period, making people feel that it is rare and hard to buy, which makes them feel special.
But do we wonder that those brand items cost tens of thousands of dollars, and a single purchase can last for decades, it never goes out of style. The brand owner can make it popular forever, and no new products can replace it later. At this point, the brand owner has to do another important thing, which is to create a special product and sell it in a limited quantity. We have also seen products with these special versions, such as Louis Vuitton releasing shoes together with Nike, Fendi mixing with Versace, and so on. The reason for suddenly creating such unique product versions is twofold. First, selling products in limited quantities like this highlights the special uniqueness from regular brand products. Second, we have already mentioned from the beginning, a luxury brand must be something that is always popular. When the popularity starts to decline, the brand owner will not release such a model again. But because it is a limited-production item and is made very specially, it is difficult to find and buy again. So it becomes something that has value forever, and it does not affect the sales of products that they produce later. For example, some people buy Rolex or Patek Philippe watches, and after wearing them for decades, they are still not out of style. Sometimes their value can increase tenfold, which is more profitable than investing in other sectors. But no matter how expensive it is, it is just a product. How expensive can a bag or a pair of shoes be? It has value only when people are willing to buy it, right? Yes, not only is there no shortage of buyers, but there are also people queuing up to buy it. Why do we value those brand products so highly?
For this reason, we have to look at another special story that those luxury brand companies have made. That is, linking their brand to a history or a famous novel to add points to their brand. By doing this, their brand can become more mysterious and more cultural. Speaking like this, it seems a bit abstract. I will give an example to make it easier for all of you to understand. Let's look at the famous French brand, Chanel. One of its most popular designs is called the "Little Black Dress," a simple dress by Gabrielle Chanel, or her nickname, Coco Chanel. At that time, she was a very famous woman all over Europe for her fashion design and style of dressing. When she wore this simple long black dress to an elite event, it amazed the public, making this style unexpectedly famous. Later, this dress was redesigned, representing the simplicity of the elite and the freedom of women. Not long after, another French brand emerged, YSL, which Saint Laurent created for the modern woman, starting with a special women's suit called "Le Smoking Suit." Representing equality between men and women. Where did this name come from? In fact, it has its own story. In the 1960s, when men attended major business events, they always wore suits. But after the event, when they returned home, the smell of cigarette smoke lingered on those suits, and even after washing or cleaning, the smell would not disappear. So, later, a type of suit was created that did not absorb cigarette smoke as much.
And there was no more smell of cigarettes on the suit. At that time, it was popular that this type of suit was only for men. Later, Yves Saint Laurent, the fashion designer and founder of YSL, created a suit for women, which was named "Le Smoking Suit." which wanted to show that both men and women have equal rights. So, it's not just a regular suit. They also want to send a message to you that what men can do, women can do too. Following these famous French brands, an Italian brand also emerged, Armani, an Italian luxury product brand that designs, produces, and sells clothes, shoes, bags, watches, and glasses, etc. They created a women's suit called the "Power Suit," a type of suit with large, smooth shoulders. In the past, men's suits had wide shoulders, while women preferred small, form-fitting suits. But now, Armani has created this type of suit that women can also wear.
This also wants to show the equality between men and women. From showing the freedom of women to showing the equality between men and women, these messages have been sent to consumers through fashion. Even though it has gone through wars and many popular eras, the stories behind these fashion designs can never be forgotten. So, those big brands, before designing their products, they have to come up with a name or a style that is related to a story in history, or they can create it first and then create the story later. The value behind these fashion designs and stories is priceless. That is how those brands can maintain their value in the minds of customers. Even the logo of Versace took the head of Medusa, a monster created by the goddess Athena, which represents a love that one cannot escape from. These are just stories that they came up with or fabricated to link to their products.
But having only one story is not enough. How to sell at an extremely high price is the important thing. Next, we come to the second important point where we will talk about how these big brands make money and their business models. In this book, they describe many points, but here we will only talk about one point, which is the famous pyramid model. We can imagine that a pyramid has a wide base and a sharp top. Some brands also have goods that are sold at a reasonable price. These products are like the base of a pyramid. Low price, large quantity, wide market, many buyers. While other products are expensive, but in limited quantities, and the target customers are narrow. But you must think that a brand that only sells expensive luxury items, when they sell at a moderate price like this, won't it damage the brand's name? It's okay. At this point, these big brands have already thought about it. We will take the Italian brand Armani as an example. Armani is an old brand, established since 1975. By 2005, under the Armani brand, there were many other smaller brands, both cheap and expensive, such as Giorgio Armani, Emporio Armani, and Armani Exchange. So, whether it's fame or profit, Armani has been successful on the international stage. But keeping small brands at the base of the pyramid like this can have a negative impact on the luxury brand at the top of the pyramid.
Even though small brands can generate profit for the company, they never forget to maintain the face of the luxury brand. So, Armani has created many charity programs and fashion shows in famous cities around the world to restore its reputation. By 2021, Armani's sales had increased by up to 34%. A similar example happened to the old French brand, Balenciaga. This brand was established in 1919, more than 100 years ago. But in recent years, Balenciaga has released too many youth-style shoes and T-shirts, which has changed the flavor of their brand to something else, not the original sense that they worked hard to build. Even though it received a lot of support and sold well at first, if another brand comes out that is cooler and more popular, it will make the popularity of this brand decline. So, after their popular fashion strategy had been running for more than 53 years, they decided to go back to the top of the pyramid, maintain their value, and not worry too much about the mainstream market anymore. In conclusion, no matter how much money a product brand can make, if it forgets to maintain its value in the minds of the users, one day a new product will surely come to replace it. Above, we have already listened to the definition of a luxury brand. And we have also learned about the business models of these companies. Finally, we will distinguish between popular products, brand products, and luxury products. First, let's look at the difference between popular products and luxury products. The difference between these two is that luxury products can distinguish social status.
Whereas popular products cannot. The poor, the rich, can all buy popular products to use. But luxury products are only for the rich. Next, let's look at the difference between brand items and luxury items. Why do consumers always confuse these two? First is because both of these items are expensive. Second, a company can produce both of these products, a brand product and a luxury product. Like Armani in the example above. In the Armani brand group, there is Giorgio Armani, which is a suit that costs thousands of dollars, and they also have the Armani Exchange brand, which sells T-shirts for tens of dollars. That is why consumers are easily confused. How are these two distinguished? The author tells us that it's easy. It's to look at the price versus the quality. For brand products, buyers always want them at a cheap price. But for luxury products, it is not necessary. As we have said from the beginning. Luxury products can be sold at a very high price, many times more than regular brand products. We will give an example to make it easy for all of you to understand. Those who buy a BMW 5 Series car because they can travel easily, whether it's raining or hot, they can go anywhere and fit in. But those who buy a Lamborghini or a Ferrari don't think about convenience or rain. They don't buy it because it can go 100 meters in 3 seconds either.
What they want is luxury, the attractiveness of its appearance, and its excellence. In fact, the value in use is much lower than the feeling they get when driving it. In the market, there is no shortage of people who are obsessed with branded items. Only by using branded items can they make themselves feel different from others and highlight their own value. Of course, those branded items can make us feel good and happy for a while. But after we have used them for a while, those new and exciting feelings will decrease. And we will go to find other new things to comfort ourselves forever. This way, it cannot make us satisfied and happy. Finally, we will briefly summarize the main content of this book. The first part we mentioned is the definition of the word "luxury." Its special feature is that it is something that can maintain its value for a long time and is more expensive than a regular item with a similar function. It makes users have a unique and special experience. Moreover, they know how to link their brand to a story that is easy for everyone to remember. Selling in limited quantities or in a specific area is also a special feature of a luxury product.
The second point, we have mentioned the business model and the way to make money of these luxury brands. We have taken the pyramid model as a comparison, where brand products with low prices are at the base of the pyramid, which most people can accept. And they also have high-priced brand products for the rich market. They use the income from products sold at a cheap price to compensate or spend on marketing, promoting their brand to maintain the brand value in the minds of the users constantly. The third point, we have mentioned the difference between popular products, brand products, and luxury products.
Do we wonder why a bag that costs only a few hundred dollars to produce is sold for tens of thousands of dollars, and people still line up to buy it non-stop? What are those people thinking, daring to spend so much money on these brand products? What strategies do those brand companies have? Regarding this question, many people have answered that it's because they have a good business plan. Some say it's because their products have high quality, while others say it's because of their good marketing and brand building. Of course, all these answers have their own reasons. Here, we are not going to analyze who is right and who is wrong. We are here to listen to the important content in this book together. The answer to this is in this very book. In fact, the main business activity of these big brands is to do only one thing: to create a brand that is special, excellent, strong, and different from others.
And it can stick in the minds of customers. So, whether it's production or marketing, it's just a tactic. Their main goal is to create a special brand that people all over the world can recognize and spend money on without any regrets. So, whether you are the owner of a small product that has just entered the market, or someone who is about to create your own brand that doesn't even have a name yet, this book is very useful for all of you. The two authors of this book are both people who have led and consulted for these big brand companies. The first author's name is Vincent Bastien, who was a CEO and COO of many big luxury brand companies. He led the famous brand Louis Vuitton to the international stage. The second author is Dr. Jean-Noël Kapferer, who is a famous researcher in this field and has provided consulting to many big brand owners around the world.
From here on, we will summarize the main content of this book in three parts and reveal to you all the secrets and techniques of building a brand by these big brand owners. Part one, we will talk a little about the definition of what luxury goods are. Part two, we will study a little about how those big brand companies make money and what business strategies they have that we should learn from. And part three, we will distinguish the differences between popular products, brand products, and luxury products. What are the differences between these three types of goods? Let's get to part one, what is called a luxury item? Before giving this definition, let me ask you all a little. What do you all think was the first luxury item in ancient times? In this book, it is written that luxury items in ancient times were objects that were buried with the dead to comfort their souls. For example, gems, jewelry, weapons, or horses. Or it could be something that can be understood as comforting the mind of the deceased to calm them.
Until this era, such customs are still seen. For this reason, we can predict that the special characteristic of a luxury item is its value in people's minds, not the value of the product itself. Therefore, a luxury item is not just an expensive thing, but it must be something that people value the most in their minds and can comfort their minds. We have seen all the activities of those big brands, whether it's advertising, design, or marketing. All of these focus on one thing, which is to connect with the emotions of their target customers. Whenever they think of a brand, they will remember and think of the stories or the identity behind those brands. This is what makes them special and different from others. So what kind of goods can be called luxury items? This book states that luxury items must meet the following six conditions. First, this item must have good enough quality.
How good? Its quality must be durable enough, giving the user a long-term feeling of satisfaction. This point is the difference between luxury brand goods and ordinary popular goods. Luxury brand goods require long-term storage or use. Popular items are for a short period only. Second, this item must be sold at a high price. How high? The price is much higher than other items with similar conditions. This is also the second special characteristic that makes luxury brand items very different from ordinary brand items. As for the difference between popular items, brand items, and luxury brand items, we will discuss it in detail in the third part of this summary. Third, besides durable products and extremely high prices, luxury brands don't just sell one product. They must provide excellent service to the users, allowing them to have a wonderful shopping experience. Fourth, luxury products must provide users with a special and unique feeling. Fifth, luxury goods cannot be sold just as they are produced. The number of sales must be limited, the sales location must be limited, and if there is a Limited Edition, it is even more special.
And sixth, behind these brands, there must be a story that makes people remember it forever. First, let's talk about how luxury brands make people feel special and different. For most product commercials, they always want to show the functions or special features of their products as much as possible. But for luxury brands, they don't really highlight this point. For example, the French luxury brand Dior, or Dior, once spent a huge amount of money on a short commercial. In that short video, there is a scene in a sports arena from ancient Greece, with a few athletes and models walking up and down the sports field. With the cheers of the fans and a clear blue sky under the hot sun. In this video of over a minute, there is no mention of their product at all. Only at the end of the video, the Dior logo is shown for only two seconds. Such a short time, let alone motivating people to want to buy it, those who don't know this brand can't even see the logo clearly. You must be wondering why Dior spent so much money on a commercial without advertising any of its functions or special features, and in the video, there is nothing related to the product they are selling.
What message do they really want to send to the users? Later, the director of that commercial explained that the female model wearing a long skirt but wearing sports shoes on the sports field meant that women can also be free and can do what they want to do. Appearing on the sports field shows courage. Wearing sports shoes shows freedom and flexibility. Wearing a skirt shows that she is still a woman. If it were you, after hearing these interpretations, how would you feel? At that time, after Dior released that commercial, in the comment box, two different groups of people were arguing with their opinions. The first group said the meaning was profound, while the second group said they still didn't understand. As for this commercial, there are many people who don't understand it. There are very few people who can understand the meaning of this commercial.
Among those who understood it, they can be divided into several other categories. Some of them are already fans of this brand, so they can understand it immediately. But there is another group of people who are the most interesting, they don't really understand it clearly, it's a bit vague. So they go to do more research on the information to understand this brand. This last group of people is the target customer that they want to capture. This is how those big luxury brands find their target customers. They don't attract the existing market. They create a new market for themselves. Attracting people to learn about the stories behind their brands. From the moment they first advertised, they have gathered a group of people who are curious, want to know, want to understand them, and have already gone to learn more about their brand. This is their special point.
Those luxury brands know very well that not many people understand them, and they don't want too many people to understand them either. Because there are very few people who can afford to buy their products. Let's summarize a little about the techniques of organizing and promoting their brand to target customers. First, they create a story or an event that is interesting, but not entirely clear. Those stories make a small group of people wonder and want to learn more. Making those stories stick in the minds of a small group of people. which makes them love it and have a special feeling that sticks in their minds more than other brands. As for this technique, those in the marketing field have probably heard of it. They usually don't advertise to people who have never known or heard of their products before. They only pay attention to a small group of people who might buy their products. It is completely opposite from a regular brand that advertises everywhere. Making more people know and hear about them. But you must remember that this is not an energy drink. Energy drinks can be advertised everywhere to everyone, on TV or on the streets, etc. But for luxury brands, they have to refine their target customers first and market to them directly. We already know that the path that those luxury brands have taken is a reverse advertising approach. The same goes for sales. They don't display a lot of products for sale and not sell them all. They set a sales limit in a certain area or during a specific period, making people feel that it is rare and hard to buy, which makes them feel special.
But do we wonder that those brand items cost tens of thousands of dollars, and a single purchase can last for decades, it never goes out of style. The brand owner can make it popular forever, and no new products can replace it later. At this point, the brand owner has to do another important thing, which is to create a special product and sell it in a limited quantity. We have also seen products with these special versions, such as Louis Vuitton releasing shoes together with Nike, Fendi mixing with Versace, and so on. The reason for suddenly creating such unique product versions is twofold. First, selling products in limited quantities like this highlights the special uniqueness from regular brand products. Second, we have already mentioned from the beginning, a luxury brand must be something that is always popular. When the popularity starts to decline, the brand owner will not release such a model again. But because it is a limited-production item and is made very specially, it is difficult to find and buy again. So it becomes something that has value forever, and it does not affect the sales of products that they produce later. For example, some people buy Rolex or Patek Philippe watches, and after wearing them for decades, they are still not out of style. Sometimes their value can increase tenfold, which is more profitable than investing in other sectors. But no matter how expensive it is, it is just a product. How expensive can a bag or a pair of shoes be? It has value only when people are willing to buy it, right? Yes, not only is there no shortage of buyers, but there are also people queuing up to buy it. Why do we value those brand products so highly?
For this reason, we have to look at another special story that those luxury brand companies have made. That is, linking their brand to a history or a famous novel to add points to their brand. By doing this, their brand can become more mysterious and more cultural. Speaking like this, it seems a bit abstract. I will give an example to make it easier for all of you to understand. Let's look at the famous French brand, Chanel. One of its most popular designs is called the "Little Black Dress," a simple dress by Gabrielle Chanel, or her nickname, Coco Chanel. At that time, she was a very famous woman all over Europe for her fashion design and style of dressing. When she wore this simple long black dress to an elite event, it amazed the public, making this style unexpectedly famous. Later, this dress was redesigned, representing the simplicity of the elite and the freedom of women. Not long after, another French brand emerged, YSL, which Saint Laurent created for the modern woman, starting with a special women's suit called "Le Smoking Suit." Representing equality between men and women. Where did this name come from? In fact, it has its own story. In the 1960s, when men attended major business events, they always wore suits. But after the event, when they returned home, the smell of cigarette smoke lingered on those suits, and even after washing or cleaning, the smell would not disappear. So, later, a type of suit was created that did not absorb cigarette smoke as much.
And there was no more smell of cigarettes on the suit. At that time, it was popular that this type of suit was only for men. Later, Yves Saint Laurent, the fashion designer and founder of YSL, created a suit for women, which was named "Le Smoking Suit." which wanted to show that both men and women have equal rights. So, it's not just a regular suit. They also want to send a message to you that what men can do, women can do too. Following these famous French brands, an Italian brand also emerged, Armani, an Italian luxury product brand that designs, produces, and sells clothes, shoes, bags, watches, and glasses, etc. They created a women's suit called the "Power Suit," a type of suit with large, smooth shoulders. In the past, men's suits had wide shoulders, while women preferred small, form-fitting suits. But now, Armani has created this type of suit that women can also wear.
This also wants to show the equality between men and women. From showing the freedom of women to showing the equality between men and women, these messages have been sent to consumers through fashion. Even though it has gone through wars and many popular eras, the stories behind these fashion designs can never be forgotten. So, those big brands, before designing their products, they have to come up with a name or a style that is related to a story in history, or they can create it first and then create the story later. The value behind these fashion designs and stories is priceless. That is how those brands can maintain their value in the minds of customers. Even the logo of Versace took the head of Medusa, a monster created by the goddess Athena, which represents a love that one cannot escape from. These are just stories that they came up with or fabricated to link to their products.
But having only one story is not enough. How to sell at an extremely high price is the important thing. Next, we come to the second important point where we will talk about how these big brands make money and their business models. In this book, they describe many points, but here we will only talk about one point, which is the famous pyramid model. We can imagine that a pyramid has a wide base and a sharp top. Some brands also have goods that are sold at a reasonable price. These products are like the base of a pyramid. Low price, large quantity, wide market, many buyers. While other products are expensive, but in limited quantities, and the target customers are narrow. But you must think that a brand that only sells expensive luxury items, when they sell at a moderate price like this, won't it damage the brand's name? It's okay. At this point, these big brands have already thought about it. We will take the Italian brand Armani as an example. Armani is an old brand, established since 1975. By 2005, under the Armani brand, there were many other smaller brands, both cheap and expensive, such as Giorgio Armani, Emporio Armani, and Armani Exchange. So, whether it's fame or profit, Armani has been successful on the international stage. But keeping small brands at the base of the pyramid like this can have a negative impact on the luxury brand at the top of the pyramid.
Even though small brands can generate profit for the company, they never forget to maintain the face of the luxury brand. So, Armani has created many charity programs and fashion shows in famous cities around the world to restore its reputation. By 2021, Armani's sales had increased by up to 34%. A similar example happened to the old French brand, Balenciaga. This brand was established in 1919, more than 100 years ago. But in recent years, Balenciaga has released too many youth-style shoes and T-shirts, which has changed the flavor of their brand to something else, not the original sense that they worked hard to build. Even though it received a lot of support and sold well at first, if another brand comes out that is cooler and more popular, it will make the popularity of this brand decline. So, after their popular fashion strategy had been running for more than 53 years, they decided to go back to the top of the pyramid, maintain their value, and not worry too much about the mainstream market anymore. In conclusion, no matter how much money a product brand can make, if it forgets to maintain its value in the minds of the users, one day a new product will surely come to replace it. Above, we have already listened to the definition of a luxury brand. And we have also learned about the business models of these companies. Finally, we will distinguish between popular products, brand products, and luxury products. First, let's look at the difference between popular products and luxury products. The difference between these two is that luxury products can distinguish social status.
Whereas popular products cannot. The poor, the rich, can all buy popular products to use. But luxury products are only for the rich. Next, let's look at the difference between brand items and luxury items. Why do consumers always confuse these two? First is because both of these items are expensive. Second, a company can produce both of these products, a brand product and a luxury product. Like Armani in the example above. In the Armani brand group, there is Giorgio Armani, which is a suit that costs thousands of dollars, and they also have the Armani Exchange brand, which sells T-shirts for tens of dollars. That is why consumers are easily confused. How are these two distinguished? The author tells us that it's easy. It's to look at the price versus the quality. For brand products, buyers always want them at a cheap price. But for luxury products, it is not necessary. As we have said from the beginning. Luxury products can be sold at a very high price, many times more than regular brand products. We will give an example to make it easy for all of you to understand. Those who buy a BMW 5 Series car because they can travel easily, whether it's raining or hot, they can go anywhere and fit in. But those who buy a Lamborghini or a Ferrari don't think about convenience or rain. They don't buy it because it can go 100 meters in 3 seconds either.
What they want is luxury, the attractiveness of its appearance, and its excellence. In fact, the value in use is much lower than the feeling they get when driving it. In the market, there is no shortage of people who are obsessed with branded items. Only by using branded items can they make themselves feel different from others and highlight their own value. Of course, those branded items can make us feel good and happy for a while. But after we have used them for a while, those new and exciting feelings will decrease. And we will go to find other new things to comfort ourselves forever. This way, it cannot make us satisfied and happy. Finally, we will briefly summarize the main content of this book. The first part we mentioned is the definition of the word "luxury." Its special feature is that it is something that can maintain its value for a long time and is more expensive than a regular item with a similar function. It makes users have a unique and special experience. Moreover, they know how to link their brand to a story that is easy for everyone to remember. Selling in limited quantities or in a specific area is also a special feature of a luxury product.
The second point, we have mentioned the business model and the way to make money of these luxury brands. We have taken the pyramid model as a comparison, where brand products with low prices are at the base of the pyramid, which most people can accept. And they also have high-priced brand products for the rich market. They use the income from products sold at a cheap price to compensate or spend on marketing, promoting their brand to maintain the brand value in the minds of the users constantly. The third point, we have mentioned the difference between popular products, brand products, and luxury products.