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- 9 Jan 2014
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2013's Best Global Luxury Brands

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Mercedes-Benz Campaign styled by Carine Roitfeld


For the second year running, nearly 15% of Interbrand’s 2012 Best Global Brands were luxury brands. We spoke with Rebecca Robins to better understand why

Again in 2013, luxury brands played an important role in Interbrand’s ranking, from Mercedes-Benz at #11 right through to Moet et Chandon at #99. Prada in particular was one of the overall top risers (alongside Apple, Google, Facebook & Amazon) , increasing in brand value by 30% (ranking 72nd), after not placing at all in 2010 and 2011.

“It was a game of hide-and-seek,” revealed Manfredi Ricca, managing director at Interbrand. “Luxury brands once sought discerning customers in the so-called mature markets while being sought after themselves as objects of desire for status-seeking consumers.”

“There was a need to be as subtle as possible for the sophisticated elites, and as visible as necessary for the icon-thirsty masses at the borders of these brands’ empires.” Though times are changing according to the 2013 ranking.


 The gradual transition from showing to knowing is beginning to impact more brands’ bottom lines 


Recent lukewarm results by some major luxury brands indicate that, even in fast-developing markets, the relationship between exposure and desire is no longer a sky-rocketing straight line, but a declining curve.

The gradual transition from showing to knowing (or from status
 to substance), once waved off by some as being a purely European concern, is now beginning to impact more brands’ bottom lines (Interbrand).

We spoke with Rebecca Robins, director at Interbrand and co-author of Meta Luxury, to better understand the rise in value of luxury brands in 2013, and indeed how this is impacting their position as ‘luxury’ brands.


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For a luxury brand, is an increase in brand value actually a positive shift for the brand? Or could it be an early sign that the brand is becoming ubiquitous?

Brand Value stems from a combination of three aspects – financial magnitude, role of the brand in driving choice, and the brand’s strength or risk profile. Hence, it is essential to observe what is at the heart of that increase.

For instance, a delta which is justified by the fact that the brand is stronger from a competitive standpoint is explained by the fact that the brand is less risky and better positioned vis a vis its peers, and is therefore a positive shift.

Needless to say, if an increase in brand value is generated exclusively through sheer size, perhaps to the detriment of Role of Brand and Brand Strength, what we observe is a short-term success which might hit back at some later point.

The question is therefore not only how much the brand is known, but how it is known: our Brand Strength framework includes a component which discounts the effect of overexposure, reflecting it into a higher risk profile, ultimately diminishing brand value.


 Louis Vuitton is trying to gravitate closer to the meta-luxury paradigm in terms of rarity & focus 


Louis Vuitton retained its spot at #17. Given that the brand is shifting its strategy to slow retail expansion, and move away from monogram products in favour of exotic skins and higher price points, do you expect Vuitton to drop in this ranking in the future?

First and foremost, a brand’s rank position is by definition a relative element – it is driven by the brand’s own value as well as other brands’ performance. Hence, we should look closely at what the absolute change in brand value is.

Louis Vuitton, like many other brands, is on a journey – no pun intended. It is trying to gravitate closer to the meta-luxury paradigm in terms of rarity and focus. Missing revenue potential should be seen not as a cost, but as an investment in rarity.

So if this shift is managed in the right way, whatever short-term impact is likely to be counterbalanced by a higher likelihood of seeing a stronger, more respected LV brand in the future, and therefore a stronger asset. In many ways, brand value is a metric that reflects building rather than reaping.


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Prada’s commitment to culture was evident in the SS14 Womenswear Collection


Prada was one of the top risers. Any comments as to what has driven this increase?

There are three main factors. First, this brand has a clear angle, which comes from a keen observation of the world and culture, its engagement in contemporary art and the inauguration of Prada Journal being only a manifestation of that ethos. This keeps it moving and surprising.

Secondly, it has transitioned from the combination of campaigns and media to the concept of initiatives and online/offline touchpoints – we only have to look at the result of the Dress Gatsby initiative.. Thirdly, it is highly influential in terms of design and fashion, which, ironically, is something which cannot necessarily be said about all global fashion brands.


 Luxury brands have amazing stories to tell & the opportunity to thrive in a content-intense world 


In fact almost all of the 13 luxury brands that ranked, increased in brand value. What do you feel is driving this overall increase in the brand value for the luxury sector specifically?

While there are some social observations to be made in terms of what we value in the post-crisis environment, what we feel is crucial is another point – this sector has understood much earlier and better than others the power of creating a seamless offline and online experience, from branded content all the way down to retail.

Many luxury brands have amazing stories to tell, and they have the opportunity to thrive in a content-intense world, as long as they keep a focused, engaging point of view.


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Ferrari’s limited production €1,160,000 LaFerrari


Many luxury brands have expressed a desire to follow in Vuitton’s footsteps and move away from conspicuous products, to avoid oversaturation. How will this affect brand value in the future?

We are not surprised as brands such as Vuitton and Ferrari follow in the steps of the meta-luxury paradigm that we wrote about last year, whereby long-term value is built through excellence as a hard conviction rather than luxury as an easy convention.

We do not expect to see less valuable brands, but rather brands which are more valuable because they are stronger, not necessarily bigger. In financial terms, we believe that what we will see is luxury brands increase their value through a different return/risk combination. What we learn from meta-luxury is that economic growth is not only a question of how much, but how well.





To further investigate branding on Luxury Society, we invite your to explore the related materials as follows:

- 2012’s Best Global Luxury Brands
- The New Luxury is Luxury For All, Suggests Jean-Noël Kapferer
- Logo Driven Luxury Brands Look to Reduce Visibility


more

Interbrand’s Best Global Brands is an annual ranking of brand strength based on the financial performance of the branded products or services, the role of brand in the purchase decision process and the strength of the brand.

interbrand.com/best-global-brands