In the second of his series of monthly extracts, Philippe Mihailovich argues that luxury branding is more about human relationships, passion, desire, love, trust, family, kinship, honour and heritage than the mass market theories often used by companies today. By approaching brand building like the stages of a love story, each extract from his forthcoming book provides useful insights that can be used as a checklist to ensure a sustainable relationship with the luxury connoisseur.

Where are you from?

Not long after meeting someone for the first time, you may expect to be asked, “where are you from?” based on your name, your accent or your look. The same will be asked (even if just in thought) of your brand, especially if it is different. We may be interested to know the brand’s place of origin, nationality, neighbourhood, everything. Here’s where heritage kicks in, even for new brands. If a watch brand is from Switzerland, that helps. If the car is from Germany, that helps. Luxury branding cannot be separated from place branding. They work by adding brand value to each other.

Places now compete in the same way as companies do and the emerging nations now realise the need to start developing their own luxury brands instead of importing them. Clearly cities, regions and nations can benefit from encouraging the development of local luxury brands. Paris is no stranger to this. The city positions itself as “Paris, Capitale de la Creation”. It’s a branding operation that brings together 20 professional fashion and home decoration exhibitions annually and helps the city to compete with all others and it works. We believe Paris to be the capital of creation just as we believe the best sparkling wine comes from Champagne and that the best watches are Swiss.

Made in …

France has a reputation for cheese and wine and as such does not add the same value to a perfume bottle, as does the name Paris. The French insist on being reminded where their food comes from. The regional name Champagne on a bottle of sparkling wine adds more value than that of the name, France. If Champagne were to be situated in Germany, we would still be buying it. Geneva may add more value to a Swiss watch than “made in Switzerland”. Can we imagine trying to add value to food or wine from France by adding a patronising Fair Trade label? Place branding should not to be taken lightly. It is here where a luxury brand has the power to make a place brand prestigious and vice versa. Even a street such as Savile Row has become an extremely powerful place brand with an historically established reputation for the very best tailoring.

Does “where are you from” mean “where were you born” or “where do you live” or “what school or university did you attend”? It seeks an answer to origin of creator or expertise. “Paris – And all elements attached to the belief in the superiority of Paris, French ‘saviore faire’, culture, ‘art de vivre’ and the rest come into play. Not quite the same response can be expected if the brand is “from everywhere” or “from nowhere special”. The choice of place must always be given considerable thought. It’s the duty of a luxury brand to add as much value to its place as possible. Witness what Tiffany did for New York and what New York did for Tiffany, what Dunhill did for London and vice versa, Vuitton, Dior, Chanel and others for Paris. What is most relevant is that we tend to believe in cultural mythology, prejudice and place reputations.

For France, the Comité Colbert is a national asset. It has a membership of 70 houses of luxury whose object is to collectively promote their shared values in France and internationally. Their quest is to combine tradition and modernity, craftsmanship and creativity, history and innovation. “These economic powerhouses generate many jobs, help maintain socio-professional diversity and sustain the crafts professions. They project an international image by spending heavily on communication outside France (1.4 billion euros in 2005) and enhance its cultural reputation, thanks to their dynamism, charisma and sponsorship,” says Mayor of Paris, Bertrand Delanoë, who is convinced that the Comité Colbert companies help the City by boosting growth.

We recognise the extent to which Paris has ceded some ground to New World wines in foreign markets, and observe similar trends in fragrance, lingerie, and even their language dominance of Europe. The extent to which the USA has ceded its technological ground to Japan, South Korea and China, not to mention the motor industry. What of the industries the Great British Empire used to dominate? No brand or positioning is invincible. Yet in our minds, Paris remains the heart and soul of luxury, fashion, fragrance and perhaps even romance. Its Eiffel Tower is seen to symbolise and embody those attributes.

Paris as a co-brand

Hermès without Paris, could be misperceived as being Greek. Hermès and even L’Oreal, by adding Paris to their brand names, have effectively co-branded themselves with all Parisian associations thereby enabling their brands to stretch into almost any French category that Paris is known for. For their own parts, both add to the image of Paris, with every product and every advert. Please note they are not using France to add value, but Paris. Clearly, the heritage of Paris or France will not add value to pasta unless a touch of French gourmet cuisine has been added. France has many attributes allowing it to add value across categories, those of elegance and sophistication. Most heritage luxury brands built their original reputations by association to royalty. Its quite ironic then to find that France, a country which tried to extinguish its aristocracy, is the very one that continues the tradition of luxury which had been driven by that very aristocracy.

Today’s luxury is more linked to celebrities, yet brands from the old countries still retain a perceptual advantage. How is it that the countries that created great luxury brands also tended to create great art? Two worlds sharing one language, or are they one and the same world? Is it simply a level of individual cultural sophistication or a collective one driven by the culture of the place? Does old world culture give the European brands an unequal advantage in the world of luxury? Although America has its reputation built more around Coca-Cola, McDonalds, Disney and Starbucks than luxury brands, New York is different. New York with Warhol and others can be said to have created the contemporary art movement. Not surprisingly, most of America’s luxury brands were born in New York. It could be argued that it is the culture of Paris, the fact that fashion is seen as art, that has attracted the world’s best fashion creators to the place. It is thanks to the collective power of the fashion designers whom have worked in the French capital that the city has this power. Clearly the people lend a reputation to the place and the place lends a reputation to the people. This reciprocal branding can be the most fundamental success factor of a luxury brand, yet is often ignored.

The Power of Place

Reputation of a place can make or break a luxury brand just as it can affect the employment chances of an individual. The “Made in China” brand is a case in point. After concerns over pet food, toothpaste, seafood and defective tires, China had to cope with exploding mobile phone batteries and poisonous baby food. Ironically in the 18th Century the French were importing the finest luxury goods from China. It takes a long time to establish a good reputation for a brand and a very short time to destroy it. “Made in China” now reads like a consumer warning. Bad news always travels faster than good. As such, luxury brands from mainland China may still have a long way to go, but only a fool will underestimate the time it will take for China to develop its own luxury brands. ‘Made in Shanghai’ may be the route.

Historically clients would come from all over the world to visit the great Parisian maisons. Much of this has changed. Today the brands are the ones that are doing the travelling. Just as mass fashion brands did in the past, growth for most luxury brands today is mostly linked to location, location, and location. Luxury brands have evolved from the modest discreet ateliers to retailers with factories everywhere. In the case of Vuitton, the brand’s Parisian image may have been somewhat diluted due to the brand’s worldwide expansion. Although the original maison may still be in Paris, we may no longer feel the need visit Paris anymore. Place is not simply part of the brand’s reputation, it should form a key part of the brand experience.

Where do you live?

Location, location, location. Benetton has built its business on this mantra and luxury brands now seem to be doing the same. In the luxury field a key brand may decide not to move into a street unless its competitors are there too. This is why we will find that in the Middle East, for instance, the Al Tayer Group has Gucci, Bottega Veneta, Dolce & Gabanna, Giorgio Armani, Yves St Laurent, Loro Piana, Jimmy Choo, Bulgari, Boucheron and many more including Harvey Nichols and the big brands love it because when a new shopping centre is built, they can all go in together and claim a luxury floor or end of the building. The entire competitive neighbourhood is joined at the hip. Art Galleries have often done the same thing. They need to build reputations for their streets or neighbourhoods altogether. This way the neighbourhood becomes the destination and then the war begins between the brands.

The discreet place

The French store is considered the extension of the owner’s home (maison), in many cases it actually is. So the French tend to treat business as part of the private sphere, therefore it’s up to the customer to greet the staff when they walk in. Paris is a hidden, private city. You only get to see inside when Parisians decide to let you in. And they only let you in when they know who you are. You cannot simply knock on the door of a great artist’s atelier and walk in. We only expect to do so, ‘by appointment’. For high-end discreet luxury, locations are often kept secret. Today certain spots in Manhattan that are secret and hidden are the latest craze and make for an extra nightlife challenge. Knowing about a hidden establishment makes the consumer feel special. They leave you with the impression that having the secret info makes you feel like a guest – rather than a mere patron. The only way to get in is to know someone – or to act as if you do.” Clearly location can be the core of your brand’s heritage. If so, attach it to your name.

Philippe Mihailovich