Luxury Brands & Marketing Strategy

Last week I shared a story on Hansel Group Marketing’s LinkedIn page about China’s factory brands and how they plan to diversify. Click link to read. China’s Factory Brands: Clones or Clever Business?

Today’s article is a continuation on the outlet theme.

Luxury or aspirational brands have discovered that their strategy to be everywhere ultimately cheapened their brand and jeopardized future sales with top tier customers. Let’s be honest, luxury brands have a certain snob appeal. While Coach is not considered a super elite brand, it does cater to the luxury market.

Coach alienated its loyal customers by expanding into mass market department stores and rapidly opening up outlet locations across the country. Although the majority of Coach products sold at the factory outlet were made specifically for those outlet stores, the outlet products still retained the brand name. Coach did not attempt to introduce another line and instead diluted the brand by embarking on this marketing strategy.

Coach also implemented a pricing strategy by offering heavy discounts at the outlet stores. Both Coach and Michael Kors have been guilty of this practice and now they are on a correction course. Discounting and making cheap products for outlet stores increased sales short term but at what cost? Even the aspirational buyer will stop buying and move on to the next luxury brand.

Mass market <> Luxury.

Click here to read the Washington Post article that inspired this post. It’s about to get a lot harder to get a discounted Coach or Michael Kors handbag

 
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