Kadence International recently carried out a self-funded primary Luxury Study. We interviewed 5,775 consumers across 13 markets and 98 brands to explore what drives perceptions of luxury in different countries. Our robust data resulted in a tailor made Luxury Index comprised of eight principal components. Defined by Kadence through initial qualitative research, these were:
- Product quality - high specifications and craftsmanship, as well as (at times) service and the latest technology
- Product distinctiveness - where others recognize the brand or the design as either unique or identifiable – or both
- Brand heritage - a brand story that is established and has a sense of tradition that is widely accepted
- Enduring appeal – Timeless appeal of the brand and its ongoing relevance to society as well as it’s keeping to its core vision and values
- Status - an opportunity to ‘show off’ and feel that you have ‘made it’ in life
- Exclusivity - the less attainable nature of the brand, generally represented by the price and available quantity of the range
- Feel good factor - how using or owning the brand makes you feel, how it might improve your self-esteem or make you savour experiences with the brand
- Experiential - experiential aspects of a brand are the in the moment feelings and experiences – such as exclusive environments or multi-sensorial experiences
Maybe unsurprisingly, product quality and brand heritage were the two biggest universal drivers for luxury, with exclusivity being the least important driver across all markets. When looking at the categories that are more luxurious, interestingly, cars, jewellery and watches were seen to be most luxurious. However, jewellery turned out to be strong in the west, with Asia being very much dominated by cars:
- Rolls Royce
- Rolls Royce
- Rolls Royce
What brand do you think ranked highest in your country? Download the full luxury index results here.
With product quality and brand heritage being the biggest drivers of luxury, why it is that Cartier and Mercedes-Benz came out on top? What is it about these brands that separates them from competitors?
Cartier: A rich brand heritage
To give a brief idea of Cartier’s rich brand heritage, Cartier was founded by master jeweller, Louis-François Cartier in 1847. After taking over his master’s workshop, M. Cartier was propelled forward by his son and grandsons, remaining under family control until 1964, and resulting in the prestigious brand it is today.
Cartier opened their first shop in 1899 in Rue de la Paix, a renowned cosmopolitan hub of Paris which attracted figures worldwide, and from here the Cartier ‘empire’ was established, attracting aristocracy and becoming official supplier to powerful dynasties across Russia, England and Spain and even catching the attention of Indian royalty. This established Cartier as the “jeweller to kings, and king of jewellers” as stated by the Prince of Wales in the early twentieth century, truly cementing Cartier in the space of luxurious and aspirational jewellery.
On top of their already well-established regal heritage, Cartier’s story positions themselves as ‘pioneers’ in their field. Whilst the origins of Cartier are known to be in jewellery making, Cartier was also the first brand to develop the modern wristwatch we use today. This romantic story stems from Alberto Santos-Dumont, a pioneer of air travel, who is considered by many to be the first man to pilot a flight (who also happened to be a friend of Louis Pierre Cartier). Until this point watches were conventionally placed on a chain and stored in a pocket, but M. Santos-Dumont found this rather challenging, and indeed dangerous, mid-flight. To solve this predicament the first modern wristwatch was developed by Santos and Cartier in 1904, the ‘Santos de Cartier’, a physical embodiment of the brand’s aspirational nature. The Santos de Cartier was first mass produced, allowing Cartier to reach the masses with the revolutionary and elegant wristwatch, the origin of which is continually referenced in their advertisements today.
Cartier’s brand heritage makes their top place on our Luxury Index easily understood. Their international reach, royal ties and forward-thinking capabilities have resulted in a brand that is respected and recognised globally. This is a message that is still consistent with the brand as seen in the following ‘Cartier film’ alluding to all aspects of their brand heritage.
Mercedes-Benz: a bumpy road to quality
For most people, Mercedes Benz immediately brings connotations of ‘quality’ to mind, unsurprisingly, given their deep heritage in quality stemming from their roots in German engineering tradition. It has however not always been straightforward.
One of the founders of Mercedes-Benz, Karl Benz, is considered to be the inventor of the modern automobile, initially dubbed ‘a replacement for the horse’. For over one hundred years Mercedes didn’t just invent the automobile but played a huge role in the ongoing evolution of automotive history, from the first a diesel powered car, to huge safety advances (the first car with a rigid body and adequate crumple zone), all concepts that we all take for granted today. Mercedes continually strive to develop a message consistent with their brand promise “the best or nothing” – reinforcing their pursuit for perfection.
“The best or nothing”
However, there was a brief period whereby Mercedes faltered on this promise. This was driven by a colossal (and in hindsight, misguided) shift in strategy in the 1990s. The aim was to make umbrella company Daimler-Benz the world’s biggest car manufacturer, by making their offering more ‘affordable’, and overtaking market leader General Motors in terms of unit sales. As a result, relentless mergers and acquisitions followed, and within just a few years Daimler more than doubled its portfolio, from just four car platforms and ten models to almost ten different platforms and over twenty models. Over the following years Daimler had a 37% stake in Mitsubishi-Fuso, 10% of Hyundai and a "merger of equals" with the Chrysler Group with a view to developing a presence worldwide (AutoEvolution).
This incredibly rapid expansion of their line meant that the Mercedes-Benz brand was briefly neglected. This resulted in quality mishaps such as ‘traditional malfunctions and failure’ of features and controls like wipers, cruise control and navigation system, according to J.D. Power - of course resulting in a loss of trust from customers at the time. A 1999 survey ranked Mercedes’ the M-Class ranked last among luxury S.U.V.'s.
Once new management took over, a change in strategy followed, and Mercedes spent $645 million globally to fix quality issues in 2004. This marked a significant turning point in quality with Mercedes-Benz climbing from 25th to 5th in 2007 (PistonHeads). With that being said, Mercedes do have their ‘history of quality’ on their side. In 2005 72% of the Mercedes cars sold since 1955 were still on the road- a testament to their enduring quality and longevity (NY Times).
Mercedes continue to project brand messaging around quality, a factor that is crucial within the automotive industry:
What about the future of luxury?
With the rise in environmental concerns and increasing digital capabilities will perceptions of luxury change?
The automotive industry has seen a rise in more stringent environmental regulations. Will this mean that the term ‘luxury’ have wider implications for the environment in the future?
In a recent article by TechCrunch, Mercedes is now one of the latest automobile companies to electrify its entire vehicle lineup (by 2022). China, Norway, The Netherlands, UK and France have also announced plans to eventually ban the sale of fossil fuel vehicles entirely (Business Insider). This will of course represent an enormous challenge to the automotive industry as manufacturers will need to differentiate in ways far beyond the engine. And with autonomous cars projected to take over our roads in the next 5 years, which levers will luxury brands have to pull to differentiate themselves?
When it comes to luxury watches, how do luxury brands match up their timeless images with the fast-paced smart watch space, where a product can be obsolete within 24 months? What would Louis Pierre Cartier have made of smart watches? Our suspicion is that he’d have valued the artisinal craftsmanship of a handmade luxury watch, but with the likes of Tag Heuer already playing in the smart space with their ‘connected’ range, what price a Cartier smart watch before too long?
Undoubtedly, perceptions of luxury will continually to change in order to redefine itself in the modern world – and Cartier and Mercedes-Benz share a consistent vision to continue to innovate, whilst retaining their histories, allowing themselves to maintain a position as leaders in their respective fields. Although the surroundings and regulations may change, a truly luxurious brand is one that adapts and leads the development into what is possible without compromising their quality or heritage in the pursuit of perfection.