Luxury As We Do Not Know It – Part 1

Luxury As We Do Not Know It


The Importance of Context

Written by: Prof Piyush Sinha and Prof Ashok Som

The discussions in our classes during the ESSEC – IIMA Global Management Program on Luxury could sometimes become quite heated. The 2011 programme in luxury management was attended by senior executives in luxury businesses as well as those planning to start their own luxury business.

One such discussion occurred when we were looking into the meaning of a luxury product or service. One of the participants said, “All premium products are luxury products”, and thus began an exciting debate. After nearly a whole hour, we were all confused but happy that many age-old paradigms had been shaken, if not shattered.

The catalyst to this debate was a simple question placed to the participants: “What do you think is luxury?” They were asked to write down five examples of things they consider luxurious. The answers they came up with show a wide variety of products, services and experiences. Here are some of them.

  • Owing a Rolex

  • Buying a Yacht

  • Living in Monaco

  • Dressed in Armani Suits, Jimmy Choo Shoes, Chanel No 5, White Ceramic WatchLuxury lifestyle

  • Evening at a Chateau

  • Vintage Wine

  • Crocodile or Python Skin Bag

  • Tea with the Queen

  • Walking to office in Mumbai

  • Fresh Air

  • Green Pastures

  • Free time with family, without Blackberries

  • More than 24 hours in a day

  • Definitely European

  • Live life king like

  • Freedom to do whatever I like

  • Watching Waves come and go for ever

  • Designer wear

  • Esoteric

  • Exclusive

  • A house at the most expensive place

  • A house with sprawling green lawns and a swimming pool

  • Holiday on an island

  • Holiday on Alps

  • Taj Safari in Kanha

 A cursory look at these statements is enough to understand that luxury has a very vague meaning. It is not just about brands or expensive products. It is what the customer values and there is a high intangibility factor in the total value that the customer wants. In other words, it is about living and life.

Luxury: One word, many definitions

Luxury is a word that, despite its simple origins, is hard to define. According to the Oxford Dictionary, luxury is “the state of great comfort and extravagant living” or “an inessential, desirable item that is expensive or difficult to obtain”.

But does it mean that every expensive item is a luxury item for everybody?

There is an old saying that goes “One man’s trash is another man’s treasure”. Tastes differ; so do situations. What may be a regular item to one person might be cherished as priceless by someone else. The perceived value of a luxury product or item changes with the context of usage.

Luxury always requires a context.

A true understanding of luxury needs a subjective, objective as well as a collective point of view. After years of studying the luxury value perceptions of consumers across the globe, researchers have now identified four dimensions of value: Individual (personal enjoyment), Social (prestige and status), Functional (product excellence) and Financial (exclusivity). Another model proposes a different set of dimensions: symbolic/expressive, experiential/hedonic, utilitarian/functional, and cost/sacrifice.

The importance of each dimension can vary due to many factors such as demography (nationality, culture, gender) and situation (time, occasion, mood). It is only when a product or service is placed in the right context that it becomes luxurious for a set of consumers.

As luxury becomes global in a digital age, brands have to deal with the varying concepts of luxury in each country. In France and Italy, luxury and grandeur are accepted as a way of life. In Germany, functionality and precision get higher importance. On the other hand, the Asian luxury market is driven by the need to stand out socially.

The responses by the participants give us the best insight into the importance of context in luxury. For many, being “dressed in Armani Suits, Jimmy Choo Shoes, Chanel No 5 and white ceramic watch” is the definition of luxury. But for an urbanite, “fresh air” and “green pastures” indicate lavishness. Spending time with family and relaxing by the waves is the peak of luxury for a businessman with a hectic schedule.

Thus, we realized that luxury is not about the price, but the value. The greater the value of a product or service in a particular context, the more luxurious it becomes.


Berthon P, Pitt L, Parent M, Berthon J-P. Aesthetics and ephemerality: observing and preserving the luxury brand. California Management Review 2009;52(1):45–66.

Wiedmann, K.-P., Hennigs, N., & Siebels, A. 2007. Measuring consumers’ luxury value perception: A cross-cultural framework. Academy of Marketing Science Review, 7: 1-21; Vigneron F, Johnson LW. Measuring perceptions of brand luxury. Journal of Brand Management 2004;11(6):484–508; Bourdieu P. Distinction: a social critique of the judgement of taste. Cambridge: MA: Harvard University Press; 1984

Smith JB, Colgate M. Customer value creation: a practical framework. The Journal of Marketing Theory and Practice 2007;15(1):7-23



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