How luxury brands imitate the royal court

Wealth-seeking consumers must woo luxury brands and persuade them to grant them coveted and privileged access to certain products called “enrichment products.” These items are known to be resold at significantly higher prices on the second-hand market, a new study has found. Luxury watch market show.

The study is published in the Journal of Marketing.

Researchers from the University of Bath and France’s ESSEC Business School have identified this practice as a 17th- and 18th-century development by court officials desperate to curry favor with the French king in order to benefit from his attention and generosity. He compared it to the royal privileges granted at the Palace of Versailles.

“Luxury brands have succeeded in restricting access to a select few, enhancing the attractiveness and future value of their products, and creating a system of ‘enrichment privileges’ distinguished by a new economic logic. “This means that many luxury items increase in value in the second-hand or used resale market,” says Dr Roman Pavlyuchenko from the University of Bath’s School of Management.

“In this ‘wealth economy,’ aspiring buyers are increasingly seeking access to luxury brands by building relationships, spending large sums of money on the brand’s less desirable products, and giving gifts to salespeople. Professor Delphine Dion, co-author of ESSEC’s Marketing Department, said:

ESSEC co-researcher Sonja Prokopec said: “The rewards for this court dance are significant. You have the potential to make huge profits right away or turn your cash into a safe long-term investment.”

A study on the luxury watch market, “The Wealthy Economy: Market Dynamics, Brand Strategy, and Ethics,” finds that luxury brands acquire investment products to a small, well-vetted group of consumers who are incentivized not to resell them. Watches that are shown to have the privilege to do so will be sold quickly, limiting supply and inflating resale values.

Furthermore, this market is characterized by a rich second-hand trading platform that emphasizes the value of concentrates as assets, contributing to the creation of market transparency and liquidity that are essential for the enrichment economy to thrive.

“But the key is what we call the ‘monetization of enrichment privilege.’ The few consumers who manage to secure this privilege have access to an exclusive club of wealthy watch enthusiasts who can have their watches appreciated. Or, by transferring the watch to the right buyer at the right time, you can make an immediate financial profit,” says Dr. Pavlyuchenko.

Researchers said the key for brands is to manage enhancement opportunities while maintaining revenue and desirability. They identified a new “enrichment strategy” where brands become enrichment curators, turning products into enrichment privileges. The study noted that this raises ethical questions regarding potentially unfair business practices.

“Rolex has been fined $100 million by the French Competition Authority for preventing authorized dealers from freely trading certain watch models, and there is currently a class action lawsuit underway in the U.S. against Hermès. “Even the coveted Birkin and Kelly handbags,” says Dr. Pavlyuchenko, “are encouraging consumers to buy accessories before they get them.”

The study also found that the prospect of huge profits in the second-hand market continues to push consumers to buy goods on the primary market for resale, a practice that raises questions about sustainability. pointed out. It also challenges economic circularity, a model of resource production and consumption that shares, leases, reuses, repairs, refurbishes and recycles existing materials and products for as long as possible.

“This vicious cycle of ‘buy, sell, buy, sell’ continues as consumers continue to reinvest their earnings. This is a sign of growing evidence of the dark side of ‘cyclicality.’ “Given that circularity is rapidly becoming a business dogma, we encourage all stakeholders to consider alternative approaches to sustainability.” added.