Who is currently (as of Feb 14th, 2023) the richest man in the world? Jeff Bezos or Elon Musk?
It's neither.
It’s Bernard Arnault, the CEO of LVMH (Moët Hennessy Louis Vuitton) and majority owner of Christian Dior SE.
Bernard Arnault, CEO & Chair of LVMH
For the last few years, it seemed like we had a different tech titan claim the crown of the richest person, but as of today, bags and belts have made the next king.
And this is all thanks to the Power of Branding.
In tech, there is a clear value proposition that makes or breaks a product or service. Amazon aims to sell every product in the world (everything from A to Z) and have them within the desire's reach of every single person. Microsoft provides Personal Computing solutions to big businesses and individuals alike. What does LV do?
Fun Fact: Amazon sells everything from A to Z, as shown by the arrow in their logo
A Dior bag holds the same things that a ₹500 bag from a roadside vendor can, and yet the margins generated from their sales resulted in a net worth of over $190 billion for its CEO (specifically, $151 billion is attributable to Christian Dior SE).
Louis Vuitton, Hennessy, Dior, Tiffany’s and other such luxury brands thrive on people’s need to display a high social status. Luxury brands exploit this need by positioning themselves as the symbols of exclusivity and of the ultra-elite. As Benjamin Simmenauer, director of research at the Institut Français de la Mode puts it:
“If you buy Vuitton, you buy this part of this super powerful universe where all the celebrities are showcased, where they partner with the most exclusive events, the best artists.”
“You can go to a Vuitton store, you can buy a small wallet, and you can feel that you are part of this ultra-elite world.”
LVMH creates this air of exclusivity around their products by limiting supply, charging extremely high prices and associating with entities in the world of the upper-classes (art exhibitions, celebrities, etc.)
LV's collaboration with Supreme and Lady Gaga
Brands leverage the power of perception to sell products and/or services. To understand what this exactly means, let’s first define a brand.
“Brand” is an intangible (you can’t see or touch it) that shapes peoples’ perception of a company, its offerings, its employees and/or of an individual(s).
In this case, LV has positioned itself in the minds of customers as a representation of everything upper-class and elite.
Luxury brands take advantage of people’s aspirations, i.e, they help people reach an idealised version of themselves (for more on aspirational marketing, click here)
Basically, brands want to be associated with things that can generate the most profit. McDonalds wants to be thought of as quick, tasty and cheap, which drives the masses to their chains for fast, yummy and wallet-friendly meals.
LV can charge exorbitant prices for its handbags simply because of its brand-name, and this simple need for social status has enabled Arnault to become richer than the man planning to colonise other plans and the man with the world’s largest marketplace.
If a simple brand can do this for Arnault, imagine what it can do for your business (or for you as an individual, read more here)!
Branding is a complex task that requires careful integration of all marketing channels and constantly keeping an eye on people’s beliefs and perceptions. Even LV had to reinvent itself by entering the streetwear segment as perceptions around high-fashion changed.
LV's foray into streetwear involves collaborations with prominent rappers
We at LIIT have a wealth of experience in Integrated Marketing Communications (with a focus on digital) that aim at creating and enhancing brands.
Want professionals to create the ideal brand for your business?
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