Is Nike a Luxury Brand?
In "Two Business Cultures of Luxury Brands", Jean-Nöel Kapferer delineates two distinct approaches to creating luxury in terms of brands. In doing so, he puts forth a list of ways in which brands can create rarity, either through use of rare ingredients or through strategic means. In the introduction to his writing, he states that Nike is not seen by the consumer as a luxury brand, but I would say they do employ all the strategies of rarity that he mentions. His statement is thus: “Nike trainers are much more expensive than the copies which come from the same Korean manufacturing companies that also produce Nike -shoes. However, Nike is not a luxury brand. Certainly Nike's premium prices are based on image, but still very few people would consider it as a luxury brand.” I would push back on the notion that Nike is not a luxury brand. It is a brand that works on two levels. On one level they produce mass market products, that everyone has access to. On another level, they produce products that are released by Kapferer’s own strategies for creating rarity. And nearly to a t. This is one of the best examples of mass-stige you can find. If they execute all these strategies correctly, to the point that they even use rare materials, especially insofar as technological advancements in the sports arena are concerned, in their exclusive releases, does one not have to consider Nike a brand with luxury status. Furthermore, does this then not go against Kapferer’s own argument for the distinction between brands with and without a prolonged history as Nike is able to touch luxury status through strategy without a prolonged history but still through a history of craftsmanship and innovation in its category. Is the distinction not then only made by the brands positioning, whether it is made for the rich, as is the case with Cartier, or it is made for the people, as with Nike. I would argue that Ralph Lauren and Nike are more similar in execution than not, making the only difference between luxury and not, per Kapferer’s definitions, the brand’s own posturing.
What do you think?
Kapferer's strategies for creating rarity:
“• the choice of a restricted selective and exclusive distribution such as Louis Vuitton
fully owned stores or Hermes stores;
• creating a permanent but non-lasting out-of-stock situation on specific items;
communicating by word of mouth that there will not be enough supply for all
• manufacturing the product after it has been ordered, to emphasize the impression
I of exclusivity created by this one-to-one apparent customization;
• creating a halo of exclusivity/by the sponsorship of top stars, super models, fashion
designers, and creators: this is how Absolut Vodka maintained its exclusive image
while becoming the third worldwide spirit in sales;
• creating special and very rare products whose goal is only to stimulate the buzz
and press fallouts: for instance Glenlivet created a special product called the
Millennium. This famous single malt brand announced it would produce malt and
sell it in full barrels, kept 15 years, and sold at the eve of the year 2000. The barrel
was priced at 15 ,000 euros. This created a large echo in the media, thus increasing
the feeling of an exclusive brand. Most of the sales of this brand, however, concern
the regular Glenlivet available in all regular liquor stores;
• another typical strategy is to create a feeling of exclusivity by the special advantages
gained by belonging to a restricted club. Here the brand emphasizes service to
foster its image while expanding its product sales;
• finally, one major strategy is to divide the business in two parts: one will be made
of actually very rare products, exceptional, promoted by event which themselves
are unique and by creators or designers who master both art and the media (John
Galliano, Tom Ford, Mark Jacobs). The second part is made of products far less
expensive and mass-produced, which will benefit from the halo effect created by
the exclusive part. This is mass-stige: are Yves Saint Laurent cosmetics still luxury?
No, of course not. However, they are endowed with the image of this world renowned
designer and capitalize on it to sell a higher dream at a higher price.”