Luxury Branding – Attracting Younger Consumers

In economics, a luxury item is an item that is purchased with high value in mind, usually because of its rarity or special quality, so when demand increases more than proportional to income, that spending on the item becomes a larger percentage of overall spending. Luxury goods tend to be collectibles. They can be art, clothing, antiques, coins, works of architecture, and many other types of collectibles. While some luxury items are more expensive than others, the items all tend to have high values on the market.


Luxury goods increase in price in relation to demand over time, and this price variation is called a premium. High income people tend to pay higher premiums for luxury items than do lower income individuals. As income increases, the premiums decrease, so too do the purchases of luxury items. When income decreases, then luxury items tend to increase in price, so they are a luxury item for those at the lower end of the economic scale. In economic theory, when income decreases, then the demand for luxury items declines, creating a premium on them.

As a result, consumers are willing to pay a premium for these luxury brands, whether the premium is justified by the demand. Luxury goods tend to be very popular with consumers, being seen as items that one needs, rather than a status symbol. Luxury brands appeal to a younger, more educated consumer who identifies with the images associated with them. This makes the luxury brand much more valuable to consumers, since they are seen as a true investment.