Reflecting on Seth Godin’s post about Luxury versus premium goods

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Artist: Aleksandr Vojtenko
Artist: Aleksandr Vojtenko

In various posts I mention the changing consumer behaviour due to the depression and web 2.0. Seth Godin’s reflects to the facts that in some business marketeers have not chosen for either the positioning as a luxury brand or a premium brand. You may guess the consequences for customers and organization.


Luxury vs. premium

Luxury goods are needlessly expensive. By needlessly, I mean that the price is not related to performance. The price is related to scarcity, brand and storytelling. Luxury goods are organized waste. They say, “I can afford to spend money without regard for intrinsic value.”

That doesn’t mean they are senseless expenditures. Sending a signal is valuable if that signal is important to you.

Premium goods, on the other hand, are expensive variants of commodity goods. Pay more, get more. Figure skates made from kangaroo hide, for example, are premium. The spectators don’t know what they’re made out of, but the some skaters get better performance. They’re happy to pay more because they believe they get more.

A $20,000 gown is not a premium product. It’s not better made, it won’t hold up longer, it’s not waterproof or foldable. It’s just artificially scarce. A custom-made suit, on the other hand, might be worth the money, especially if you’re Wilt Chamberlain.

Plenty of brands are in trouble right now because they’re not sure which one they represent.

Artist: Aleksandr Vojtenko
Artist: Aleksandr Vojtenko
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