Pure luxury

With today's society increasingly fixated by status symbols and lavishness, Alexandra Dubsky finds out what differentiates the really wealthy from the pseudo-rich.

  • E-Mail
By  Alexandra Dubsky Published  April 1, 2007

Paying US$300 for a pair of jeans or US$1,000 for a designer handbag might have seemed insane a few decades ago, but status symbols are becoming increasingly popular in today's society.

And the trappings of wealth are no longer limited to those who can afford them; it is incresingly the middle-income groups who pay large parts of their savings just to appear affluent - and retailers are quick to cater for this need, offering a high-end niche for almost every consumer product.

Phone manufacturer Nokia operates a fully owned luxury subsidiary - Vertu - that sells cell phones costing from US$4,616 to US$356,184. The handsets are based on the standard Nokia models, but are made out of gold, diamonds and other precious metals.

"In the early 1990's mobiles were business devices, so the idea came up to transfer them into personal items. A few years down the line, they developed a more consumer-type character, so the idea of the luxury phone was born," says Alberto Torres, President of Vertu.

The Vertu project started in 1997, but did not launch until 2002, since the entire branding and positioning required restructuring. "The Nokia brand was very inclusive. An exclusive brand needed something more elite in terms of materials, channels, and so on. Everything needed to be different," Torres states. "Today we are spending more money on developing a new phone than a Formula 1 team spends on launching a new car every year," he boasts.

When advertising for luxury products it is important to create an emotional connection between the product and the target group, and to emphasise image rather than actual functionality and value for money. According to Vincent Bastien, a professor at the Paris Business School HEC; "Luxury strategy is very different from the classical practice of marketing. It's about psychology and people's dreams, not just upscale prices and high quality. You advertise to enrich your image, and you never talk price because, as with gifts, the price of luxury goods should be a secret."

In the case of Vertu, international celebrities like Madonna and Victoria Beckham are often seen with their phones. Torres, however, stresses the fact that Vertu does not have paid ambassadors, and that celebrities just happen to buy the phones. "Our marketing is mainly word-of-mouth. Visibility is also critical for us, being offered at the right places and outlets, obviously luxury environments" he says.

To grant exclusivity, Vertu launches many special editions, which consist of a limited amount of pieces that stay in the market only for a short period of time. "The reason for that is not only that we try to be exclusive, it's really hard to make these products. You can't make them in high quantity, last year demand outstripped supply," Torres underlines.

He explains that "we are not only selling a new brand, but also a new concept. People are now starting to understand this concept, in Europe, the Middle East and China, but it's still relatively new. Real competition would drive this trend forward, and would help us to benchmark."

The oil-rich gulf region and especially the UAE - Abu Dhabi has the highest per capita GDP in the world at US$46,000 - offer great opportunities for luxury brands. Vertu grew at 140% in the Middle East last year, and Torres plans to penetrate the market even further. "This year we plan to double the size of our company with another triple-digit growth figure," he says.

And with modern society being increasingly obsessed with glitter and glamour, there is certain to be much more untapped potential for companies like Vertu for years to come.

Most expensive resorts

1. Rania, Maldives – $10,000

2. Altamer, Anguilla – $9,285

3. Sandylane, Barbados – $2,700

4. Frégate Island Private, Seychelles – $2,550

5. Singita Private Game Reserve, South Africa – $2,145

6. Turtle Island, Fiji – $1,975

7. Explora En Patagonia, Chile – $1,344

8. Lulana, Grenada – $968

9. One&Only Maldives at Reethi Rah, Maldives – $930

10. Eden Rock Hotel, St. Barts – $888


Most expensive list

Actor:
Although Jerry Seinfeld earned US$267m for his role in Seinfeld in 1998, Tom Cruise is said to be the most expensive actor. He did not receive a single penny as a salary, but his 20% profit sharing for "War of the Worlds" in 2005 will surely set the record.

Actress:
Reese Witherspoon is now the most expensive actress in Hollywood. Reese will star in the new horror film "Our Family Trouble" and gross a whopping US$29m. She now leads the board and puts Julia Roberts in second place for her US$24m "Mona Lisa Smile".

Car:
Bugatti - Between 1927 and 1933 a total of 6 Bugatti Type 41 Royale cars were produced. Manufacturer's suggested retail price at the time: about US$42,000. In 1990 one of the Bugattis sold for US$15m in Japan.

Cigar:
The most expensive cigar is the brand of La Escepcion, which was made at the Havana's Partagas factory. Production of the brand was discontinued in 1985. The "Jose Gener Gran Gener" was the best cigar ever made by La Excepcion and is now a collector's item. The price of just one of these cigars today is approximately US$682.80.

Domain:
In January 2006 Escom beat the record for the world's most expensive domain name when they purchased "sex.com" from previous owner Gary Kremen for US$14m. Back in December 1999, before the bubble burst, Texan Marc Ostrofsky paid US$7.5m for the domain name "business.com". An auction house reported "america.com" had a bid of US$10m, but the sale was never confirmed.

Executive jet:
The Bombardier Global Express XRS ultra long-range business jet. This jet will travel up to 6,150 nautical miles at a cruise speed of Mach 0.85, and 5,450 nm. The price tag for this jet is a sky-high US$46.6m.

Film:
When looking purely at production cost "King Kong" (2005) edges out "Superman Returns" (2006) by a paltry US$3m. The tab for "King Kong" ran to US$207m, while "Superman Returns" lightened investor wallets by only US$204m. If you count inflation "War and Peace"(1968) blows away the competition, costing the equivalent of US$560m 2005 dollars, while "Cleopatra" (1963) comes in a distant second at US$286m 2005 dollars. "War and Peace" took 7 years and US$100m to produce.

Golf clubs:
The Honma golf clubs are created in Japan to the exact length and weight that is desired. Costumers can even go as far as to have initials engraved on each club. The price of US$52,938.50 is for 14 clubs in all.

Hotel Room:
One night in the Bridge Suite at the Atlantis Resort on the Bahamas will set you back US$34,000. Since check-in is at 2 PM and checkout at 11 am, 1 hour of bliss will cost you US$1,691.

Music Video:
At US$7m "Scream" by Michael Jackson in 1995 is by far the most expensive music video ever produced. Here are some stats about the video:

Taking 11 days to film it cost an average US$636,000/day.

Each set averaged US$450,000, totalling US$5m for all 11 of them.

US$53,000 worth of guitars were broken.

Michael Jackson's makeup cost US$3,000.

Skiing resort:
The Game Creek Chalet is within the private ski resort in Game Creek Bowl on Vail Mountain in Colorado. The price per night for a stay, according to the options you choose, could lighten your wallet by US$2,800.

Yacht:
Lady Moura, owned by Saudi multi-millionaire Nasser al-Rashid, is 105 metres long, the 6th longest yacht in the world. Nasser al-Rashid reportedly paid over US$100m for the yacht.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code