Luxury And Prestige Are Not The Same - Forbes

Luxury And Prestige Are Not The Same - Forbes


Luxury And Prestige Are Not The Same - Forbes

Posted: 30 Sep 2020 07:57 AM PDT

The American Express Centurion Card and its sibling The Platinum Card are prestigious, as are The Chase Sapphire Reserve and The J.P. Morgan Reserve Credit Card. These cards can buy luxuries. A Regal Cruise is luxurious with a wide range of luxury amenities. A Venicci Shadow 2-in-1 Stroller is a very prestigious perch for your infant. It is not clear that your baby appreciates luxury. An Oscar is a prestigious award. But, what is prestige? What is luxury? These two concepts – prestige and luxury – are not the same. Yet, they tend to be used as synonyms. This is a marketing mistake.

The misuse or muddling of these two concepts – prestige and luxury - is a problem for luxury brands and for prestigious brands. The two ideas are different, denoting different brand and cultural experiences.

Prestige is about the image of the owner; it is bestowed; it is given; it is leveraged. Luxury is about the product or service. A high quality, high priced product may be a luxury. A high status product may be prestigious to own. A luxury brand is not necessarily a prestigious brand. However, a brand can have the elements of both.

Recommended For You

Although not mutually exclusive, the two concepts deliver different functional, emotional and social benefits. And, the values of the target customer may be profoundly different. For example, a power seeker will want to associate with goods and services that bestow a sense of elevation relative to others. This does not mean that this power seeker will refuse to buy luxury items. What it means is that the power seeker uses prestigious items for stature and reputation.

Bernard Dubois of the HEC School of Management, a French grande écoles, ("grandes écoles" are elite, private, and yes, prestigious, schools, feeding graduates to the top levels of French public and private companies and government) wrote a journal article in 2002 on this subject of prestige and luxury. He reported, "… prestige is based on unique human accomplishment" while luxury refers to the "benefits of refinement, and aesthetics." His research demonstrated that prestige and luxury have different consumer perceptions that if ignored have "substantial consequences" for a brand. Prestige is associated with admiration for a person while luxury reflects perceptions of comfort, quality and beauty.

Professeure Elyette Roux teaches at the University Paul Cézanne in the IAE Business School, in Aix-en-Provence. Professeure Roux is considered to be France's most reputed (luxury) brand researcher. Previously, Professeure Roux was the LMVH Professor at ESSEC Business School, another of France's most selective "grandes écoles."

In 1999, Professeure Roux wrote a "white paper" on understanding luxury, describing the difference between prestige and luxury. According to her analysis, "Prestige is the act of striking the imagination, demanding respect and admiration. Prestige implies that one is looking for power over others, impose power over others." Luxury is not about seeking power over others. "Luxury refers to pleasure, refinement, and perfection as well as to rarity, and the costly appreciation of that which is not a necessity."

The American sociologist, and author of The Power Elite, C. Wright Mills, wrote, "Prestige is the shadow of money and power." Examples of synonyms for prestige are status, standing, stature, reputation, repute, regard, fame, note, renown, honor, esteem, celebrity, importance, prominence, influence, eminence, and more. These are not synonyms for luxury. Examples of synonyms for luxury are premium, lavish, indulgence, expensive, extravagant, affluence, opulent.

According to the French, and they should know, luxury is "a way of living represented by great spending to show elegance and refinement… it is a way of being rather than a way of appearing." Professeure Roux regrets that the concept of luxury has come to be associated with ostentation, which is all about "showing."

A McLaren P1 GTR costs US $3.4 million dollars. The McLaren P1 GTR is a highly prestigious brand, even though it is low to the ground and small on the inside. Yes, it is a fast, beautifully designed, aerodynamic head-turner, especially on city streets or at valet parking. The McLaren bestows an image of prominence, distinction and importance on the owner. Think of the Concorde SST. It was very prestigious to be an SST passenger. But, in fact, the SST was a long, skinny silver tube. If you were over 5' 8", you had to stoop to walk down the aisle to your tight, uncomfortable seat.

The Mercedes S Class is considered a luxury vehicle. The copy describing the S Class sedan drips of luxury: "…the S-Class cabin is sculpted, sewn, appointed, and equipped not just to provide unmatched comfort and convenience, but to stimulate and soothe your senses. Especially your sense of contentment." For this state of art 2020 S Class Convertible, you will need to fork over upwards of US $138,600.

The merger deal that has gone wrong between Tiffany and LVMH is financially driven. LVMH wants to get out of it. However, Tiffany is suing LVMH. Tiffany claims that their brand is very prestigious. For example, the robin's blue box confers all sorts of status. LVMH is a holding company with some of the world's most luxurious brands such as Dior, Loro Piana, Patou, Bulgari, Moët Chandon and Hennessey. In its recent countersuit, LVMH is inferring that Tiffany's poor performance, bad management and questionable future have dented Tiffany's prestige.

According to Professeur Dubois, prestige takes a long time to build and is "… difficult to acquire. However, it is easy to lose. One negative experience is enough to disqualify the brand from the domain of prestige." Prestige is about the power of personal respect, status, and reputation. As Professeur Luxury is "a world of creations that make life more beautiful."

LVMH, Tiffany Engage In Luxurious War Of Words - pymnts.com

Posted: 29 Sep 2020 08:01 AM PDT

Things are getting a bit uncivilized in the spat between LVMH and Tiffany & Co. The two ultra-high-end brands were supposed to be part of the same happy family after LVMH agreed to buy Tiffany earlier this summer, but the deal has dissolved into courtroom battles and public recriminations. In the balance lies the future of one of retail's truly iconic luxury brands.

LVMH said Tuesday (Sept. 29) it had filed a countersuit against Tiffany as it tries to reconfigure or even abandon a $16.2 billion takeover. The suit, filed Monday in Delaware, says that LVMH "continues to have full confidence in its position that the conditions necessary to close the acquisition of Tiffany have not been met."

The pandemic apparently has had a lot to do with LVMH's decision. It tried to scrap its  acquisition in early September, when LVMH said it would not complete the acquisition of Tiffany "as it stands." In the suit on Monday, LVMH mentioned the pandemic saying that a "material adverse effect" has now occurred. It also criticized  Tiffany's "mismanagement of its business."

"For instance, Tiffany paid the highest possible dividends while the company was burning cash and reporting losses. No other luxury company in the world did so during this crisis. There are many examples of mismanagement detailed in the filing, including slashing capital and marketing investments and taking on additional debt," LVMH's statement Tuesday said.

LVMH's statement was hardly out for an hour before Tiffany fired back. "LVMH's specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany," said Tiffany Board of Directors Chairman Roger Farah. "Tiffany has acted in full compliance with the Merger Agreement, and we are confident the Court will agree at trial and require specific performance by LVMH. Had LVMH actually believed the allegations made in its complaint, there would have been no need for LVMH to procure the letter from the French Foreign Minister as an excuse for its refusal to close."

Tiffany also fired back against LVMH's claim that the pandemic constituted a Material Adverse Effect. It pointed out that it had just one single quarter of losses before returning to profitability in Q2 and projects fourth-quarter earnings in 2020 greater than those in the same period in 2019.

"This is the exact opposite of LVMH's unsupported claims that the 'Pandemic has devastated Tiffany's business' and that 'Tiffany's recent woes are just the beginning of its troubles,'" said Tiffany in a statement. "Nothing alleged by LVMH has come close to meeting the MAE definition in the Merger Agreement, which excludes all 'changes or conditions generally affecting the industries in which [Tiffany] operate[s]' and 'general economic or political conditions.'"

Up next? The two sides go to trial in January in Delaware. "The Delaware court hearing the case has a reputation for holding companies to what they signed up for," says The Wall Street Journal. "If the judge forces LVMH to press ahead with the transaction, it will have to integrate Tiffany with a lot of bad blood on both sides. The U.S. jeweler's current management team would very likely have to be replaced. Admittedly, hiring top talent has never been an issue for the French luxury giant."

——————————

PYMNTS TV LIVE OCTOBER SERIES: B2B PAYMENTS 2021 – WHAT WILL YOU CHANGE? 

Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border. Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.

Charge Card Vs. Credit Card: What’s The Difference? - Forbes

Posted: 03 Sep 2020 12:00 AM PDT

Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.

They may look identical, but charge cards and credit cards are surprisingly different financial tools. Although both allow you to make a purchase without using cash, there's a big difference when the bill comes. With a credit card, you can carry—or revolve—a balance and pay it off over time, although typically you'll incur interest charges to do so. With a charge card, any balance must be paid in full when the monthly statement arrives.

There are also other distinctions to be aware of. Here's a deeper dive into how each type of card works; it will help you decide which one is a better fit for your particular needs.

Read More: The Forbes Guide to Credit Cards

How Does a Charge Card Work?

Unlike a credit card, a charge card doesn't come with a preset spending limit. This can make it more flexible, since it will grant access to the buying power you need even if that amount fluctuates widely month to month.

This doesn't mean you have unlimited spending ability, though. If you're planning on making a significant purchase, first contact the issuer to see if they'll approve the amount you'd like to charge. Ultimately, a charge card can help you be a more responsible shopper, since you'll know you're on the hook to pay back your debt in the not-so-distant future.

A credit card allows you much more leeway. It may have a firm borrowing limit, but you're only required to make a minimum monthly payment on the total amount you owe. While the idea of smaller payments may be appealing, interest will accrue over time, adding to your overall burden, so it's still in your best interest to pay your card off in full each month.

But for someone who needs extra time to pay down their bill, a credit card could be the better choice. It's possible to avoid interest charges for a period of time by using a card with an introductory 0% APR offer on purchases. These offers generally last from six months to nearly two years. It's almost impossible to find this sort of leniency with a charge card.

How Can I Get a Charge Card?

Although credit cards are available even to those with not-so-great credit, a charge card typically requires a good-to-excellent score. That's because the issuer is taking a bigger risk by assuming you'll pay your full bill every month and not giving you a preset spending limit. If you have poor or limited credit history, you may want to look to a secured card instead.

American Express is the only major issuer that still offers charge cards. The options currently available to consumers include:

Even though these are charge cards, they have a feature called "Pay Over Time" that allows eligible purchases to be treated as they would be on a credit card (up to the Pay Over Time Limit), meaning they don't have to be fully paid off at the end of the billing cycle and are subject to interest charges*.

Aside from American Express, a few retailers (notably gasoline chains) may offer charge cards that can only be used within their brand, although the majority of these allow you to carry a balance.

What Are the Key Differences Between a Charge Card and a Credit Card?

There are six key differences between charge cards and credit cards that you should be aware of.

Payments

A credit card requires a minimum payment at the end of each billing cycle, and you can revolve your balance from month to month. A charge card requires payment in full at the end of each month.

Credit Score Required

A credit card can be obtained even with a bad credit score. A charge card requires good-to-excellent credit.

Fees

There are plenty of no annual fee credit cards, but charge cards that are currently available carry a yearly cost of ownership (usually substantial; the fees on the American Express charge cards range from $150 to $550, for example).

Credit Utilization

A credit card has a firm spending limit, and the amount of that limit you use (known as credit utilization) is responsible for about 30% of your FICO credit score. Approaching the limit on your card will likely have an adverse impact on your score.

Since a charge card doesn't have a limit, your usage of it won't change your credit utilization.

Rewards

Some credit cards have rewards programs, some don't. In contrast, all charge cards earn rewards, often at generous rates. The Amex Gold ($250 annual fee – see rates and fees), for example, earns 4 Membership Rewards points per dollar spent at restaurants and U.S. supermarkets*, 3 points per dollar spent on flights booked directly with airlines and provides a welcome bonus of 35,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 3 months. This is on par with a top-tier credit card.

Options

While there are hundreds of credit cards to choose from (each with its own benefits and drawbacks), the pickings are slim with charge cards. The only widely available charge cards are the three offered by American Express.

Should I Get a Credit Card or a Charge Card?

Choosing a credit card or charge card comes down to your own goals and unique financial circumstances. While charge cards have the advantage of preventing you from overspending and amassing debt, there aren't many to choose from, and they have high annual fees.

In contrast, there's a wider array of options when it comes to credit cards (including credit cards for those with bad credit), but it's much easier to rack up debt by revolving a balance. Even so, a credit card, especially one with a 0% APR offer, can be an excellent option for anyone who needs extra time to pay off a big purchase.

In the end, we can't provide a hard-and-fast rule for which type of card you should get. By understanding what you're choosing between, you can take a harder look at your financial situation and the cards currently available to make a better decision for yourself.

To view rates and fees of the American Express® Green Card, please visit this page.

To view rates and fees of the American Express® Gold Card, please visit this page.

To view rates and fees of The Platinum Card® from American Express, please visit this page.

Comments

Popular posts from this blog

Window for Small Businesses to Apply for PPP Funding Closes Saturday - Bay News 9

List of Easy Approval Net 30 Accounts for 2020 - Nav

This new business index offers a more accurate way to forecast recessions - MIT Sloan News