The 4E of Luxury: Interview with Équité CEO Daniel Langer

Dr. Daniel Langer on a client mission to inspire about the future of luxury

Daniel Langer is one of the world’s most renowned experts on luxury, pricing, and disruption. He is named one of the global "Top Five Luxury Key Opinion Leaders to Watch” by Netbase Quid. He founded the luxury strategy firm Équité and is also the Executive Professor of Luxury Strategy at Pepperdine University in Malibu and a Professor of Luxury at NYU in New York. With his team he elevates, optimizes, and advises some of the world’s most admired and iconic luxury, lifestyle and consumer brands and also several luxury startups and smaller brands. Daniel is the author of several best-selling luxury management books in English and Chinese and is frequently featured in leading global media publications including The Economist, Financial Times, Forbes, New York Times, Nikkei, Luxury Daily, and Jing Daily. His education includes Harvard Business School and he holds an MBA and a Ph.D. in luxury management.

Question: Let’s dive right in. You’ve been extensively writing about the 4E framework in luxury. Can you briefly explain what the 4E stand for?

Dr. Daniel Langer: The 4E framework stands for Emotion, Experience, Engagement, and Exclusivity. I propose this framework as a replacement of the 4P model, that in my point of view is grossly overused, even in academia – and vastly irrelevant in today’s world. The 4P were developed in the 1960s and their role was to help brands create standardized products and services for mass audiences and sell and promote them at scale. First, the 2020s are a completely different reality. Skyrocketing expectations of digitally native Gen Z, hyper-competition, and hyper-personalization fuel the need for brands to think radically client-centric instead of being product-centric. Second, luxury is about creating desirability and extreme client value. It is the opposite of the philosophy that was guiding the 4P. The 4P were great for the reality they were envisioned for, 4E serve much better to create a lasting connection with clients in a complex and increasingly noisy reality. They are the future of luxury.

The 4E build a comprehensive approach to understanding and crafting luxury brands. These four elements are crucial in creating value and differentiation in the increasingly competitive and unforgiving luxury market. Emotion is about the deep, personal connections that the brand evokes in its audience through its brand story, its most fundamental core value and promise. Experience encompasses the unique, extraordinary and memorable interactions consumers have with a brand. Exclusivity highlights the perceived uniqueness of the product or service. Engagement refers to the ongoing, meaningful interactions between the brand and its consumers.

Question: In your recent articles, you’ve emphasized the importance of emotion in luxury. Could you elaborate on how luxury brands can effectively evoke emotions in their consumers?

Dr. Daniel Langer: Evoking emotion is about defining and consistently delivering a powerful brand story that resonates on a personal level with consumers. Luxury brands need to tell a brand story that inspires and connects with their clients’ aspirations, values, and desires. The role of brand storytelling in creating deep emotions is in my point of view one of the most undervalued. As humans, intuitively, we tend to attribute more value to the tangible, the product. And here, intuition is wrong. The brand is more important than the product, especially in luxury. The brand carries the value, the product simply reflects the story of the brand. Many brands put products first and neglect the brand and its story. This does not mean that products are not important. They are – as an exciting expression of the brand story. They are not the story. Without a story, they have very limited value.

Importantly, in a luxury reality, the brand story needs to be about the role of the brand in the life of the client. Not about quality and craftsmanship. Clients are the judges of quality and craftsmanship, so just telling them that you are the best will not work. Instead, we need to inspire them and make them crave us. The only way to do this is to tell a phenomenal story.

Question: Let’s talk about exclusivity. How do brands like Hermès create value and pricing power through exclusivity in a market that is becoming increasingly accessible?

Dr. Daniel Langer: Maintaining exclusivity in today’s market requires a multifaceted approach. Brands like Hermès achieve this through limited production, meticulous storytelling, and maintaining high barriers to entry. Hermès’ pricing power is sustained through a combination of factors. Their brand and product storytelling is exceptional, their products are timeless pieces of art and immediately recognizable. The Birkin bag is seen by many as the most iconic handbag and the obscure waiting list approach is a myth of its own, further driving desirability.

Question: Engagement is a crucial aspect of the 4E framework. How can luxury brands enhance engagement with their consumers?

Dr. Daniel Langer: Enhancing engagement involves creating ongoing, meaningful interactions with clients and prospects. Luxury brands need to leverage increasingly digital platforms to offer personalized and immersive content and experiences. This is an area where I still see too many “more of the same” approaches. Social media, for instance, is critical to tell the brand’s story in every message and highlight extraordinary and unique aspects of the brand. For many brands it’s still an afterthought. Additionally, brands can offer exclusive events, private viewings, and personalized shopping experiences. The goal is to make consumers feel like they are part of an exclusive community and to maintain a dialogue that reinforces their loyalty to the brand.

Question: With the rise of digitalization, how can luxury brands maintain a balance between exclusivity and accessibility?

Dr. Daniel Langer: The key is to use digitalization to enhance the luxury experience without diluting exclusivity. Brands can achieve this by offering exclusive digital content, virtual events, and personalized online services that complement their physical offerings. Limited editions and special collections can be released online to create buzz and maintain a sense of rarity. It’s about leveraging technology to enhance the customer experience while ensuring that the brand’s core values remain intact. To me, it is strategy over hype.

Question: You’ve mentioned that luxury consumers today are more informed and demanding. How should brands adapt to this change?

Dr. Daniel Langer: Brands need to be transparent and authentic in their communications. Informed consumers value brands that are honest about their practices, sourcing, and craftsmanship. Additionally, brands need to focus on creating value beyond the product itself. Brands should also be agile and responsive to feedback, continuously evolving to meet the changing demands of their audience.

Question: Sustainability is becoming increasingly important in luxury. How can luxury brands integrate sustainability into their strategies without compromising on quality and exclusivity?

Dr. Daniel Langer: Sustainability can enhance a brand’s value when integrated authentically and not done just to please expectations. There is still too much greenwashing and not enough disruptive ideas. Brands need to focus on sustainable sourcing, ethical production processes, and transparent supply chains. Clients today expect certainty and not empty promises. Creating a sustainable business model not only aligns with the values of today’s luxury clients but also ensures the long-term desirability of the brand. High-quality, timeless designs that last a lifetime are inherently sustainable. But they are not enough.

Question: Finally, what do you see as the future of luxury?

Dr. Daniel Langer: The future of luxury will be defined as follows: brands that embrace a deep integration of the 4E framework and execute in an exciting, engaging, and inspiring way with excellence will grow disproportionately. Brands today and even more so tomorrow need to offer exceptional experiences, heighten exclusivity, engage consumers on a personal level, and evoke strong emotions. Digital innovation and immersive and hyper-personalized experiences at the point of sale will play a significant role, offering new ways to interact with and inspire clients. Sustainability will become a non-negotiable aspect of luxury. Overall, the brands that can seamlessly blend authentic brand storytelling with innovation, differentiation, and inspiration will lead the change.