Building luxury brands requires emotion and cultural capital: Interview with Daniel Langer, CEO Équité and Pepperdine Professor of Luxury

Daniel Langer, Équité CEO, is photographed supervising the creation of the visual brand story execution for a new luxury brand

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 creates, optimizes, and consults 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 top-rated 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.

Q: It seems that many luxury brands are recently going through significant changes. Burberry just presented its new direction, Louis Vuitton appointed Pharrell Williams, Gucci will be under new creative direction. The list goes on and on. What is in your point of view the most critical for the success of a luxury brand in the new realm of luxury?

Dr. Langer: Luxury is changing faster than ever before. In fact, the critical success factors for luxury brands today are completely different than say 5 years ago. Until relatively recently, it was sufficient to create great products and spectacular designs and - somewhat - restrict access. Now, in times where desirability creation happens in an algorithm-driven reality on TikTok and Instagram, creating cultural capital becomes the most critical success factor. Don’t get me wrong, brands still need to be excellent in everything they do. The difference is now that heritage and exceptional quality are merely expected. They are not differentiators anymore. Without the ability to create cultural capital, many existing luxury brands will see dramatically declining revenues despite still delivering on traditional value dimensions. And most new luxury brands will fail if they don’t create emotional power.

Q: You help creating and revamping many top luxury brands. What do you recommend their management teams to do in light of the new codes of luxury?

Dr. Langer: I just returned to Los Angeles from spending significant time with a client overseas in their launch markets, a client for whom we are developing a new luxury brand from scratch in line with the vision of the founder. The objective was to be obsessive in understanding each and every detail of the local luxury clients. The brand will be rolled out globally, however it is critical to understand how to build cultural capital not just in an abstract way, but very specifically market by market. Every region has slightly different values, expectations, and nuances. A luxury client in Dubai or Abu Dhabi has radically different expectations and experiences towards service than someone in Tokyo, Shanghai, Cape Town, Mumbai, London, or New York. As an example, Chinese luxury customers expect to speak with a human within maximally 5-8 seconds when they have a question. In USA it’s not uncommon to be put on hold for several minutes, even among the top brands. This is why I personally spend an incredible amount of time with my clients in their key markets including in-depth sessions with local experts to be able to create not just experiences, but experiences that are mind-blowing, that create an emotional response, and that make clients feel valued. The human connection is the key to creating cultural capital. Many brands forget that.

Q: How do you create the human connection?

Dr. Langer: Creating the messaging platform for a brand is the most critical task. In other words, having clarity on the storytelling. Traditional brand positioning approaches are often limited to defining the position of the brand relative to other brands within a category. It’s an inside-out view. Most brand bibles I see have beautiful pictures, speak about superlatives, have all kind of values, but when you look at them from a neutral outside-in perspective, they don’t create value for clients. They take a “we….” perspective. And by doing so, they fundamentally fail to create cultural capital. The inside out view is - frankly - irrelevant from the perspective of a luxury client. If I am the client of a brand I want to know what the brand does for me, and more specifically, which emotion should I feel. That’s how brands have to be defined from now onward. When we analyze different categories, from fashion to jewelry, from cars to travel, to name a few, the reality is that most brands tell a similar story, hence their experience will feel similar. And they don’t leave the realm of category positioning. That will lead to failure in the new world of luxury. 50% of luxury brands will disappear by the end of this decade, and many of those who survive will struggle and see their market shares erode and their profits under pressure. The gap between the best brands in creating cultural capital and the rest is growing, not declining.

Q: What do brands get wrong when they create their identity?

Dr. Langer: During the visit with my client I supervised the production of their first brand film and the production of the social media content for the launch. I calibrated every single aspect. Why did I not delegate it? Because the brand message is the most critical to break through in the noisy social media reality. If the brand story does not come across, if the social media content is not creating an emotional connection that is “on story,” then there is no story. And if clients perceive no story, then - due to lack of emotional connection - they will not buy the brand. This is why I urge bands to pay much more attention to every single detail. And if the storytelling is not sufficiently defined from a client perspective then I would go as far as not doing any communication. Any imprecision in executing the messaging will lead to client confusion and it will weaken the brand equity instead of strengthening it. Cultural capital is the new critical success factor. Its importance can’t be overstated.

Q: While you where traveling, did you see any concerning luxury brand executions?

Dr. Langer: Frankly, I saw many. For example, one was in the most expensive hotel in the target market, which is supposed to be beyond excellent in service. The brand is considered my many as one of the top 5 luxury hospitality brands in terms of quality of product. When I was there I was totally underwhelmed. The real estate, spectacular. The views, priceless. But the human factor was where the property failed. The staff was friendly. But as stated before, friendly is the minimum expectation in luxury. The service was not mind-blowing, and importantly, there was no story. It felt like any other hotel, simply in a beautiful setting. That is not enough in today’s world. Then, during store checks at competitor luxury brands of my client, the consensus was that the staff knowledge and client attention was overall not even solid. That gives plenty of room for disruption and for launching new luxury brands that focus on the human connection, on creating emotional responses, on creating desirability through cultural capital. The future of luxury has begun, and the success factors are different. Incumbent brands need to act in order to stay relevant.