What defines a Luxury Product or Service and who decides it?

Luxury is a constantly evolving concept, influenced by culture, society, and economic trends. But what makes a product or service considered luxury? Who decides it? In this article, we explore the key elements that define luxury and the actors that influence its perception.

1. What Is Luxury?

Luxury is not just about a high price; it’s about exclusivity, craftsmanship, heritage, and experience. In general, a luxury product or service is characterized by:

• Exclusivity: It is not accessible to everyone, either due to its price, limited availability, or restricted access.
• Exceptional quality: Made with the finest materials and superior craftsmanship or technology.
• Brand prestige: Associated with an image and values that communicate status, sophistication, or differentiation.
• Unique experience: It’s not just about the product itself but also the experience surrounding its acquisition and use.

For example, a Hermès handbag is not just an accessory but a handcrafted masterpiece made by experts with decades of experience. A trip on the Venice Simplon-Orient-Express is not just transportation but an immersion into the elegance of another era.

2. Who Decides What Luxury Is?

There is no single authority that determines what is and isn’t luxury, but several key players influence its definition and perception:

2.1. Luxury Brands

Brands themselves set the luxury standard through their positioning, history, and communication. Through marketing strategies, storytelling, and distribution control, they create the perception of exclusivity and desire.

2.2. Consumers

Luxury is subjective and evolves with consumer preferences and expectations. What was once considered a luxury may become commonplace (like mobile phones in the past), while new categories emerge (such as sustainable luxury or high-end technology).

2.3. Industry and Experts

Specialized media such as Vogue, Robb Report, Forbes, and LUXONOMY, along with market consultancies like Bain & Company or Deloitte, analyze and define trends in the luxury sector. Their influence is crucial as they don’t just report but also shape the narrative around brands and products.

2.4. Culture and Society

Sociocultural factors also influence the definition of luxury. In some countries, luxury is associated with minimalism (Japan, Scandinavia), while in others, it is linked to ostentation (Middle East, Russia).

3. How Does the Perception of Luxury Change?

The concept of luxury is not static. Some trends that have redefined the sector in recent years include:

• Experiential luxury: The value lies not in the object itself but in the experience it offers (exclusive travel, haute cuisine, premium wellness).
• Sustainable luxury: Environmental and social impact is now a key criterion (brands like Stella McCartney and Tesla have revolutionized the sector).
• Luxury technology: Brands like Apple or Bang & Olufsen have elevated technology to a new level of sophistication.
• Extreme personalization: True luxury today is owning something unique and custom-made (like Rolls-Royce Bespoke services or personalized Patek Philippe watches).

4. Tesla Model Y Case: A Declining Luxury?

Tesla revolutionized the automotive industry by positioning technology and sustainability as pillars of modern luxury. However, the Tesla Model Y has called this status into question.

Initially, the Model Y was introduced as a premium electric SUV, featuring innovative characteristics and a value proposition that placed it in the luxury market. However, its mass production, price reductions, and certain quality issues have eroded its exclusive image.

Adding to this, the controversy surrounding Elon Musk, whose polarizing public persona has negatively impacted the brand’s perception. His statements on social media, business decisions, and association with controversial movements have led some high-net-worth consumers to distance themselves from Tesla.

Consequences for Tesla and Automotive Luxury

• Erosion of exclusivity: Tesla, once seen as a high-tech luxury brand, has lost part of its exclusive appeal.
• Premium customer attrition: Some consumers have turned to traditional luxury brands like Mercedes-Benz (with its EQ line) or Porsche (with the Taycan).
• Accessible luxury vs. aspirational luxury: Tesla faces the dilemma of whether to remain an “accessible luxury” or reclaim its status with more exclusive models.

This case demonstrates how fragile the perception of luxury is and how it depends not only on the product itself but also on the brand, its leadership, and the customer experience it offers.

Luxury is a combination of exclusivity, quality, experience, and prestige, but its definition is dynamic and depends on multiple actors. Brands, consumers, the industry, and culture collectively determine what is and isn’t luxury at any given moment in history.

The Tesla Model Y case highlights how quickly the perception of luxury can change. While Tesla remains an innovative brand, its market strategy and the image of its CEO have led some luxury consumers to seek alternatives.

Ultimately, luxury is not just about a high price—it is a symbol of desire, differentiation, and, most importantly, a well-told story.