ABSTRACT
This chapter places the attention in a critical area of interest for any luxury firm—the way luxury creates value. It sets the ground for the competitive discussion of luxury as it unveils the fundamental principles that explain a luxury firm’s ability to compete meaningfully in the market place. The chapter provides the guidelines to ascertain the boundaries of luxury competition. It provides the fundamental analytical tools to evaluate the challenges and potential for competitiveness of luxury firms. In general terms identifying the normal and the excess competition is quite evident. One of the most complex aspects to manage in a luxury firm is the entry-level offering. The chapter explores the normal versus excess framework as a way to ascertain luxury value creation. It provides a more detailed analysis of Extraordinariness. To conclude, the chapter provides in its last section a discussion on the fine line that sometimes exist between normality and excess, especially when firms define their entry-level offering.
