Luxury in Education Innovation
In a world where consumer values are rapidly changing, the luxury industry stands at the epicenter of innovation. The pioneers of luxury have traditionally been artists, designers, architects, and visionaries; they have set the zeitgeist and framed the culture. This article explores the concept of luxury within the context of education, examining how elite universities operate as luxury brands and the implications of this "luxurification" on access and equity.
The Making of a Luxury Brand
Luxury brands are synonymous with exceptional materials, craftsmanship, and service. High-quality leather, fabrics, and rare stones are sourced by luxury companies from carefully selected supply chains, and rigorous screening processes are used to maintain premium product craftsmanship. Luxury companies are also recognized for offering high-quality in-store and post-sale services dedicated to their customers’ needs.
Luxury brands also signify the high level of creativity that is embedded in their goods and services. Luxury fashion companies vigorously support innovation in product design, constantly redefining fashion trends and luxury lifestyles. Legendary designers, such as Giorgio Armani, Coco Chanel, Valentino Garavani, Gianni Versace, and Yves Saint-Laurent, created and branded their own luxury business empires with highly creative designs. Luxury conglomerates such as Compagnie Financière Richemont SA, Kering SA, and LVMH Moët Hennessy Louis Vuitton rely on gifted designers and artists.
Luxury companies maintain the exclusivity of their brands through pricing strategies, with high prices normally commensurate with the quality and creativity invested in their products or services. Harry Winston and Van Cleef & Arpels sell their jewelry at a much higher price than other brands because of the high quality of their diamonds and creative designs, craftsmanship, and services. Normally, the better the materials, craftsmanship, and services a luxury company provides and the more it invests in creativity, the more it charges for its products.
As price is an important indicator of the level of exclusivity, luxury brands apply marketing strategies like offering limited editions and controlling sales channels. To safeguard these exclusivity-oriented marketing strategies, luxury companies have taken legal action against retailers who sell their products too cheaply or without a license.
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Conspicuous Consumption and the Veblen Effect
The exclusivity of luxury brands is inextricably linked with their signifying function vis-à-vis the conspicuous consumption of luxury goods or services. Conspicuous consumption refers to people’s willingness to pay a much higher price for a functionally equivalent good for the purpose of the public display of that good as a status symbol. According to Veblen, “In order to gain and to hold the esteem of men, wealth must be put in evidence, for esteem is awarded only on evidence.” One’s consumption of the bare necessaries of life does not produce such evidence, but lavish spending on luxury goods and services does.
Conspicuous consumption leads to the so-called Veblen effect, through which the demand for luxury goods increases as their price increases. Subject to this effect, a luxury good or service has a two-segment pricing scheme: the real price and conspicuous price. The former stands for the normal market price that ordinary consumers pay for the good. It covers the costs for design, production, and circulation. The conspicuous price refers to the extra costs the seller charges for the status-signifying function of its luxury goods. People who consume conspicuously are willing to buy luxury goods at higher conspicuous prices. The higher the conspicuous prices of luxury goods, the more elite consumers are willing to buy these goods as signifiers of status.
Since the 1980s, the luxury goods sector has radically transformed its elites-oriented business model through branding. First, as more people are able to afford luxury goods, sales volume increases. Marketing luxury goods through brand names is cost-effective and impactful. This trend has intensified since the formation of luxury brand conglomerates, making each luxury company more profit-driven. Second, extensive advertising of luxury goods through television and social media increasingly relies upon brand names.
With increased prevalence of trademarks, consumers increasingly associate these symbols not only with luxury goods and services but also with prestige and social status. Trademark law has also come to recognize trademarks as symbols of prestige and social status. Given that luxury brands signify their users’ social positions, courts have further recognized their function in relation to conspicuous consumption.
Elite Universities as Luxury Brands
Elite university names also represent exclusivity and serve conspicuous consumption and, thus, such names should be regarded as luxury brands. Moreover, mainly from the trademark protection perspective, elite universities should be regarded as owners of hyper luxury brands.
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Elite universities achieve exclusivity through bolstering their quality of education, creativity of research, competitiveness of the admissions process, and rates of tuition. With large endowment funds plus high tuition fees, elite universities are financially capable of offering excellent software for teaching and learning. These universities top the relevant educational rankings and have the largest endowments. Thirteen have individual endowments valued at $10 billion or more. Elite universities endeavor to recruit talented scholars through rigorous hiring processes and further provide training programs to improve the quality of teaching. They also dedicate resources to innovating curricula that will equip students with cutting-edge knowledge for postgraduate and professional pursuits. Moreover, elite universities generously capitalize on their endowments, creating an excellent peer learning atmosphere by enrolling high-caliber students. Meanwhile, elite universities are well known for their excellent hardware, such as libraries, classrooms, and dormitories. For example, Harvard University has the largest university library in the US and the largest private library in the world.
With vibrant academic traditions, culture, and capabilities, elite universities excel in research performance, producing impactful findings. The top positions in ranking lists are mostly occupied by elite universities. These universities have a vital role to play in fostering innovation and inventing new technologies. Stanford, the Massachusetts Institute of Technology (MIT), and Harvard have been ranked as the top three most innovative universities in the world for five straight years since 2015, and all ten universities with the highest number of Nobel Prize winners between 2000 and 2017 are elite universities.
The highly competitive admissions process is another factor contributing to the exclusivity of elite universities. Every year, the number of applications to elite universities far exceeds the number of students they can admit. There has been a tendency for elite universities to raise admissions standards, making enrollment even more competitive. The acceptance rates of Ivy League universities and other top colleges have dropped to record lows in recent years.
Exceptionally high tuition is another force driving the exclusivity of elite university education. Price reinforces the luxury aura of such educational services as it creates a financial barrier to entry, separating those who can afford education as a luxury good from those who cannot. In fact, if elite universities charged lower tuition, their quality and status could be questioned. Current tuition and fees for full-time undergraduate students at all of the top ten US universities exceed $50,000 per year, while the average cost for in-state students at public universities is $10,440. Columbia University charges the highest tuition among the top ten at $64,380. Over the last forty years, the tuition and fees of US elite universities have risen faster than US inflation rates and household income, deterring middle- and low-income students from applying.
The high costs of elite university education are justified not only by the quality of education, creative output, and competitive admissions process, but also by access to highly compensated jobs upon graduation. Most Wall Street bankers are recruited from the Ivy League and other elite universities such as MIT and Stanford. Four-fifths of US law firm partners earning $5 million in profits per partner are graduates of the top five law schools. A recent survey of Harvard, Princeton, and Yale alumni shows that three-quarters of them live in zip codes ranking in the top 20 percent on an index of income, half in zip codes in the top 5 percent, and a quarter live in zip codes in the top 1 percent.
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Luxury Education Foundation: Nurturing Craftsmanship
Behind the appeal of many luxury brands is the artistry, craftsmanship and attention to detail that set them apart. But how, in this age of need for speed and lack of formal apprenticeship programs, do young people interested in working in the world of luxury goods learn their craft? Enter the LEF, the Luxury Education Foundation. A public, not-for-profit organization merging the worlds of design and business for students, LEF is an educational collaboration between Columbia Business School and Parsons School of Design, providing undergraduate and graduate students various platforms related to the creation and marketing of luxury goods.
The LEF also took this opportunity to announce its tenth program, the Luxury Craftsmanship Workshop. As Van Cleef & Arpels President & CEO Alain Bernard explained, “Craftsmanship is the essence of luxury brands. In an era where most focus seems to be on digital, LEF feels it is essential to give an opportunity to students to understand how you go from a sketch to an actual “objet”, and work hand in hand with the true stars of our Maisons - the craftsmen.”
Students from Parsons were immersed in each brand to learn its heritage, core values and unique contributions to luxury craftsmanship. Working alongside the designers and artisans, they gained knowledge of techniques and approach to materials, translating their new understanding into a design of their own. All of the prestigious brands which support and participate in the Luxury Education Foundation programs are dedicated to building on their substantial legacies while looking forward to successful futures.
The Impact of Technology on Luxury and Education
AI, combined with other advances in technology, threatens to replace at least part of the role of the imagination. What value does the customer put on artistic versus AI-generated creativity? How do you build a brand in today’s tech-mediated environment? How will technology impact authenticity and craftsmanship? These are critical questions for the luxury industry.
Legal and Social Implications
The “luxurification” of higher education perpetuates class division and violates the right to education by favoring students from families who can pay the tuition. In characterizing a recent college admissions fraud case brought by the US Attorney for the District of Massachusetts, Judge Douglas Woodlock bluntly labeled the fraud “a sneaky crime of conspicuous consumption.” Like luxury goods companies, elite universities are regarded as owners of luxury brands under trademark law. Companies such as Louis Vuitton, Ferrari, and Hermès own brands that enjoy a high level of exclusivity and attract conspicuous consumption. So do elite universities.
tags: #luxury #in #education #innovation
