Beyond function: brand value as a determinant of list and premium prices for luxury watches

Abstract This study defines brand value as ‘value beyond function’, and focuses on the halo effect generated by alternative characteristics of brand value factors: ‘rarity image’ and ‘proportion of high-end models’. It elucidates an integrated pricing mechanism in which this effect determines both list and secondary market prices of basic models. Using 64 basic-model watches from brands in Switzerland, Germany, and Japan, qualitative comparative analysis was performed on secondary market prices, and multiple regression analysis was performed on list prices. Complication rate, brand size, and official e-commerce presence were used as alternative characteristics for brand value factors that generate a halo effect originating from high-end models. The findings reveal that list prices are related to complication rate and brand size. Given the absence of an official e-commerce site, three configurations are related to secondary market prices above list prices. These configurations consist of brand characteristics, such as complication rate and brand size, and product characteristics. This study demonstrates the mechanism by which the halo effect of brand value affects prices. Practically, it suggests that strategies centred on brand value include high-end product development, product portfolio rationalisation, distribution control, and the cultivation of iconic product characteristics. These strategies are applicable as a means of decommoditisation.