Luxury is the creation of extreme value for customers. In other words, it is how well a brand can trigger extreme desirability. People say, “I fell in love with that Dior bag” or “I dreamed about this Rolex for years.” Expressions like these show how luxury is different from other product categories. It’s a realm in which we dream, desire, and fantasize about iconic products made by the brands we worship. And as a result of the extreme value that those products create, we are willing to pay significant price premiums for them.