It is universal truth that luxury brand industry is still booming even during financial crisis because today 's people have the right mind-set that luxury products are purposeful and well thought out. In other words, they want to show off their wealth and personal status.
Main Forces The Macroenvironment Facing The Luxury Brand Industry
Analysing the macroenvironment facing the luxury brand industry, there are demographic forces, economic forces, cultural forces and technological forces.
1) Demographic Forces
Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation and other statistics “Principles of marketing” (Kotler, Adam, Denize and Armstrong, 2008, p.89).
Age …show more content…
Everything we use nowadays exists because of the technology. “Luxury Fashion Branding” (Okonkwo, 2007, p.179) indicated the impact of the internet on the luxury brand industry is mind-blogging and it could change consumer behaviour and the way the company operated.
Technology introduced us with the internet, internet banking, credit card and online shopping. The online shopping become very popular since the consumer only needs a few clicks and a few minutes to buy the desire brands.
As a result, E-retail has become the essential sales channel for the luxury brands to sell their products online. Clearly, both the consumers and the luxury brands have a lot of benefits because of the technology. Providing up-to-date information, customers can save time not to visit many outlets when they want to get something, can make the products comparison at home and they also feel very convenient and trustworthy to shop online are a few benefits consumers can enjoy because of the technology.
Factors Influencing The Increase In Younger Consumers ' Interest In Luxury Products
The main factor that greatly influences young people 's interest in luxury brands is Internet.
Nowadays most of the young people are wasting almost half day of their time on the internet. The first thing they do in the morning is the checking their Facebook profile or email. That is the proved that internet
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This expansion demonstrates how the luxury industry is now run by massive corporations whose focus is only on growth, visibility, brand awareness, advertising, and most importantly, PROFITS! With growth and expansion, has come a decrease in quality and rarity. The luxury garments produced are mostly not handmade but are even outsourced to large factories in places such as China and Turkey. Also, to meet quarterly turnover projections, “designers churn(ed) out increasingly trendy collections of clothes, handbags, and shoes.” (Thomas, Pg. 246) With hundreds of new stores around the globe the surplus of designer labeled merchandise is immense hence, the proliferation of outlet malls.
At the apex of the market was haute couture with it very high-end “custom” product offering that catered to the extremely wealthy. Luxury goods manufacturers believed diffusion brand’s lower profit margins were offset by the opportunity for increased sales volume and the growing size of the accessible luxury market and protected margins on such products by sourcing production to low-wage countries. Eye-catching utilization of their products by prominent figures in society leads to increasing demands for luxury good items and it is a growing industry with the global luxury goods market growing 9% per year. These consumers buy their products for satisfaction and to boost their self-esteem rather than for ease or comfort. All these components blend in the context of a successful business of the luxury goods.
While regular brands use advertising media such as billboard, public transportation, radio, flyers, and etc to make their products exposed to as many people as possible, luxury brands usually use magazines to promote their items and this is maintained in a membership system(Marketing - Promotion Strategy, no date). One of the qualifications of luxury goods is that only people of the top drawer, who are the main consumers of the brand, should know the brand or their products. If the brand or items are exposed to the public, their already existing main consumers will leave due to the fact that the items they buy are no more rare and they cannot be the envy of others anymore. This leads to the fall of brand value and this explains why luxury brands do not make themselves exposed to the public by advertising through magazines. Another evidence that luxury brands use differentiated advertising media is that there is a difference in maintaining vip consumers. While common brands advertise online or through text messages due to the development of communications technology, luxury brands still use traditional advertising method, which is ‘direct mail(Finocchiaro 14).’ By providing information about new products or sale to consumers who have enough income to buy luxury items and to the ones who use luxury brands often, consumers feel satisfied that they belong to the prestigious group and get to feel that they are worth being treated in that kind of special way from luxury brands(The attraction of direct mail | Tangent Snowball, no date). Besides, direct mail make consumers see and feel the high value of the brand and the products with classy quality of the mail(Finocchiaro 15). Using differentiated advertising media, luxury brands not only enhace the value of themselves but also enhance the value of their consumers so that they can manage their customers with hugh income.
Maintenance of the brand image is always the fore most important factor for the luxury brands in order to sustain in the market. is very critical. Therefore, of all the criteria mentioned above, we have determined the brand image is the most important criterion on which we will base our recommendation.
Although currently the global economy seems are fluctuation or even is experiencing a noticeable recession (??The Euro Area,?? 2008; Webster, 2008), request for luxury goods worldwide is enhancing and swiftly increasing, with over 200 billion dollars of annual sales on average every year. (Mcferran et al., 2014). Luxury items represent abundant consumer goods sales all over the world; worldwide selling of accessories, top grade apparel, beauty, jewellery and watches, and many other products (Roberts, 2010). For luxury industry major market segments are not limited into some developed western countries any more, the expansion of markets also reach to emerging markets like some Eastern developing countries or areas such as China (Sherman, 2009). Over and above the traditional developed segments of market new luxury market segments are developing rapidly. For example, performance by graduates of university with decent job as well as pretty high discretionary income, acted as the top twenty five percentage of the U.S. consumers who are called as Generation Xers, spend 1/3 more on personal luxury goods such as ornaments, high-end apparel, beauty as well as home luxury goods rather than those who are called as Baby Boomers (Park and Reisinger, 2009).
The idea behind this study is of great significance because e-commerce (online shopping) has grown tremendously since the turn of the century. It has shaped the way people do shopping for the most part.
Bain and Company (D’Arpizio et al, 2014) state that the’ market for personal luxury goods has nearly tripled in the past 20 years’ (p. 7), with the industry reflecting healthy growth by exceeding €850 billion in 2014 (p. 3). It is evident that luxury consumption is a thriving industry. Despite the fact that prices of luxury goods has risen over 60 percent in a decade, consumers are still choosing to purchase such items (Sherman, 2014).
In the last couple of years, luxury brand management has generated much interest and discussions in both academic and business circles. Among business leaders, the debates have been related to the associated challenges that have emerged as a result of the evolution of luxury since it became a consolidated economic sector. Many
LV should focus more on the Europe and US markets, and the absolute and aspirational customer segments. According to date of world luxury goods market study, both Europe and Americas markets together shared over 65% of the total market in 2011, while they were also predicted to have over 5% growth in next year. What is more, data of competitor sales analysis also show that most of them had high revenue in those two markets. As it is well known, Europe and Americas are the traditional market for the luxury industry and almost have huge customer base who are main the absolute and aspirational customer segments. As to focus on them, LV needs to spent more money on built high as well as upper class fashion and offer more made-to-measure and high quality product and/or services. In the same, the degree of rivalry was high in this two market where all the luxury companies targeted and
How luxury brand can add value to customer’s life trough more than designing a product
In the external environment of part two, the report analyzed the relevant dimensions of the macro environment by use of the PESTEL framework and the luxury industry by the Five forces framework. The global economy, people s expectations on luxury goods, drive for
I believe that nowadays, luxury brands who tend to be reserved to elites are democratizing themselves. Aiming to reach more customers, luxury brands use new strategies: Implementation of entry-level products, collaboration with Fast fashion brands (H&M x Karl Lagerfeld).
Luxury industry has always been the core aspect of a project that usually goes beyond production of just clothes or foot-wear. Luxury bags industry has also been ventured into though with some weaknesses, opportunities, strengths and threats just like any other fashion and luxury industry on the ‘trendiness’ dimension. The business had created its reputation on definitive designs in elegant styles, since its main customers are older women who approve of quality over fashion. From when it was first found, Coach’s business strategy on product is centered towards production of timeless, classic pieces. The argument in support of this
The Luxury goods industry is a very wide industry comprising of products from watches, jewellery, perfumes, expensive wines to yachts, expensive pens, and clothes. Goods for which demand increases more proportionally as compared to income, are known as ‘Luxury goods’, in contrast to a "necessity goods", for which demand increases less proportionally to income.
Luxury product has become more importance roll in social life especially in Asia pacific, the sale has increased from 12% in 2007 to 29% in 2015 in expected, due to the luxury brand is a symbol to shows a social status (Tovikkai and Jirawattannukool 2010; Zhang and Kim, 2013), affected to many western luxury brands desire come to investigate or launch a new store in Asia to serve the demand (Ferdinandi 2014)