Marketing Development Of The Luxury Goods Industry

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.

For years, Louis Vuitton enjoyed high profit margins from the luxury market in Japan until other competitors such as Prada and Gucci entered the market. Counterfeiting also became a threat to the firm’s brand by satisfying consumer demand at lower prices. Other external global environmental problems included highly priced products, limited availability in stores only, and a heavy dependency on the Japanese market (Pearce & Robinson, 2013, p. 14-18). Moreover, “the after-shocks of the global recession were a threat to Louis Vuitton’s luxury business in Japan”, and Japanese women became less interested in the brand’s products (Pearce & Robinson, 2013, p. 14-18). Alternatively, Louis Vuitton could “reinvent itself and regain what used to be its well-attested

The luxury market is growing fast in China and India due to the rapidly increasing wealth levels and standard of living gains. Coach must keep in mind the different cultural backgrounds of each country and take that into account when designing and marketing new products and lines.

The author who inspired the topic of this thesis is Dana Thomas. As a fashion writer, Dana Thomas, has analyzed the changes in luxury fashion business. Thomas has been writing about fashion for the past twenty-five years in various journals such as Newsweek, The New York Times Magazine, New Yorker, Harper’s Bazaar, Vogue, Financial Times, and more. Dana Thomas’ two books, Deluxe and Gods and Kings, are the inspiration for this thesis. Deluxe: How Luxury Lost Its Lustre goes into great detail the secrets of the leading luxury industry brands, namely Prada, Gucci and Burberry, to showcase the “New Luxury” of today and how “luxury lost its luster” by featuring the manufacturing and logistical processes. Thomas exposes that many luxury brands use the same Asian factories that mass-market retailers employ, which raises questions concerning quality and craftsmanship for luxury brands.

An increasing economic interdependence of national economies across the world experiences a rapid cross-border movement of goods, service, technology and capital. Luxury goods industry, serve as one of the most competitive industry, emerging and developing rapidly all the time. To a great extent, globalization promotes the development of luxury goods industry significantly in spite of the big shock hit by several times of economic crisis.

We think that the luxury goods market is very sensitive to economic conditions. Customers who are not as comfortable or upbeat about the economy tend to spend less or by cheaper substitutes. Recession or poor consumer confidence in the US or Japan could result in a decrease of sales for short or long periods of time. Also, strong competition from other companies creates further pressure to lower prices and reduce net income. Italian and French handbag makers have a history of being favorites of women seeking fashion. Coach will continue to see these companies as a threat as each attempt to regain customers.

During the period of globalization (the 1990s) the role of luxury as the historical phenomenon has changed: from the cultural factor it turns into the industrial factor, the factor of production that brings added value. Luxury moves the long way from a reserved craftsmanship available only for the elite to the luxury industry. In the luxury industry, the capitalization of the following sociocultural phenomena takes place: values, social norms and

This behavior brings competitive advantages to the European luxury brands. Moreover, customers in different countries have different purchase behaviors. For instance, some countries’ customers are willing to move away from common recognized brand, because they want to purchase more exclusive products. Furthermore, because of the increasing speed of globalization, people are more likely willing to travel between different countries. These travelers will buy luxury good during their trips. In fact, Chinese tourists contributed over one third of sales in Europe. The luxury goods industry should notice to adjust the actual demand between local people and tourists in Europe

Many people have heard about Italy through the success of some of its famous luxurious brands such as Gucci and Ferrari. Behind this eminent success there is a culture of combining tradition, heritage and innovation. In what follows I will present some examples of such combination. And I will also discuss some of the problems that Italian firms face and propose some element of solutions to these issues.

One of the competitive forces that have a great effect on industry attractiveness is the threat of new entrants and how hard it is to build up a brand name that can compete with the likes of Coach, Louis Vuitton, Dolce & Gabbana, and Versace. It takes deep financial pockets and great commitment to create luxury image with well-known brand and superior quality. Thus making it costly for new entrants to gain exposure and market share. Luxury items are known for their superior quality and to some people, the status that they carry. New entrants must build this status from the ground up, which can prove difficult without

In Japan, the costs of LVMH handbags cost approximately 40% more than in France. This started a growing market to distribute bags from France to Japan for resale at a cheaper price. Arnault believes that the producers of LVMH’s goods need to be unrestrained by financial matters in order to produce extremely high quality products. To keep the brand management of highly priced and high quality goods, LVMH needs to expand to the younger new money of the Asian market. The high quality is also a result of the mentality that “Made in France” is perceived as high western quality. LVMH does not want to lower the labor costs because there would be a similar direction of the quality.

Luxury product sales boost in the emerging marketing like China, which has extraordinary growth and strong potential consumers for the development of luxury goods in the China market. With gradually lower and lower increase of revenue in the European countries, Louis Vuitton (abridged as LV in the following sections) commits itself to set up more stores in China. However, LV is faced with the problems of declining profits in China, which urges it to adjust its entry strategy into the China market. In this case, this report will focus on distinguishing the factors that influence LV’s development in China and

Gucci is a brand which was founded in 1921 in Florence. Distinguished for its quality and « savoir-faire » in fabrication of products such as leather goods, ready-to-wear, watches and jewelry or shoes, it is one of the biggest luxury brands in the world. Today, the brand is also appreciated for its ongoing commitment to responsibly and integrity of all aspects of its business.

The development of luxury industry never leaves human’s vanity. People want to look rich but not poor, specially, in United States and under American Dream. According to “Sales of the Luxury in Selected Countries in 2013” (see figure 1), the country which has the highest “sales of the luxury goods” in 2013 is United States which is almost four times higher than Japan which is in the second place (Bain& Company). People use to compare themselves to their friends and their idols. When Bai Zhen talks about Mr. Louis Vuitton’s early age, he mentions a

In recent years, there has been an increasing amount of literature on luxury brand marketing. “Luxury Brand Marketing is, the best design, the best materials, the best merchandising, and the best packaging occur in the luxury industry “(Ko &Megehee, 2012:1395). Even though there are few brands in the luxury sector, the sales of said brand are extremely effective. Due to this and the constant successful marketing of the luxury brand, these brands set an example to non-luxury brands (Ko & Megehee, 2012). This literature review is intended to examine luxury brand marketing, and will demonstrate the behavior of consumers who purchase luxury brands. This literature review consists of two parts; the first part provides a definition of what luxury brand marketing and what luxury brands. The second part focuses in particular on the behavior of consumers who purchase luxury brands and it will be described under the three headings: privileged access, the desire to show others people and bandwagon.