Introduction
According to Kotler, market segmentation can be defined as ‘grouping buyers according to their separate products or their desired marketing mix (Kotler, 2013). This report will focus on the psychographic aspect of market segmentation. The concept of psychographic segmentation is defined as ‘grouping consumers according to their social class, lifestyle or personal characteristics (Kotler, 2013). Ultimately this will have a large impact on consumer behaviour towards luxury goods. Consumer behaviour is heavily impacted upon by psychographic behaviour, therefore making it an important aspect of market segmentation. Luxury goods are promoted effectively through firms’ careful consideration of consumers’ psychographic attributes.
Industry Overview
Luxury goods are defined as unnecessary items in terms of daily life, however these items are desirable within modern culture and society. Luxury goods are also refereed to as “positional goods” because luxury goods signal that the owner has the ability to afford items that is directly proportionate to their income or assets. Examples of luxury goods include: Designer Apparel, Luxury Cars, Luxury Accessories, Luxury Jewellery and Timepieces, Fine Wines/Champagne and Spirits, Super Premium Beauty and Luxury Electronic Gadgets. The size of the luxury goods market is one that has recently grown after the decline it has because of the Global Financial Crisis in 2008. With an increase around the world of wealthy consumers, luxury goods have become a benchmark in many markets such as fashion and automobiles (Euromonitor International 2013), as in 2012 US$5.8 billion a week throughout the world was spent on luxury goods and the total spent on Luxury goods globally in 2013 was in exce...
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...Opportunities Worldwide, Euromonitor International, London, viewed 17 May 2014, http://www.portal.euromonitor.com.simsrad.net.ocs.mq.edu.au/Portal/Pages/Search/SearchResultsList.aspx
Euromonitor International 2013, Luxury Goods: Global Trends and Prospects, Euromonitor International, London, viewed 19 May 2014, http://www.portal.euromonitor.com.simsrad.net.ocs.mq.edu.au/Portal/Pages/Search/SearchResultsList.aspx
Euromonitor International 2014, Luxury Goods 2014: New Insights and System Refresher, Euromonitor International, London, viewed 18 May 2014, http://www.portal.euromonitor.com.simsrad.net.ocs.mq.edu.au/Portal/Pages/Search/SearchResultsList.aspx
Journal Article:
Silva-Buck, M, 2013, ‘Emerging Markets: The Global Luxury Market Growth’, CBP International Magazine, viewed 20 May 2014, http://www.cbpmag.com/emerging-markets-the-global-luxury-market-growth/
Choose several countries to enter that is suitable for the luxury market and in order to develop the strategy of the company
Veblen’s work was, and continues to be, quite controversial; however, his dissections of human behavior as it relates to social structure and consumption were far from inaccurate. Interestingly enough, it seems that his theories have even become increasingly accurate over time, as proved by the way conspicuous consumption and “Veblan effects,” have both played a significant role in changing not only the luxury fashion industry as a whole, but also in changing the image and symbolic nature of the luxury good.
Burberry today is considered one of the leading luxury brands of the word. Here is a synopsis of rise of Burberry:
“Our greatest fear is not in never falling, but in getting up every time we do.” – Confucius
Six years after deciding to be an independent public company in late 2000, Coach Inc.’s net sales had grown at a compounded annual rate of 26 percent and the stock price had increased by 1,400 percent due to a strategy keyed to a concept called accessible luxury. Coach crafted the accessible luxury category in women’s handbags and leather accessories by differentiating themselves on price, but matching competitors on styling, quality, and customer service. The accessible luxury strategy mirrors a focus (or market niche) strategy based on low costs. Coach concentrates on a narrow buyer segment and outcompetes rivals by having lower costs than rivals and thus being able to serve niche members at a lower price. Management believed that new products should be based on market research rather than on designers’ instincts. Coach utilized extensive consumer surveys and focus groups to gain insight in the market, and ultimately a competitive advantage over competition. Coach’s $200-$500 handbags appealed to both middle class consumers who now were able to afford a taste of luxury, as well as affluent consumers with the means to spend $2,000 on a handbag on a regular basis.
1. Designer handbags 2. Male and female clothing 3. Jewellery
...specific, the prices of leather goods, accessories, watches, jewelry, shoes and ready-to-wear of Louis Vuitton dropped by seven percent in 2008. Besides, Fujii takes some actions to face the challenges. For example, he sets an Internet business to follow the world trend and to enlarge the distribution channel. Also, he increases the product line to cover the children clothes and enlarges the market by opening stores in mid-size and small cities. Since Japan is still a developed country with wealthy families, the Japanese luxury market would still be a healthy and attractive market for Louis Vuitton and these challenges could be overcome in large extent.
Kapferer, J., & Bastien, V 2009, The luxury strategy: break the rules of marketing to build luxury brands. London: Kogan Page.
For one, luxury can be defined through good health. For another, luxury can be defined through comfort. To many, luxury is defined through lavish possessions such as cars or jewelry. Regardless of how we perceive luxury, there is a journey behind how we achieve it. Cartier produced an exquisite commercial to celebrate the brand’s history. With the worldwide icon, the leopard, we went through the odyssey of Cartier’s history. The commercial started with a leopard statue of diamonds and jewels coming alive which symbolized the birth of the legacy of Cartier, the start of the odyssey. Then we start watching the leopard visit significant places of Cartier’s history: China, India, and France. All these places are important to the luxury industry. After the journey across different continents, we finally arrive in Paris where Cartier was founded, where
Segmentation: Some of the important bases for segmenting consumer markets are Demographic, Geographic, benefits, Psychographic and Usage rate segmentation. Geographic segmentation is the priority of Zara. It is a global brand and its supply chain management is very much perfect. It helps Zara in getting the latest trends into stores in three weeks’ time based on consumer preferences. It’s a Spanish brand, so it would a better option for Zara to open more store in European countries. Consumers would be more interested in making their decision towards preferring Zara. It has dived its segment on the basis of gender where more preference is for women and less preference for men. It can be seen that in any Zara store there are two floor for women and 1 floor or a part of a floor for men products. For example, the store in Leeds. It focuses on women age group up to 35 years who is more concerned about having a fashionable life style. As per the psychographic segmentation, Zara consumers are more ambitious and are attracted towards fancy and trendy products. It makes products that give...
The high pressure luxury brand industry has evolved over the last few decades from a small and selective to a multibillion dollar arena offering significant potential and growth opportunity for the luxury brands that compete within its realm. With many luxury brands competing for over $225 billion (The Economist, 2009) in revenue each year it is easy to see how strategy plays an important role.
By 2002, Moet Hennessy Louis Vuitton was the world’s largest luxury products company, enjoying annual sales of 12.2 billion euros. LVMH carries the most prestigious brand names in wine, champagne, fashion, jewelry, and perfume. Upon entrance of this luxury product industry, LVMH was aware that they produced products that nobody needed, but that were desired by millions across the world. This desire in some way fulfills a fantasy, making consumers feel as though they must buy it, or else they will not be in the moment, and thus will be left behind.
-Status symbols: Sophisticated customers who value the distinctive, exclusive collection seem to value the corporate-branded version of luxury. –Philip Martiz, chairman of the board
“Despite worldwide softness in the sale of luxury goods, LVMH has cemented its position as the world’s largest and most profitable player in the category. To stay there it must keep its customers loyal and its brand strong and find new markets worldwide” (Hazlett C. 2004). That is why in its mission they state to represent the most refined qualities of Western “ art de vivre” all around the world. Their objective is to be the leader in the luxury market, continuing to transmit elegance and creativity. This poses some major challenges, the main one is to keep being the leader in the luxury market through a sustainable growth. The main problem to achieve it is the high dependency on three main countries, France, Japan and USA. This becomes a threat because if there is an economic downturn in one country it affects LVMH directly that is why.
In all reality, all businesses will, in some way shape or form, complete all of the marketing activities, even if completing these activities is not their main goal. (Dlabay 2006.) These marketing activities are product, place, price, and promotion. A business tool called that marketing mix takes all of these activities and puts them together in a way that can be used to help improve a business’s marketing strategy. Product is what the company is selling; Place is where the consumer will obtain this product; Price is what the consumer will pay for the product; Promotion is any type of communication that is intended to remind, inform, or persuade. (Dlabay 2006.) The marketing mix and the four P’s describe very well what business marketing is all about.