Nowadays, there are many brands in the market where manufacturing costs are way below the price charged. Some of these brands are Nike and Adidas in apparels, Louis Vuitton and Prada in the luxury industry, Rolex in watches, and Porsche and Rolls-Royce in cars, to cite only a few. For this discussion assignment, I will discuss Rolls-Royce and Prada.
Both brands produce luxurious items that target a specific segment of the world population which revolves around the wealthiest few for whom money isn’t an issue. For this specific segment, which is very price insensitive, acquiring these items is for prestige, luxury, pride, “a sense of status, wealth, and exclusivity” (McFarren, 2014). Customers, who purchase these items, usually do so for self-satisfaction
He even details in a book he co-authored with Jean-Noël Kapferer “the [24] anti-laws of marketing”(Bastien, 2015). Luxury strategy is more about identity, cultural forces, and taste education (Bastien, 2015). While it tends to listen to its customers, it doesn’t confine itself to solely satisfying their wants; but it sells excitement, uniqueness, surprise, self-elevation, pleasure, and recognition (Bastien,
“Luxury sets the price; price does not set luxury” (Bastien, 2015).
13. “Raise your prices as time goes on, in order to increase demand”(Bastien, 2015).
14. “Keep raising the average price of the product range” (Bastien, 2015).
15. “Do not sell” (Bastien, 2015).
Customer information, which revolves around wealthy people seeking exclusivity, is used as part of the pricing strategy. Companies listen to their customers in order to understand their needs, but they don’t let customers’ opinions dictate their strategy or their acts. In fact, they follow their own approach to how luxury items need to be.
Finally, while luxury brands tackle a specific niche, they don’t only advertise to their targeted customers, but they seek to be known around the world and to make a name for themselves which is synonymous with wealth and exclusivity. They even set themselves apart from the competition by making themselves look unique in their niche. Dare I say that they don’t intend to sell to 7.5 billion people, although they seek to be known around the world, but only to a few thousand who can afford their luxurious items?
Reference:
Bastien, V. (2015, September 20). Marketing to a high-end consumer, using the luxury strategy. Entrepreneur Middle East. Retrieved from:
People are often deceived by some famous brands, which they will buy as useless commodities to feel they are distinctive. People require brands to experience the feeling of being special. People spend their money to have something from famous brands, like a bag from Coach or Louis Vuitton which they think they need, yet all that is just people’s wants. Steve McKevitt claims that people give more thought on features or brands when they need to buy a product, “It might even be the case that you do need a phone to carry out your work and a car to get around in, but what brand it is and, to a large extent, what features it has are really just want” (McKevitt, 145), which that means people care about brands more than their needs. Having shoes from Louis Vuitton or shoes that cost $30 it is designed for the same use.
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.
A weakness for Vuitton as a brand is their limited target market and customer segment. Although their products are very accessible and attainable, they only cater to the elite individuals. The longevity of debt within the company was very interesting because these obligations can cause of inability of growth within the company (Louis Vuitton-History, 2015).
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.
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
Johnson, L. (1999). A review and a conceptual framework of prestige-seeking consumer behavior. Academy of Marketing Science Review. Retrieved on May 4, 2005 from http://www.findarticles.com/p/articles/mi_qa3896/is_199901/ai_n8843016
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.
Another reason is that the business will now cater to a new market of customers, it will also need to contend with that market’s existing competitors such as Macy’s, Bloomingdale 's, and Lord and Taylor. Stores such as these are already dominating the market, offering superior services along with their products. Furthermore, the proposal will also require that management invest heavily in promotion and advertisements to gain customer awareness. According to an article published in the Luxury Daily, a news leader in luxury marketing, the number of high income earners have decrease. Organizations must actively engage, pursue, and attract these kind of customer. In the same article founder of the Shullman Research Center stated “in many respects have to go after these people.” http://www.luxurydaily.com/high-income-tops-high-wealth-for-luxury-purchase-intent-report/ . An alternate perhaps better use of these resources is to cater more to current customers’ need which may result in an increase of market share. Lastly,
Consumerism has always been a big part of society back in the golden days. In today’s society, the ongoing debate of wants and needs are not justified by an individual’s wealth, but it is rather opinionated by the generalized public. Not only are the consumers getting caught in this mess, but many retailers are being sucked in as well. Retailers, have to stay up to date with the latest trends, to make sure they get their products across. Human identity is no longer determined by how much a person makes an hour, but by the commodities they possess. Consumers are so centralized on the materialistic items, that they forget what is more valuable and important. Unfortunately, the frivolous consumption has taken over the
Value is an integral part of marketing (Newman, 2015). If consumers are provided with goods and ideas of greater value by a business compared to its competitors, that have shown the businesses in depth market research taken in order to fulfill its consumer’s particular needs then it can create longer affiliations with the consumers due to the level of satisfaction and quality provided. Based on the concept of “Demand Chain Management” (Madhani, 2015).
Dubois and Czellar (2002) refer to luxury brands as those goods that can offer comfort, beauty and refinement. On the other hand, a prestige brand is referred to as a brand that has achieved a definitive level of accomplishment, either in the quality or performance. O’Cass a...
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.