Customers find value in rational, emotional or symbolic aspects of luxury items, but when asked very often refer to superior quality, outstanding materials and craftsmanship (which is a rational type of value). Do luxury fashion brands still reflect these values or are they just efficiently communicated?
Who, in a luxury fashion value chain is responsible for value adding? Where does it lie? In production or in a communication sphere? Is it designed maybe for effective distribution?
Dear Cecilia,
thank you very much for your VERY interesting and insightful comments. Food for thought...I'm now in the process of building the customer e-questionnaire about these global value chains in luxury goods sector, but I start to question the sense of this....well, I have to reconsider this very deeply....again thank you very much,
best regards from Poland
I believe that many parties create value in the fashion luxury sector. First of all, quality of the product add value, then the marketing and promotion of the seller also add value to the fashion luxury sector.
While we all recognize luxury, definitions are hard to agree on, some define luxury by a list of attributes, others by price, and still others by exclusivity of distribution. The issue has become more complex as corporations took ownership of many luxury brands, and as lower price points and broader distribution put ownership of many luxury items into the hands of the masses. In economics, a luxury good is a good for which demand increases more than proportionally as income rises, and is a contrast to a "necessity good", for which demand increases proportionally less than income. Luxury goods are often synonymous with superior goods. The global luxury goods industry, which includes drinks, fashion, cosmetics, fragrances, watches, jewelry, luggage and handbags, has been on an upward climb for many years (others include the luxury categories of automobiles, travel and leisure services, boating and yachts, fine art and collectables).
The value of the global personal luxury goods market was 212 billion euros and is estimated to be worth about 217 billion euros in 2013. Although the technical term luxury good is independent of the goods' quality, they are generally considered to be goods at the highest end of the market in terms of quality and price. The United States has been the largest regional market for luxury goods and is estimated to continue to be the leading personal luxury goods market in 2013, with a value of 62.5 billion euros.
As the global economy recovers, the global luxury industry is growing accordingly. Not unexpectedly, growth is disproportionately focused on the Asia Pacific region. Although economic growth has lately slowed in much of Asia, this is to some extent offset by the rise in income inequality. Thus, income available to upper income households is growing faster than overall income. The near term future of the luxury market will depend, in part, on how the global economy evolves.
During the last five years, an expanding global middle class in emerging markets has supported growth in the luxury sector and is projected to continue fueling growth through 2018. According to Euromonitor, the emerging markets of Asia Pacific, Latin America, and the Middle East and Africa accounted for a combined 9 percent of the luxury market in 2008. This figure leaped to 19 percent in 2013 and is projected to grow to 25 percent in 2025, driven by the combined forces of urbanization, economic development and the love of luxury. By 2018, China is expected to be the second-largest market for luxury goods, following the U.S. and surpassing Japan due to the increasing numbers of households with annual gross income greater than US $150,000 to $ 3.5 million. Following China, Brazil is a promising growth market for luxury goods with its surging middle class. Euromonitor projects the Brazilian population of annual gross income greater than US $150,000 to expand 46 percent by 2018 to 1.4 million people.
Africa provides a longer-term growth opportunity for luxury brands. Sub-Saharan Africa is second only to Asia Pacific in growth of consumer markets according to the Euromonitor report, albeit from a very low base. While the region is still considered ‘frontier’ and isn’t likely to supersede the BRICs soon, it is worth noting that Nigeria is one of the fastest growing markets for French champagne and digital televisions.
The developed economies of the U.S. and Europe stand to benefit from the emerging markets’ expanding middle classes, who are traveling to the world’s capitals and boosting sales of luxury products. For such tourists, developed markets offer superior product selection and availability, as well as advantageous price comparisons due to high import taxes in the home countries. In 2012, according to Euromonitor, the U.S. was the top country in terms of incoming tourism shopping receipts with approximately $15 billion. Fifth-ranked France, at about $8 billion, was a favorite destination for luxury shopping, especially for BRIC travelers. Over the 2012-2017 period, Euromonitor projects China to lead in outbound tourism expenditure growth, exhibiting a 15 percent CAGR. India, Vietnam, and Taiwan are expected to show significant increases as well.
Compared with the rest of the consumer products industry, luxury goods have been relatively insulated from recent economic distress. Accordingly, the luxury sector has outperformed the consumer goods M&A market as a whole. Both trade players and financial investors are seeking opportunities that support their growth objectives, provide greater control over the value chain for their products, and deliver cost and revenue synergies.
Three main trends are driving deal making in the luxury and premium goods sector:
• Globalization
• Integration
• Consolidation
Finally, I would say that the following are those that add values to luxury goods: Name of the company, designers, quality, among others.
the quality and when the customer finds the that the performance exceeds his expectation, and he got delighted.
Dear All,
thank you very much for your comments. You are great :)
To me quality matters, but sometimes I feel that - especially in apparel goods, it simply does not exist - it is just a brand, that people buy. So everything matters (design, quality, brand, following the crowd - so called bandwagoon effect), but probably the proportion of these buing factors and values behind it depend on the type of luxury goods and the money disposal...
When we take this prognosis of rapid expansion of this industry as realistic, then the quality will probably be even lower and luxury will lose its allure, as it will be not rare anymore, what do you think?
best regards
Beata
Dear Cecilia,
When you say that luxury products are available for the crowd, they are no longer a luxury. Or rather, can be in many ways but perhaps not on what matters most. Let us not forget that the luxury creates a "natural" hierarchy of people. This hierarchy (social differentiation) can be explained by the symbolic relationships. Are such symbolic relationships are what really add value to this market, rather than characteristics of the product itself (which become secondary) such as durabilidadade, quality, comfort, etc. ..
I think the added value in this market, then passes symbolic criteria such as the ability of the article to discriminate against people, to differentiate them socially, to show that they are part of a particular group (social class - mainly - but can also be some other type of social aggregation), or feelings that indicate symbolic values (ability to display, ability to take you to the top of the pyramid symbolic of social differentiation, etc ...). The social hierarchy is able to differentiate people, but also point out its similar, their social peers, which is an important thing too. Personally, I think the symbolic feelings aroused by such products should be further investigated. For example: archetypes that invoke these products? Social representations which they cause in those who use them and those who do not use? There yet (I was forgetting) of issues libido and unconscious relations that permeate consumption (especially luxury) and how all this relates to our psyche.
As for the point that market lose its "charm" I think this is nothing but only questions estritu sensu market, designer, price, quality, etc, etc, etc ... but for all those things which I have spoken above. So it's more a matter of how to capture such feelings, desires and representations evoked by this kind of product or article.
I think this should be further explored by you, Beata, that the intrinsic characteristics of goods or articles.
I warn them (Cecilia and Beata Stępień) that despite daring to make that comment, I'm not an expert on the subject. It's just my particular way of seeing this question.
Regards,
S.
Dear Sergio,
I appreciate what you have written, it's very proffesional and interesting comment...
What i can see from answers you gave here , my dear colleagues, it circles around symbolic and auratic values the luxury items have...or - to be more precise, the brands that communicate such treats...
I wonder if this can be proven that symbolic and social values of luxury items are those that
matter the most, and they are not only communicated efficiently by brand owners, but also reinforced by customers, while rational reasons of purchase lose on importance with the growing consumption in this sector....
what do you think?
best
Dear Beata,
Probably some of the symbolic elements and aspects that are raised in my post already, somehow, those used in communications products and brands. Communication should be reinforcing these points. Remain to know exactly what points and to what extent. I started to smile writing this because I think this will be quite complex l0l.
But I think a controlled test done with groups of people who will have their impulse buying motivated by rational criteria and groups motivated by more subjective and symbolic criteria. This experiment should be very well designed, certainly, to capture these aspects and be able to differentiate the groups, by some measure.
I was about to say goodbye but it occurred to me otherwise. Perhaps a survey of buyers of the luxury market to try to understand what motivated the move to buy. Again, that would be very well designed to achieve capture the subjectivity of which we spoke earlier.
I do not know what's going to think of ideas. But to prove it, we have to test the hypothesis somehow.
greetings,
S.
Since ancient times luxury goods have always been associated with wealth, exclusivity and power, describing that the original meaning makes reference to anything sumptuous or expensive.
The colours and features of the clothes worn indicated the social and political classes of the people and expressed the power of the person who wore them, these have not changed that much, in fact wearing luxury and branded clothes automatically leads to the image of a certain social and economic position in the society supposed to be held by that person, or in other words lends prestige to the person
Nowadays, luxury fashion sector has an important role in terms of economic and social influence in the society. The global luxury fashion sector is estimated to be around US $ 130 billion with an annual growth rate of approximately 20%. Furthermore, it significantly contributes to the national economies of some countries; in fact it is one of the most prominent industries for example in France, Italy, Spain, USA, China and India
since ancient times luxury goods have always been associated with wealth, exclusivity and power. They elaborated further, describing how the word “luxury” is derived from the Latin “Luxus”, a word that the original meaning makes reference to anything sumptuous or expensive. In ancient times the colours and features of the clothes worn indicated the social and political classes of the people and expressed the power of the person who wore them. Today the things have not changed that much, in fact wearing luxury and branded clothes automatically leads to the image of a certain social and economic position in the society supposed to be held by that person, or in other words lends prestige to the person
Nowadays, luxury fashion sector has an important role in terms of economic and social influence in the society. The global luxury fashion sector is estimated to be around US $ 130 billion with an annual growth rate of approximately 20%. Furthermore, it significantly contributes to the national economies of some countries; in fact it is one of the most prominent industries for example in France, Italy, Spain, USA, China and India
Find out more from UK Essays here: http://www.ukessays.com/essays/marketing/branding-strategies-within-the-luxury-fashion-market-marketing-essay.php#ixzz3GYJ2k0zv
hello Cecilia,
Certainly we have a conceptual issue here. The concept of luxury that worked was to articles, products and services to form a social hierarchy and establish differences between people. Can be applied to other aspects of life such as beauty, education and money. But in short, the concept of luxury which I used are loaded economic influence, to accomplish it, in whatever aspect of life is.
Our colleague Krishnan also explained some of that vision of a very clearly in his post.
But I understand your concept of luxury and appreciate your ideas.
Very grateful for the thought-provoking dialogue and always smart on their part.
With admiration, greetings.
S.
hello Cecilia,
It was an interpretation from the conceptual differences. You worked with the vision of merchandising. I used an economic and social concept. My vision, admittedly, is fraught with a bit of marxism and an economic and social criticism.
Accept my sincere apologies for putting their name on words or ideas that were not his. I'm sorry.
A fraternal embrace,
S.
Hello,
Dera Sergio, thank you very much for ideas of experiments - this will be challenging to construct since it requires prior grouping into these customers finding value in rational aspects and those who appreciate symbolic or social values more. The problem remains that these are perceptions, so we can have people claiming that rational things matter, but in fact they act emotionally and value symbolic treats...What I think that Cecilia implied, (at least what I started thinking after reading your insightful comments Cecilia :) that luxury goods are quite complex when it goes about the value proposition they communicate and deliver. Many of these values are perceived subconsciously...
well, that's a real challenge for an economist, (who I am from the background).... dealing with measuring emotions is fascinating but very soft and dificult to measure....
but who says it will be easy...:)
any ideas how to quantify emotions underlying the luxury products' purchases?
Dear Beata,
Actually it will not be easy :)
Our friend Cecilia made some interesting observations. I think that incorporate them can help build a richer instrument.
But rethinking here, Beata, maybe we can abandon the idea of groups and try to research what people think (rationality) and feel (emotion) when buying a luxury product.
Thinking here, maybe it could be done in a playful and entertaining way (not even ask me how l0l) as a part of the selling process, maybe. Addressing the customer immediately after each purchase you might be able to capture their spontaneity (spontaneous opinion), as suggested by Cecilia. Who knows Cecilia have any suggestions for us as research. Maybe it's something in that direction she would send you.
As a way of measuring so I thought of using a Likert scale, both for the feelings as to the rational arguments too (Cecilia also spoke well of it competently). So that would be an instrument that exploits reason and emotion to try to measure which of the two aspects impacting more (or how these two aspects correlate, actually). Anyway that would be something that would leave people and the will to capture their spontaneity as close as possible.
I would like to learn more, knowing your opinion and Cecilia too.
My compliments,
S.
Dear Cecilia and Sergio,
thank you very much for your hints...I will definitely use them while planning this survey...
best regards
Beata
Hello Beata,
It was just a joke when told not to ask me (at that time) as do research in a fun and entertaining way, if this is a valid option for you.
Anyway success for you in this work.
If I can contribute something, feel at ease.
Brazilian greetings,
S.
Sergio,
usually i try to have as much fun as possible... also from the research :)))
you did contribute already, but I will bother you more, when I ask a question next time
all the best from Poland
Beata,
Grateful for the pleasant conversation. Success !!!
See you later.
S.
The defining characteristic of luxury is in the communication sphere. Erving Goffman(http://en.wikipedia.org/wiki/Erving_Goffman) argued that people use expressive equipment to show others the desired image they have of themselves. Luxury has no meaning without others' perceptions of the value of the things we own. A $2.5 million auto gets you from point a to point b. Nevertheless, this car is only a luxury if there are many more people around who wish to own it, cannot afford it, and envy the person who can. Luxury items we own fall within the communication sphere of symbolic interaction theory. The items we own are a statement of who we propose ourselves to be on the public stage. Therefore, the value of luxury is in the projection of personal image and personal brand onto others. Moreover, luxury is about individual differences gained through the combination of things owned that are perceived to be exclusive and hard to get.
Luxury fashion retailers should consider the areas in which they can credibly be seen as an authority and create quality content that allows them to strike a balance of commercial integration to gain trust from their target audience. In addition to meaningful content, retailers should consider two addition truths: brands are part of a broader cultural context and there is a single brand experience between online and offline
http://www.luxurydaily.com/value-beyond-the-product-is-a-priority-in-fashion-retail-nrf-speaker/
Dear Reginald,
tahnk you very much for this intriguing comment, in many cases you are absolutely right,
but..... if we decide that the value of certain items (being a luxury or not) is constituted only by other jugments... what about our own perception?
Dear Krishnan,
thanks a lot, that's another VERY HOT topic worth exploration... new distribution channels that add value to the items...but at the same time they can dissapoint the more old - fashioned customers...
Dear Cecilia,
there are still many people (well, at least i hope so) that purchase luxury items for their beauty and excellence and with no interest in others' response to this...
Even though this group of customers does exist and maybe the numer of them is rising, but not so rapidly as the purchases for conspicous reasons... While for the second group following the crowd (but under the flag of sophistication and luxury) is the main reason to buy, then many from the first group, just by observing this trend, can simply decide not to buy the items the crowd is purchasing. Are they a snob herd then ???
Or maybe within the first group are just artisitc souls (like you :) and they simply do not care what is going on around, they are just interested in the beauty, design or unique quality... I do not know... I'm asking myself these questions... or maybe we are dr Jekylls and Mr Hydes, with different attitudes towards different groups of items, or our purchase intentions are driven by our knowledge...
thank you very much guys :). I was not aware that men have even noticed sth like FTV...
I wonder what kind of value we can put this to; emotional, hedonic, or enhancing social status....
well, I have to start watching this :)
I remain convinced that what creates value in the fashion luxury sector is the pursuit of social status. Objects owned, however, are the manifestation (artifacts of reality) of a projected self-image a person wishes to show the world.
I think to compare luxury to the aesthetic beauty of a priceless work of art, say The Mona Lisa, is a misconstruction. Can one person truly own The Mona Lisa?
Luxury, therefore, is in having what the elite has and the elite is constantly changing its mind. Taste in luxury items change and the trend setting elite have the power to determine luxury and the items which represent luxury.
If you follow luxury brands, their birth and decline tell a story of social interaction led by the elite. Merchandisers pay star athletes huge sums of money to indorse their products for this very reason.
In American basketball, Chuck Taylor's converse (now about $30US) was the rave in the 1970s and early 1980s. Then came Air Jordan shoes. Although converse is still on the market, young people pursuing luxury brands don't perceive converse shoes as a luxury item, which it once was. Young people wearing Air Jordan shoes (now about $120US) feel they are members of an elite club.
Each money spending industry ( games, computers, fashion etc.) is primarily oriented to young population.
Hello,
sorry for late response, i was away and busy with exploring this luxury sector - but only as a researcher, not consumer, regretfully ;)
thank you very much for touching another areas - buyers. Luxury buyers can be of different age. To me it depends of what of luxury products/ services we think - can we say that the bigger the price the older the buyer? Young generation is a very good marketing target since they are quite easy to manipulate, but they are mainly masstige products' buyers - what do you think? They need certain icons to follow, but are these heros/ celebrities/ actors ect. value creators or the just help to recal the brand?
I wonder what are your opinions
Very interesting and interesting issue.
My reflections. Sorry for the little English.
For long-term prospects are very important to the quality of materials and quality of tailoring. A positive result when it exceeds all expectations of consumers. Then the customer makes a purchase with confidence. And especially when this effect is achieved without high-profile brands products.
People are willing to pay for quality products, but only if reasonable cost. The issue of pricing is not very simple. With enough sales high price allows the producer to invest more in their products. Create a greater variety of product range, to develop technologies and their brand.
Such an approach will have a positive effect in the long-term brand and take market share.
Thank you for your interest.
LVMH is the only luxury goods player with two strong category "legs": a very strong position in Leather Goods with Louis Vuitton, and an equally strong position in premium Wines & Spirits, with a vast portfolio of major brands, including Dom Pérignon, Moët et Chandon, Veuve Clicquot and Hennessy. These two divisions provide around 80% of group operating profit and about 95% of net cash
http://www.luxesf.com/wp-content/uploads/2009/10/LVMH-King-of-the-luxury-jungle.pdf
https://www.researchgate.net/publication/305887180_Beyond_the_Border_Yellow_Goes_International
Article Beyond the Border: Yellow Goes International
Formula: Performance+Perception
An important element of the strategy is having a portfolio—particularly a diverse one—of brands.. Companies with a diverse portfolio created 14 percent more value than companies with a single brand. Companies present in multiple product categories created 33 percent more value than companies operating in a single category. Companies that predominantly focused on retail distribution or had a healthy mix of both retail and wholesale (less than 2/3 of sales concentrated in either retail or wholesale) created 45 percent more value than companies with a predominantly wholesale model. Most importantly, companies that rang up a large portion of their sales abroad created 167 percent more value than companies that didn’t.
Perception has two dimensions—brand fundamentals and the narrative. The fundamentals provide the foundation for building and maintaining growth momentum—brand health, intellectual property, talent, and the leading-edge capabilities in areas like design, merchandising, digital, and M&A. These elements provide the company’s creative engine. Sustainable growth requires managing this momentum in a measured and disciplined way so that overexposure does not destroy long-term brand equity for the sake of short-term profits. Winners anchor growth management in a strategic roadmap with precise guidelines and activities to achieve their aspirations and create value, and they invest in building the brand, managing talent, and increasing managerial discipline. The other dimension of perception is the narrative, or the company’s story. Fashion companies show and tell this story in every runway show, window, and floor display. The narrative includes the value that the brand communicates and supporting messages conveyed to investors, partners, the media, employees, and customers. The narrative forges the emotional connection that brands need to sustain loyalty and growth.