LUXURY BRAND MANAGEMENT.

SESSION 1

Luxury is hard to define, because it depends on context, culture and personal values.
However, here is the main definition.

LUXURY DEF-> Is a way of life consisting of spending sumptuous and superfluous

expenditure, in order to surround oneself with a sumptuous refinement or for the pure
taste of ostentation, as opposed to factors falling only in the strict necessity.

By extension, luxury also refers to all the elements and practices that make it possible
to achieve this standard of living.

"Luxury is the opposite of vulgarity" Coco Chanel.

It has been defined by Greek philosophers as the opposite of temperance, It means

Luxury is seen as a synonymous of bad life, amorality.

 Should we consider that Luxury has always existed?

Egyptian art, if it is not then the first manifestation, is the living memory of the
luxuriance that has come down to us.

Should we believe that modern Luxury dates back to the construction of

“manufactures” under Louis XIV and under the aegis of Colbert?

Or, that Luxury hatched thanks to the beginnings of department stores, like the Bon
Marché (1838), not only offering the customers of the goods, but arousing the dream
and the desire to buy.

ShouldwesupposethatcontemporaryLuxuryonlystartedwiththebirthof conglomerates
and its nascent industrialisation with Bernard Arnault?

To this artistic and economic history, we can add the history of fashion and jewellery,
the history of gastronomy and even the history of tourism which are key elements in
understanding luxury.

1.1 LUXURY VALUES

 Edonistic.  Beuty
 Unique  Expertise
 Desire  Handmade
 Aesthetic  Glamour
 Art  Aspirational
1.2 OLD VS NEW LUXURY

 OLD LUXURY (BELONGING)-> Price, exclusive, ownership, artisanal.

 NEW LUXURY (BEING)-> Knowledge, unique access, inspirational, experience.

1.3 WHY LUXURY IS HARD TO MANAGE?

 Hedonistic/Rare-> Hard to create.

 Hard to use (expertise)/ Hard to acquire (price)-> Hard to consume.

 Offering a unique experience-> Hard to duplicate.

 A social marker/ Differentiating-> Hard to maintain.

1.4 KEY TAKE OUTS

 There is a tension in luxury between desing (creation) and the marketing

function.

 Luxury marketing gas some specific rules sometimes opposite to classic

marketing rules.

 Luxury is not a marketing technique but some are using its codes to maximise
the perceived value of a premium product.

 Luxury consumption is driven by esteem and fulfillment needs.

SESSION 2 – UNDERSTANDING THE LUXURY CUSTOMER.

In the luxury business, the “average” consumer does not exist, hence, there is no one
size fits all luxury consumer psychology.

For 2025, the global luxury customer will come from:

 US + ASIA, who look for what money cannot buy.

 New base of emerging luxury customers looking for innovative products with
stylistic content.

1.1 STUDIES IN LUXURY.

Marketing studies are made to reduce the risk of launching a new product or category,
without them this can lead to a commercial and image failure.

Luxury brands are not created to respond the needs of customers, they are created to
create aspirations and satisfy unrevealed needs.

1.2 CHANGE IN LUXURY.

Before luxury was an industry too invasive, they made so many studies of everything.
Now things are changing, and they prefer to talk about customers and their needs.

Explore-> A new phenomenon, a problem or opportunity)

Describe-> Behaviors, situations…
Explain-> Relationship between two items as for example price and purchase.

1.3 TYPES OF RESEARCH

- Demographics, Behaviours and psychographics (personality, lifestyle or desires)

Done with, focus groups, individual interviews, online interviews…

Understanding customers, segmentation, monitoring pricing strategies.

In luxury researching it is more important the quality of the result than the sample
size.

1.4 MYSTERY SHOPPER

Send a fake customer helps brand to understand how frontline staff is towards
standards and guidelines.
SESSION 3- CHANLLEBGES OF CULTURAL CONTEXT

More and more luxury brands are owned by foreing investors and in some cases, this
can raise the question of the identity of the brand.

Notion of TERROIR is really present in luxury market, and this encapsulates both,
natural and human factors and means that the resulting product cannot be reproduced
elsewhere.

- Cultural context is crucial when regarding how to communicate with your

customers. The local perception can be completely different depending on the
cultural context.

- They have to take care due to not use wrong targets or wrong references.

Culture is related to aesthetics, religion, language, manners, education…

The real problem that marketers need to understand is how attitudes and values are
different in countries.

3.1 CONVERGENCE VS PARTICULARISM

Convergence do not erase local particularism.

Modes of consumption coexist. The consumer is a chameleon New "global" lifestyles

overlap, rather than replace, local behaviours.
It is more accurate to speak of the coexistence of modes of
consumption, sometimes of cultural mixing, than of uniformity. The
consumer is a chameleon who adds
to his practices without giving up
what, in his eyes, is the basis of his
cultural identity.

3.2 CULTURAL APPROPIATION

An individual or organization from one culture raking something from another culture
and using it in another culture and in another context for purposes foreign to its
original intention and narrative framework.

Types of cultural misunderstanding (when two or more people speak the same
language, but they mean different things).

- Misusing images and codes.

- Misunderstanding references.
 - Language based misunderstanding/ misunderstanding values.
SESSION 4- GLOBAL BRAND POSITION.

4.1 SEGMENTATION

- Determine the segmentation criteria.

- Split the market into homogeneous groups.

Socio-demographic, geographical, behavioral…

4.2 TARGETING

- Assess the interest of each segment.

- Identify target segments.

Choose one of the segmentation groups, distinguish between product target and
communication.

4.3 POSITIONING

- Define its place in the market compared to competitors.

- Define each segment marketing mix.

How to differentiate yourself? Positioning map. Kapferer´s prism.

 Luxury brands must tread carefully with customers research because they
should anticipate undeclared needs and offer them creativity.

 Segmentation helps a brand to focus their marketing efforts.

 Luxury made no or few studies before, but it is changing due to the expansion
of customers.

How to know customers?

- Build personas= buyer persona.

- Represent a specific segment.
- Synthetized behavior patterns.
- Collected data.

The power of brand is limitless, a powerful brand can command a high price where
another weaker brand might fall.

Differentiation between marks came with a clear brand positioning with help guide
every decision.
A brand is not fully one if it does not occupy a clear place in the minds of customers
who, by recognizing it, attribute meaning and value to it.

How is possible to add new segments-> Innovations.

The challenge is not to lose old customers while trying to attract new ones and make
the change understandable and credible.

A brand’s name can start telling a story, and it is crucial to think about local
interpretations.
SESSION 5- PRODUCT AND PRICING STRATEGIES.

A luxury product is bought because of the emotion that it gives, the products must
have personality.

What makes a product luxury is the humanity, the geniality that has been
implemented in it.

The brand can’t decide to make an iconic product: It is always a particular event that
gives status.

- Chanel n°5 became very desirable because Marylin Monroe said that it was the
only thing she wore at night...

5.1 SYMBOLISM

A luxury product has to be a symbolic object, the purpose of a luxury product goes way
beyond functionality, it is about tapping into universal needs but above all desires and
conveying emotions. This is why luxury brand are deeply symbolic.

5.2 PRODUCT LIFECYCLE

5.3 BRAND STRETCHING & COBRANDING.

Brand extension is vital for Haute-Couture, supposed to have a strong symbolic,

cultural image.

Risks: Blurring the core identity, reduce the quality and losing control and image.

Co-branding is useful to-> Test new ideas, modernize brand, catch new customers,
Key success factor of co-branding-> Added valie of the new product, complementarity
between marks.

5.4 PACKAGING

Packaging is not only there to catch the eye, but to add a plus to the experience, it
goes beyond differentiation.

5.5 PRICE

In traditional markets demand increases as price decreases.

In luxury markets, demand decreases as price decreases

- The demand is price inelastic.

- This is the Veblen effect: an increase in income causes a bigger % increase in
demand (the income elasticity of demand is greater than 1).

PRICE AND PRODUCT

 If the price of a luxury product is reduced by 50%, it is no longer viewed as a

luxury item in the marketplace.

 Here is also general scepticism towards luxury products sold at a low price.
They are often perceived as not authentic or as fake products.

This has consecuences:

- The price of luxury always goes up. Luxury has a dream value and should be
positioned as inaccessible.

This does not mean that prices can be increased, and demand will rise indefinitely. At
some point, a higher price will hurt demand.

UNDERSTANDING THE PART OF THE DREAM.

hose that have managed to stay successful over time have done three things:

- they have applied some form of restraint, selling less than market demand.

- they have worked to update their product offer, sometimes killing off products
that were selling too much.

- they have evolved — and sometimes veered — their marketing approach to fit
broader shifts in consumer demand and the competitive landscape.
HOW TO SET THE PRICE.

HOW TO SET THE PRICE?

The difficult part in setting price here is to know the symbolic value of the product
preferable to begin at the low end of the spectrum and then increase in successive
steps.
SESSION 6- COMMUNICATION.

 Communication is about informing, persuading and, ultimately, closing the

deal.

 There are different kinds of targets: commercial, internal and external and each
must be treated accordingly.

 Just like there are different types of communications: media and non-media
(such as PR, which plays a key role for luxury brands).

 The key to having a great piece of communication is writing a great brief!

 Integrated marketing communication is when all messages convey the same
central idea and pursue the same goal, whatever the medium used.
 Take into account the variety of means of contact between the company and
its customers
 Each means of contact must deliver a consistent message with the message of
the brand
 In today’s world, Storytelling is a key pillard within a brand’s Comms Plan :
creating content that feels aspirational and relevant to consumers.

 The Digital channel is absolutely fundamental to luxury brand’s communication

strategies : the power of social media and influencer campaigns are a witness
to that.
 Most luxury brands chose brand ambassadors whom best embody the universe
and the values of the brand (personification) and increases visibility.
SESSION 7- DISTRIBUTION

- TRANSACIONAL FUNCTIONS-> Provision of the good or service in best

conditions.

- RELATIONAL FUNCTIONS-> Create a sustainable partnership between

distributor and suppliers.

- EXPERIENTIAL FUNCTIONS-Z Allow customers to have an experience at the

point of sale.

DISTRIBUTION GOALS.

• Distributions choices should answer these questions:

 How can a business ensure that its products reach existing and potential
customers?
 How and where do customers prefer to buy the product?
 How important are factors such as stock availability, delivery speed?

To make product available in the right place, at the right time, in the right quantities.

LOCATION

Big luxury brands don't have locations on Rodeo Drive in Beverley Hills, Bond Street in
London, Ginza in Tokyo, and the Triangle d’Or in Paris because of their success. They're
successful because that's where they put their stores.

RETAIL O WHOLESALE?
CONTROLLING CHANNELS:

Here are various kind of retailers:

• Multiples chains of shops owned by a single company.

• Specialist chains
• Department stores
• Independents – a shop run by an owner
• Franchises (retail format operated by franchisee)

In Luxury, you will always find selective distribution or exclusive distribution.

Vuitton in the most exclusive brand for what regards distribution: you can’t find any
Vuitton item elsewhere than in a Vuitton store (or corner). Even perfume.

SELECTIVE AND EXCLUSIVE DISTRIBUTION

Why does luxury always have a selective or exclusive distribution?

 Putting the products of a luxury brand in the hands of an independent retailer is

exposing it to its opportunism because it could recycle them in annual sales, without
even informing the brand.

WHY USE INTERMEDIARIES?

 Lack of retailing experience  stay focused on your core business and expertise
 better use of time and resources elsewhere
 geography: customers may live too far away to be reached directly
 culture: a local retailer could be more accurate to adapt to local targets
 segmentation: different segments of the market can be best reached by
different distribution channels