Alessandro
Kapferer- The Luxury Strategy refer
What is the function of the object and it’s value ? What is the
price of the luxury object? The diamond is a lose stone you
find on earth, after all since ages people have been wearing
diamond .Ten largest luxury groups, the number one is
LVMH-louis Vuitton Moet Hennesy. Followed by Richemont ,
Cartier is the most prominent one amongst the group.
Heritage of eyewear making is in Italy. Then comes the
Swatch Group. And Kering, includes Bottega Venetta.
The Mass Marketing of Luxury- There are levels of luxury,
affordable luxury.
Luxury was born in different civilization. In Greece one of the
two big important civilisation was Greek and Latin , which
created the roots for modern European Culture. In Latin
eraluxury –Lux means light.
In the past, Luxury must be of the elite otherwise we cannot
speak about it. In luxury you communicate with those who
are not in target. There always was a necessary need and
desire to be associated with the elite.
The links for story telling /Luxury
-Emotional/Sentimental
-Craftsmanship
-Needs/Necessary(the money you earn, you are allowed to
spend)
-Passion
-Status
-Purpose
When people start doing things primarily because others are
doing it. The stature is called Band Wagon effect.
Particularly, what happens to people who can already afford
the products, they take a step level up , it is called the Snob
effect.
Veblen effect- Research
What are the functions of luxury :-
Difference
Self Rewarding
Quality
Contentment
Fitting factor
Social distance
Refinement
Power
Prosperity
Brunello di Montalcino-must try wine
Pens- Ebony & Ivory, It is the most exclusive wood. How does
a company declare that it is using ivory at this moment. They
are using mammoth. (Fountain ivory pen)
Salvatore Ferragamo shoes were handmade, tailor made and
expressly made for the queens and the celebrities.
BVLGARI-the rings are the best selling ones in the world.
Morgan Roadster- It is a handmade sport car built with
traditional ash woods There is a lot of value for the second
hand Morgan roadsters. Ferrari cannot be sold online , the
second hand one’s. The team of Ferrari buys it.
Ferrari P4/5 is the most unique one . The fourth Ferrari ever
made is mixed with the fifth one. Made to order. This is the
extreme of luxury.
Living in a private residential ship- The largest residential
ship on planet. Home to 165 residences in which residents
and guests can spend extensive time. Exploring the most
exotic and well travelled destinations. The lifestyle exists
nowhere else on earth.
What do you mean when you say luxury?
-Luxury is when you spend time for experiencing what is
beautiful and perfectly made.
Luxury is also about absence of vulgarity, it should be
elegant and beautiful. Coco Channel
“Luxury is defined by exclusivity and customization” Giorgio
Armani.
..Luxury is first of all everything that makes life easy
Tom Ford
Luxury is about having the time to listen to music
Bernard Arnault
You cannot influence customer’s needs. The needs are
already there in the heart. The advertisements are just
making us more aware. The thing that we can influence is the
Taste.
What makes it “Luxury”?
-Premium quality: materials and craftsmanship
-Elements of uniqueness: shortage of materials, handmade
details, limited edition
-Heritage of craftsmanship
-Design and Aesthetics: embody the personality of the
creator
-Technical Performance
-Country of origin
-Brand Reputation
-Emotional Appeal
-Creation of a lifestyle
Exclusive Service level
Ethical purchases
Old Luxury : Luxury was Intrinsic to the object
WHAT MAKES IT “LUXURY” [Kapferer]
-A very qualitative hedonistic experience or a product made
to last
-A price that far exceeds the mere functional value
-Tied to a heritage , unique know-how and culture
-Restricted distribution (purposefully)
-Personalized accompanying services
-Representing a social maker – making the owner feel special,
with a sense of privilege.
What makes it “luxury” [Kapferer and Michaut]
-High Quality -Minority
-Expensive -Rarity
-Prestige -Personalized Service
-Pleasure -Heritage
-Beauty -Timeless
-Fashion -Art
-Dream -Innovation
You need to sell products with the concept of dream.
What makes it “luxury” [Brun]
Real Luxury..
-Is the anti-consumerism- does not get technically
superseded
-Has handmade details
-places hedonism(self indulgence) before functionality
-Appears both perfectly modern and laden with history
-Is Not Access
-Is ethical
-is “positive” (in that it helps somebody to be happier)
-Is multi-sensorial
-Requires (customer) knowledge to be truly appreciated
-Always places quality first
-Due to (natural or artificial) scarcity ,conveys the idea of
inaccessibility
Parfums De Rosine was the first designer to think of making
fragrances
Fashion Victim- a person who does not care about the quality
but only of having a particular brand’s game for show off.
Typically if you are a quality lover, you will not look at the
brand.
Why is luxury desirable?
Luxury as a personal affair [I don’t care about others]
Running away from[I differentiate from the mass]
going towards [ I belong to an elite]
Perception depends on your role
Different evaluation of the same luxury experience can
depend on personal attitude but also on whether you ask the
purchaser (the person who pays for the product), the actual
user or the influencer (i.e. intermediaries)
Apple does not want the snob effect but a band wagon. The
reason they launched the I pod with the white earphones.
Social marker.
Social markers-“style symbols”
Luxury in mature economies is undergoing a shift in
paradigm:
-From opulence to excellence
-from loudness to intensity
-from visible to hidden
-from object to experience
-from status symbol to style symbol
-from total look to mix& match
-from passive to proactive
Ferrari Tailor made is the exclusive new personalisation
programme from Maranello.
What is going on in Luxury ?
-A new paradigm
-Shorter life cycle
-Extreme personalization
-A new democratization
-attention to social and ethical aspects (with internet
technology the company needs to know that everything is on
the net)
-Internet and digital technologies
ex- Hermes guitar case, made on special demand.
A NEW DEMOCRATIZATION
When you have the money, a person goes for extreme
personalization.
Trading up is the New American Luxury. We are facing a
second wave of democratization , where luxury is now
accessible by even more people. The market of luxury is
expanding a lot.
Armani, Vercase Bulgari have their brand extensions , by
opening up hotels.
You don’t pay for the food you eat at luxurious places, you
pay for the experience.
How are brand owners reacting?
-Increasing the control over the Supply Chain
a)Near shoring
b)Vertical integration with suppliers or long term
agreements to secure raw materials
c) Reduce licensing
d) Strategic Alliances
e) Growing international presence
[Check your market]
f)Exploiting “parent advantage”
g) Green and ethical supply chain
Brand portfolio brings to “parent advantage”
Revamping heritage
Hermes launched an exclusive Chinese designed and
manufactured line name Shang Xia in china. It was strictly
designed for the Chinese market.
See now buy now
The SNBN is a revolution for the market and for the fashion
shows business.
MANAGEMENT AGENDAS
-Manage growing complexity
-keep control of quality
-manage consumer spend volatility
-Scale back inventory, while keeping service level
-manage supply chain disruption risks
-Increase Internet presence +manage digital communication
-Manage expenses and improve cost control (measuring
hidden costs)
-Exploit simple IT solutions to Increase visibility and control
-Increase SC flexibility
-CRM [Customer relationship manager]
-Emphasise personal selling
-Event driven marketing