Global luxury brands’ strategies to Fight recession
Luxury brands are actively responding to the latest economic downturn, said to be the worst since the Great Depression, racking their brains to escape the grips of the falling luxury goods market. Indeed, the hit to sales has been particularly bad as industrialized nations, traditionally the main luxury good markets, have suffered greatly. With luxury goods consumers having become more diversified by region, class and age, and an increasing number of luxury brand companies adopting professional management structures, luxury brands are approaching their |Figure 1
marketing and brand strategies in a more systematic manner than in the past.
Consumption Keywords in the Global luxury Goods marKet
Consumers of luxury goods can be divided into three groups: “absolute consumers,” “trigger consumers” and “bandwagon consumers.” The first group is comprised of super-rich global leaders with worldwide influence, while the sec-
Keywords of Consumption in Luxury Market amid the Economic Downturn Luxury goods consumers Impact of the downturn
The super rich, the top 0.5% of the population •10millionHNWIworldwide(1) • 18,000HNWIinKorea 1 Private consumption pattern •Preferencesforrarebrandsandproducts High-income earners, top 5% of the population •Highly-educatedprofessionals(monthly wageofover7.5millionwoninKorea) •Increaseinhigh-incomeearners inemergingmarkets Settingthetrendinhigh-endmarket •Interestedinexpensiveandpopularbrands •Sensitiveaboutsocialand environmentalissues
Changes in consumption pattern in the downturn
Keywords of consumption in the global luxury goods market in the downturn
Maintaining original consumption pattern •Upscalinginconsumption •Differentiationfrompopularmarket •Greaterawarenessofsnobappeal
1. “Discrete” Consumption • referenceforultraP highpricedgoods • emandfor D customizedservice
Emerging market: Conspicuous consumption •Spreadofmaterialism •ncreasingdemandforhighI pricedoverseasproducts Major market : Selective consumption • ocusingonthewhole F valueofconsumption •Risingawarenessofsocial-friendliness
2. Global New Money •Conspicuousconsumption • iversificationof D luxurygoods
3. New Elitism • aximizingthevalueof M luxurygoodsconsumption • ocusingonpublic F interestofabrand 4. Self-Comforting Consumption •Purchaseofentryproducts • iversificationofluxury D goodsconsumption channels
Middle and upper class, top 20% of the population • ighly-educateduppermiddleclsss(monthly H salaryofover4.7millionwoninKorea) Spreading popular fashion •Followingthelifestyleoftheupperclass
Saving-consumption pattern • osingeconomicconfidence L • elayingpurchaseonhighD pricedanddurablegoods • ventfulconsumption E
Note:HNWI=HighNetWealthIndividual,apersonwithfinancialassetsofoverUS$1milliondollars.See World Wealth Report 2008,Capgemini &MerrillLynch,June24,2008,.
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ond is made up of highly educated professionals who set trends in their respective regional premium markets. The last group consists of people who admire the lifestyle of the rich, and spread fashion trends into the mass market. Financially secure, “absolute consumers” are unaffected by economic downturns and maintain their living standards, including the purchase of exclusive products and brands. Trigger consumers in advanced markets tend to be conservative and are becoming more sensitive to social issues, while those in emerging markets have a growing desire to buy luxury goods as materialistic values continue to spread.
Financially secure, “absolute consumers” are unaffected by economic downturns and...