Shanghai Tang: the First Global Chinese Luxury Brand

Topics: Luxury good, Income elasticity of demand, Goods Pages: 4 (1410 words) Published: February 11, 2011
Shanghai Tang: The First Global Chinese Luxury Brand

1. What is a luxury brand and how is it different than a mass market brand? How does one build a luxury brand? 2. What might have accounted for Shanghai Tang’s unsatisfactory early results in building a global luxury brand? What could they or should they have done differently? 3. What strategies did they use to promote the brand? What worked and what didn’t work? How did they expand the brand? Was it a good strategy? 4. How has Shanghai Tang positioned itself relative to other luxury brands? How might that improve? Is it important to be brand positioned relative to competitors?

A Luxury good is defined in economics as a good whose demand increases more than proportionally as income rises, income elasticity of demand. This makes the demand for the good change inconsistently with respect to income. The result is that a luxury good may become a normal good or inferior good as income rises. Conversely, a mass market good is a good whose demand decreases as income rises due to substitution. Mass market brands create the largest potential market by lowering costs and have cheaper prices to appeal to the largest possible market. When building a luxury brand, one must understand what these types of goods focus on. Luxury brands are built on designs and product quality. Luxury brands can be classified in to two classes; they can be a story brand, trying to sell a story, or a history brand, selling the history of the brand/designer to the consumer. Luxury brands can focus on detail and quality in their products and on high end fashion. To build a luxury brand, one needs to consider all of these areas to become successful. Shanghai Tang is a brand that is trying to transform itself into a luxury brand from its modest beginnings. Shanghai Tang has taken steps to try and transform its image from that of a Chinese Emporium into a worldwide luxury brand but has had unsatisfactory early...
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