1. What are the defining characteristics of the luxury goods industry in 2012? What is the industry all about today?
Today there are key defining characteristics of luxury goods industry such as pricing, quality, style, and brand reputation. The pricing of goods is based on economics, demand increases as income increases. Pricing is also determined by exclusivity, quantity availability, quality and location of the product. The quality of a product can help determine the price, but not always. Luxury goods have higher quality, which results in higher price from the workmanship, material, and labor to product good. Many luxury goods have a particular style that is unique to each brand. Sometimes other brands or companies will try to reproduce a similar item, but cannot compete with the original style and exact fit or design. This is why the reproduced products might not sell as well as the original one. Each brand has a reputation to an individual. It can come from experience, advertising, word of mouth or location. These factors will form your personal preference to whether you will purchase goods from that particular brand. It also creates a sense of status and how others will perceive you if you have certain luxury goods. For example, you seem to be wealthy if you own Louis Vuitton or Chanel handbag over an Anne Klein handbag.
2. What is competition like in the luxury goods industry in 2012? What competitive forces seem to have the greatest effect on industry attractiveness? What are the competitive weapons that rivals are using to try to outmaneuver one another in the marketplace? Is the pace of rivalry quickening and becoming more intense? Why or why not?
The competition in the luxury goods industry in 2012 is strong. The demand for luxury goods is increasing, especially in emerging markets such as China and India. Companies such as Coach, Michael Kors, and Dooney & Burke are competing with