Introduction
Luxury brand
industry once is described with its marketing strategy as anti-law marketing
strategy. Here are some statements about people's perception towards luxury
brands differentiates itself from the other industries: promotion such as
advertising is not aim to sell, it aims to enhance the brand image and retain
the brand 's equity through disparate storytelling and artistic expression;
Luxury industry is not driven by demand and supply equilibrium to adjust its
price setting strategy; Staff in luxury store is to provide interactive
consulting services instead of selling items; also, luxury brands only sell
marginal through internet.
However, in the
wake of globalization; increasing of the spending power, accessing to luxury is
no longer served for those stratified privilege groups. Some of the luxury
brands start opening up to conquer the rest of world by seeing the potential
prospect profits driven by younger generation and the newly emerging female
professionals group. As Richard J.G. mentioned in our reading: “innovation based on process
need, a restatement of the cliché that necessity is the mother of innovation”
(Innovation as Process, 2012). However, does it mean that luxury brands are
becoming vulgarizing and about to lose its idiosyncratic heritage? We are going
to briefly illustrate you with three successful cases in both luxury fashion
and hospitality industries by adopting strategic brand stretching, and stride
over the contradictions. In our individual report we are going to give a detail
explanations of those three, here we focus on the how Luxury Brands accomplish
innovative shift to achieve a so called ‘luxury democratization’ in term of
employing marketing new concepts and strategies.
Explain and Analyse
How the Luxury Industry Manage
the Market Change from a Historical Perspective
With the emergent wealthy middle class and traditional loyal high-level
consumers’ new luxury preference and consuming behaviour, it has changed the
state quo in the luxury industry significantly. Therefore it has some
implications for this industry to reassess its original market strategy. During
this time, many new organizational-level strategies are spurred to cater for
this new consumer generation and cultivate and prospective consumers as well.
Some traditional luxury companies expanded their product offerings vertically
by providing more sub-brand portfolios, while some extend their brand
horizontally by collaborating with some non-luxury brands. As a result, these
two strategies not only maintain the loyalty clientele by providing them with
the exclusive luxury products representing the social status and individual
preference, but also attract the more youth attention by giving an access to
the luxury world. According to the reading “
Innovation as Process”, “Recognize that innovation
process integrate different organizational and external factors. These factors
include individual (e.g., idea creation), groups (e.g., idea evaluation),
organizations (e.g., resource allocation and formalization of new activities),
and contexts (e.g., external power structures or collaboration partners).
Evaluating innovation requires consideration of several levels of analysis
concurrently” (Innovation as Process, 2012).
Strategies Changing in Luxury Industry
The perception of luxury goods has
shift from the past that the change of democratization of luxury make it accessible
to all vulgarization. In other words, luxury brands have changed it strategies
to increase the target of the middle classes of the society. Some brands even
decide to shift it strategies to affordable luxury to serve the mass market.
However, it could be a dangerous issue to tarnish the parent brand or the
entire brand image if the strategies don’t handle it properly: “a
solid understanding of the complex forces driving change in a given industry,
including emerging and converging trends, competitive strategies, potential
dislocations and alternative scenarios” (A Framework
for Strategic Innovation, 2002). For our individual part, we will
introduce three successful cases how each brand uses it strategies to target
different segments of customers: Armani (Winson), Jimmy Choo (Maggie) and
Inter-Continental Hotel (Josephine). The
change of democratization luxury has widen the range of offering to target to
the mass market and become less expansive then traditional luxury goods.
Therefore, nowadays have basically transform into three major types of luxury
goods: (1) accessible superpremium, for example, IHG, Starbucks coffee and
Moet, (2) old-luxury brand extension; for example, Armani, Mercedes Benz and
Tiffany and (3) mass prestige or masstige; for example, Jimmy Choo, Coach and
Victoria’s Secret.
Conclusion and Luxury Industry Future Prediction
According
to the article ‘Luxury Brand 2020, 3 Trends Reshaping, “Wider access to the luxury market has somewhat diminished the
exclusivity of luxury products” (Luxury Brand 2020, 2013). In this article,
there are two remedies for the situation we highly appreciate. One of them is
customization for
loyal elite clients, through which enables further segmentation to satisfy
their psychological needs that is to differentiate themselves from other mass
luxury brand holders. The other one we call it ‘designing localization,’ this will solve the local demands for
luxury brands that enables the global clients feel closer to their preferred
brands through adding unique local cultural icons on the product design.
In conclusion, “The businesses that can support a large degree of individualism in its
products will prove the winner in the high-end luxury segment” (Luxury Brand
2020, 2013). This
will require enough organizational agility to foresee and react to global
market changing. Yet, to keep the luxury brands' idiosyncratic discrimination
from heritage while obtain maximum market penetration is a continue topic open
for discussion in the future. Rosabeth M.K. from Innovation: the Classic
Traps, (2006): “Getting the balance right between exploiting
(getting the highest return from current activities) and exploring (seeking the
new) requires organizational flexibility and a great deal of attention of the
relationships. It always has and it will always be” (The Classic Traps, 2006).
Many recent events such as the
increasing size of disposable incomes, growing number of wealthy consumers have
changed the landscape of this specific industry. Also the implications of these
changes have demanded the luxury industry reassessing the sustainable
development strategy and implementation process. Under this globalization
context, the whole industry have to employ the new innovative strategies such
as sub-branding, collaborating and so on to maintain the loyal customers whose
consuming behavior has changed significantly. Meanwhile, taking advantages of
these new brand extension strategies, this traditional industry has more
exposure in cultivating the new fashion-conscious consumers who have an access
to the luxury products at present and become the prospective consumers in the
future.
References:
A Framework for Strategic Innovation: From Breakthrough Inspiration
to Business Impact (2002). Strategic Innovation Group, 1-20.
Innovation as
Process. (2012). Standfold Social Innovation Review.
J N
Kapferee & V Bastien The Luxury Strategy : Break the rule of marketing to
build luxury brands(2012)
‘Luxury Brand 2020, 3 Trends
Reshaping the Luxury Market’ (2013) http://www.thefutureofluxury.co.uk/luxury-2020-3-trends-reshaping-luxury-market/
Richard J. Goossen, Entrepreneurial Expect: Peter F Drucker: The
Drucker Legacy on Innovation and Entrepreneurship
Rosabeth
M K,' Innovation: the Classic Traps, (2006)
