The global luxury goods market has today, reached a peak. “We estimate the market of new luxury products and services to be $400 billion, growing at an annual rate of 15 percent” says Silverstein.
According to Keane & McMillan (2004) “spending on luxuries (in Britain) has increased by 50% in the last decade, compared to a rise of 7% on basics.”
The concept of luxury has undertaken a huge transformation and it is still changing over time. It involves a constant shift of consumers' needs and wants. In fact consumers ask for consistent quality, innovative design and superior service.
Moreover luxury brands have to be more competitive and aware of customer needs. This implies that companies must adapt their brands by refreshing and extending their ranges, to offer more affordable products.
Is this evolution influenced by a change in consumer behavior, or the communication strategy of luxury brands?
In this assignment, we will study the market evolution of luxury products and services, and then analyze who the new consumers are, and what their expectations are. In the last part we will analyze the communication strategy of luxury brands.
Luxury isn't what it used to be. “Luxury used to mean very expensive products in limited supply, with great demand. Only a few people who had a lot of money or access could afford luxury items” (Klein, 2005). Luxury items were very expensive thanks to the quality, the features, and the specifications. These products were bought by comfortably off people who wanted the most.
“Luxury is more often than not defined as those special qualities, features and attributes that are intrinsic to a product”. (Danielle Veldre 2005)
Pamela Danziger (2004) argues that “old luxury was about things”. Danielle Veldre (2005) agrees and talks about “stuff”. Moreover Pamela Danziger explains that the new concept of luxury is a recent phenomenon that is more accessible, contrary to the old luxury which used to be a heritage brand, and affirms that “Heritage and prestige are the hallmarks of many luxury brands, some of which are hundreds of years old. The enduring quality of a particular luxury good can be part of its appeal, yet consumers – particularly young, fashion-conscious consumers – want a product that looks fresh and unexpected.”
[...] Silverstein and Fiske (2003) present the new consumer's needs and describe the four ‘emotional pools' to better understand the clients and their needs: - Taking Care of ‘Me' - Questing: experience that challenges them and helps define who they are in their own eyes and those of others - Connecting: attracting mates, spending time with friends, and nurturing family members - Individual Style: demonstrate one's success in life and express one's individuality and personal values Do companies adapt or change their communication strategies with the entrance of new consumer in the luxury market of goods and services and their new expectations and needs? [...]
[...] This democratization is classified by Silverstein and Fiske (2003) in three types of goods: Accessible super premium: Products which are the most expensive ones in their category but affordable by middle market consumers; this is ticket items”. Old-luxury brand extensions: These are brands, which are “lower-priced version of goods that have traditionally been affordable only by the rich”. That means that brands extended their range to attract more people. Mass prestige or “Masstige”: It is from being the highest-priced product in a category” This is a mix between mass and class; less expensive than super premium goods. [...]
[...] Cultural and societal shifts like new family structure, the role of women, and more money to spend, led to a democratization of luxury. Moreover people's needs and expectations have changed. Today they buy luxury products and services for different reasons, such as, to impress others, self direct pleasure, self gift giving, and of course for quality. This drives companies to adapt their marketing communication strategies, by using an Integrated Marketing Communication (IMC). In fact Luxury brands use tools such as advertising, public relations and sponsorship. [...]
[...] We note the entrance of new consumer groups, especially young people, in the evolution of the luxury global market, and observe that the consumer's behavior and expectations have also changed significantly. There are a few distinctive groups of consumers, who appeared; principally the young people, the baby boomers and the ‘old' people. “Many of today's luxury shoppers are not about to wait for the good life. Shifting incomes and demographics have placed tremendous spending power in the hands of young people” (Veldre, 2005). [...]
[...] October Spotting Trends With Promise. Business Week. Mick, D.G & Demoss, M Self-gifts: phenomenological insights from four contexts. Journal of Consumer Research. Moore, Christopher M The Burberry business model. International journal of retail and distribution management. Roth, W.E Consuming to achieve affective goals: a framework for analysis with application. Advances in Consumer Research Saller, Syl. Summer 2004. Trading up : The democratisation of luxury. Market Leader. Shu-Pei Tsai Impact of personal orientation on luxury brand purchase value. Silverstein, Michael J. & Fiske, [...]
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