Luxury good Essay
It is universal truth that luxury brand industry is still booming even during financial crisis because today’s people have the right mind-set that luxury products are purposeful and well thought out. In other words, they want to show off their wealth and personal status. Main Forces The Macroenvironment Facing The Luxury Brand Industry Analysing the macroenvironment facing the luxury brand industry, there are demographic forces, economic forces, cultural forces and technological forces. 1) Demographic Forces.
Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation and other statistics “Principles of marketing” (Kotler, Adam, Denize and Armstrong, 2008, p. 89). Age It is learnt from the case study that generation Y is so important to luxury brands. The main reason is that most of them are single people with single incomes. So, their spending power is really higher, compared to generation X. Thus, recession also does not affect them much. As a result, generation Y can be considered as a confident segment that prefers to spend over saving.
Moreover, they are brand loyal and feel personally connected to their choices. And, they get the information from the social web like Facebook and Twitter as well as from the fashion-forward television series Gossip Girl (Caines, 2009). In addition, they have been attracted by those Hollywood stars like Emma Watson, Rachael Taylor, Kristen Stewart using Burberry, Louis Vuitton, Chanel, etc. (Case Study). Therefore, it is understood that the international luxury market is made up of young affluent citizens of the world. Location.
According to the “Luxury Fashion Branding” (Okonkwo, 2007, p. 73), a quarter of the world who are using luxury goods are Japanese. And, most of them are over fifty years old who are the centre of the Japan’s wealth. They are more willing to buy the luxury brands without hesitating. Moreover, Asians are very enthusiastic to sample for new things and prefer to buy the best quality because they acknowledge Western brands as high quality. After all, the most important reason to have the designer brands or luxury brands for them is for their personal status. 2) Economic Forces.
They consist of factors that affect consumers buying power and spending patterns “Principles of marketing” (Kotler, Adam, Denize and Armstrong, 2008, p. 89). In fact, both of the power depends mainly on the personal income and country economy. Based on (Yann Truong, 2010, p666), Yann Truong said that lower and middle class consumers are more interested in luxury brands due to the global growth of disposable income. Indeed, the buying power heavily depends on the income. The consumer income reflects their lifestyle and living standard. It means that the more they earn, the more they spend on luxury products.
That’s why, it is studied that the marketers are observing the changes of the economic trend every second in order to grab the opportunities. 3) Cultural Forces It consists of society’s basic values, perceptions, preferences and behaviours “Principles of marketing” (Kotler, Adam, Denize and Armstrong, 2008, p. 89). “Brand Equity of Luxury Fashion Brands Among Chinese and U. S. Young Female Consumers” (Jung and Shen, 2011, p. 55) explained that Confucian philosophy is deeply rooted in China and Chinese people are too obedience to theirs superiors for social harmony.
Therefore, China consumers have a very strong respect for authority compared to the United States consumers. As a result, Chinese are more likely to be influenced by the celebrities and opinion leaders. Furthermore, their imitation of celebrities’ lifestyles is quite high, and their purchasing decisions are strongly influenced by the celebrities. Thus, business people are using the celebrities to advertise their brands in the market. 4) Technological Forces They affect new technologies, creating new product and market opportunities “Principles of marketing” (Kotler, Adam, Denize and Armstrong, 2008, p.
89). It is undoubted that the technology plays as the most powerful force shaping the luxury brand industry. Everything we use nowadays exists because of the technology. “Luxury Fashion Branding” (Okonkwo, 2007, p. 179) indicated the impact of the internet on the luxury brand industry is mind-blogging and it could change consumer behaviour and the way the company operated. Technology introduced us with the internet, internet banking, credit card and online shopping. The online shopping become very popular since the consumer only needs a few clicks and a few minutes to buy the desire brands.
As a result, E-retail has become the essential sales channel for the luxury brands to sell their products online. Clearly, both the consumers and the luxury brands have a lot of benefits because of the technology. Providing up-to-date information, customers can save time not to visit many outlets when they want to get something, can make the products comparison at home and they also feel very convenient and trustworthy to shop online are a few benefits consumers can enjoy because of the technology. Factors Influencing The Increase In Younger Consumers’ Interest In Luxury Products.
The main factor that greatly influences young people’s interest in luxury brands is Internet. Nowadays most of the young people are wasting almost half day of their time on the internet. The first thing they do in the morning is the checking their Facebook profile or email. That is the proved that internet is very popular among young people. Those young people are using Facebook or Twitter every day to communicate and share the information with their friends. As an example, a 20 years old girl bought a Kate Spade bag and posted it on her Facebook.
Then, all of her friends or who look at her Facebook profile saw the bag and realized that this brand is called Kate Spade from New York, and then they will buy the same bag or the same brand. This is how internet could speed up younger consumers’ interest in luxury brand. Furthermore, some people like to post their favourite actors or actresses’ photos on their Facebook, like Kristen Stewart who is the actress of the Twilight, wearing Camilla & Marc dress when she attended the film’s Paris premiere. Immediately, her photo wearing that dress was on Facebook and some other blogs.
After a short while, the company received the high demand for that dress (Caines, 2009). Similarly, the brand named Billabong also received the high response for its Hannah jacket from the customers by uploading the Stewart photographs on internet. In the photographs, Stewart was wearing the Hannah jacket and soon the company received sell-out-orders for that jacket when the Twilight fans saw the photographs (Caines, 2009). Another factor makes younger consumers interested in luxury brands is magazine. According to the (Caines, 2009), 18 to 27 years old people have been influenced the luxury brand by the magazine.
In other words, they love to read magazine rather than the traditional newspaper. Then, they browse through who are at where and who are using which products. The final factor that young people are interested in luxury products is peer pressure. They want to compete with each other and show off among their friends. But, of course, there are some young consumers who want to get high quality with gorgeous design for their personal status. As well as, they have admired the brand’s craftsmanship “Innovative Tokyo” (Fujita and Hill, 2005, p.26).
Conduct secondary research to find out the reasons for the growing interest in fake luxury brands and ironic purchasing among young people The fake luxury brands exist because of the consumers’ appetite for real luxury brands. And, another reason is that young people cannot afford the genuine products. So, they just buy the replica things like LV and Gucci although they know that those products are fakes and in poor quality “Why Do Consumers Buy Counterfeit Luxury Brands? “ (Wilcox, Kim, Sen and Sankar, 2009, p. 248).
One of the Los Angeles designer also mentioned that “It is completely opposite from 10 years ago. Everybody is proud to say they got an off-price deal or a knockoff” (Smith, 2000). It showed that consumers are proud to have good quality replica products and even think that they are resourceful. In addition, they even spread the words to their friends that they could find the quality fake goods easily. And, Smith (2000) indicated that “22-year-old woman not only could buy a replica Kate Spade bag with the bargained price of $35 but also receive the compliments on that bag”.
It is obvious that nowadays, majority of young ladies buy only fakes and they do not care about buying a fake Kate Spade bag as long as it has a label. Based on Smith (2000) “11-year-old daughter ask her mother to buy a Kate Spade handbag for her birthday present and the mother bought two fake bags instead and feeling sure it would be enough”. Moreover, Smith (2000) also expressed that “Using of expensive luxury handbags at school become so popular among 10- to 14-year old girls” said by one of the school officials. The above paragraphs explain the difference between the genuine goods and the fake goods.
Although the fake luxury brands are cheap and poor in quality, they still have many advantages. In fact, they help to reduce the burden of the parents since the real brands are expensive. On the other hand, they give parents the other options because buying real brands for young children is the indirect way of spoiling their attitude and behaviour. Most importantly, the replica luxury brands could satisfy the children and make the both party happy. Some young shopper said that “With a luxury bag, you’re bored of it after one season” according to “Counterfeiting Exposed” (Hopkins, Kontnik, Turnage, 2003, p.49).
It is true that some consumers might think that they would not pay thousands of dollars on genuine brands when the fake brands could be bought easily with their bargain purchasing power. They could satisfy their needs with the fake brands and most importantly the quality of the fake brands are improving like Korea made Lousi Vuitton called AAA quality, and then they become more authentic looking. In addition, consumers could easily change to other brands or designs due to cheap offer. In summary, the consumers are continuing buying the fake brands although they know they are buying the replica products.
Aside to the poor quality, the fake brands have many advantages such as cheap in price, authentic looking and switching to other bands or design without hesitating. In addition, the price difference between the fake luxury brands and the genuine luxury brands is quite significant nevertheless functionality is affected very little. Therefore, it is natural that consumers are growing interest in fake luxury brands and buy it over the genuine brands. Reference Caines, C. , 2009.
Young Stars raise style stakes. The Australian, [online]2 September. Available at:< http://www. theaustralian.com. au/news/lifestyle/young-stars-raise-style-stakes/story-e6frg8k6-1225768442198> [Accessed on 14 February 2012] Fujita, K. and Hill, R. C. , 2005. Innovative Tokyo. United States of America: Michigan State University. Hopkins, D. , Kontnik, L. T. and Turnage, M, T. , 2003. Counterfeiting Exposed. United States of America: J. Wiley & Sons. Jung, J. and Shen, D. , 2011. Brand Equity of Luxury Fashion Brands Among Chinese and U. S. Young Female Consumers. Journal of East-West Business, 17(1), pp. 48-69. Kotler, P. , Adam, S. , Denize, S. and Armstrong, G. , 2008. Principles of Marketing.
4th ed. Australia: Pearson. Okonkwo, U. , 2007. Luxury Fashion Branding. United States of America: Palgrave Macmillan. Smith, L. , 2000. Faking it in the fashion world, Los Angeles Times,[online] Available at:< http://articles. latimes. com/2000/mar/19/news/cl-10317> [Accessed 14 February 2012]. Truong, Y. , 2010. Personal aspirations and the consumption of luxury goods. International Journal of Market Research, 52(5), pp. 1-20. Wilcox, K. , Kim, H. M. , Sen. and Sankar. , 2009. Why Do Consumers Buy Counterfeit Luxury Brands?. Journal of Marketing Research (JMR), 46(2), pp. 247-259.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 15 February 2017
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