Market evolution of luxurious products and service

Résumé du document

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.”

Extraits

[...] The abrupt change between old and new luxury came from consumer behavior modification, which forced companies to adapt their marketing strategy. Luxury brands now react by influencing the market and improving their communication strategy. Bibliography Baran, Michelle. October Luxe rising. Footwear news. Birtwistle, Grete The Burberry business model. International journal of retail and distribution management. Csikszentmihalyi, M The Psychology of Optimal Experience. New York: Harper Perennial. Danziger, Pamela. September 2004. Luxury brands: setting the record straight. [...]

[...] They also argue that the personal orientation has been neglect contrary to the social orientation, which is privileged during the luxury related research. Wong and Ahuvia (1998) opine that for some consumers, personal orientation towards luxury brands consumption is more visible than those whose intent is to: - Derive self-directed hedonic experience from the use of the product - Pursue private meanings in the product - Judge the product with individual-based standards Consumers may obtain three benefits towards their personal orientation. [...]

[...] The second group of people who represent a big part of luxury consumer are the baby boomers. According to Veldre (2005), they are the “20-somethings parents”. Danziger describes them as the generation of luxury consumers who want more from life than simply buying another thing to display, another outfit, or a new gadget.” She calls them “butterflies, as they have emerged from their luxurious cocoons to reconnect with the world in meaningful way.” In accordance with Maslow's hierarchy of needs, the consumption of butterflies is driven by a desire for self-actualization. [...]

[...] This allows everybody to have access to luxury goods and all brands, to reach a maximum number of consumers. Syl Saller (2004) notes that, luxury is redrawing the price-volume demand curve, because consumers are both trading up and trading down. They are trading up in categories that are important to them, and down in wants that aren't. They shop at Costco (cheap supermarket) and drive there in their brand new Range Rover; they fly with a low cost airline and then stay in a five-star hotel.” Silverstein and Fiske (2003) assert, like Saller (2004), that the trading up concept concerns all kinds of goods and services. [...]

[...] The luxury perception of consumers isn't what it used to be. 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). [...]