Luxury can be defined as an indulgence rather than a necessity. It comes with a heavy price and only the up-market population can afford to enjoy it. This does not make the market any smaller or short of demand. The luxury goods market include- fashion, fragrances, watches, automobiles, drinks etc. The size of the market was US$ 175bn and grew at 7.9% in 2000 and faced its first recession in 6 yrs in 2009 where the growth went down to about 3% in 2008, due to the financial crisis worldwide. ( Bain and Company’s luxury goods worldwide market study). Some of the most Luxurious Countries included :
According to the study conducted, the above markets constitute about 80% of the global markets. High End Product Brands
We know some consumers buy luxury brands because they are called ‘Luxury Brands’. Be it status, badge value, or a desire to feel part of the in-crowd, come people buy Versace for its plaid, Mercedes for its Hood, Chanel for the CC. But that is not the scenario for the typical luxury consumer. As far as a handful of luxury categories automobiles, cosmetics and beauty, watches, consumer electronics go, a majority of a affluent consumers rate the brand as very important in their purchase decision. Let it be any category for any specific product, the brand image plays a very important role. “Luxury, derived from the Latin word luxus, means indulgence of the senses, regardless of cost. Luxury brands are brands whose ratio of functional utility to price is low while that of intangible utility to price is high.” - A . V. Vedpuriswar. http://www.thehindubusinessline.com/catalyst/2005/03/03/stories/2005030300170200.htm Luxury Brands have often been associated with the core competences of creativity, exclusivity, craftsmanship, precision, high quality, innovation and premium pricing. The product attributes give the consumers the satisfaction of not only owning expensive items but the extra added psychological benefits like esteem, prestige and a sense of a high status that reminds them and others that they belong to an exclusive group of only selected few who can afford these items. Brands like Rolex and Louis Vuitton represent the highest form of craftsmanship and command a staunch consumer loyalty that is not affected by trends. These brands create and set the seasonal trends and are also capable of pulling all of their consumers with them wherever they go. Premium Brands are those brands like Chritian Dior, Chanel, Ralph Lauren that aspire to be luxury and prestige brands but their marketing strategies are more towards a mass market or a luxury mass market. Luxury has no certified origins. But luxury branding is said to have taken birth in the west with the appearance of High end brands. This Industry is a global multi-billion dollar sector comprising of a multitude of brands with high relevance. Among these are brands like Loius Vuitton, Gucci, Ralph Lauren, Rolex etc. They are also among the most valuable and influential brands in the world. Despite its large size and income generation this industry has witnessed a slow growth in its strategic business direction. This is because for a long time luxury brands were managed through traditional business methods where decisions were made based on intuition and sometimes on a trial basis. These traditional methods also featured a strong focus on product development and publicity generation through conventional advertising methods. [Reference Book : Luxury Fashion Branding (Trends, Tactics, Techniques) by Palgrave Macmillan]
Luxury consumers tend to buy luxury products for their superior functionality and quality or luxury consumers tend to buy these brands as a status symbol or luxury consumers tend to buy these goods to lavish themselves for self – appreciation. These are the three components of a luxury brand.
The market of luxury...
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