 LUXURY MARKET

Material Traceability
ESP- emotional proposition
Two parts of luxury- Tangible & Intangible. No subjective luxury.
Louis Vuitton only uses canvas, no leather. There are qualitative
factors to a brand. They create a supply demand aspiration.
Responsible snubbing is what should be done.
There is a difference between branding and de branding, And
marketing and anti marketing
Attributes of a brand. Research on gucci and who found and why?
Legacy.
Boutiga Venetta- research-technique
If you want to handle luxury. You have it live it first.
Three verticals in the industry- Mass, premium, luxury. Premium is
expensive mass. Luxury has nothing to do with either of them.
Always see the details.

LVMH, Richemont, Swatch Group , kerig group. Come up with

other groups.
Morbado, what brands they have and segments.

LVMH-Louis Vuitton moet Henessey. It’s a conglomerate head

quartered in Paris. It has perfumes, watches,(Zenith is a watch
which does not have a signature watch but a signature movement)
It was found in 1987, 32 years ago. The company was a merger
between fashion house LV with Moet Henessey. Dior is the main
holding company of Lvmh with 40.9% shares and 59% voting
rights. Basically LVMH is home to 75 distinguished houses rooted
in diff sectors that create high quality products. Wines & Spirits,
fashion and leather goods, perfumes and cosmetics,watches and
jewellery. They have a decentralized organization, which in terms
is responsive too and autonomous. Brands such as belvedere and
moet chandon in wine and spirits.
Fashion and leather goods- Fendi, Christain dior, loro piana and
givenchy. Also constitutes of belmond hotels
Richemont is a switzerland based company owning may of the
luxury brands, speacilalizing in jewellery, watches and writing
instruments. Formation 1988. Subsidiaries, cartier, montblac,
international watch company. Richemont launched a new brand
called Baume and also acquired Watchfinder.co.uk , largest seller
of pre owned premium watches.

Kerign group is a development of series of luxury brands , the

subsidiaries are gucci, saint laurent, bottega venetta, Balenciaga.
The name is prounanced as caring.
Other groups are Luxottica, hermes.

27th August 2019

Intangible things cannot be measured. Luxury is about power and

strength.We market the legacy. One is a good and a product, a
service might not have product. What is a brand? It is a perception
of the human mind. How do you market? You tell them about it ,
how do you make it desirable,? Demand increases more
proportional than the income. You get 3-5 seconds to build the
image of the brand.Vm- the way you see , furniture, lighting , the
way the clothes are put, is all the part of the brand. You need to
spend as much money on the product as the interior.The buyer
who buy the luxury brands, the have lots of money, the demand
does not stop. What stops is the demands of aspirational group.
The money increases the demand increases. This is Anti-
marketing for luxury. The aspirational people are bigger
consumers of the luxury products. Aspirational buyer is someone
who saves money to buy the luxury product. The perception of a
mind does not stop on a product. Read about andre angessey. A
brand will follow their own identity.
Several manufacturing products attain the status of luxury goods
due to their quality (QA Qc)- raw material, finished goods. Quality
assurance is how do you buy and who will i buy from, how much
will i buy from. The process is very stringent , if there is slightly of
default it gets rejected, because it is system oriented. In transit
damages is diff from damage.
Merchandise planning - allocation of goods - people oriented and
system oriented.
Sometimes certain things are considered as luxury just because of
the status symbol.
Old luxury is intrinsic to the object. All the emphasis was only on
material and craftsmanship. There was uniqueness because only
limited products was produced. Country of origin plays a very
important part. Exclusive service level is luxury.
The main point is experience.
The first segment is Automobiles , beauty, fashion (includes
everything) ,real estate, eye wear, wines and spirits, hospiltality,
services. Mobile phones are called communication devices. Pens
and pencils of the world are called writing instruments.
Time pieces are from switzerland, most of them. Time pieces are
nothing but watches. Switzerland are for now famous for time
pieces.
Denmark, switzerland and france came up with diary product.
Automobiles has been taken over by germany and spain
France leads beauty. Montegrappa - It is a luxury brand for writing
instruments is an Italian brand. Gourmet(research)- Dean and
DeLuca( research)
Eaetaly (reserach). Netherlands , germany produces most of the
Yacht, Fincantieri,leusson ,heesen )
Research- Sole
Ayurveda- India
Luxury Welness- Sri lanka, turkey, china, india
Main bocher-research
Dom perignon -research
Emilio pucci - research
Omas-research
Swatch group owns ETA, most of the brands use this movement.
Stiffano riche- research
Aqua Dicriseallo- expensive water
Brand Extension is different from market extension.Product
Extension is something new from what they are doing. THEY ARE
CALLED CO BRANDING.
Diversification, means totally gone into different set of things.
ILS- instrument landing system, to reduce mishap.
ANTI LAWS OF MARKETING:-
1) Forget about positioning, it is not important in luxury marketing.
Luxury is not comparative. On the outside they do not show that
there is competition. But on the inside they work on it.
2) Do not listen to the customers. They will not change or modify,
all they will do is stategise.
A brand is not just a product but a mindset. It’s the way you make
people perceive it.
3) Keep non enthusiasts. The brands do not want people want
people doing window shopping.
4) Dominate the client, make them feel intimidated.
5) Make it difficult for the clients to buy. Like many boutiques in
Geneva, you have to ring the bell. It’s a challenge
6) The role of advertising is not to sell. If you look at an
advertisement , it is luxury. Like bottega venetta, the product is
small and everything else is more huge. They want you to feel the
product, feel the luxury and not see it as a product.
You’ll never know what is the advertisement about. They do not
want to sell the product but make you want it.
7) Communicate with those who you are targeting. Create the
aspiration among the mass/middle class people. So it goes like,
create the aspiration, make you want it, do not give you the
product and then you snatch it away.
8) The presumed price is higher than the actual one. They do not
care about the production cost but the brand equity. To see how
many people want it . Overall sales is the top line. Like Louis
vuitton says i will not sell 50 products a year. Every parameter you
mark is money. You scan your target audience, the supply will be
restricted ,because if you sell it to a middle class person, it will not
spread.
9) Do not test. Do not go to the market and check if it sells, how
and why will people not buy it. DO NOT CARE.
10) I don’t care if you like it or you don’t. It’s your loss.
Products keep selling because of the new riche ness coming.
10) Do not listen to the voice of the customer. Let them adapt.
How much you want to supply is up to you.
They will adapt to change, not change for you.

How do you brand a product?

~ Identity , perception
How do you market a product? Which channel should you choose
is very critical. Every product will have a different set of channel.
Some products will not go well with the department, due to the
monochrome, the variety is huge.
Monobrand is just that single brand, boutique brand.
Merchandise planning -It is to maximise the return on investment.
Vourjois- research
Traditionalist approach with a mix of newness. Want to reduce the
operational cost, how much can you even sell online? Certain
products will not wish to sell online. But what i anticipate is that we
will go back to the traditionalist way, the services what we crave
for.
Brand collaboration is very imperative. You might get different set
of reviews and feedback, it should not divide you. We are creating
a different set of product for different set of people but we are not
changing from within. How do i address different contributors?
That is the problem. How many products do i create , it is easier to
handle in the mass market. But in a niche market that is luxury,
what we do is , create an iconic product.

Ascertain and capitalize brand loyalty. The millennials are not

loyal to a particular brand. How do we make the people brand
loyal? For example , a certain brand makes you feel good and the
product fits you well, then the person will agree to compromise
onto other design.
Digital media and market influencers. It is coming down because
they are not following it , more like you endorse for a product it and
then they refuse to wear it.
Monobrand means one brand only. Multi brand means many
brands under it. Like Ethos.
MARKETING BUDGET & ALLOCATION - it operates in a turnover.
You should always remember sell in and sell out.
SELL IN means buying. And SELL OUT means what i sell to the
customer.
What happens in a franchise is that you agree to the amount of
turnover in a year.
Pre pack mean a brand knows what they are going to sell.
In production , you have to create a minimum quantity, if you don’t
you will not be able to cover the cost. If you waste it, the selling
price goes high.
In a plan there is something called wide and deep.
If you are ordering all of it , it is called wide. Wide is more variety.
Deep means going access inventory which will help you in sales.
BUY BACK means if it does not sell, it will be bought back. The
brands will buy back.
You choose your pre pack wisely according to the market.

POSM- POINT OF SALE MATERIAL

A Franshice model follows all the protocol of the brand except for
the fact that the products are made by the representative not the
brand.
In a joint venture both the brands create a fund. Lets’ say in the
next five years we will create ten stores, the budgeting is done
together.
Joint venture is a long term investment.
Subsidiary means same brand which comes directly.
Weighted cost - world wide cost
Catch trap means that they know that they have the money but
they know that if they continue like that they will shut down.

Directly operated stores aka DOS/DOB - DOS is directly operated

by the main brand company. The people report to them directly.
In Subsidiary the decisions are aken lowkey for example LV will
send someone from france but directly operate from france.
TAA- every brand will go through this process. It means trade area
analaysis.

19thSept 2019
You can restrict resources only when you have it.
Global Market Transformation

Global Luxury Market- US$ 1.5 trillion

Experiental Luxury growing faster VS Personal luxury

NouvaRich- People who are newly rich, just became rich.
Phase-In & Phase-Out means how long will that product last in the
market. Sometimes the product that sell in the west die down but
the product lasts longer in India. Example –Iphones.

Why does Experiential Luxury last longer. The minute you become
rational, rational meaning why is it expensive . One is Utility , and
the other is an emotional connect.
floor Space Index – it means that if this is the size of the land, you
can go a certain height. Because it is cost-effective.
To Luxury industry , being rational is dangerous. So the industry ,
switches over to brain washing.

Brand Voice- means how do you market the product.

Genz1993-2001. Read Reports on Gen Z. They have a strong
influence over the market. What are the difference of values
between the two generation.

Digital permeates every purchase- 25% of the market’s value up

from 10% as of today. 100% online will not happen.
Multi- level marketing - the company buys the entire inventory
and then you pack it and sell it .

The biggest challenge is the Consolidation of network- reduced

footfall, due to the online and other channels (omni channel)

Operations margin is how much are you earning and how much
are you spending.
Distinction between premium and luxury
The distinct identity that they want to build is the problem.
Luxury Issues

Retail management- It is everything about the store, the way the

store should be , the knowledge of the product that the people
working at the store should have.

Human Resources – Mind set is the problem.

Merchandising & Experiential luxury & Visual merchandising.

Research – Bell Ross
Dior- Midnight blue

Bell and Ross watches meet four basic principles –

legibility,functionality,precision and realibility. The technical
precision is expressed through pure lines and timeless elegance.

Your personality talks a lot about your purchasing power.

What is your personality type ? when you go on the outside what is
what you want to buy ?

Your window time to get attracted to a product/ window is 3

seconds.
5% Real – Term Growth means it is prediction of the growth in the
future.
Trade Area Analysis – TAA ; every product, every category will
have different audience
Personal Luxury Goods Market Over performing Other Luxury
Segments. Aspirational buyers are one of your consumer types.

Luxury Toys – Positive but softening (there is a growth but it will de

grow) means the strategy is not working. Aspirational segment
outperforming. When I saw aspirational , everything changes.
Private jets market on the decline , hit by cannibalization from
second hand segment , meaning that some of the private jets are
still using old and not updated techniques which some countries do
not allow.
Auctions are the finest way of showing art. Brand VS Brand
Collaboration is very important. If you have the brands on board ,
the clients will also be on board and vice versa.
Authentication of the brand is very important . At the time of
recession the tier1 will splurge more, to show that they have the
money and to snub.

Consolidation trends have changed , it means the interior

components. A simple spirit will not leverage. The brands have an
exclusivity bond. The exclusivity is very important in the food and
beverages industry. Low single digit growth for wines. A
restaurant brand name is imperative. Positive growth in real terms
for luxury hotels. Travel becomes a “state of mind “
CAGR- Compound Annual Growth Rate – Research

Half of the luxury purchase will happen in their home country.

Japanese and china has the purchasing power. The maturity of the
consumers in China and japan is higher. Chinese consumers
continuing to grow their purchases ; both enthusiastic international
shoppers.

Local Vs Tourist :- The Europeans are not contributing as much as

they were doing it before. Example Starbucks in Italy, it’s a big no
no because the local coffee will die.
A population that spends internally always grows.
Vietnam is an emerging market. OPEC –is the group of all the gulf
countries that produce oil, who decide the price of oil and how
many barrels of oil is to be produced.
Germans are the fastest aging country in the world.
In Europe , 100% of luxury purchases will be influenced by an
online interaction.
Personal Luxury goods market by channel.
Airport, off price stores ,dept. stores , speciality stores , mono
brand stores

-Mono Brand means just one brand

-Multi brand means lots of different brand example collective ,
Sephora
-Dept. Store means all the brands and all the segments
-Speciality store means only one product , a single segment
example -Ethos.

LFS- Large Format Store aka Dept. Store

Consumer Behaviour :-Loyalty, Purchase, Consideration and

awareness.
Online Influenced purchases in the luxury market.
Continuous integration – means showing and seeing how you can
customize your vehicle but do not buy it online.
Loyalty :- means you like it and you have felt it and you wan to
consider it first. But if you do not get it you will buy something else.
Digitally Enabled purchases in the luxury market.
-Implementation of technologies
-Virtual reality
-Mobile payments

Consideration :- You might want to consider it because you have

heard of it . Purchase:- You do have the purchasing capacity and
you do not mind experimenting.
Foot print Consolidation…RESHAPING THE STORE OF THE
FUTURE

Foot print Consolidation :- Digital penetration will lead to physical

disruption. Network consolidation means instead of many stores. I
might have three good stores in good area. Because you will have
to keep all the products and designs in all the store. You have to
reduce the operation cost.

l-f-l like for like

buy back means I have bought certain goods and I want to return it
for some reason. The MOU states that the company A from where
we bought the goods , will take it back but on the credit that we will
have to buy more the next time . It is because of Wrong Buying.
Role of the store to inevitably change : from point of sales to point
of touch.

Consumer Behaviour
Customer Vs Consumer
Specific brand | Product | loyalty

What is marketing VS Sales ?

Consumer self interest to seek rewarding experience.

Luxury brands spend a lot of money on story telling and the legacy
that you would invest in.
The biggest challenge for marketers is the ROI.
All the activities that you do will reflect on the market share.
Understand customer needs – the desire and want will vary with
time. It is important to adapt.
Capacity utilization is a challenge
Identify Customer Needs – fancy components might not have any
perceived value.
Lewis Hamilton – Research

Cultural – Wants and behaviour and cultural shifts

HENRY – High earning not rich yet
Degrisono – research , tondo and uno fastest selling.
product extension , from where you were to where you got to.
Types of Retail Format – Department store , discount store
(outlet), supermarket , warehouse store (bulk buying- more of
distribution ), supermarket, e tailers (online), Dollar-Single price
stores.

Merchandising Offering – Wide vs narrow. The number of

merchandise categories. Going deep means many pieces.

Evolution of indian retail

source of entertainment – neighbourhood store – availability low
costs – shopping experience
12 million retailers , mostly the retail industry is dominated by
dukandars and traditional shops. Mainly divided into organized and
unorganized. India Is one of the most attractive market destination
for apparel retailers.
Retail flow – Inventory planning & sourcing