Luxury Goods

1
(No Transcript)
2
Who Cares?
Ryan Burvill Sean Martin Wu, (Janet) Xiao
chen Thu Pham (Melissa) Greg Schadt Sanjeet Parmar
3
Who?
4
Buying Motives

• The Drive for Self-Actualization
• Prestige
• Pleasure
• Enjoyment
• Improving the quality of life

More Information
http//www.researchandmarkets.com/reportinfo.asp?r
eport_id297178tdcat_id
5
Market Segment

• Japanese market for luxury goods
• Luxury goods manufacturers are focusing on the
  Japanese market
• Louis Vuitton
• Gucci,
• Hermes,
• Burberry,
• Versace,
• Prada, and Chanel
• In Japan alone Prada earned 3.3 billion while
  worldwide profits fell 45.
• Louis Vuitton, earned approximately 1.4 billion
  in sales for 2002.

More Information
http//www.uwlax.edu/URC/JUR-online/PDF/2004/nguye
n.pdf
6
Market Segment Cont.

• China has a massive increase in the purchase of
  luxury goods
• 2001 1 of worldwide luxury market
• 2006 12 of worldwide luxury market
• 2015 29 of worldwide luxury market (projected)
• 13 of China's population buys the highest
  quality brands
• 48 million American households control 66 percent
  of total consumer expenditures

More Information
http//www.cnn.com/2006/US/10/18/bin.luxury.overvi
ew/index.html http//www.boston.com/business/artic
les/2006/03/21/chinas_hunger_for_luxury_goods_grow
s/
7

• How?

8
How do retailers sell Luxury

• Retailers use
• Customer service
• Store environment
• Attention to detail
• And emotional triggers
• Limited quantity of goods
• Pricing
• Appealing to consumers value system

More Information
http//www.businessweek.com/bwdaily/dnflash/nov200
5/nf20051129_4460_db016.htm
9

• Why?

10
Reasons people buy

• Form of life changing exhilarating experiences
• To give/get unusual gifts
• Sense of satisfaction
• Once in a lifetime experience
• Societal need to escape from reality
• Like to walk out of a shop knowing they've
  overpaid

More Information
http//www.boston.com/business/articles/2006/03/21
/chinas_hunger_for_luxury_goods_grows/
11
Why buy Luxury products

• Luxury Products
• Can help consumers manage stress
• Customers a feeling of happiness and
  accomplishment
• Consumers are essentially buying the story
• Luxury satisfies an emotional need

More Information
http//www.cnn.com/2006/US/10/18/bin.luxury.overvi
ew/index.html
12
New Luxury

• New Luxury Items are
• perceived as high quality
• stylish
• without being prohibitively expensive.
• New luxury customers are
• willing to spend an amount of money
  disproportionate to their income for a product
  they consider highly important
• For some people, luxury is a daily 4.50 vanilla
  latte

More Information
http//opalroom.com/DP/OPAL/Buy-luxury-gifts-and-p
resents.htm
13
Types of Money

• New money
• More likely to spend frivolously
• Tend to show off
• Impulsive
• Old Money
• More conservative
• Spend less on everyday goods
• Make logical choices

More Information
Solomon R. Michael, Zaichkowsky Lynne Judith,
Polegato Rosemary (2005) Consumer Behaviour,
Toronto Canada, Pearson Prentice Hall, pp.
383-397.
14
Luxury Market Groups

• Luxury groups
• Functionality
• Enduring Value
• Reward
• Demonstrate Success
• Indulgence
• Extremely Lavish

More Information
Solomon R. Michael, Zaichkowsky Lynne Judith,
Polegato Rosemary (2005) Consumer Behaviour,
Toronto Canada, Pearson Prentice Hall, pp.
383-397.
15

• What?

16
What are Luxury products

• Classifying Luxury
• Luxury products depend on income
• BMW V.S. Rolls Royce
• Higher Incomes
• can afford more Luxury
• higher level Luxury
• Lower incomes
• Still buy luxury but at lower levels
• Buy luxury less often

More Information
http//www.researchandmarkets.com/reportinfo.asp?r
eport_id297178tdcat_id
17

• Thank you!

18
Sources

• http//www.researchandmarkets.com/reportinfo.asp?r
  eport_id297178tdcat_id
• http//www.uwlax.edu/URC/JUR-online/PDF/2004/nguye
  n.pdf
• http//www.cnn.com/2006/US/10/18/bin.luxury.overvi
  ew/index.html
• http//www.boston.com/business/articles/2006/03/21
  /chinas_hunger_for_luxury_goods_grows/
• http//www.businessweek.com/bwdaily/dnflash/nov200
  5/nf20051129_4460_db016.html
• http//www.boston.com/business/articles/2006/03/21
  /chinas_hunger_for_luxury_goods_grows/
• http//www.cnn.com/2006/US/10/18/bin.luxury.overvi
  ew/index.html
• Solomon R. Michael, Zaichkowsky Lynne Judith,
  Polegato Rosemary (2005) Consumer Behaviour,
  Toronto Canada, Pearson Prentice Hall, pp.
  383-397.