welcome to luxury products dr. satyendra singh professor, marketing and international business...

Welcome toLuxury Products

Dr. Satyendra SinghProfessor, Marketing and International Business

University of Winnipeg

s.singh@uwinnipeg.cawww.uwinnipeg.ca/~ssingh5

History of Luxury

King and Queens always appreciated beauty/luxury

1010 BC – 100 BC King David/Solomon, Queen of Sheba1150 BC – 700 BC Egypt, Greece800 BC – 500 AD Etruscan Empire and Roman Fashion450 AD – 1500 AD Byzantine Empire

15th – 16th Century Italian fashion1600 – 1750 Baroque fashion1715 France 1828 Modern luxury fashion21st Century Democratization of Luxury

High Net Worth Individuals (HNWI)

People with $1m assets excluding home, car…Affluent (Sub HNWI) .1m – 1mHNWI 1m-5mVery HNWI 5m-50mUltra HNWI >50m

13m HNWI in 2013 3m in Europe 4m in USA 3m in Asia-Pacific 2m in Japan .5m in Latin America 1m in Germany .4m Middle East .5m in China .1 Africa .5 in UK

Charles Frederick Worth -- 1838

Avenue-de-Champs-lys-es-Paris

Luxury is Dream

Creates social gap Exclusivity

Sensory experience Feel, touch, smell

Luxury is beauty You may suffer in the name of it, or for it

Vibrates your emotions feelings

Object of worship needs respect

You wish!

Liya Kebede

Swarovski Tangara

Characteristics of Luxury

HistoryHeritageCulture Message

InnovationHigh PriceHigh quality material

Differentiation Value creation

Luxury Differentiation

Porshe Craftsmanship, proof or expertise, engineering, aesthetic

Ferrari Red color, unique sound, make 8000 only per year, F1, 100 yr of exp

Ducati Red motorcycles

Hermes Kelly and Birkin bags

Harley Davidson distinct sound

Lamborghini Monster of technology

Rolls-Royce like living room, wood

Value Creation

Elegance not only perfume, but also bottle

Handmade gold, diamond, watches, bags,…

Rarity animal skin, silk, make clients wait

Made in Europe

Precision in craftsmanship….

Gucci Jackie

Gucci la pele Guccissima

Shows mrf process

Hermés Cap Cod -- Craftmanship

ChloéMaterial

Creativity and Innovation

British History – typical lines

Ferrari: red, speed, precision, power0nly 8000 per year

18 hours of single craftsmanship

Rolls Royce – 2600 hrs, wood, living roomx10 Ford’s price

Luxury Product or Dream Categories

Fashion (Apparel, bags, shoes, belt…)

Perfumes and cosmetics

Watches and jewellery

Eyeware

OtherRestaurantHotelsCarHome…

Luxury Depends on

WealthWealthy >$.5m / yearAffluent > $.2m / year

StatusIncome, Education, OccupationWhere do you live?Quality of residence…

Luxury: Wealth vs. Status

DiscreetAuthenticFrenchSmall logo

RussiansEmerging markets

NicheCreatorsBritishHeritage

Need to proveCounterfeitPoor countriesBig logo

HI Status

HI Wealth

LO Status

LO Wealth

Luxury Industry

+1500 # of billionaire worldwide (2014)

↑ 7% more billionaires every year

$150b / year (People spend on luxury)↑ 20% sales growth / year

200-300 luxury brands

Major Luxury Groups

Louis Vuitton Moet Hennessey (LVMH) 30Louis Vuitton, Givenchy, Marc Jacobs, Fendi, Donna Karen…

Richemond (Switzerland) 15Cartier, Chloé, Montblanc, Lancel…

Gucci (Italy) 10Gucci, YSL, Sergio Rossi…

Prada (Italy) 5Prada, Miu Miu, Azzedine Alaia…

Levels of Luxury

Luxury or prestige Lifestyle setterBulgari, Hermes, Hugo Boss,…

Premium Aspire to become LuxuryHI Calvin Klein, Tommy Hilfiger,…MI LaCoste, Furla,…LO Zara, GAP, …

Fashion Changes quicklySeveral

Product Structure

Product Line/LengthBag, Shoes, Belts…

Product BreadthHand bagEvening bagWeekend bag…

Product DepthVariety of hand bags in this category…

Luxury: Design vs. Modernity

LamborghiniFerrariAston-Martin

???You decide

BMWMercedesLexus

MorganBentleyRolls Yoyce

Modern

Design

Traditional

Comfort