Jean-Noël Kapferer HEC Paris
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1 THE LUXURY STRATEGY Break the rules of marketing to build luxury brands Prof Jean-Noël KAPFERER HEC Paris April 19, 2010
2 Copyright JN Kapferer Plan The luxury business growth A growing market confusion The question of luxury definition Understanding di the specific rules of luxury management
3 COPY RIGHT J.N. KAPFERER Luxury market is growing Its highest perspective is in the BRIC countries
4 Why does this market grow? There are more very rich people -Oct : 130 Chinese billionaires $ -Forbes Feb 2010 : 1000 billionnaires -The CLEWI index goes up, much more than the regular price index
5 The gap grows between extraordinary and ordinary people
6 Copyright JN Kapferer Why does this market grow? The democratization of luxury - economic growth : middle class feels optimistic, is richer and wants to trade up - women work and marry later -««you are what you wear» -access pleasure through shopping malls
7 Luxury is correlated to GDP growth
8 Copyright JN Kapferer Why does this market grow? Because the mass wants to own a bit of what symbolizes the better life of the happy few - economic growth makes you go beyond needs and liberates your aspirations - Luxury is consumption at its best : it delivers rare intense emotions ( love, power, pleasure, pride, reward, social sign)
9 Copyright JN Kapferer Why does this market grow? Because people like luxury
10 Copyright JN Kapferer People like luxury 1 to 10 ; source IPSOS WLT China 8.2 HK 6.3 Mexico 8.0 Russia India 7.3 Italy 6.1 UK 7.3 Germ 6.1 USA 6.8 France 5.7 Korea 6.4 Japan 5.6
11 Copyright JN Kapferer Why does this market grow? Why people like luxury -It elevates them -It gives them pleasure, beauty,style in life -It gives them products with meaning, with high quality, out of the ordinary, -With prestigious brands, known as visas of social distinction. -Saving the face, becoming a person
12 COPY RIGHT J.N. KAPFERER Luxury is in danger The middle class growth in many countries is a business opportunity for luxury and also a great danger To capture this huge demand, mass brands imitate luxury, mimick its codes How will luxury show its difference,and avoid running too after volume?
13 COPY RIGHT J.N. KAPFERER Confusion in the market Main Street brands imitate High Street brands, creating confusion between luxury and non luxury Today, many mainstream brands use the codes of luxury (small series, top models ) : frontiers seem porous
14 Unclear frontiers
15 COPY RIGHT J.N. KAPFERER Unclear frontiers Chanel s worldly known designer Karl Lagerfeld partners with H&M
16 Unclear frontiers
17 Unclear frontiers
18 COPY RIGHT J.N. KAPFERER Unclear frontiers ZARA is a low cost producer but its stores do not look low cost
19 COPY RIGHT J.N. KAPFERER Confusion in the market A lot of new terms come out every day adding to the confusion -new luxury -mass prestige -mass luxury -trading up -premiumization
20 New terms add confusion
21 Confusion:luxury or premium?
22 Key source of confusion Price Luxury Premium Brand Mass Qualities
23 Luxury is not more of premium Luxury Price Premium Brand Mass Qualities
24 Luxury is specific Luxury is not more of premium, or beyond premium or more expensive than premium : it is elsewhere, Luxury is Janus: two indissociable faces A sociological face : it represents,and publicly l incarnates social stratification tifi ti A psychological face : giving oneself a pleasure and dream of exception
25 COPY RIGHT J.N. KAPFERER A turning point Today, all these porous frontiers recreate a need of clear social markers of the latent vertical social hierarchy especially in so-called open or classless societies
26 COPY RIGHT J.N. KAPFERER A turning point Stripes and stars are back
27 Status for everyday life
28 COPY RIGHT J.N. KAPFERER What is luxury after all?
29 This is surely not luxury
30 This is not luxury either
31 Is this luxury?
32 Are they all luxury brands?
33 COPY RIGHT J.N. KAPFERER What is luxury after all? No commonly agreed definition that clearly separates it from super premium or even mass prestige
34 What definition for luxury? What is luxury? Traditionally the word luxury applies to tangible goods, suggesting superior materials and designs sold in an upscale retail environment Bain & co.
35 What definition for luxury? What is luxury? «Exclusivity, premium prices, image and status which combine to make them more desirable for reasons other than function» TJ T.Jackson
36 COPY RIGHT J.N. KAPFERER What is luxury after all? What is luxury? Another definition «Expensive rare objects with an image of good taste»
37 COPY RIGHT J.N. KAPFERER What is luxury after all? Need to distinguish «Luxury» ( absolute meaning ) from the happy few to the man in the street «A Luxury» ( relative meaning ) for a specific group trading up for more quality and prestige,not the happy few «My Luxury» ( purely individual )
38 What is luxury after all? «Absolute luxury»: a consensus Categories and famous brands held in the world as symbols of luxury
39
40
41
42 COPY RIGHT J.N. KAPFERER What is luxury after all? «A Luxury» is a relative statement For some consumers, Coach is «a luxury», it gives them a feeling of extra quality, of prestige, above that of ordinary bags. Same for Lancel, But the «happy few» disagree.
43 A Luxury is relative In India «a luxury» is drinkable water for a majority of people but golden taps for a minority
44 COPY RIGHT J.N. KAPFERER What is luxury after all? «My Luxury» is very private «My luxury» is not «your luxury» What is rare and priceless for me may not be the same for you. «My luxury» does not imply social comparison : it is intimate and does not create a market
45 Copyright JN Kapferer Understanding luxury HOW ECONOMISTS DEFINE LUXURY
46 Copyright JN Kapferer PRICE Understanding luxury HOW ECONOMISTS DEFINE LUXURY FUNCTIONAL BENEFITS
47 Copyright JN Kapferer Understanding luxury HOW ECONOMISTS DEFINE LUXURY PRICE Premium FUNCTIONAL BENEFITS
48 Copyright JN Kapferer Understanding luxury HOW ECONOMISTS DEFINE LUXURY PRICE Luxury Premium FUNCTIONAL BENEFITS
49 Copyright JN Kapferer Understanding luxury HOW ECONOMISTS DEFINE LUXURY PRICE Art Luxury Premium Fashion FUNCTIONAL BENEFITS
50 COPY RIGHT J.N. KAPFERER Go beyond function art for art?
51 Luxury is close to art
52 COPY RIGHT J.N. KAPFERER Luxury cultivates the arts
53 copy right J.N. Kapferer Understanding luxury What does Etymology say about the essence of luxury?
54 copy right J.N. Kapferer Understanding luxury What does Etymology say about the essence of luxury? LUXUS Latin word «luxatio», result of going apart, making a leap, a big gg gap
55 What chinese etymology says Big people / Lot of people
56 What indian etymology says sanskrit : vitasar To dazzle, to impress
57 COPY RIGHT J.N. KAPFERER Understanding luxury What History says The business of luxury goods has been created by the collapse of the aristocratic societies where strict rules prohibited the diffusion i of luxury signs and goods (etiquette)
58 Understanding luxury What History says By making it accessible, luxury business has grown on the basis of the drive for social imitation and dth the democratic right htt to happiness and hedonism
59 Understanding luxury What is new today? This evolution has stimulated t the consumption of luxury products but the central sociological function (signaling the social stratification ) has been lost
60 COPY RIGHT J.N. KAPFERER Why luxury? A clear marker of a social gap Yesterday Aristocracy An obligation demonstrate your inherited rank Noblesse oblige Etiquette Today Meritocracy Reward by signing one s success and accessing elit pleasures
61 RECREATING THE GAP Pi Principles i of fl luxury management
62 Luxury : re-create the gap
63 Luxury, fashion, premium Luxury Social elevation Priceless Timeless Hedonism Slfditi Self distinction Superlative Dream Gift Tribal differentiation Imitation Ephemeral Seduction Realism Performances / Price Rational Investment Comparative Fashion Frivolous Seriousness Premium
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