Luxury in Asia - Introduction PDF

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LUXURY IN ASIA – AN INTRODUCTION Christina Boixière

Professors Christina)Boixière Course)Leader)of)Luxury)in)Asia • Founder)&)CEO)of)La#Voyageuse • Business)consultant)for)Multinationals)&) Startups • Sales)Director)at)Wiidii • EU)Sales)Director)at)Twinhead International#Corp. Specialized)in: MBA)Creative)Industries) Management) University)for)the)Creative)Arts) London,)UK

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Asian)&)international)market IT,)tourism)and)creative)industry) B2B/)B2C/)B2B2C)sales)strategy) Strategic)partnerships) Brand)management)&)Social)media)marketing Creative)thinking

Professors Jonas)Holmqvist ([email protected])) Associate)Professor)of)Marketing Office)1470,)Marketing)Department

• PhD)from)Hanken School)of) Economics) • Editor)for)luxury)research,) Journal)of)Business)Research • Consulting)for)LVMH,)Baltic) Yachts • Academic)ambassador,)LVMH

Several)publications)in)international)marketing) journals: - Journal)of)Business)Research - International)Journal)of)Research)in) Marketing - Journal)of)Service)Research - European)Journal)of)Marketing - Management)Decision - Service)Industries)Journal - Journal)of)Service)Theory)and)Practice - Total)Quality)Management

Luxury Courses)at)Kedge Marketing)of)Luxury

Bachelor

Luxury)Marketing) (1-week)intensive)

Luxury)Marketing)1) The)World)of)Luxury

Intermediate Luxury)in)Asia)

Luxury)Marketing)2) Experiential)Luxury

Advanced

Structure

• This)course)works)in)tandem)with)Luxury)Marketing)1:)The)World)of) Luxury • It’s)not)necessary)to)have)taken)Luxury)Marketing)1)to)follow)this) course,)but)it)is)probably)an)advantage. • This)course)is)more)practical;)Luxury)Marketing)1)is)a)crash)course)in) theories)about)luxury)whereas)this)course)is)more)about)how)to)apply) them)in)an)Asian)context.

Main)Project

• In)this)course,)there)is)one)main)project)to)be)done)in)groups).) • The)project)will)focus)on)constructing)a)suitable)servicescape for)a)European)luxury) brand)in)Asia. • During)session)7,)I)will)first)give)a)mini-lecture)on)the)servicescape,)to)help)you) understand)it. • There)will)also)be)academic)articles)available.)These)articles)are)not)necessary)for) the)exam)– they)are)just)to)help)you)with)the)project. • After)the)lecture)on)the)servicescape,)the)rest)of)session)7)consists)of)you)working) in)group)You)will)using)the)content)from)all)of)Christina’s)sessions,)combine)it)with) the)servicescape,)to)create)an)appropriate)boutique)design. • In)session)9,)all)groups)will)present)their)project

Before I'start… 1.'Tell'me'about'yourself. 2.'Why did you select'luxury in'Asia'courses?'What motivated you? 3.'What do'you expect from this lecture? 4.'Your experiences with luxury (Have'you ever purchased any luxury items?'Any unforgettable stories'to'share?) 5.'What is luxury to'you?'

• Why luxury in'Asia? • Introducing luxury in'Asia • How'is Asian'luxury market different?

1.'Why luxury in'Asia?'

ASIA’S'PO ’S'POTENTI TENTIAL'IN' AL'IN'LU LUX URYY'MAR ARK ASIA ’S'PO TENTI AL'IN' LU XUR KET

THE'WORLD’S'LARGEST'MARKET'

SOME)FACTS CHINA Chinese consumers account for more than $7.4bn in annual spending on luxury goods and the country is expected to have the most affluent households in the world by 2021. Chinese consumers buy n nearly early half of world’ world’ss lluxury uxury products.

INDONESIA Indonesians)have)become)Asia’s)foremost)online)buyers)of)luxury)goods,)according)to) the latest)Asia)Luxury)Index.

SINGAPORE Singapore)is)the)key)regional)hub)for)Luxury)in)ASEAN,)and)a)top)hub)in)Asia-Pacific,)with)a) market)size)in)2013)of)€2.5)billion

Luxury)Goods)Worldwide)Market)Study,)Q4)2019)(Bain)&)Company))

Luxury)Goods)Worldwide)Market)Study,)Q4)2019)(Bain)&)Company))

What’s trending in)the)luxury market?

What’s trending in)the)luxury market?

What’s trending in)the)luxury market?

What’s trending in)the)luxury market?

Media)influence

International)Luxury Event)« Millionaire Bazaar »)in)Singapore)(Oct 2020)

According)to)Business)Insider)SG)there)are)200)000)millionaires) living)in)Singapore)nowadays.)Finexpo would)like)to)present)an) event)not)just)for)millionaires)but)for)the)all)the)people) interested)in)this)kind)of)a)lifestyle. The)new)expo)event)is)claiming)itself)as)the)largest)exhibition) slash)trade)event)in)modern)luxury)sector)where)those)living) this)lifestyle)will)be)able)to)see)and)even)purchase)the)best) international)luxury)industry)has)to)offer)gathering)the)key) players)in)every)segment)of)the)market)including)cars,)yachts,) watches,)jewellery,)travel,)interior)design,)cosmetics,)health)&) beauty,)real)estate,)fashion)designers,)fashion)brands,)exclusive) spirits)and)fine)food,)finance)and)private)banking,)and)exclusive) incentives.

2.'Introducing luxury in'Asia

THE'BOO MING'L UXUR Y'IN'ASIA THE'BOOMING'L MING'LUXUR UXURY'IN'ASIA

ASIAN'LUXURY'MARKET’S'THEN'&'NOW

2002)- 2008) • Opening of)China:)Chinese market finally opened its door to)luxury brands) in)2002)after being closed for)many years. • Growth of)real)estate =)more)shopping)malls =)associated flow)of) corruption. • Hong)Kong)was the)first)shop)window in)Asia)due)to)its lower levels of)tax and)shopping)malls offering more)space to)mega-flagship stores)to)luxury brands.

2009)- 2011) • “Queue)up)and)shut)up”)was)the)motto)in)the)era)of)golden)profits)for) these)brands)in)China. • Major)luxury)brands)at)this)time)were)managed)by)financial)people. • For)hard)products)such)as)watched)and)jewellery,)the)strategy)was) exclusively)based)on)price. • For)the)fashion)brands,)everyone)was)producing)everything)to)feed)the) retailers’)stocks)and ignore)the)reality)of)the)market. Therefore, impossible)to)see)a)difference)between)the)few)brands.

2012)- 2016) • In)2012,)the)Chinese)government)implemented)a)ban)on)using)public)funds) to)purchase)luxury)goods.)Asian)market started slowing down)due)to) strong anti-corruption)campaign in)China,)affecting around 30%)to)35%)of) luxury business. • From)2015,)luxury)brands)in)China)started)to)step)up)the)game)by)adapting) to)new)market)conditions and)customer)expectations. • China)accounts)for)over)66% of)regional)sales,)and)ranks)as)the)most) important)market)globally. Increasing)price)harmonisation has)also)helped) to)close)the)price)differential)against)the)key)luxury)capitals,)boosting) domestic)consumption)even)further.

2017)- 2018) • Hong)Kong,)on)the)other)hand,)remains)the)most)important)regional) market)from)a)per)capita)perspective (USD1,576),)with)Singapore (USD1,348))ranking)second)in)Asia)Pacific)and)third)globally. • In)2017,)Japan)is)the)second)largest)luxury)market)in)the)world. luxury brands)such as)Dior)is counting on)Japan’s luxury market to)rise in)2018)due) to)the)booming tourism. • Chinese)consumers)account)for)more)than)$7.4)billion)in)annual)spending) on)luxury)goods.)In)other)words,)the)mainland)residents)make)up)almost) 1/3)of)the)entire)global)luxury)market,)numbers)that)are)likely)to)grow)in) the)near)future.

2019)) • Chinese)consumers)are)leading)the)positive)growth)trend)around)the) world.)Their)share)of)global)spending)has)continued)to)rise)(now) estimated)at)33%)of)global)luxury)spend.)In)Mainland)China,)luxury)sales) grew)18)percent,)driven)by)rising)demand)rather)than)by)price)increases. • Luxury)purchases)in)Japan)softened)slightly. However,)retail)sales)still) grew)at)3)percent)at)current)exchange)rates)to)€22)billion. Increased) consumption)from)tourists)in)Japan)is)prompting)brands)to)rethink) their)distribution)models.

2019)) •

Across)the)rest)of)Asia)retail)sales)grew)7%,)due)to)dynamic)growth)in) South)Korea,)driven)by)strong)local)consumption. Brisk)growth)in)other) Asian)countries)– Singapore,)Thailand)and)Taiwan)– also) contributed. Hong)Kong)and)Macau)benefitted)from)Chinese)purchases.

In)conclusion,)in)the)past)20)years,)Asia)has)become)the)world's) largest)market for)personal)luxury)goods)such)as)clothing)and)jewelry.)

Source: Bain#&#Company#Fall-Winter#2016#Luxury#Goods#Worldwide#Market#Study

Among)which,)Chinese)consumers)will)represent)a)major)force) behind)this)increase)in)luxury)spending.)

Source: McKinsey)&)Company)2017)China#Luxury#Report

Today, Asia is the most important region for luxury goods worldwide, Shoppers in Mainland China continued to lead growth of the luxury industry globally.

UNDERSTAND'LUXURY'IN' AND'LUXURY'IN'ASIA UNDERST AND'LUXURY'IN' ASIA

HOW IS'LUXURY'IN'ASIA'DIFFERENT?

Group'Discussion:'How'East'&'West'perceive luxury?

EAST Purchasing Drive/) Motivation Culture/)Buying Behavior Value)Perceptions Social)Influence Societal factors

WEST

Why luxury brands'should avoid cookie-cutter'approach?' EAST

WEST

Purchasing Drive/) Motivation

Social status,)achievement,)wealth

Pleasure, less attached to)psychological meaning

Culture/)Buying Behavior

•

Culturally)collectivist)countries (people)emphasize) the)social)relationship)and)group)welfare)over) individual)needs.)) A distraction)from)the)problems)in)their)lives.)

• •

Individualistic mindset The)view of)self)is defined by)one’s own opinion) and)tastes)and)not)being swayed by)social) pressure)to)conform.

Positional)value)consumption. Quality driven)=)therefore)willing)to)pay)a)premium) price. Comprehensive)values)associated)with)luxury) fashion)brands.)

•

Likely)to)be)drawn)by)messages)about)the) product’s)social)acceptability)&)by)symbolism) connected)to)achievement,)prestige)and)wealth.)

Use)material)possessions)and)brand)names)to) reinforce)their)social)identity.) Chinese)consumers)are)the)most)influenced)by) word-of)mouth)strategy)when)buying)new)goods. Tend)to)comply)with)social)pressure

•

Less)affected)by)the)influence)of)reference) groups. Personal)motive)oriented)consumers)are) concerned)with)being)able)to)identify)their) internal)self)with)the)product,)gain)an)enjoyable) experience)from)the)product)and)match)their) individual)tastes)to)the)product’s)image)

• Value)Perceptions

• • •

Social)Influence

• • •

Societal factors

•

Government policies,)economy, political attitudes,)global)events…etc.

Although consumers in all these markets thought that a product’s functional value was important indicates one area where the same kinds of messages might cut fer ent co untries in differ ferent countries through, the clear message is that dif East and W est per cei ve luxuries very dif fer ently West percei ceive differ ferently ently..

WHAT CAN WE LEARN FROM THESE EXAMPLES?

While luxury in Asia is booming with the rise of new money and an affluent consumption class, the picture is not all rosy for the luxury brands within or outside of Asia, many luxury brands have their work cut out for the present and future in figuring out how to succeed in these rapidly growing, but ever so competitive and fickle markets.

ASIAN'LUXURY'NEW'TREN RY'NEW'TRENDS ASIAN'LUXU RY'NEW'TREN DS WHAT S'NEXT? WHA T ’S'NE XT?

New)luxury)strategy)In)Asia? e-comm commerce'to erce'too comm erce'to o ,'led' In'the'Asia'Pacific'region,'luxury'brands'are'slowly'adopting' eby'names'like'Gucci,'Louis'Vuitton,'and'others'who'now'have'exclusive'online' Clearly,'the'futur ,'the'future'of'lux e'of'luxury ury'r 'reta etail'in'Asi il'in'Asia'is' ,'the'futur e'of'lux ury 'r eta il'in'Asi a'is'omnichannel.' stores.'Clearly

The'inherent'nature'of'luxury'brands'is'such'that'it'demands'exclusivity'and'deep' personalization.'These'brands'ride'high'on'amazing'customer'experiences,'and' nal' wisd om'in al' ad e'away' conventional' nal'wisd wisdom'in om'in''luxury'circles'is'that'digit luxury'circles'is'that'digital' al'ad advvertising ertising''can'tak can'take'away' the'conventio from'everything'that'has'historic om'everything'that'has'historically' ally'demanded' demanded'lux luxury'brands fr om'everything'that'has'historic ally' demanded' lux ury'brands .' ggest' where'the'biggest' This'wisdom,'however,'may'not'work'in'the'Asia'Pacific'region' where'the'bi luxury'consumer s'are'the'digital'na tives' – bab y'boomer s'and'm illennials .'By'2020,' luxury'consumers'are'the'digital'na s'are'the'digital'natives' tives'– baby'boomer y'boomers'and'm s'and'millennials digital'is'e al'is'expected'to'a xpected'to'account' ccount'ffor'25 or'25%' %'of'tot of'total'media'ad'spending'in'sev al'media'ad'spending'in'sever eral'parts' digit al'is'e xpected'to'a ccount' %' of'tot al'media'ad'spending'in'sev er al'parts' of'Asia almost'60%' %'of'luxury'sales't of'luxury'sales'toda oday'is'digit y'is'digitally' ally'influenced of' Asia.'Moreover,'almost'60 %' of'luxury'sales't oda y'is'digit ally' influenced .'

New)luxury)strategy)In)Asia? Asian'luxury'goods'consumption'is'highly'influenced'by' social'media'and' influencer influencerss,'not'just'by'traditional'channels'such'as'print'and'TV'advertising.' actively'inv investing'in' esting'in'social'media'channels' inv esting'in' social'media'channels' like'Facebook'as'well'as' Brands'are'actively' hosting'high'quality'c ting'high'quality'cont ontent hos ting'high'quality'c ont ent on'their'YouTube'channels.'Several'of'these'brands' are'also'taking'their'Facebook'and'Instagram'operations'in-house,'and'thus' constantly'need'audience'data'to'ensure'that'their'content'and'approach'to'these' new'marketing'initiatives'is'rooted'in'deep'data.'

As'the'uptake'of'digital'advertising'grows'among'luxury'brands'in'Asia,' undersstanding'the'cultur anding'the'cultural'nuances'and'int al'nuances'and'interes erests'of' ts'of'affluent affluent''cons consumers'w umers'will' under al'nuances'and'int eres ts'of' affluent umers'w ill' become'increasingly'crucial.' become'incr easingly'crucial.' These'insights'will'be'the'driving'force'behind' creating'personalized'and'effective'marketing'strategies'that'engage'audiences' and'inspire'them'into'action.

Successful luxury brands'in'Asia'– Burberry Co Ratberry tberry’’ Camp Campaign Burberry Won Over Chinese C onsumers With ‘Ra tberry aign

http://chinafilminsider.com/cbi-case-study-burberry-ratberry/

Successful luxury brands'in'Asia'– Cartier'I

Cartier’s)“520”)WeChat)campaign)plays)off)the)classic)“Pac-Man”)to)promote)its)“Amulette”)collection.

Successful luxury brands'in'Asia'– Dior

Successful luxury brands'in'Asia'– Dior

Successful luxury brands'in'Asia'– Chanel

Successful luxury brands'in'Asia'– Longchamp

https://www.youtube.com/watch?v=a5B9VkZq-_U

Tw Two o key qu questions estions reg rega ardi rdin ng the curr current ent ho homogeneo mogeneo mogeneous us tr treatment eatment of Asian consumers consumers::

• What underlying values consumers in Asia associate with luxury brands? • How can a luxury brand profit from these rapidly growing, competitive and diverse markets?

2020 UPCOMING TRENDS

HERITAGE)CULTURE)

RESPONSIVE) PERSONALISATION

Inclusion)&)Fluidity

Sustainable Luxury

China'Has'Changed'The'Luxury'Retail'Market

Video#by#Business#Traveller TV#

Will sustainable luxury win the heart of the consumers in Asia? Who is the driver behind this trend?

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