Market Segment & size One characteristic according to the case was that the luxury industry targets a market segment of high income earners who do not compromise on style, uniqueness and quality. The case described high income earners as those with income levels ranging from $300,000 and above. This market segment can be found in developed countries such as Europe and United State, which by estimation worth over $105 billion in 2005 and was expected to grow at 7% to reach $112 billion in the following year. However, firms in the luxury goods market are spreading their tentacles to other countries from emerging markets such as India and China. They are able to capture this market using the affordable luxury goods strategy.
Its definition how people look at the competition in an industry. An high threat of new entrance can make the industry very competitive and cause the existing competitors to lost profit. In this case, Louis Vuitton threat of new entrants are Gucci, Chanel and Prada, these are the luxury brands that rely on the imagery of their products to appeal to the high-end market. Their pricing creates a high quality images and position that customer claims as a status symbol. Therefore customer would compare these few brands before buying of one the
Clothing industry is one of the most competitive industries in the world because people often buy clothes almost every season. Because of the weather, people need to buy clothes for each season. Especially United States, it has one of the largest clothing marketing in the world. According to statista (n.d,) the size of the clothing market in the United States was 225 billion dollar in 2015. It was same size of the 28 percent of global clothing industry.
There are various definitions of luxury brands. For example, luxury brands are defined as products whose price and quality ratios are the highest in the market as compared to other products of the same kind (McKinsey, 1990). Even impoverished people in developing countries, who cannot afford food and shelter on a daily basis, are willing to pay a premium for branded products (Van Kempen, 2004). A clear understanding of the factors that influence consumers to purchase luxury brands is necessary to inform marketers so that they can devise strategies for global luxury brands. Understanding how consumers ' underlying motivations to purchase luxury brands and consumer buying patterns differ by culture and why those differences occur is important for marketers (Bian & Forsythe, 2011).
BMW targets to the people who have a very high income and can afford a costly car. This is how BMW differentiates itself within the other car companies. They target segments that have a reputation and fame with his occupation. It is understood that any person would buy a BMW car that have a lot of money to spend on a car. BMW has understood the psychographic of this segment as well.
The brands set different prices of its product base on design, size and heritage. This is due to brand loyalty that each brand possesses by each luxury group. Particularly put extensive brand portfolio to cover different customer segments. As such, the brand is niche in the market leading to rivalry of the competitors in this industry to
Over the past 30 years China has risen from the rubble, it has undergone a social, economic, political and environmental change so quickly that it astonishes the rest of the world. In the blink of an eye, it has become the manufacturing capital of the world. China has proven that it is possible to have a communist-capitalist government system. Although the transformation China has undergone is unbelievable, the country has also run into many problems along the way like overpopulation, environmental issues causing the economic growth is starting to slow down. China has had the largest ongoing migration in history, currently the government is planning to move 250 million people from farms to urban cities (New York Times).
In any case scholars (Shukla & Purani 2011) observe that the word luxury brings no clear understanding because to the level of involvement and value recognition from others. As referred to Ling (2009) Luxuries product are characterized by very good quality , high price , stylish design ,heritage , elites, reputation ,unavailability and clear impression of the identity , and According to (Danziger ,2005 ) noted luxuries are the additional items in our life that make it all the more satisfying ,all the more agreeable and more enjoyable and charming . Luxury product ,reflect a wide idea that have three fundamental characteristics ( Weidman at al 2009) and it is agreed by the most academic studies : very high quality ,costly and not very essential for ordinary living , and the consumption of such items includes purchasing a brand that represents a value to both the individual and to the significant others. As it were buy and display luxuries product covey esteem to the owner and social recognition (Vigneron and Johnson 2004). Watching the development of luxuries brand purchase in the most recent couple of decades, scholars
Individuals who come from this countries who just amassed a great wealth because of amazing performance of the economy would want to taste a luxury brand as Gucci. Moreover, they create competitive advantage in different business segments. Finally, there need is to expand and produce more luxurious products arise. Threats There is a problem that Gucci needs new marketing strategy because there is lack of innovation. The luxury goods carry the highest level of items produced for extremely rich people.
That is why a luxury brand must have a story, a myth to tell. The brand and its story have to be spoken about without getting taken for a mass-market brand (Okonkwo, 2010). Public relation programmes are a tool luxury brands use to increase visibility. Such programmes include events, exhibitions, news stories and sponsoring from a certain sector. The emphasis of those PR programmes reserved at a limited audience must lie on excitement and emotion (Catry, 2003) and must portray the brand’s heritage and craftsmanship while involving celebrities and influencers (Liu et al., 2016).