Fang Jun Business Dialy, 18 Dec. 2008

Luxury Marketing in Downturn

Wharton Knowledge on Line issued one article recently Luxury Brand: High-end Marketing in Downturn, in which the viewpoints are very suggestive: “With 2009 is about to be the most challenging year for those generations who pursue luxury, the plan salesmen use to lock those young girls who chase fashion and to expand rapidly to enter the new rich colony of Russia and UAE turns to be 'outdate' suddenly. The 'popular' measure to sale luxury in rough period is to cater for the demand of the richest and the most loyal clients now days."

Here are some extracted viewpoints and analysis:

"I think we will lose a few clients who chase fashion due to economic crisis. ......the core of luxury brand are the really richest clients." the majordomo of global marketing and advertisement of Tom Ford International said.

Team discussants make a consensus, it is a awful tactic to attract those customers who are in the bottom of economic stratum because that even high-end customers also would find themselves restricted by economic situation in downturn.

A great deal of experts consider that the economic suffering brought along by increasing economic depression will be embodied disproportionately on these salesmen who are engaged in such industries as top-grade perfume, fashionable dress and delicate accessories. The investigation report issued by Bain Company in October shows development speed appears the signal of slowing down in individual luxury industry including footwear, Jewelry and fashionable dress; according to the report's forecast, the sale will decrease by from 3% to 7% in 2009 if this current tendency would continue.

Several team discussants point out that, their core customers who are really rich person maybe will cut down some free dominated expenditure but won't do the same thing to luxury indiscriminately. Randy Kabat, vice-president of Prada's (USA) marketing and advertisement, pointed out that approximately 50% of the company's sale benefit from these 5% clients, but she still worried about that they would lose some so called "fashion-chasing" middle-class customers in downturn--those young girls who spend money like water to buy famous brand bag.

Of course it is the key that never take any measure which will damage famous luxury brand. "Good management can stand the favorable circumstance and adversity, remember that fashion won't change forever," Patrick Abouchalache says.

Team discussants have a consensus, compared high-end luxury company with large-scaled mass consumption company; there is a great difference when it comes to the marketing and brand of Patrick Abouchalache. The latter one always seeks some scaled market vacancy in common and then to create new product to fill this kind of gap. However, as for luxury, they point out that the business plans count on designers' artistic imagination, by which they hope to attract consumers.

Luxury salesmen think that they can finally get through this financial crisis if they could create the demand successfully. Maybe this thought is against intuition, however, Abouchalache thinks that, the demand to consumption such as Cheerios and so on is limited, but the demand to luxury is limitless in certain extent.

Despite of global economic situation is intense, the luxury salesmen say that their main task will not be alternated: to sale more fascinating life style to those customers who chase fashion. "You are just buy that dream," Carbat says, "you are buying that splendid theme, which are our job."

link to see the whole article

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