We connect brands to culture We connect brands to culture
We study Culture people language perception behavior We study
Culture people language perception behavior
INTRODUCTION What is Luxury?
INTRODUCTION In the 14th century, luxury was originally a
pejorative word, denoting sinful self-indulgence. 14
Luxury is the opposite of vulgarity Coco Chanel Luxury is not
the opposite of poverty; it is the opposite of vulgarity Luxury is
the opposite of vulgarity Coco Chanel Luxury is not the opposite of
poverty; it is the opposite of vulgarity
INTRODUCTION WE DONT NEED IT
INTRODUCTION But it is interwoven into our own sense of
self
~LUXURY~ Its unbelievable how much you dont know About the game
youve been playing all your life-Mickey Mantle ~LUXURY~ Its
unbelievable how much you dont know About the game youve been
playing all your life-Mickey Mantle Luxury is something that we
continue to study, something that in every generation gets its
definitions, something that keeps developing and in movement
continuously.
Luxury brands are regarded as images in the mind of consumers
that comprise associations about a high level of : PRICE, QUALITY,
AESTHETICS, RARITY &SPECIALITY. (By Klaus Heine Dec 2011) 2011
12
Authentic Brands deliver Poetry Authentic Brands deliver Poetry
According to Forrester studies.brands that distinguish themselves
on emotional attributes can capture 60 percent greater
loyalty.
The compass for luxurys new codes of meaning. These four codes
reflect polarities of meaning and reflect a sense of how brands
must balance the realities of how culture shapes their
relevance.
Rank The last bastion of conspicuous consumption. Rank The last
bastion of conspicuous consumption.
1990s Consumption as a culture of keeping up 1990s Consumption
as a culture of keeping up you drove a Hyundai to get here tonight,
I drove an eighty thousand dollar BMW.
Rank relies on how informed you are Maestro Dobel tequilas
small Batch production is noted by handwritten date and bottle
numbers, as well as distiller name Dobel
We are forced to reflect on our consumption in ways we have
never done before. We are forced to reflect on our consumption in
ways we have never done before. We are forced to reflect on our
consumption in ways we have never done before. We are forced to
reflect on our consumption in ways we have never done before.
Restraint trumps decadence Guccis initiative toward FSC paper
and cutting down excess packaging is only one angle of a larger
sustainability campaign. FSC
With choice come Responsibility If you can afford all the
riches in the world, its impossible not to feel the gravity of
choice and be compelled to give back or take action.
Perfection Perfection A relentless pursuit of perfecting the
process by which an object is crafted.
Control of process Is Critical Chanel buys seven of the most
specialized ateliers in Paris, Ensuring continuation of the houses
own couture techniques
Troon NL Dutch Dockland 18 Perfection should feed
transcendence. Its emotive to do something special that no one else
can
Freedom Freedom The pursuit of personal acquisition and
creative accomplishments.
The power Of one The power Of one Freedom is about Creative
beginnings.( like Coco Chanel)
We need to indulge In playful stories Poking fun at himself,
The bitter Chocolatier tells his tales of Misfortune throughout his
life through different flavors. Bitter Chocolatier
Globalization has broadened the Narrative Globalization has
broadened the Narrative More than half of the growth in global
demand for imports is now originating in developing countries.
RECASTING ASSUMPTIONS RECASTING ASSUMPTIONS SPOTLIGHTING IRONIES
SPOTLIGHTING IRONIES
100 MILLION CHINESE LUXURY CONSUMERS. INTRODUCTION
ALREADY THE SECOND LARGEST LUXURY MARKET IN THE WORLD.
INTRODUCTION
INTRODUCTION THE WORLDS TOP LUXURY MARKET BY 2015. 2015
INTRODUCTION THE ONLY COUNTRY WHERE MEN CONSUME MORE LUXURY
THAN WOMEN.
INTRODUCTION THE WORLDS YOUNGEST LUXURY MARKET, WITH PEOPLE IN
THEIR 30S. 30
INTRODUCTION WHATS NEXT ?
INTRODUCTION THE NEXT GENERATION
INTRODUCTION THEY WILL LOOK AND BUY DIFFERENT.
BUT HOW? INTRODUCTION
To identify the potential for any brand behind these
over-whelming figures, we need to understand what luxury buyers try
to achieve and sell them what they need to succeed
INTRODUCTION
Analyze changing life drivers and desires of Chinese luxury
consumers to identify upcoming consumer requirements towards luxury
brands. Analyze changing life drivers and desires of Chinese luxury
consumers to identify upcoming consumer requirements towards luxury
brands. -Which social changes shape the life drivers and
motivations of chinas consumers? -Which new consumer needs will
challenge Chinas rising luxury market? -How to address to these
needs with products, marketing and services?
Agenda Agenda 1. Peoples Republic of Change 2. Luxury in a
shift 3. 2010 Faces of Luxury 2010 4. 2011 2011 4 Tapping Chinas
luxury goods market 2011 by McKinsey&company April 2011.
Peoples Republic of Change Peoples Republic of Change The
future of luxury is based on a fundamental change of social values
from the past to the present. The future of luxury is based on a
fundamental change of social values from the past to the present.
Within the last 60 years Chinese consumers underwent two major
value shifts, which significantly impacted their lives, beliefs and
buying habits.
Three decades of communism were followed by three decades
capitalism. Now China slowly transitions into three decades of
consumerism. Three decades of communism were followed by three
decades capitalism. Now China slowly transitions into three decades
of consumerism. Peoples Republic of Change
The Chinese market is influenced by three generations, who
possess contrary ideals. The Chinese market is influenced by three
generations, who possess contrary ideals. 1.Baby Boomers
2.Generation X X 3.Generation Y Y Peoples Republic of Chang Peoples
Republic of Change Peoples Republic of Change
Baby Boomers (1950-1964): Dominated by political figures and
movements. They respond to politics and believe in heroes.
1950-1964 Peoples Republic of Chang
This generation lost its creativity with the Cultural
Revolution. Following and imitating others was the only way for
social development. Money is power and power is everything! The
baby boomers are frugal people ,trained not to desire material
goods and creaturely comfort. Nowdays some of them are the richest
people in china. They splurge to impress. Money is power to them
and power is everything. People republic of change
Generation X(1965-1979):A generation of realists Who wake up
after Tiananmen Square protests, Who believe only in themselves . X
1965-1979 Peoples republic of change Peoples republic of
change
Mr. &Mrs. X are opportunists. They were educated by Mao and
trained by Bill Gates. They are open to new things and appreciate
originality. X Money can change your life Generation X suffers a
collective insecurity from living through so much change. They
therefor trust in material security and status. 60% of them buy
luxury goods to increase their self-confidence! Their heroes are
the rich and famous entrepreneurs who made it. X 60% Generation X
is the majority of these who keep the 80% of Chinese private
business running. 30% X They make money, show off the money, and
spend the money. Peoples Republic of change
Generation Y(1980-1995):Possesses a Chinese mindset but a
global life style Shaped by McDonalds, Google and MBAs Y 1980-1995
MBA Peoples Republic of change
Self made web-clips offer the best insight to Chinas youth
detailing their dreams and believes first hand: tudou.com tudou.com
I am what I am. You're serving me! Generation Y is the first
Chinese generation born into consumerism. They grew up in the
information age with internet and mobile phones. Y They are
overwhelmed with information and personal choices. Are you Hello
kitty or Rebel? Gym or yoga? Stay in china or go abroad? Artist or
businessman? They are the first generation with the right to choose
their career ,lifestyle and cultural affinity. Peoples Republic of
change
For generation Y there is nothing wrong with hedonism and self
rewarding. Y They buy because the product emotionally bond with
their self identity, because of peer pressure, because its a fad.
They are often educated outside China and will spend more on luxury
products, because they wont know what it means to be without money.
They are not frugal, nor do they buy status, believing that
consumption is a part of self- expression. Generation Y represent
the future of China. Today they are the ones dictating what is cool
and what is not. This generation will be the first where business
and political elites will be surpassed by design and style elites.
Y People s Republic of change People s Republic of change
Chinas culture today is mainly determinate by security,
harmony, control and formation than lust, strangeness or
sensuality. Peoples republic of change
The next generation will open the door for value shift towards
consumerism, self-expression and hedonism. Peoples republic of
change
China turns into a global society China turns into a global
society The fundamental value shift from communism to capitalism to
consumerism will unleash a new type of consumer with advanced
preferences towards brands, products and services. Peoples Republic
of change Peoples Republic of Change Peoples Republic of
Change
Agenda Agenda 1. Peoples Republic of Change 2. Luxury in a
shift 3. 2010 Faces of Luxury 2010 4. 2011 2011 4 Tapping Chinas
luxury goods market 2011 by McKinsey&company April 2011.
This new luxury will possess elements of showing ones Status
and self-reward. But the way to achieve it will shift The next
level. Luxury in a Shift
There are four types of luxury consumers based on social
background ,luxury experience and income level. Luxury in a
Shift
While most of Chinese luxury shoppers are the Nouveau rich,
many of them are still looking for their place in the world of lux.
Luxury in a Shift
Nouveau Rich: Showing-off works! 65% of Chinese are convinced
that who own luxury brands are successful people! 65 Luxury in a
Shift
Nouveau Rich: Movie star Fan Bingbing is preferred star in
advertisements and one icon for the Nouveau Rich in China. I want
to stand out! Background: Entrepreneurs, celebrities or young
business who are the first in their family, who can afford luxury.
They still rank themselves with average people. Motivation: They
want to show their success and want to stand out from the mass.
They dont care about others, but due to their cultural background
formation still rules. Habits: To balance formation and their
longing to be special they buy the most popular brands with high
mass reputation. (Armani,BMW,Mercedes,Rolex,Gucci) Luxury is in a
Shift
Understaters: Not show but know! About 70% of Chinese believe
that owning Luxury brands doesn't necessarily mean one is
fashionable. 70 Luxury in a Shift
Understaters: Successful actor Lu Yi spends his time with his
family Instead on superficial glamorous events. I want to fit in!
Background: successful creative ,rich people from behind the
scenece or experienced luxury consumers. They are international,
speak English and understand luxury as life style. Motivation: They
want to fit in to a sophisticated group of international and
stylish people. They want differentiate themselves from superficial
show-off attitudes. Habits: They mix establish brands with niche
brands to create their individual style as long as it fits into the
peer group. They tend to be a bit artistic and edgy(MINI,Y-3,Issey
Miyake,Marc Jacobs,MIU MIU) Luxury is in a Shift
Connoisseurs: Already today about 60% of Luxury consumers, buy
luxury to reward themselves. 60 Luxury is in a Shift
Connoisseurs : Jiang Wen is a famous movie director and king of
the Chinese film. He enjoys his life away from hustle and bustle. I
want to enjoy my life! Background: either they are self-made
businessmen with a good self perception pr they grew up in a
financial hedge. Money is seen as a key not as a treasure.
Motivation: They want to enjoy life. Life balance and sensuality
are very important. soft luxury is highly appreciated. Habits: They
often live a quite life, Enjoy excellent foods, traveling but also
doing charity activities. Luxury brands have to offer them a
personal relationship, a buying experience and high
quality(Bulthaup,patek philippe,ferreti yatchts, cohiba, Hennessy)
, Luxury is in a Shift
Spirituals: They often overseas born Chinese. With a growing
number of Chinese returning back home this group is slowly rising.
Luxury is in a Shift
Spirituals: Wang Fei is a talented singer who incarnates Asian
musical culture. She lives an international, individual and edgy
lifestyle. I wan to find myself! Background: Grow up in a well off
environment or with an artistic background. Luxury goods are
nothing more than commodities for them. Motivation: They want to
find the meaning of their life. They are looking for authenticity
and spiritual experiences. Habits: Spirituals are often involved in
charity and fundraising. Though they are highly individualistic,
striving for spiritual adventures and bored by the superficial
world of luxury. Reversion to nature and the primordial dominates
their lives(Yo,Linda Loudermilk, Leica). , Luxury is in a
Shift
Luxury is in a Shift Brand preferences of different consumer
types
Luxury is in a Shift Chinas luxury market will be dominated by
the Nouveau Rich and Under- Staters,but Connoisseurs will have a
significant impact on them.
Luxury is in a Shift Chinas luxury market will give birth to
new attitudes towards luxury to keep pace with developing mindset
of Chinese luxury consumers
These upcoming attitudes are the output of sustainable shift in
the mindset of luxury consumers These upcoming attitudes are the
output of sustainable shift in the mindset of luxury consumers
Sensuality: Authenticity Lust : Enjoyment Strangeness :
Experience
With a rising consumers variety Chinas luxury market will be
more diversified. Luxury is in a Shift
Chinas luxury shoppers of tomorrow are brand savvy. For them
the big price tag and an even bigger label name doesnt make a
product luxury. Luxury is in a Shift
Agenda Agenda 1. Peoples Republic of Change 2. Luxury in a
shift 3. 2010 Faces of Luxury 2010 4. 2011 2011 4 Tapping Chinas
luxury goods market 2011 by McKinsey&company April 2011.
63% of young Nouveau Rich want to enjoy the present moment as
much as possible and 76% would pay more to buy natural healthy
foods. 63% 76% The experiential, authentic and enjoyable side of
luxury products and brands will determine if consumers consider
them luxury or not. Faces of Luxury 2010 2010
Marketing Approaches In the future luxury consumers will save
as much as possible, adhering to the motto: Make luxury an
investment to make most of ones life. Encourage national pride but
dont try to be Chinese. Revive your brand with enjoyable and
entertaining content not with a painful interruption of it. Take
over responsibility and share your success. Charity is highly
appreciated within the community of luxury buyers. For the majority
of Chinas upper class1 luxury will be out of reach. Affordable
accessories will be a market to target. Marketing will be dominated
by seduction, education and establishing 1-to-1 customer
relationship Faces of Luxury 2010 2010
POS Service Approach The rich has less time. Time saving
services and efficiency at the POS are appreciated by customers.
Chinese are comfort junkies. Space, silence and customization are
important. Escapism is common in darwinistic China. Offer a
shopping experience which allows to escape from reality for a
moment. Luxury buyers adopt a global lifestyle and are eager to
learn about a brand. Coaching is more than welcome. Nowadays
loneliness is pervasive in all social classes. Make your brand to a
place where customers find kindred spirit. Service makes the
difference between counterfeit and original. Innovative services
will be key in strong customer relationships. Faces of Luxury 2010
2010
- - - - Product Packaging is often the first brand experience
for luxury consumers and therefore most important. Chinas
hyper-growth left a lack of pureness and authenticity. Products
that tell a story about their origin and ingredients promise a
desirable piece of pureness. Chinese consumers live between
national pride and global attitudes. Global luxury goods touching
Chinese tradition will find a grateful audience. Chinese are
opportunists and believe what they see. They dont just buy a
product, they buy a bit of an admirable world of lux, not made in
China. Products give brands a body and an appearance to make brand
values alive. Therefore authentic luxury needs to be an experience
for all senses. Faces of Luxury 2010 2010
The following cases illustrate a scenario of the Chinese world
of deluxe In 2010. 2010 Many brands which are successful in the
west, flop in china. Therefore, fine-tune global strategies
regional distinctions. Many brands which are successful in the
west, flop in china. Therefore, fine-tune global strategies
regional distinctions. Faces of Luxury 2010 2010 Faces of Luxury
2010 2010
Authenticity of a brand means consistency in design,
communication, service and also manufacturing Gucci re opens
factories in Italy Insight: 70% of Chinese appreciate the superior
quality of Luxury brands but doubt that superior quality can be
made in China. 70 Solution: While brand awareness is still low, The
country of origin is more important. Therefor Gucci decided ro re
establish some of their factories in Italy. An Europe made Gucci
bag not only guarantees for superior quality but can be easily
identified as counterfeit. Output: The trust in the quality of
Gucci products increased while the number of Counterfeits slightly
declined. Faces of Luxury 2010 2010
An individually made stamp and personally by Oppenheim's
Factory-an experience customers are willing to pay for. Oppenheim
sold stamp edition in 30 days. 30 Insight: After two decades of
Westernizing Chinese consumers rediscover their roots and
appreciate luxury that revive their tradition. Solution: Oppenheim,
maker of high-quality writing instruments, released an edition of
signature stamps, which have a long tradition in China. After
launching a jade made USB-stick last year, Oppenheim proved again
its excellent consumer understanding. USB Output: Customers
appreciate the classical look of the black-white stamp but also the
high quality of the stamp signature, which is handmade in Chinas
oldest stamp factory. Faces of Luxury 2010 2010
The staff in showrooms are important communication of the brand
and a strong influence on the nouveau rich who have little brand
knowledge. LV succeeds with sophisticated staff. LV Insight:
Customers complain about pushy badly trained staff in luxury
stores. Solution: Louis Vuitton recognized this challenge early and
educated its staff partly in Hong Kong. They offer specific courses
and international staff exchange to push their staff to the same
sophisticated level as their customers. Output: Since LV also
offers home visits to save customer's time, customers begin to
build personal relationships with their style consultants during
their style-time together. LV style-time Faces of Luxury 2010
2010
Luxury market is like a dating : its about long term
relationships. If customers think you just want money, they want a
divorce. Many women felt in love with HERMES Insight: In a rushing
, anonymous world with over populated cities also luxury consumers
are looking for attention and unique experiences. Concept: Hermes
took-up this desire when they introduced its new collection of
Luxury finesse. With a handwritten, poetic letters store manager Li
Dan indulge the senses of Beijings luxury elite. It took three days
to write all letters but in response many women felt in love with
the French luxury brands Hermes. Outout: And as its said Li Dan
indulged not only the senses of his upscale clients but also their
wallets and credit cards. Faces of Luxury 2010 2010
Consumers look for new, inspirational shopping experiences that
excite the senses. Three on the Bund opens Men Only Zone Insight:
Chinas Connoisseurs are spending more for cosmetics and fragrances.
They look for shops that cater to their special needs- shops which
are bold clean and cool. Concept: Together with Lancme Homme
Shanghais lxury shopping venue Three on the Bund has established a
pink-free world for male toiletries,providing everthing indulgent
men need to look and feel great. Output: The royal comfort
experience helped Lancme to introduce many other products and made
Three on the Bund the first choice of men. Faces of Luxury 2010
2010
Agenda Agenda 1. Peoples Republic of Change 2. Luxury in a
shift 3. 2010 Faces of Luxury 2010 4. 2011 2011 4 Tapping Chinas
luxury goods market 2011 by McKinsey&company April 2011.
Tapping Chinas luxury goods market By 2015, Chinese consumers
will account for more than 20%OR 180 billion renminbi
($27billion)of the global luxury sales. 2015 180 20 27
McKinsey&company April 2011 2011 4
Tapping Chinas luxury goods market McKinsey&company April
2011 2011 4 Even during the global recession in 2009,sales of
luxury goods increased by 16%,to about 64 billion renminbi 2009 16%
640 (-DOWN FROM THE 20%GROWTH OF PREVIOUS YEARS BUT FAR BETER THAN
THE PERFORMANCE OF MANY OTHER MAJOR LUXURY MARKETS.) 20%
13 million households in Chinas upper middle class (incomes
between 100,000 and 200,000 renminbi) Offer the biggest new growth
opportunity. 1300 10 20 13 million households in Chinas upper
middle class (incomes between 100,000 and 200,000 renminbi) Offer
the biggest new growth opportunity. 1300 10 20 Tapping Chinas
luxury goods market
McKinsey&company April 2011 2011 4 McKinsey&company
April 2011 2011 4
Tapping Chinas luxury goods market 2015 60 30 By 2015 luxury
sales in urban areas such as Qingdao,Wuxi will triple over the next
5 years, and could pass 500 million renminbi( in more than 60
cities compared with 30 today.) McKinsey&company April 2011
2011 4 New Geographic markets
Tapping Chinas luxury goods market Much of luxurys allure comes
from the opportunity to share in the rich cultural heritage
associated with a brand. McKinsey&company April 2011 2011
4
The fusion of inspirational elements from French and Chinese
culture captures the ethos of Qeelin, Chinas first luxury jewelry
brand. The brand was founded by Dennis Chan and Guillaume Brochard
who share the mutual dream of combining the rich aesthetic heritage
of China with the French mastery of luxury craftsmanship to create
stylish, contemporary jewelry. Launched in Paris, 2004, Qeelin
swiftly became an international brand. All Qeelin collections are
exclusively made of precious metals and stones, such as gold,
platinum, diamond, sapphire, ruby and naturally, the Chinese
national stone, jade
All the the facts and information of this presentation are
based on researches made by the following companies: 1.Asia-Pacific
Group. 2.SenarioDNA company SenarioDNA 3.McKinsey&Company
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