China becomes wealthier, luxury brands boom

The Chinese economy has been developing rapidly during the past years. The financial means of the Chinese people have increased, and by consequence the demand for luxury goods has grown noticeably. Sales of luxury vehicles have increased fourfold between 2005 and 2009, despite the financial crisis.

While luxury carmakers are putting more resources in the Chinese market, they have to take one thing into account: the unique psychology of Chinese people. Their pragmatism is one of the characteristics they have to deal with. Luxury car manufacturers use several marketing strategies to excite the Chinese buyers.

To make luxury cars more affordable for the Chinese population, they introduced entry-level luxury models and they offer cheap credit options. To lower the price even further, Mercedes launched the environment-friendly 1.6-liter C-Class, which qualifies for a sales tax cut and a subsidy, allowing young people to buy their dream car too.

Nick Z.
Source: People's Daily Online

Are luxury brands sustainable?

Any particular brand can become a luxury brand. The key is to create a hype but also to retain exclusive. But how can you stay a luxury brand in this time of age?

Luxury brands had a hard time facing the credit crunch, they had to lower their prices, but not too low, in order to keep their credibility and stay exclusive. Many people have lost a lot of money, and so they were forced to buy inferior or sumptuous goods instead of their usual luxurious products.

The managers of the luxury brands had to work out a new brand strategy. It's important that the strategy is flexible enough to easily adept with changes in economy but also be strong enough to compete with the risks that these brands have. Brand management is clearly an important subject of healty luxury brand. The managers should be aware of the value of their products, so they can have better customer relations. They also have to understand the changes in customer psychology and their shopping habits, in order to create a good marketing strategy.

Jana Vastenavondt
http://ezinearticles.com/?luxury-Brands-and-Their-Sustainability&id=5150002

Which luxury brand do you prefer?

According to the popular economic magazine Forbes, Gucci is the most desirable luxury brand. Forbes has done a survey in 48 countries with te simple question, what would you buy if money was not a problem.

The CEO of tis hot stuff brand is Mark Lee. Since he was in charge of Gucci, the sales have enlarged enormously.

What makes Gucci so popular? According to Michael Macko, Gucci is a brand wich is very high fashion and also commercial. Gucci was originally a leather goods company, that's why we link Gucci most of the time with his logo-ed handbags.

The runner-ups are Chanel and Calvin Klein. We all know Chanel from the little black dress and the perfume Chanel nr. 5. The products of Chanel stays classic but they are also stylish. Calvin Klein is become more and more popular since Phillips Van Heusen has taken over the company in 2003.

Who buys this luxury brands? Well according to forbes, the people of the United Arab Emirates and Hong Kong are luxury lovers. North America was on the bottom of the list. Maybe it's because only 20% of the citizens of Europe and North America think that the luxury brand has a higher quality then a non-designer comparing to 34% of the people in the United Arab Emirates and Hong Kong.

Jana Vastenavondt

http://www.forbes.com/2008/03/25/brand-luxury-desirable-forbeslife-cx_nr_0325style.html

Luxury Brands = Luxury Shares?

Expensive handbags and haute couture, big diamonds and golden watches, nice cars and delicious perfumes, who doesn't dream about luxury products? But are they really worth the money? Many economics will say 'no'. The investors amongst us may pose another question. What about the companies behind these products? Is it a good idea to buy their shares?

The middle classes in emerging markets like China, India and Russia are growing, and they have acquired a taste for the Western lifestyle too. More and more prosperous Asian tourists are purchasing luxury products during their stay in Europe. Of course, the companies behind these products seize their chance to penetrate these emerging markets too. But will this also result in a rise of their shares?

Let's take a look at three luxury good companies' shares and the recommendation of Bloomberg's brokers:

1. LVMW (€ 120)
   
   The LVMH group holds over 50 luxury brands. Henk Potts (equity analyst for Barclays Wealth) sees LVMH as a core holding in its sector, due to its high quality brands, strong management team, and significant earnings growth potential in addition to its recent acquisition of a stake in Hermès.
   
   Rating: buy 23, hold 10, sell 2.
   
   
2. BMW (€ 59)
   
   In 2009, Bayerische Motoren Werke (BMW) has sold almost as much units as in 2007 (before the financial crisis) and their global sales increased by 13% in the first half of 2010. It seems like the worst recession is behind for luxury car makers. According to Mr. Potts, the roll-out of the new series five has put BMW in a strong position.
   
   Rating: buy 28, hold 12, sell 4.
   
   
3. Polo Ralph Lauren ($ 110)
   
   In July, these shares have hit a low, but since then they have recovered by 40% due to increased global demand. Forbes blogger Zacks states they are "on sale" and recommends investors to buy them now.
   
   Rating: buy 5, hold 8, sell 0.

Other companies of luxury goods and their ratings:

1. Burberry: buy 3, hold 19, sell 3.
2. Mulberry: buy 2, hold 0, sell 0.
3. Richemont: buy 13, hold 14, sell 3.
4. Rolls-Royce: buy 10, hold 9, sell 7.
5. Tiffany's: buy 10, hold 9, sell 2.
6. Diageo: buy 20, hold 12, sell 3.
7. Inchcape: buy 7, hold 4, sell 3.

It seems like shares of luxury good companies are indeed doing rather well, with overall high 'buy' and/or 'hold' ratings, and low 'sell' ratings.

Nick Z.

Source: The Telegraph

Lol, humor and luxury!

Although humor and luxury seems incompatible, exclusive brands start combining them in order to reach Generation Y.

Imagine a prestigious serious man watching a commercial of Hermés featuring a fingerboard making tricks on some clothing products. Odd? Yes, but also childish funny.

Generation Y are known as people born around the mid-1980's and later. This means that nowadays they work and buy goods. This generation, also called the Millennials, is known for their tech-savvy nature and is less formal oriented.

Marketing managers of luxury brands believes that Millennials are more open minded and might be attracted to humorous advertisements. The Gen-Y luxury consumers might appreciate the childish humor and could be seduced to buy the featured product. Another strong point is, that in this way they can communicate to people who are not interested in the traditionally focus on respect, formality and prestige of luxury brands. They also show the brands’ product portfolio.

Though this innovative form of advertising seems promising, humor remains something personal. Not all luxury consumers are pleased with hilarious commercials. Most of the marketing managers are aware of this and are not fond of this new trend.

Andreas Verleysen

http://luxurysociety.com/articles/2010/11/humour-the-next-trend-in-digital-luxury-marketing

http://www.youtube.com/watch?v=wKVeSMDewnA&feature=player_embedded#!

Luxury brands on social networks

To stay popular, luxury brands have had to adjust to the new generation, and this generation is a social one, mainly on the internet. So they use the social network sites like; Facebook, Twitter, YouTube, and many more, to stay in touch with their consumers and future consumers.

For example Burberry, Christopher Baile, the chief creative officer has had a video chat session with some of the brand's two million fans on Facebook. He answered questions and the fans were able to see hem working in his office.

Michel Phan, a teacher of luxury brand management, says that luxury brands can not compete on their products alone. He says that the brand loyalty is low, so brands have to find ways to bind their customers to them.

The social networks are also a good way to assure the credibility of the brand. By putting images or videos of how the goods are made, the customers can see that your product has a good quality and that it"s been made by craftspeople.

So social networks can help the brands a lot by making the brands more accessible and transparent, but they have to be careful to keep the mystique en exclusivity that comes with a luxury brand.

Jana Vastenavondt

http://www.nytimes.com/2010/11/10/fashion/10iht-rcyber.html?scp=7&sq=luxury%20brands&st=cse

eBay not liable for counterfeit luxury products

On eBay, thousands of luxury brand products can be found at low prices. Unfortunately, in many cases these products, which are often shipped from Asia, are counterfeit. Although eBay only offers a virtual marketplace for individuals and doesn't sell products itself, the famous jewelry company Tiffany's & Co. sued eBay Inc, arguing that they should be held liable for trademark infringement.

The first trial dates from 2004, when a federal judge and later also a U.S. appeals court ruled that eBay cannot be held liable for trademark infringement, following the argumentation above. The court also acknowledged that eBay takes sufficient efforts to reduce the amount of counterfeit goods sold on their websites to a minimum.

Tiffany was not pleased with this ruling, and appealed to the Supreme Court. They said eBay has made a profit of $4.1 million from sales of counterfeit Tiffany jewelry between April 2000 en June 2004. eBay asked to reject this appeal, arguing that trademark laws for internet commerce are not to be changed by the courts, but by lawmakers in Congress. They also noticed that they already spend as much as $20 million per year on anti-fraud measures. On Monday, November 29, 2010, the Supreme Court rejected Tiffany's appeal without further comment.

Nick Z.
Source: Reuters