Creation of brand
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This document discusses the creation of a luxury brand. It begins by defining luxury and luxury brands, noting that luxury involves great expense and comfort. It then discusses some of the largest luxury goods producers like LVMH. It explores the birth of luxury brands and how advertising expenditure is typically 5-15% of sales revenue. The document then examines rational and emotional aspects of luxury brands and different luxury sectors. It outlines eight pillars of luxury branding: performance, pedigree, paucity, persona, public figures, placement, PR, and pricing. Finally, it provides insights into marketing luxury brands in India, including that Indian consumers are brand conscious but price sensitive and have high expectations of service.
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Creation of brand
- 1. Submitted for the partial fulfilment of the award of the degree of bachelor of business administration A project report on Study on creation of a luxury brand ALLPPT.com _ Free PowerPoint Templates, Diagrams and Charts
- 2. Defining luxury.. Luxury, luxury brand, luxury good. Luxury is a state of great comfort or elegance, especially when involving great expense. Luxury good is a good for which demand increases more than proportionally as income rises. It is in contrast to a “necessity good”, for which demand increases proportionally less than income. A luxury good is often synonymous with “superior” or “Veblen goods”. A luxury brand or prestige brand is a brand for which a majority of its products are luxury goods. It may also include certain brands whose names are associated with luxury, high price, or high quality, though few, if any, of their goods are currently considered luxury goods. price, or high quality, though few, if any, of their goods are currently considered luxury goods.
- 3. Luxury at its best. Birth of luxury LVMH (Louis Vuitton Moet Hennessy) is the largest luxury good producer in the world with over fifty brands, including Louis Vuitton, the brand with the world's first designer label. The LVMH group made a profit of €2 billion on sales of €12 billion in 2003. Other market leaders include Richemont and Kering (previously PPR, after it purchased the Gucci Group). A rather small group in comparison, the wealthy tend to be extremely influential. Once a brand gets an "endorsement" from members of this group, then the brand can be defined as a true "luxury" brand. An example of different product lines in the same brand is found in the automotive industry, with "entry-level" cars marketed to younger, less wealthy consumers, and higher-cost models for older and more wealthy consumers. The advertising expenditure for the average luxury brand is 5-15 percent of sales revenue. This rises to about 25 percent with the inclusion of other communication such as public relations, events and sponsorships.
- 4. Faces of luxury brand Rational Relational Functional Emotional Who are you? •Very expensive. •High brand awareness. •Available in Flagship stores. •Technically superior. •Very high in quality. What about you & me? •Status & stories. •Satisfying role play aspects. •Symbolic & iconic meaning. •Class of own. What are you? •Extravagant designs. •Unique craftsmanship. •Not known for extensive product use. What about you? •Memorable brand experience. •Social approval. •High on hedonism. •Satisfy desire.
- 7. 8 pillars of luxury Performance Performance refers to the delivery of superior experience of a luxury brand at two levels – first, at a product level and second, at an experiential level. At a product level, fundamentally it must satisfy the functional and utilitarian characteristic as well as deliver on its practical physical attributes – a recipe of quality or design excellence ingredients like craftsmanship, precision, materials, high quality, unique design, extraordinary product capabilities, technology & innovation. A luxury brand must perform at an experiential level as well, i.e. the emotional value of the brand the consumers buy into – beyond what the product is to what it represents. For example: Rolex stands of symbol of heroic achievement & Tiffany is a symbol of love and beauty.
- 8. Pedigree Many luxury brands have a rich pedigree and extraordinary history that turn in to an inseparable part of the brand’s mystique. This mystique is generally built around the exceptional legendary founder character of the past, making up an integral part of the brand story and brand personality. So, when consumers buy say a Cartier or a Chanel product - it is not only because of the product performance factor, but subconsciously they are also influenced by the brand’s rich lineage, herit age and the years of mastery. Coco Chanel started her business in 1913 and within a few decades, became a revolutionary couturier. With Chanel Coco Mademoiselle Campaigns in 1981,2008, 2009 & the recent 2011, Chanel has continuously leveraged its pedigree / brand mystique.
- 9. Paucity Over-revelation-and-distribution of luxury brand can cause dilution of luxury character, hence many brands try to maintain the perception that the goods are scarce. Case in point - Burberry diluted its brand image in the UK in the early 2000s by over-licensing its brand, thus reducing its image as a brand whose products were consumed only by the elite. Natural paucity is triggered by scarce ingredients like platinum, diamonds etc. and/or those goods that require exceptional human expertise for example handcrafted quality that constraints the mass production. Technology-driven paucity is as a result of conception-time involved in continuous innovation and research -&- development process. Tactical- driven paucity are more promotional in nature such as the limited editions or the special series to generate artificial desire and demand. Natural paucity Technical driven paucity Tactical driven paucity
- 10. Persona The persona of a luxury brand is largely a result of – first, its distinctive projection plus coherence of its applications across consumer touch-points and second, the brand communication through its advertising. The visual brand identity captures the brand’s personality, mystique & emotional values in a nutshell. The distinct and consistent orchestration of the identity is central to establishing the visibility, familiarity & common identifiable brand imagery.
- 11. Public Figures Public-figure or celebrities have been traditionally employed as one of the mark eting mix in luxury brand advertising and they still continue to garner attention, credibility and impact. Chopard has been official partner of the Cannes Film Festival since last 14 years, showcasing and premiering their collection by accessorizing celebrities on the red carpet. The Lebanese singer and UNICEF goodwill ambassador Nancy Ajram was Cartier’s special guest at the Cartier International Dubai Polo Challenge held in Dubai, UAE in 2010.
- 12. Placement The retail branded environment in luxury branding is all about heightening the consumer’s brand experience and amplifying the brand aura. Hence, the branded environment, the movement of truth, is where it must “live” the brand by orchestrating immaculate detailing that engages all senses of the discerning audience. Rolex associates itself with more than 150 events in golf, sailing, tennis, motor-sport, arts and at equestrian tournament vs. associating with sports like football / cricket that have more mass following.
- 13. PR(Public Relations) PR in luxury branding plays an enormous role in image proliferation of the brand, thereby subtly influencing public opinion. It is also employed to convey other supporting messages and attributes of the brand which cannot be explicitly captured in advertising, but by no means are less important to create brand’s personality, mystique and emotional values – whether it’s via the pedigree factor or via public-figure any of the previous 7 P’s mentioned. PR is utilized to generate buzz & convey the brand news, point of views of inspirers and influencers (celebrity talk or the designer speak), a crucial support for brand activation (like the fashion weeks, sport-events, themed previews, etc.).
- 14. Pricing Pricing plays a quite a big role in the way consumers perceive luxury brands. Consciously or sub-consciously, consumers tend to generate a mental luxury stature or image with the price-range that the brand operates. Therefore, it is important for luxury brands to price themselves right – as setting the price lower than the consumer expectation and willingness to pay can potentially harm the brand value, whereas the reverse can potentially not given enough justification for consumers to go ahead and buy. Another way employed by luxury brands is by creating an extension into a secondary line with relatively lower price points like Giorgio Armani’s - Armani Exchange, Roberto Cavalli’s - Just Cavalli, Prada’s – Miu Miu, Alexander McQueen’s - McQ lines.
- 16. Getting to know the Indian consumer
- 20. The Indian Picture Brand Conscious The Indian customer is aware of world trends be cause of growing travel overseas for business & Leisure travel, where they get exposed to best of the brands & luxury trends. Price Price Sensitive Demand value for money which is mostly because of traditional & cultural values.
- 21. Personalized connect It is very important because Indian consumer has high emotional association with products they own or acquire. High Expectations High standards of service expectation as the luxury consumer will mostly have long term association with the product.
- 22. Victims of Habit Consumers get accustomed to shopping abroad. They ‘d rather spend 200 pounds on a shirt There, than Rs. 200,000 here. It is tough getting them to change. Import duties are a headache Steep duties translate to prices 15% higher than in Europe. Jet setting wealthy Indians hence shop abroad- means luxury brands often struggle to make a profit in India. Indian presence is often seen as just a branding exercise.
- 23. Indian men love to shop Around the world, the mix is a 60:40 (women vs. men), but in India, its Skewed in favour of Menswear. Men's formal wear is the fastest Growing segment in India. So it makes Sense to focus on this segment.
- 24. This seasons trends are missing! Luxury retailers offer a limited product range & stock second rung products at astronomical prices. The customer thus, opts to buy from the stores abroad instead. India needs New York’s Fifth Avenue Luxury retailing in India is limited to a few shopping Plazas, select high locations, Malls & five star hotels lobbies. Just 3 centres which are in the Luxury segments are DLF Emporium in Delhi, UB City in Bangalore & Palladium in Mumbai. However the Right location & retail ambience for a brand are crucial.
- 25. Indian market : the to do list. Brands should be in for a 10 yr. Wait. Doing business in India is definitely not a wham bam thank you mam & certainly not a “ aao toh welcome, jao toh bheed kam” formula. Its a slow process but one that will eventually pay long term dividends.
- 26. Brands can JV with local partners which can help them to understand local markets better. with India’s FDI rules having a local partner becomes profitable. Prime examples are Reliance brands with Diesel Genesis colours with Burberry. DLF brands with Boggi. Partnership is the key.
- 27. Softer Price points. Brands would benefit by keeping their price competitive & offering entry level products as well. Pricing products at a comparatively lower level than its international price can be a great investment towards brand building. The Indian customer seeks the thrill of making a ‘steal’ bargain. Initially the brand can bear the higher import duties partly helping the customer to get oriented with the brand. Indianise product Foreign brands need to understand Indian Personality & fashion elements to Indianise their products. A win win situation for global brands is to utilise the talented & cost effective Indian designers. It worked So well for others so why not India.
- 28. Thank you Made by: sakshi tiwari Roll call : 88548