...manufacturer and marketer of luxury handbags in the UK. They are looking to explore the possibility of investing in setting up a new operation in China to cater to the local market. This presentation examines the risks and the opportunities involved. 2. Opportunities PESTEL analysis is used to study the external environment for the luxury goods market in China - Political factors: China has a single-party political system and the country has a long history of communist regimes. Even though the political forces have traditionally favoured a closed environment, post the accession to the WTO, China has slowly opened up the economy in most of the sectors for foreign investments. The increasing openness in the luxury goods market has resulted in the steep increase in the consumption of luxury products in China. Following chart shows that China is the fifth largest consumer of luxury goods in the world. [pic] Source: Economist (2013) China consumes about 25% of the total luxury handbags in the world. [pic] Source: Economist (2013) - Economic factors: Economic factors have significant impact on the demand for luxury products as the nature of demand for these goods is highly discretionary in nature. Following chart shows that the GDP growth of China. [pic] Source: Tradingeconomics (2014) It can be seen that the GDP growth rate has slowed down significantly since peaking in 2010. However, even at the current rate of 7.7% China is one of the fastest growing...
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...Development Plan for Blanc de Chine To: Lisa Liu, Vice CEO, Blanc de Chine Prepared by: Xiaoxi Zeng Submitted: 9 December 2014 Subject: Recommended strategy to for Blanc de Chine to enhance competitiveness Executive Summary: Luxury brand is regarded as the highest level of prestigious brand. Researchers underscore its intangible value and psychological value, for example: conspicuous value, society value, quality value and uniqueness value. Fashion always associates and integrates the past and the future. Blanc de Chine devoted itself into translating the past Chinese cultural value into modern fashion. Making a comparison among famous luxury brands, we can conclude that even though those companies use different adverting methods, they all try to broadcast their brand culture and concept. Their advertising objectives is in consistent with the researchers’ study. Therefore, the company can make a good use of its Chinese culture background to gain loyal customers. This paper provides with three detailed recommendations: a, culture exploring; b, establishing culture display platform; c, event advertising. Blanc de Chine should make full use of their products’ cultural value and advertise their concept by appropriate methods to gain loyal customer and enhance competitiveness. Table of Contents: I. Introduction and Background.........................................
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...INTRODUCTION Control strategies, prevention and reduction of counterfeiting, as applied today in different countries, pose, in the particular case of China, a real problem at two levels. On the one hand, knowledge of the motivations and logics that lead to the consumption and purchase of counterfeit products remain inadequate, given the different needs of consumers, on the other hand, they pose a problem coping methods counterfeiting reduction, to the extent effective strategies were designed for a transnational action against the proliferation of counterfeiting. In this paper we analyze, using the individual interviews method, firstly, the logical and motivational factors that lead to the consumption of counterfeit luxury goods,...
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...The Overconsumption of Luxury Items in China Introduction Chinese luxury goods market has grown dramatically over the past decades. According to a report released by Bain & Company (2012), currently, Chinese consumers occupy about 50% of the luxury purchases in Asia, and nearly 33% of those in Europe. Globally, one in four purchases of individual luxury goods comes from Chinese customers. Therefore, overconsumption of luxury items in China is a problem which should be given attention to. This problem will lead to a series of negative impacts on economy, society and environment, such as bustling counterfeit markets, distorted values, and damaged environment which could present significant challenges for China even all over the world. The purchase of luxury goods by Chinese consumers may be motivated by different factors from the aspects of economy, society and culture. This report will identify the impacts, analyze the causes, and consider possible solutions of this problem. Impacts Three aspects could be affected by the overconsumption of luxury items in China: economy, society and environment. To begin with, the overconsumption of luxury items would result in thriving counterfeit markets and threatened domestic businesses. Due to the demand for luxury goods, a bustling counterfeit market has been established, with counterfeiters offering replicas of luxuries at much cheaper prices than the authentic counterparts. For a country as a whole, this counterfeit market...
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...OROTON International Marketing Report Student: Erin Burgess Student: Kellie Burmeister Student: Mark Bell Lecturer: Suzanna Mahinder Due date: 25th August 2013 OROTON page 2 TABLE OF CONTENTS INTRODUCTION ................................................................................................. 3 THE OROTON BRAND ....................................................................................... 3 OROTON PRODUCTS........................................................................................ 3 THE CHINESE MARKET .................................................................................... 4 OBJECTIVES ...................................................................................................... 4 TARGET MARKET .............................................................................................. 5 MARKET RESEARCH ......................................................................................... 5 ENTRY STRATEGY ............................................................................................ 6 PRICE STRATEGY ............................................................................................. 7 PRODUCT STRATEGY....................................................................................... 8 PROMOTION STRATEGY .................................................................................. 8 DISTRIBUTION STRATEGY ................................................................................
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...terms of luxury spending worldwide. However the biggest problem in the Chinese luxury market is that Chinese consumers make most of their purchases overseas. Bain & Company's China luxury market study (2014) demonstrates that Chinese consumers contribute to more than one third of global consumption of luxury goods, which is nearly 380 billion RMB, but only 30% of consumption, which was contributed by Chinese consumers, is done in Mainland China, and the rest is from overseas purchases. Admittedly, consumption of the luxury products is beneficial for economy, but overseas purchase is an issue that has negative impact on economic development of China due to capital outflow. World Tourism Cities Federation (2014) shows that 44% of the Chinese tourists travel abroad for shopping. The huge price gap between Mainland China and some other countries is the most important reason that result in overseas purchase. Therefore, there is a debate about whether or not to cut down tariffs of the luxury products to solve this problem. Although cutting down tariffs of the luxury goods seems to be an effective way to attract Chinese consumers to make their purchases domestically, in this case, cutting down the tariffs of the luxury products is useless, because reducing import duties has little effect on the price of domestic luxury products. Instead, it is the pricing strategies of international luxury companies that play a more important role in the Chinese market, which price the luxury products...
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...[pic] A2 Business Studies Pre-Release Research Task ‘Development in Emerging Markets: China’ Learner Name: _____________________________ Preparing for A2 Business The Unit 3 examination Strategies for success • 25% of A level • 1 hour 45 minutes exam • 80 marks • The exam is case study based and comprises one 10 mark calculation question, two 18 mark evaluation questions and one 34 mark report. The Unit 4 examination The Business Environment and Managing Change • 25% of A level • 1 hour 45 minutes exam • 80 marks • Section A: Pre-release research tasks leading to a 40 mark essay • Section B: Choice of 3 essays, one must be chosen for 40 marks • This unit is synoptic – this means that it pulls together all the material from the entire AS and A2 specification. There are two key additional elements of preparation for this paper: Complete the research task The research task is designed to enable you to investigate in detail a small part of the Unit 4 specification. The research brief will give you precise guidance on the tasks to complete. Do not make too much of this task and extend your research beyond what is asked. Do, however, relate your research to a variety of large businesses producing goods and services and operating in different markets. Read widely about business You should read newspapers, magazines, and books, watch television and surf the internet for news...
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...• Status of the luxury market today: According to the latest survey of The World Association of Luxury goods, Chinese luxury consumption amount in January this year has up from $8.6 billion to $9.4 billion, accounting for 27.5% of the world. It is expected to 2015, China's luxury consumption will account for 32% of the global market, becoming the world's largest luxury consumer than Japan. With China's luxury consumption ability to continuously release, this brand in China is expected to have obviously large sales growth space. According to Viscoelasticstatistics, large luxury product groups coming to settle in Beijing, Shanghai and Hong Kong. The numbers of shops are now beyond that of Italian and equals to that of London. In previous years, in Shanghai and Beijing, Tod 's, LV, Bottega Veneta, Cartier, Salvatore Ferragamo, Zegna and etc. brands flooded in just a few months. At present, the domestic market possesses nearly two thirds of the luxury brands, estimate in 2013 years or earlier, people can find all luxury brands in domestic market. • The status of LV’s market in China and its strategy: There are about 100 sales outlets of LV watch and jewelry in domestic now. LV bag has opened 39 stores in China now and the sale amount is accounted for nearly 40% of the whole sale amount of LV in the world, which is beyond the Europe,the birthplace of the 19% market share and the 23% market share of USA. A Chinese cinema's manager said jokingly: “If a cinema can earn 20 million...
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... Introduction The luxury goods may be are fatal temptation for each girl. In economics, luxury goods are good for which demand increases more than proportionally as income rises. It present a striking contrast to "necessity goods". As the demand of "necessity goods" are not related to income increasing or decreasing. On the other hand, Begin with 2007, global economy has been stumbling under recession. As known to all, financial crisis brought to United States economy slowing down and it has spread globally effecting all countries. Economic recession directly influenced on income level and employment. In addition, consumption levels have fall off drastically. Such two characteristic factors make me interested in the relationship between luxury brand and Economic recession. So I researched the ideas and found a few books which talked about the luxury brands in Asia under economic recession. The literature review will pay attention to a book on the cult of Luxury Brand, Impact of Personal Orientation on Luxury Brand Purchase Value, Shopper Behaviour in Recession and impulsive buying behaviour in recession. Radha Chadha is one of the most famous expert in marketing and consumer research in Asia. In the book of the cult of the Luxury Brand which presented the "lux- plosion" or the explosion of luxury brands in Asia. This book shows up the paradox of the luxury brands management in Asia market and tries to redefine the new age luxury brand...
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...Beijing Tianjin Inner Mongolia Shaanxi Hunan Chongqing Sichuan Guizhou Source: China National Statistics Bureau, BBDO Analysis 3 As the economy expands and breaks into new ground… …the luxury category is also following suit -- it is achieving high growth simply by getting MORE PEOPLE TO BUY LUXURY GOODS FOR THE VERY FIRST TIME… 4 Luxury spending growth is driven by CATEGORY FIRST-TIMERS DECONSTRUCTING LUXURY SPENDING IN CHINA Source: Bain Luxury Market Survey – China 5 The crucial role of China’s BURGEONING MIDDLE CLASS % SHARE OF URBAN HOUSEHOLDS by income group (in RMB) % SHARE OF LUXURY CONSUMPTION by income group (in RMB) Source: McKinsey & Co. 6 How can they AFFORD LUXURY GOODS What is driving THEIR INTEREST IN LUXURY ? 7 China’ s middle class have a MINDSET THAT IS CONDUCIVE Optimism Ambition Loving of Life for luxury goods & services 65% feel their life will be better in the next 12 months. 42% say they work or study harder in order to succeed. 87% find it important to experience new things & enjoy life. Source: BBDO Voices 8 Their is a desire that is much stronger than THEIR EARNING POWER 49% 62% Say they long for luxury goods despite not being able to afford them right now. The figure specifically among 20 to 25 year olds. Source: TNS China 9 They SAVE UP for luxury products “ I thought about it for a very long time, and bought an LV bag. But my husband...
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...The First Global Chinese Luxury Brand?” case 1. Introduction According to the case “Shanghai Tang: The First Global Chinese Luxury Brand?”, Shanghai Tang was struggling for more than 18 years to be the first global Chinese luxury brand, but unfortunately, until today, Mr. David Tang, the founder of this brand, still has to face a lot of problems: international brand awareness, costumer approval, operation & marketing strategies, relentless competitions, intercultural communication and multicultural integration, etc. It may be on the right track, maybe not. Is Mr. David Tang a pioneer? Or is he just a dreamer? In this analysis report, I will separate all these arguments into four parts: the company’s activities and current development; comparison of competitors’ strategies and tactics; intercultural issues and costumer behaviour in the luxury industry, especially Chinese market; recommendations and alternative solutions for Shanghai Tang’s future strategies. In this report, I will focus on the two most important factors: “inter Culture” and “luxury”, which will impact on the future strategies of Shanghai Tang, and I will defend my standpoints by analyzing the environment of luxury industry and cultural context in China. 2. Shanghai Tang’s current development and business situation Since 1995, the Swiss luxury company Financiere Richem SA (Richemont) became the main shareholder of Shanghai Tang, Tang’s company had a deep European Luxury background, which could...
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...During the 18th century, there was a dramatic surge in the production and consumptions of goods in China and Europe. Exports from Asia such as silk, porcelains, and cotton were luxuries in Europe. The new trade in luxuries stimulated innovation in technologies, products, marketing strategies, commercial and financial institutions. However, China did not successfully reach a full dimension of capitalism, while Europe did. Why did luxury consumption during the 18th century instigate the development of capitalism in each region differently? Although both were developing and showing an increase in luxury consumption, these two regions are different because of their reversed attitude toward globalization, the feeling of superiority, and satisfaction of one’s ability....
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...LVMH in China. Minicase. IN JULY 2012, Louis Vuitton, the flagship brand of France’s Moët Hennessy Louis Vuitton S. A., better known as LVMH, opened its 16th global “Maison” at Shanghai’s Plaza 66, a mega luxury mall. The Shanghai Maison houses the entire range of Louis Vuitton collections, from high-‐fashion clothing and leather goods, to jewelry, watches, cosmetics, and wines and spirits. The grand opening of the Shanghai Maison also coincided with the 20th anniversary of the brand’s presence in China; Louis Vuitton had opened its first store in the country in 1992, in Beijing’s Peninsula Hotel. LVMH’s sales in Asia accounted for one third of its total revenue by the end of the first quarter of 2013. 1 Those results made Asia the largest region for LVMH in terms of revenues ( Exhibit MC7.1 ). Focusing on countries rather ...
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...How Globalization Affects Luxury Goods Industry? Andy Warhol, a pioneer in the visual art movement once said: “Whenever people and civilizations get degenerate and materialistic, they always point at the outward beauty and riches and say that if what they were doing was bad, they wouldn’t being doing so well, being so rich and beautiful” (Warhol, 1975). Throughout history, luxury emerged as early as civilization did. For old Romans, the concept of luxury was a “disruptive power of desire”. They set up the first laws about luxury: “how much could be spent on banquets and adornment” (Ward, 2011). Since the rise of Christianity, luxury stared to changed its meaning to be related to lust and sexuality. Until 17th century, perspectives of luxury products again changed across the continent of Europe because of the frequent trade and business. At that time, luxury was considered as an advantage, which brings money and profit. The extreme luxury phenomenon swept across France during 17th century, especially on the architecture of chateaus—the excessive styles and appearances with resplendent furniture. Until the late modern period, luxury began to experience the process of moralization since people’s revaluation on desire. According to “The Spirit of Laws”, Montesquieu said that: “ luxury is therefore absolutely necessary in monarchies; as it is also in despotic states” (Carrithers & Nugent, 2001). In terms of luxury products companies, they try to find the balance between history...
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...business achievement. As a matter of fact, there are a few things that companies have to face when it comes to globalization. This essay will deal with luxury products, and more particularly with high-end jewellery from the French brand Cartier. These products will be launched within the Chinese market, as it is close to become the largest luxury market in the world. In order to make this project as successful as possible, this essay will be divided into two parts. On the one hand, we will be analysing the marketing environment of the Chinese market by identifying major market opportunities. Also, the selection of a suitable target market for Cartier jewellery products will be made, and we will recommend which aspects of the product’s international marketing mix strategy would require adaptation. On the other hand, we will critically examine the notions of standardization and adaptation of the international marketing mix. 1. Market selection & Cultural Research and Impact on International Marketing Mix Strategy a. Market opportunities: In order to justify the choice of the Chinese market for Cartier jewellery products, 4 market opportunities will be identified. The first three ones will be dealing with socio/cultural aspects whereas the last one will be rather based on an economic aspect. With more than 1.3 billion of people, China has about 18 thousand billionaires, 440 thousand multimillionaires, and a fast rising middle class of around 250 millions who have high purchasing...
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