If you are currently spending a few weeks in a vacational coastal city of your country, jealously admiring the ostentatious wealth of the rich and famous, this book may interest you. It defines what constitutes a luxury product and how companies develop their strategies to profit from this status.
It actually gets off to a rather slow start but if you can get past (or skip!) the first fifty pages or so you will find some useful information. It makes in interesting distinction between ”fashion,” “premium,” and “luxury,” and sets out some rules for successfully marketing luxury goods and services. The book looks at the different levels of management of a luxury brand from HRM to Finance.
Given that there are a very limited number of luxury brands, the book is a little limited in scope. It deals very heavily with the car industry as well at the classic Franco-Italian luxury firms (Louis Vuitton, Cartier, Chanel, Armani, Ralph Lauren etc.) As sectors some as the travel industry would have been a welcome bonus.
Well, September is nearly upon us. Time to stop dreaming about owning a Ferrerri (it’s never goint to happen) and get back to work! How many days to go now before Christmas?!
Some keys facts:
Each Rolls-Royce Phantom requires 2,600 hours to be completed, that is, 10 times as much as a Ford.
At Ferrari, production is deliberately kept to fewer than 6,000 vehicles a year – rarity value sells.
Interesting quotes from the book:
Writing ‘Established 1884’ does not make you luxury: it makes you old.
Luxury is ‘superlative’ and not ‘comparative’. It prefers to be faithful to an identity rather than be always worrying about where it stands in relation to a competitor.
Neither L’Oréal, despite its acquisition of Lanvin in the 1990s, nor P&G or Unilever have succeeded in the luxury field.
American Express practices systematic ‘trading up’ by inventing ever more selective cards, such as the Platinum card; with the Black Centurion, Amex is following a luxury product strategy, while retaining the American Express name, the same as that of the basic card, sold with the classic promotion tools.
H&M called on Karl Lagerfeld to create limited editions.
Lacoste organizes fashion shows in New York and Shanghai.
The CEO of Porsche is generally credited with the statement: ‘When I see two Porsches on the same street, I begin to worry’.
Rolls-Royce is aiming at only 85,400 people in the world: the UHNWI or ultra-high net worth individuals, each possessing capital of $30 million. This market segment represented in 2007 more than 30,000 cars sold at over €100,000. Rolls-Royce sells one in two cars at over €300,000, worldwide.
The CEO of Yves Saint-Laurent, Pierre Bergé, used to say that it was the obligation of luxury to offer objects and not products, to be a space for enjoyment, not consumption.
To borrow Chadha and Husbands’s expression (2006), the new Chinese do not know Mozart or Beethoven, but they know Vuitton and Prada.
In a very recent advertisement, Hennessy, the world’s luxury cognac, high-lighted a quotation from Richard Hennessy himself (1724-1800): ‘We must let time penetrate what the present cannot.’
Luxury embodies time: this is an essential source of its value.
The Indian government wonders why India, despite its artisans, has not emerged in the global luxury market. The answer is that it has not yet reached the post-artisan stage (organization of production and distribution, democratization of products).
Brands may be perceived to be luxurious in one country but not in another. A prime exapme of this is the Lexus car.
Business School Grenoble EM International Affairs Higher Education ESC Grenoble Strategy Blog Global Ed Graduate Business School Mark Thomas
Other Book Reviews
The Luxe Chronicles: “The Internet can help sell a luxury product but cannot replace the personal relationship between the sales person (who may be the CEO) and the brand. More generally speaking, selling on the Internet without knowing exactly why you do it and how you plan to build the link with the customer is extremely damaging for a luxury brand. A brand cannot “go Internet to sell” just as an experiment or to get some extra sales.”
Inside FMM: “The book investigates those business models that have achieved profitability and unveils the original methods that were used to transform small family business such as Ferrari, Louis Vuitton, Chanel, Armani, Gucci and Ralph Lauren into profitable global brands.”
Forbes: “Each chapter focuses on one facet of the process–from pricing to distributing your product–and how these steps make brands in this category very different from other goods, such as prestige products–which are pricey but not exclusive–and mass products, which include any item accessible to the majority of the public.”
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Vikram Roy: “Suppose you have earned money to buy yourself a luxury car. This luxury car was a dream to you. To buy this car you have worked every day for last five years. The word luxury is also attached with the car but should it be called as luxury? I say, it is lifestyle, it is not luxury. Then what is luxury?”
|Classic book that gives the ins and outs of creating new markets.||One of the best strategy books I have read in a long time.|