Managing luxury brands in emerging markets

There are four keys to managing luxury brands successfully: design and communication management; product line management; customer service management and channel management (Swystun , 2007).

Design and communication management

The key element that differentiated luxury from other industries is the paramount importance of creativity. Many luxury brands achieve legitimacy and fashion authority as a result of the creative genius and marketing prowess of single individuals (Kamdar, 2009; Kapferer , 1992). The creator who is both innovative and convincing can generate favorable editorial comments and market acceptance.

Product line management

A big challenge for luxury brands owners is how to stay profitable in the face of continuous pressure for product innovation and the consumer’s desire for exclusivity (Raju, 2009; Mooij, 2010). Short production runs of a wide variety of products generate higher complexity costs with products such as fragrances an industry in which luxury brand owners rely especially on independent, new product proliferation is creating clutter and margin pressure at the point of scale. Luxury brands that have established their fashion authority are less subject to the complexity cost problem (Onkvisit and Shaw, 2009).

Service Management

As their sales expand luxury brand owners must become experts in customer service, relationship building and database management (Kapferer, 1992; Quelch, 2006). More recently the exclusivity implied by customization is now generated by product rarity, although it is still possible to obtain customization in the world of haute couture. Luxury brand retailers have been slow to invest in both computerized client transaction record keeping and in customer loyalty cards. Luxury brands must invest in management information systems to improve customer tracking for the following reasons such as the customer who buys the product today may purchase items of much higher value tomorrow, owners should exploit cross selling opportunities to a greater degree, the customer who buys a single item from one store may buy items of the same brand in other stores around the world, customer enable owners to contact their consumers with invitations to collection previews, end of season sales, trunk shows and other events and finally customer databases protect retailers from turnover of salespeople whose customer records mat be lost when they leave (Keller, 2008; Clifton, Rita and Simmons, 2004).

Channel Management

Manufacturer is under pressure from increasingly powerful distributors throughout the world. Luxury brands appear to be increasing their power via the trade sometimes cancelling the distribution agreements with multi-brand retailers and forward integrating into wholly owned retail outlets (Schroeder and Salzer-Morling, 2006). The three retail strategies are currently evident among luxury brand owners expand distribution, contract distribution and recover distribution.

References

  • Swystun J (2007), The Brand Glossary, Palgrave Macmillan, USA.
  • Onkvisit S and Shaw J (2009), International Marketing: Strategy and Theory, Routledge, New York
  • Raju (2009), Marketing Management, Tata McGraw Hill, New Delhi.
  • Mooij M K (2010), Global Marketing and Advertising, SAGE, London.
  • Kamdar M (2009), MANAGING LUXURY BRANDS: Improving and Sustaining Brand Equity Through Brand Imagery, Springer, USA.
  • Kapferer J N (1992), Strategic Brand Management, Kogan Page, UK.
  • Keller (2008), Strategic Brand Management, Pearson Education, New Delhi.
  • Schroeder J E and Salzer-Mörling M (2006), Brand Culture, Routledge, New York.
  • Clifton, Rita and Simmons J (2004), Brands and Branding, Bloomberg Press, New Jersey.
  • Quelch J A (2006), Reading in Modern Marketing, Chinese University Press, Hong Kong.

Abhinash Jena

Partner at Project Guru
Abhinash has worked in sales, branding, and marketing functions for GPS companies including MapmyIndia Navigators (www.MapmyIndia.com). In addition to writing for Knowledge Tank articles, he also writes the expert's advice for Thesis & Dissertations and Power Designs.

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