Welcome to Luxury Products Dr. Satyendra Singh Professor, Marketing and International Business University of Winnipeg

History of Luxury King and Queens always appreciated beauty/luxury 1010 BC – 100 BC  King David/Solomon, Queen of Sheba 1150 BC – 700 BC  Egypt, Greece 800 BC – 500 AD  Etruscan Empire and Roman Fashion 450 AD – 1500 AD  Byzantine Empire 15 th – 16 th Century  Italian fashion 1600 – 1750  Baroque fashion 1715  France 1828  Modern luxury fashion 21 st Century  Democratization of Luxury

High Net Worth Individuals (HNWI) People with $1m assets excluding home, car… Affluent (Sub HNWI).1m – 1m HNWI1m-5m Very HNWI 5m-50m Ultra HNWI >50m 13m HNWI in m in Europe 4m in USA 3m in Asia-Pacific 2m in Japan.5m in Latin America 1m in Germany.4m Middle East.5m in China.1 Africa.5 in UK

Charles Frederick Worth

Avenue-de-Champs-lys-es-Paris

Luxury is Dream Creates social gap  Exclusivity Sensory experience  Feel, touch, smell Luxury is beauty You may suffer in the name of it, or for it Vibrates your emotions  feelings Object of worship  needs respect

You wish! Liya Kebede

Swarovski Tangara

Characteristics of Luxury History Heritage Culture Message Innovation High Price High quality material Differentiation Value creation

Luxury Differentiation Porshe  Craftsmanship, proof or expertise, engineering, aesthetic Ferrari  Red color, unique sound, make 8000 only per year, F1, 100 yr of exp Ducati   Red motorcycles Hermes  Kelly and Birkin bags Harley Davidson  distinct sound Lamborghini  Monster of technology Rolls-Royce  like living room, wood

Value Creation Elegance  not only perfume, but also bottle Handmade  gold, diamond, watches, bags,… Rarity  animal skin, silk, make clients wait Made in Europe Precision in craftsmanship ….

Gucci Jackie

Gucci la pele Guccissima Shows mrf process

Hermés Cap Cod -- Craftmanship

Chloé Material

Creativity and Innovation

British History – typical lines

Ferrari: red, speed, precision, power 0nly 8000 per year

18 hours of single craftsmanship

Rolls Royce – 2600 hrs, wood, living room x10 Ford’s price

Luxury Product or Dream Categories Fashion (Apparel, bags, shoes, belt…) Perfumes and cosmetics Watches and jewellery Eyeware Other Restaurant Hotels Car Home…

Luxury Depends on Wealth Wealthy >$.5m / year Affluent > $.2m / year Status Income, Education, Occupation Where do you live? Quality of residence …

Luxury: Wealth vs. Status Discreet Authentic French Small logo Russians Emerging markets Niche Creators British Heritage Need to prove Counterfeit Poor countries Big logo HI Status HI Wealth LO Status LO Wealth

Luxury Industry  # of billionaire worldwide (2014) ↑ 7% more billionaires every year $150b / year (People spend on luxury) ↑ 20% sales growth / year luxury brands

Major Luxury Groups Louis Vuitton Moet Hennessey (LVMH)  30 Louis Vuitton, Givenchy, Marc Jacobs, Fendi, Donna Karen… Richemond (Switzerland)  15 Cartier, Chloé, Montblanc, Lancel… Gucci (Italy)  10 Gucci, YSL, Sergio Rossi… Prada (Italy)  5 Prada, Miu Miu, Azzedine Alaia…

Levels of Luxury Luxury or prestige  Lifestyle setter Bulgari, Hermes, Hugo Boss,… Premium  Aspire to become Luxury HI  Calvin Klein, Tommy Hilfiger,… MI  LaCoste, Furla,… LO  Zara, GAP, … Fashion  Changes quickly Several

Product Structure Product Line/Length Bag, Shoes, Belts… Product Breadth Hand bag Evening bag Weekend bag … Product Depth Variety of hand bags in this category…

Luxury: Design vs. Modernity Lamborghini Ferrari Aston-Martin ??? You decide BMW Mercedes Lexus Morgan Bentley Rolls Yoyce Modern Design Traditional Comfort