Welcome toLuxury Consumer Behavior

Dr. Satyendra SinghProfessor, Marketing and International Business

University of Winnipegs.singh@uwinnipeg.ca

www.uwinnipeg.ca/~ssingh5

What is Consumer Behaviour?

Luxury Consumers

TraditionalHead-to-toe covered, loyal to single brand,…Buy established brand Hermes, Dior,…

ModernNot brand loyal, or loyal to one brand,…They know what they wantDifferent desire and expectationsSmart, educated, savvy discerning consumersHigh status

Modern Consumers

Parent and children dress alike ↓ gapCosmetics, surgery,…

Luxury market cannot be segmented40s, 50s, 60s does not matterPresidents: Zimbabwe, Italy 80s

Group pressure > individual taste

↑ group pressure in Japan, France, Spain…

Types of Consumers

PurchaserThey’ve knowledge to buy products

BrowserFor entertainmentMay come back need more time to make decisionOpinion leader

Meeting point Sephora store (10,000 visits weekend)

We display our history and heritageThat’s why we have museum section in luxury stores

Product Display

LevelEye: ↑50%Hand: ↓30-40%Floor:???

End-of-aisleNot brand loyal, or loyal to one brand,…

Stand alone

Windows displays brand image, communications…

In-store Consumer Behaviour

Time spentWomen (W) + W = 8 minW + child = 7 minW alone = 5 minW + Man = 4 min

Stealing 33% by customers, 66% by staff

Always take receipt staff makes fake returns

RFID Radio Frequency Identification

Online Consumer Behaviour

Online Pull consumers to store

Offline sales people use knowledge for $

Debate Luxury cannot be sold online

Prada www for info only

Some brands sale limited (e.g., old) products online.

Others sale through luxury e-stores

Bluefly.com

designerimports.com

Forzieri.com

Glam.com

Neimanmarcus.com

Net-a-porter.com

Yoox.com

Attitude towards Luxury Products? (10-pt scale)

China = 8.2Mexico = 8.0India = 7.3UK = 7.3USA = 6.8S. Korea = 6.4

Germany = 6.1 difficult relationship with luxury

Italy = 6.1 and France = 5.7 Catholic countriesHelping poor and controlling desire is important

Japan = 5.6 Symbolic revenge of WWII

Not liking may not mean customer’ll not buy luxury products

Europe -- UK, Italy, Spain Germany

25% of population > 60

Older people in Europe than USA

Italy

Inspired by art

Flashy watches mechanical

Curves in jewellery

Germany

Quality is important

Simple watches Quartz

Japan

Like cosmetics, ready-to-wear,…

Do not like perfumes

It hides natural body odour

Encroaches personal space

India

70,000 millionaires 50% of population < 50 by 2020

Jewelleries gold, diamonds, gems,…

Industrial names Sony, Mercedez, BMW…

Own luxury world’s thinnest watch

Saries even becoming popular abroad

To be served Indian palace train,…

World’s thinnest (3.5mm) Indian watch

Hilton in Sari

Victoria Bechman in Sari

German model Claudia Ciesla in Sari

Palace on wheelIndian Service Luxury

Palace on wheels -- Inside

Palace on wheels -- Inside

HK/SP/Thailand/Taiwan

Full of young people

Stylish, sleek

Ready-to-wear

Brand visibility is important

China

Largest emerging luxury market in the world

300,000 millionaires in China

12% of luxury goods are sold in ChinaTo be 26% by 2020

Cosmetics ↑ whitening products

Silk, Wine, whisky,…

Russia

90,000 millionaires

Moscow alone spends $2b/year on luxury

Russians love luxury banned before

Flashy

New wealth Skiing Courchevel French Alp

Other Emerging Luxury Markets

Columbia

Indonesia

Vietnam

Egypt

Turkey

South Africa

CIVETS

Types of Fake Luxury Products

Counterfeit industry $600b (x4 luxury industry!!)

Counterfeit 100% copyDeceive customers as real

Pirated CopiedCustomers know it

Imitation Not 100% identicalCustomers know it

Custom-made Could be realReplica made by legitimate craftsman through some connection

Where are Fake Luxury Products?

China, HK, Thailand, Morocco, Taiwan, Turkey, S Korea Customers age: 25-35

London Oxford Street

Manhattan Canal Street

Shanghai Xiang-Yang Road (Closed now!)…

Fake KFC in Iran

Fake Apple Store in Iran

Fake Luxury Products Prevention

France: criminal activities buyer and seller

If caught, 2 years in jail

LV sued Carrefour for $40,000 Shanghai store

Hermes post warnings on InternetLV, Burberry,… and police raid fake shops

LV spends $15m-$20m/year to combat fake luxury

How to detect it? Click