Case study luxury brands
This case study is focusing on the basic necessary components of creating an exclusive luxury brand (or prestige brand), the importance of the retail environment when using experiential marketing strategy, and the threats which a business faces in the high-end market. When a new brand wants to penetrate the high-end market or remain competitive in the long run, it is highly important to create and excercise the right marketing policy.
A luxury brand is a brand of which a majority of its products are luxury goods, but it may also include certain brands whose names are associated with luxury, high price or high quality, though few, if any, of their goods are currently considered luxury goods or are perceived to be status symbols.
Luxury goods are very sensitive to economic upturns and downturns, have high prices and profits, and are very tightly controlled. For example since the 1980s, the Gucci brand is now largely sold in directly-owned stores in order to licence the brand widely. LVMH (Louis Vuitton Moet Hennessy) is the largest luxury good producer in the world. This multi-brand counts 50 brands including Louis Vuitton, the world's first designer label. The LVMH group made a profit of €2bn on sales of €12bn in 2003. Other market leaders include PPR(Pinault-Printemps-Redoute, after it purchased the Gucci Group) and Richemont.
There is a wide range of key success factors in launching a new brand from the marketing investment decision to the innovation to the retailing. The most important issue is marketing. These brands invest a huge amount of money in advertising and promotion. Gucci for example uses controversial and shocking ads to grab the attention and to create awareness. The balance of emotional and rational communications of a luxury brand is strongly emphasised while connecting to the customers through a variety of brand advertising.