Internship 2012 summer

1. Luxury Brand Proposal
Davy Chai Flair Li
2012.8

2. THE GLAMOUR MARKET

4. “Luxury market soon recovered
from the economic downturn.”

5. worldwide luxury market overview
Market forecast
207
billion
US $ retail value of
global luxury goods in
2015
19%
174
billion
US $ retail value of
global luxury goods in
2010

6. “The Asian market rises”

7. The emerging market drives
the growth of the global market
“Asian market shines during the dark
economic recession.”

8. The market growth of emerging market
43% 6%
Worldwide
Worldwide
Emerging market Developed market
value grew between value grew between
2005-2010 2005-2010
“Emerging economies are becoming the main driver of
today’s luxury goods industry.”

9. The potential of Asian market
The comparison among
top 3 biggest luxury markets(2010-2011) $Billion
86
80
70 69
65
58 Americas
+8%
Europe
+7%
Asia-Pasific
+19%
2010 2011
Source: http://www.bain.de/Images/Bainbrief_Luxury_Goods_Study_10thEdition.pdf

10. OUR TARGETS
Who
why

11. Asian US market
shopper

12. Target market
We
Asiantravelers
shoppers

13. Target market
Asian-American residents
Asian travelers

14. Why should we target Asian travelers?
$8.3 billion
The estimated contribution of
Asian travelers to US luxury market (2011)
$2.6 billion
The estimated expenditure of the
Asian-Americans in U.S. luxury market (2011)
Resource: the data of AA market is calculated by timing the population percentage of AA
with us whole luxury market sales

15. Why should we target Asian travelers?
The sales of luxury goods contributed by
Asian travelers account for
50% 15%
of of
Europe luxury market US luxury market
The expenditure comparison of Chinese luxury
Shoppers spent in outside Asia and inland market (2011)
$15B~$18B vs. $16B

16. Asian trevelers
market profile
Market volume
Buying power
Characteristics
Key findings

17. The number of Asian travelers to
the US and proportion
26% 7.2 million
The number of Asian travelers
74% arrived in the U.S. in 2011 v.s.
27.9 million in total
24%
the growth of Asian travelers
to the U.S. from 2009 to 2010
Resource:
U.S. Department of Commerce International Trade Administration
Office of Travel and Tourism Industries

18. Top 6 regions of Asian travelers to the U.S.
TOP AISAN COUNTRY VISITORS TO US(2011)
Region/ Country of % Change
Rank 2011
Residence (2011/2010)
1 Canada 21,028,000 5%
2 Mexico 13,414,000 0%
3 United Kingdom 3,835,300 0%
4 Japan 3,249,569 -4%
5 Germany 1,823,797 6%
6 Brazil 1,508,279 26%
7 France 1,504,182 12%
8 South Korea 1,145,216 3%
9 People's Republic of China 1,089,405 36%
10 Australia 1,037,852 15%
… … … …
13 India 663,465 2%
22 Taiwan 290,313 0%
36 Philippines 166,829 -6%
37 Singapore 159,302 14%
41 Hong Kong 128,512 -2%
Resource:
U.S. Department of Commerce International Trade Administration
Office of Travel and Tourism Industries

19. Asian travelers buying power
2011 top 10 markets to U.S.
Asian travelers' contribution to ($Million)
2011 U.S. travel market
$23billion $23,968
24% $16,660
$13,223
$9,366
29% $6,769 $6,590
$5,743
$4,694 $4,601 $4,475
Asia
Europe
Other regions
Resource:
U.S. Department of Commerce International Trade Administration
Office of Travel and Tourism Industries

20. Asian travelers buying power comparison by regions
Household income(median average)
v.s.
per capita spending on each trip(2011)
$100,000 $6,000
$4,864
$5,000
$80,000
$4,014 Household Income
$3,903
$3,500 $4,000 (median average)
$60,000 $3,262
$3,000
per capita spending on
$40,000 trip(excluding fare)
$2,000
$20,000
$1,000
$0 $0

21. Asian travelers buying power comparison by regions
Per capita spending on each day
v.s.
per capita spending on each trip (2011)
$500 $6,000
$450 $427
$4,864
$5,000
$400 per capita spending on
$350 $3,903 $4,014 each day (excluding
$3,500 $4,000
$300 $3,262 fare)
$250 $3,000 per capita spending on
$193 trip(excluding fare)
$200
$141 $2,000
$150
$102 $106
$100
$1,000
$50
$0 $0

22. Who are Asian travelers?
Pure purpose of trip of Asian travelers (2011)
Japanese 16% 86%
Korean 37% 72% Business &
Convention
Chinese 37% 72%
Leisure & Visit
Indian 57% 50% Friends/Relatives
Taiwane… 38% 79%
Gender portion of Asian travelers (2011) Average age of Asian travelers(2011)
25% 42
44%
38% 38% 40
51%
38 37
Female 36
Male
75%
62% 62%
56%
49%
Japanese Korean Chinese Taiwanese Indian

23. Where do Asian travelers go?
U.S. Top destinations 2011 for Top 10 busiest airports in general
Asian travelers (cities) travelers market to U.S. (2011)
2011 Airport 2011 Enplaned
New York City- Rank Passengers
WP-Wayne 1 New York JFK 11,704,700
Honolulu
2 Miami 8,821,900
Los Angeles 3 Los Angeles 8,065,200
22% 4 Newark 5,710,000
San Francisco 5 Chicago O'Hare 5,144,800
9% 6
Las Vegas Atlanta 4,675,500
13% 22% 7 San Francisco 4,316,000
Washington, D.C. 8 Houston Bush 4,198,400
18% 9 Washington 3,117,700
Chicago Dulles
10 Dallas/Ft. Worth 2,603,000
Boston

24. What do Asian travelers do in the US?
Top 3 most common activity participation of Asian travelers
while in the United States(2011)
Sight seeing Shopping Dining in the restaurant
46% 91% 80%

25. Asian travelers characteristics
prepaid package Length of Stay in United
States (median nights)
50% 40%
40% 25 21
30% 24% 24% 20
19% 15 11
20% 7 7
10 4
10% 3% 5
0% 0
Korea
43%
China
India
37%
1.7
55% Average party size
Japan
Taiwan
ese
ese
31% 31% OR
% of first trip to the US

26. Asian travelers characteristics
Information Sources Used for Trip Planning
(multiple response: top 4 of 12)
Japan South Korea China India Taiwan
Travel Agency 48 % 37% 29% 43% 54%
Personal Computer 45% 49% 35% 23% 27%
Tour Company 24% N/A N/A N/A N/A
Travel Guide 17% N/A N/A N/A N/A
Airline Directly N/A 14% 25% 13% 19%
Corporate
Travel Dept. N/A 11% N/A 24% N/A
Friends/Relatives N/A 11% 15% N/A 15%

27. Key findings
oThe average age of Asian travelers to the US are 40, which’s around
middle age. Chinese are the youngest whose average age is 36.
oBased on the household income, they are considered as middle to
upper middle class in their own societies, which means they have
more economical flexibility.
oShopping is the most common activity when they are travelling in the
U.S across all these regions.
oDestination preference: metropolis + resorts.
oMost of the Indian travelers come to U.S. for business trip, thus, they
are more likely to be males, stay longer and travel alone
oOver half of the Chinese travelers came to U.S. for the 1st time which
implicates that they have less acknowledge and information of
traveling in U.S. comparing with other Asian regions.

28. Asian Travelers
Insights Study
Brand preference
Psychological motivation
Segments of purchasing behavior
Segments of tourism demand

29. Top 3 luxury groups and 2011 global sales volume
of Asian favored brands
€23 Billion €15 Billion €7 Billion
LVMH Richemont PPR
Louis Vuitton Cartier Gucci
Bulgari Montblanc Bottega Veneta
Fendi Alfred Dunhill Brioni
Givenchy Chloé Yves Saint
Marc Jacobs Lancel Laurent Sergio
Loewe Piaget Rossi
Céline Ralph Lauren watch Boucheron
Parfums Christian and jewelry company, 50% Alexander
Dior
TAG Heuer

30. Asian favored brands
1.Louis Vuitton 1.Louis Vuitton 1.Louis Vuitton
2.Cartier 2.Coach 2.Gucci
3.Bulgari 3.Hermes 3.Burberry
4.Gucci 4.Gucci 4.Chanel
TIER 1 5.Chanel
6.Tiffany
5.Chanel
6.Bottega Veneta
5.Hermes
6.Prada
7.Versace 7.Bulgari 7.Cartier
8.Dior 8.Cartier 8.Armani
9.Prada 9.Dior 9.Etro
10.Armani 10.Tiffany 10.Ferragamo
Ermenegildo Zegna Dunhill MIU MIU Givenchy
Valentino Bally Fendi Hugo Boss
Celine Aigner Canali Estee Lauder
Longines Patek philippe Max Mara DKNY
TIER 2 Moschino Tag Heuer Jimmy Choo Calvin Klein
TOD’s SWAROVSKI Piaget Ralph Lauren
Lancome Testoni Shiseido Marc Jacobs
Source:
China: http://www.yxqing.com/article-2620-1.html *Data for Indian not available
Japan: http://www.jmrn.com/UserFiles/File/DCLB_JMRN.pdf
Korea: by combining 'the Financial Supervisory Service' and 'Duty-free shop sales data'.

31. Why Asian shoppers want to buy luxury goods?
Self-driven
Social-driven
Perceived value
product-related
Functionality Individualism
Conspicuousness Collectivism

32. segments of luxury shoppers based on different motivations
Individualism
Intellectual
shopper
Luxury lover
Luxury
follower
Status
seeker
Social-driven self-driven

33. 4 types of Asian luxury travel tourists
for different tourism demand
segments IDENTITY
oSuper-active, independent-minded and educated
Premium
oLook for highly personalized and authentic travel
luxury tourists experience
oregardless of the price due to the precious time
Luxury trip oFocus on high quality of service and comfort
explorer oPay more attention to social status
oMore followers than pioneers in their choice of
destination
Streetwise oYounger
purchasers oLess purchasing power
oSearch for the best possible value for the trip
Standard
oPrimarily look for relaxation and a change of pace
luxury oPrefer resort places
travelers

34. Characteristics of each type of Asian luxury tourist
High Budget High demand of Long Self-
Frequency concern personalized trip preparing time
Premium
luxury tourists
Luxury trip
explorers
Streetwise
purchasers
Standard
luxury
travelers

35. New touch points of luxury
market
Online
Smartphone

36. Distribution channels
wholesale Sales through third party distributors
Retail Distribution managed in-house
Sales transactions are completed online. It can be
Online operated as both a retail as both a retail and
retail wholesales distribution channel

37. Current trend
wholesale Retail Online Retail
•Department Websites operated by
Traditional Company
store established retailers such as
formats owned/franchised
•boutique department stores, wine
branded stores
clubs ,fashion e-boutiques
Transactional branded
Emerging
•Outlet stores •Brand websites websites, luxury outlet e-
formats
•E-boutiques •social networks stores, iPad apps, social
networking
Emerging trend
All-Digital platforms
E-stores
Social networks
Personal mobile devices

38. Luxury customers online behavior
Channel of
Channel of information
oUse the Internet to gain a better purchasing gathering
understanding of luxury brands
and products
oLuxury online shopping is
dramatically growing and people
shop for discount and brands that
are not available in China.
Online is an important channel for
research but not buying
oA recent survey shows
accelerating shift to online
purchasing among luxury
consumers
oDepartment-store doors and
sales have been steadily declining
Source: http://www.jingdaily.com/chinas-female-driven-luxury-e-commerce-market-to-surpass-3-billion-
in-2012/18347/

39. Why Asian luxury shoppers prefer physical stores?
The reasons of why they chose retail
stores for purchasing over e-stores
AUTHENTIC
Size
Real appearance
DEVIATION SERVICE

40. Smartphone penetration rate of target Asian regions
50%
36% 35% 34%
25%
smartphone
14% penetration rate
9%
0%
Taiwan Urban Urban korea Japan
India China
Source:
http://www.ipmirror.com/gomobi/whyGoMobi.html
http://communities-dominate.blogs.com/brands/2011/12/smartphone-penetration-rates-by-country-
we-have-good-data-finally.html
http://www.livemint.com/2012/06/20165308/Smartphone-usage-on-the-upswin.html

41. Chinese
Smartphone penetration rate by age groups
and top tie cities among the internet users
over 40 40% 25% 36% Tier3
47% 25% 28%
cities
30~39 51% 27% 22%
Tier2
50% 27% 23%
cities
20~29 53% 26% 21%
Tier1
55% 21% 24%
cities
under 19 49% 18% 32%
0% 25% 50% 75% 100%
0% 25% 50% 75% 100%
currently I'm using one smartphone or
more
currently I 'm using both the smart phone
and feature phone
I only have feature phones
Source: http://www.d2c-china.cn/news_detail-5.html

42. Korea
Smartphone penetration rate by age groups
56% 40s
Korea 74%
30s
n 92%
90% 20s
under 19
0% 50% 100%
•The smartphone penetration rate is relatively higher across all
the age groups compared with other target Asian markets.
•Smartphone market in Korea is currently dominating the whole
industry which left less choices for consumers.
Source:
https://wiki.smu.edu.sg/digitalmediaasia/Image:Mobile_Internet_Users-Demographics.jpg
https://wiki.smu.edu.sg/digitalmediaasia/Digital_Media_in_South_Korea#Mobile
http://www.newmediatrendwatch.com/markets-by-country/11-long-haul/63-south-korea
http://nielsfootman.com/android-winner-korea-smartphone-boom/

43. Japan
Penetration rate of smartphone by age groups
20s
40%
30s
34%
Japanese
27% 40s
15%
50s
-10% 10% 30% 50%
Source: http://nielsfootman.com/android-winner-korea-smartphone-boom/

44. Japan
Japanese 50s+ 27%
12%
n=323
40s 46% luxury
20%
n=414 purchases
30s 53% General public
26%
n=497
20s 68%
36%
n=224
0% 20% 40% 60% 80%
Using smartphone is more common among Luxury shoppers
than the general public across all age groups.
Source: mckinsey

45. India
Indian Smart phone penetration rate
% of the mobile phone users
(Mar. 2012)
over 40
5% 36-40
8% 31-35
8% 25-30
Indian 8%
18-24
13%
5% under 18
0% 10% 20%
Source: nilsen

46. THE END.
Thank you.
QUESTIONS?