The document discusses changing social values and luxury consumption trends in China. It describes three generations - Baby Boomers, Generation X, and Generation Y - and how each views luxury differently based on their life experiences. Specifically, it notes that younger generations see luxury as a form of self-expression and reward, moving away from the status signaling motivation of nouveau riche consumers. The transition to consumerism in China will create demand for luxury brands that understand Chinese consumers' evolving preferences.
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LUXURY IN CHINA: Get Rich Is Glorious
1. TO GET RICH IS GLORIOUS
Being rich a state of mind
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2. September 2008, Beijing
TO GET RICH IS GLORIOUS
Being rich a state of mind
Trend Insight Report
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3. “The money is there.” Glen Murphy, managing director at AC Nielsen in
Shanghai
100 million Chinese
luxury consumers.
Source: Morgan Stanley, 2006
Introduction
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4. “The money is there.” Glen Murphy, managing director at AC Nielsen in
Shanghai
Already the third
largest luxury market
in the world.
Introduction
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5. “The money is there.” Glen Murphy, managing director at AC Nielsen in
Shanghai
The world's top
luxury market by
Source: Goldman Sachs, 2007
2015.
Introduction
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6. To Get Rich is Glorious
115 US$-billionaires
in 2007...
Introduction
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7. To Get Rich is Glorious
The only country
where consume
more luxury than .
Introduction
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8. To Get Rich is Glorious
The world’s youngest
luxury market, with
in their 30’s.
Introduction
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9. To Get Rich is Glorious
¥ $=???
Introduction
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10. Chinese on the move
What’s Next?
Introduction
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11. Chinese on the move
The next
generation...
Introduction
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12. Chinese on the move
Introduction
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13. Chinese on the move
Introduction
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14. Chinese on the move
Introduction
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15. Chinese on the move
Introduction
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16. Chinese on the move
... they will look and
buy different.
Introduction
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17. Chinese on the move
But how?
Key Questions
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18. “If you are looking for quick profits, don't go to China. It takes a long time
to be profitable.” Nigel Luk, Cartier's managing director for China
To identify the potential for
your brand behind these over-
whelming figures, you need to
understand what luxury buyers
try to achieve and sell them
what they need to succeed.
Introduction
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19. Research is based on desk research, 24 focus groups, in-depth interviews
as well as expert interviews.
Therefore CIMG and Trendbüro
investigated upcoming needs
and rising desires of Chinese
luxury consumers as well as its
impact on China’s luxury
market.
Introduction
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20. Analyze changing life drivers and desires of Chinese luxury consumers to
identify upcoming consumer requirements towards luxury brands.
– Which social changes shape the life
drivers and motivations of China’s
consumers?
– Which new consumer needs will
challenge China’s rising luxury market?
– How to address to these needs with
products, marketing and services?
Key Questions
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21. Trend Insight Report: To Get Rich is Glorious
1. People’s Republic of Change
2. Luxury in a Shift
3. Faces of Luxury 2010
Agenda
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22. The future of luxury is based on a fundamental change of social values
from the past to the present.
Within the last 60 years
Chinese consumers underwent
two major value shifts, which
significantly impacted their
lives, beliefs and buying habits.
People’s Republic of Change
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23. Three decades of communism were followed by three decades capitalism.
Now China slowly transitions into three decades of consumerism.
People’s Republic of Change
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24. The Chinese market is influenced by three generations, who possess
contrary ideals.
1. Baby Boomers
2. Generation X
3. Generation Y
People’s Republic of Change
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25. Baby Boomers (1950 - 1964): Dominated by political figures and
movements. They respond to politics and believe in heroes.
People’s Republic of Change
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26. „The Song of Lei Feng” romanticizes selflessness which shaped the whole
generation until the 80s.
Serving the people
Between the Chinese liberation in 1949 and
the opening in 1978 Chinese consumers were
mainly faced with instability and economical
chaos.
The Great Leap Forward, the Famine and the
Cultural Revolution threatened China for three
decades. In that period, people lost their
identity, their privacy and even their right to
an education. The only things that couldn’t be
banned were their dreams.
Deficiency and limitation of goods shaped daily
life. Even money could not open all doors.
Political power was the only accepted currency
during this time.
People’s Republic of Change
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27. This generation lost its creativity with the Cultural Revolution. Following
and imitating others was the only way for social development.
Money is power and power is everything
The baby boomers are hopeless romantics and
fiercely nationalistic. While their romanticism of
the Chinese Revolution might have turned into
cynicism due to the Cultural Revolution, their
nationalism remained undiminished.
The baby boomers are frugal people, trained
not to desire material goods and creaturely
comfort. Nowadays some of them are the
richest people in China. They splurge to
impress. Money is power to them, and power
is everything.
Today, baby boomers are still the policy-makers
and the parents who shape the mindset of the
next generation.
People’s Republic of Change
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28. Generation X (1965 - 1979): A generation of realists woke up after
Tiananmen Square protests, who believe only in themselves.
People’s Republic of Change
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29. In their young adulthood only some Western movies where available.
But “Pretty Woman” came to China and libarated the Chinese dream.
First come, first serve
Generation X is influenced by the liberal spirit
of the 80s, growing-up while China transitioned
from a planned economy to market economy.
These entrepreneurs lived the Chinese dream.
But after 1989 they underwent a value shift
from an idea of collective wealth to a focus
on self, driven by political reforms as well as
the privatization of China’s economy. New
business opportunities replaced their
enthusiasm for society and turned their hearts
to a single purpose: make money, and make
lots of it.
They went from 20 years of depreciation and
food coupons to over-supply. From 1,300
private car owners in the entire nation to
three million in Beijing alone.
People’s Republic of Change
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30. Mr. and Mrs. X are opportunists. They were educated by Mao and trained
by Bill Gates. They are open to new things and appreciate originality.
Money can change your life!
Generation X suffers a collective insecurity
from living through so much change. They
therefore trust in material security and
status. 60% of them buy luxury goods to
increase their self-confidence1.
Their heroes are the rich and famous
entrepreneurs who made it. They believe in
Darwinism and they know how to work the
system to their benefit. For them there is only
an up or down but nothing in between while
the government dismantles its cradle-to-grave
welfare system.
Generation X is the majority of these who keep
the 80% of Chinese private business running.
1 TNS, 2006
They make the money, show off the money,
and spend the money.
People’s Republic of Change
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31. Generation Y (1980 - 1995): Possesses a Chinese mindset but a global
lifestyle shaped by McDonald’s, Google and MBAs.
People’s Republic of Change
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32. Self-made web-clips offer the best insight to China’s youth detailing their
dreams and believes first hand: dv.ouou.com
I am what I am. Your are serving me!
Generation Y is the first Chinese generation
born into consumerism. They grew up in the
information age with internet and mobile
phones.
They are overwhelmed with information and
personal choices. Are you Hello Kitty or Rebel?
Gym or Yoga? Stay in China or go abroad? Artist
or businessman? Fake or real?
They are the first generation with the right to
Source: 1 Seventeen Readers Poll, 2006;
choose their career, lifestyle and cultural
affinity. No wonder that 85% of them see
Picture: http://dv.ouou.com
themselves as their role model.1 Consequently,
the first generation of only children grows up in
a modern environment, full of confidence in
their future?
People’s Republic of Change
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33. For Generation Y there is nothing wrong with hedonism and self-
rewards.
Money gives access but no satisfaction
They buy because the product emotionally bond
with their self identity, because of peer
pressure, because it’s a fad.
They are often educated outside China and will
spend more on luxury products, because they
won't know what it means to be without money.
They are not frugal, nor do they buy status,
believing that consumption is a part of self-
expression.
Generation Y represents the future of China.
Today, they are the ones dictating what is cool
and what is not. This generation will be the
first where business and political elites will be
surpassed by design and style elites.
People’s Republic of Change
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34. China’s culture today is mainly determinated by security, harmony,
control and formation than lust, strangeness or sensuality.
Community
Selflessness
Tradition
Communism
Growth
Nationalism
Status
Source: SEMIOBENCH CN by Trendbüro
Capitalism
Censorship
Disparity
People’s Republic of Change
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35. The next generation will open the door for a value shift towards
consumerism, self-expression and hedonism.
Community
Consumerism
Selflessness
Tradition
Communism
Self-Expression
Growth
Nationalism
Status
Source: SEMIOBENCH CN by Trendbüro
Hedonism
Capitalism
Censorship
Disparity
People’s Republic of Change
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36. China turns into a global society
The fundamental value shift
from communism to capitalism
to consumerism will unleash a
new type of consumer with
advanced preferences towards
brands, products and services.
People’s Republic of Change
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37. Trend Insight Report: To Get Rich is Glorious
1. People’s Republic of Change
2. Luxury in a shift
3. Faces of Luxury 2010
Agenda
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38. This new luxury will possess elements of showing one’s status and self-
reward. But the way to achieve it will shift to the next level.
Luxury in a Shift
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39. There are four different types of luxury consumers based on social
background, luxury experience and income level.
Nouveau Rich Understaters Connoisseurs Spirituals
Luxury in a Shift
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40. While most of Chinese luxury shoppers are the nouveau rich, many of
them are still looking for their place in the world of lux.
Understaters Connoisseurs
Source: SEMIOBENCH CN by Trendbüro
Nouveau Rich Spirituals
Luxury in a Shift
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41. Nouveau Rich: Showing-off works! 65% of Chinese are convinced that
people who own luxury brands are successful people.1
1 TNS, 2006
Luxury in a Shift
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42. Nouveau Rich: Movie star Fan Bingbing is preferred star in
advertisements and one icon for the Nouveau Rich in China.
I want to stand out!
Background: Entrepreneurs, celebrities or
young businessmen who are the first in their
family, who can afford luxury. They still rank
themselves with “average” people.
Motivation: They want to show their success
and want to stand out from the mass. They
don’t care about others, but due to their
cultural background formation still rules.
Habits: To balance formation and their
longing to be special they buy the most
popular brands with high mass reputation
(Armani, BMW, Mercedes, Rolex, Gucci).
Luxury in a Shift
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43. Understaters: Not show but know! About 70% of Chinese believe that
owning luxury brands doesn’t necessarily mean one is fashionable.1
1 TNS, 2006
Luxury in a Shift
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44. Understaters: Successful actor Lu Yi spends his time with his family
instead on superficial glamorous events.
I want to fit in!
Background: Successful creatives, rich people
from behind the scene or experienced luxury
consumers. They are international, speak
English and understand luxury as a lifestyle.
Motivation: They want to fit in to a
sophisticated group of international and
stylish people. They want to differentiate
themselves from superficial show-off
attitudes.
Habits: They mix established brands with
niche brands to create their individual style
as long as it fits into the peer group. They
tend to be a bit artistic and edgy (MINI, Y-3,
Issey Miyake, Marc Jacobs, MIU MIU).
Luxury in a Shift
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45. Connoisseurs: Already today about 60% of luxury consumers buy luxury
to reward themselves.1
1 TNS, 2006
Luxury in a Shift
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46. Connoisseurs: Jiang Wen is a famous movie director and a king of the
Chinese film. He enjoys his life away from the hustle and bustle.
I want to enjoy my life!
Background: Either they are self-made
businessmen with a good self-perception or
they grew up in a financial hedge. Money is
seen as a key not as a treasure.
Motivation: They want to enjoy their life.
Life balance and sensuality are very
important. “Soft luxury” is highly appreciated.
Habits: They often live a quite life, enjoy
excellent foods, traveling but also doing
charity activities. Luxury brands have to
offer them a personal relationship, a buying
experience and high quality (Bulthaup, Patek
Philippe, Ferretti Yachts, Cohiba, Hennessy).
Luxury in a Shift
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47. Spirituals: They are often overseas born Chinese. With a growing number
of Chinese returning back home this group is slowly rising.1
1 From year to year the number of returning Chinese is rising – 30,000 people in 2005, Blue Book, 2007
Luxury in a Shift
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48. Spirituals: Wang Fei is a talented singer who incarnates Asian musical
culture. She lives an international, individual and edgy lifestyle.
I want to find myself!
Background: Grow up in a well off
environment or with an artistic background.
Financial problems are not relevant. Luxury
goods are nothing more than commodities for
them.
Motivation: They want to find the meaning
of their life. They are looking for authenticity
and spiritual experiences.
Habits: Spirituals are often involved in
charity and fundraising. Though they are
highly individualistic, striving for spiritual
adventures and bored by the superficial world
of luxury. Reversion to nature and the
primordial dominates their lives (Yö, Linda
Loudermilk, Leica).
Luxury in a Shift
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49. Brand preferences of different consumer types.
Source: Brand positioning is based on focus groups, in-depth interviews, expert interviews
Understaters Connoisseurs
Nouveau Rich Spirituals
Luxury in a Shift
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50. China’s luxury market will be dominated by the Nouveau Rich and Under-
staters, but Connoisseurs will have a significant impact on them.
Source: Brand positioning is based on focus groups, in-depth interviews, expert interviews
Consumerism
Understaters Connoisseurs
Self-Expression
Nouveau Rich Hedonism Spirituals
Luxury in a Shift
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51. China’s luxury market will give birth to new attitudes towards luxury to
keep pace with developing mindset of Chinese luxury consumers.
Consumerism
Understaters Connoisseurs
Self-Expression
Source: SEMIOBENCH CN by Trendbüro
Nouveau Rich Hedonism Spirituals
Luxury in a Shift
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52. These upcoming attitudes are the output of a sustainable shift in the
mindset of luxury consumers.
Sensuality: Authenticity
Lust: Enjoyment
Strangeness: Experience
Luxury in a Shift
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53. With a rising consumers variety China’s luxury market will be more
diversified.
Celebrated excess
Über-Luxury
Luxury
Personal wellbeing
Personal Luxury
The promise of
True Premium
Premium
Luxury for beginners Prêt-à-Premium
The cheap has to be more attractive Masstige
Basics have to cost next to nothing Hard Discounting
Luxury in a Shift
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54. Those who want to succeed in China’s upper luxury segment they have to
contribute sustainable value for a global luxury lifestyle.
China’s luxury shoppers of
tomorrow are brand savvy. For
them the big price tag and an
even bigger label name doesn’t
make a product luxury.
Luxury in a Shift
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55. Trend Insight Report: To Get Rich is Glorious
1.People’s Republic of Change
2.Luxury in a Shift
3.Faces of Luxury 2010
Agenda
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56. 63% of the young Nouveau Rich want to enjoy the present moment as
much as possible and 76% would pay more to buy natural healthy foods.1
The experiential, authentic and
enjoyable side of luxury
1 McCann Worldgroup Consumer Insights and Market Intelligence, 2006
products and brands will
determine if consumers
consider them luxury or not.
Faces of Luxury 2010
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57. Marketing will be dominated by seduction, education and establishing a
1-to-1 customer relationship.
Marketing Approaches
– In the future luxury consumers will save as
much as possible, adhering to the motto:
Make luxury an investment to make most
of one’s life.
1 15 mio. Chinese with annual income about $ 32,000; AC Nielson, 2006
– Encourage national pride but don’t try to
be Chinese.
– Revive your brand with enjoyable and
entertaining content not with a painful
interruption of it.
– Take over responsibility and share your
success. Charity is highly appreciated
within the community of luxury buyers.
– For the majority of China’s upper class1
luxury will be out of reach. Affordable
accessories will be a market to target.
Faces of Luxury 2010
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58. Service makes the difference between counterfeit and original. Innovative
services will be key in strong customer relationships.
Service Approach
– The rich has less time. Time saving services
and efficiency at the POS are appreciated
by customers.
– Chinese are comfort junkies. Space, silence
and customization are important.
– Escapism is common in darwinistic China.
Offer a shopping experience which allows to
escape from reality for a moment.
– Luxury buyers adopt a global lifestyle and
are eager to learn about a brand. Coaching
is more than welcome.
– Nowadays loneliness is pervasive in all
social classes. Make your brand to a place
where customers find kindred spirit.
Faces of Luxury 2010
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59. Products give brands a body and an appearance to make brand values
alive. Therefore authentic luxury needs to be an experience for all senses.
Product
– Packaging is often the first brand
experience for luxury consumers and
therefore most important.
– China’s hyper-growth left a lack of pureness
and authenticity. Products that tell a story
about their origin and ingredients promise
a desirable piece of pureness.
– Chinese consumers live between national
pride and global attitudes. Global luxury
goods touching Chinese tradition will find
a grateful audience.
– Chinese are opportunists and believe what
they see. They don’t just buy a product,
they buy a bit of an admirable world of lux,
not made in China.
Faces of Luxury 2010
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60. Many brands which are successful in the West, flop in China. Therefore,
fine-tune global strategies to regional distinctions.
The following seven cases
illustrate a scenario of the
* All cases are fictional and not aligned with the named brands.
Chinese world deluxe in
2010.*
Faces of Luxury 2010
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61. Authenticity of a brand means consistency in design, communication,
service and also manufacturing.
Gucci re-opens factories in Italy
1 TNS, 2006; 2 Many consumers are convinced that some luxury goods sold on black market are
Insight: 70% of Chinese appreciate the superior
quality of luxurious brands1 but doubt that
superior quality can be made in China.
Solution: While brand awareness is still low,
the country of origin is more important.
Therefore Gucci decided to re-establish some of
their factories in Italy. An Europe made Gucci
bag not only guarantees for superior quality but
originals stolen from Chinese factories.
can be easily identified as a counterfeit.2
Output: The trust in the quality of Gucci
products increased while the number of
counterfeits slightly declined.
Faces of Luxury 2010
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62. An individually made stamp and personally delivered by Oppenheim’s
factory – an experience customers are willing to pay for.
Oppenheim sold stamp edition in 30 days
Insight: After two decades of Westernizing
Chinese consumers rediscover their roots and
Picture: Design/Rendering by XLPlus Design, Shanghai; Concept by Trendbüro
appreciate luxury that revive their tradition.
Solution: Oppenheim, maker of high-quality
writing instruments, released an edition of
signature stamps, which have a long tradition
in China. After launching a jade made USB-stick
last year, Oppenheim proved again its excellent
consumer understanding.
Output: Customers appreciate the classical look
of the black-white stamp but also the high
quality of the stamp signature, which is
handmade in China’s oldest stamp factory.
Faces of Luxury 2010
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63. Luxury market is like a dating; it’s about long-term relationships. If
customers think you just want money, they want a divorce.
Many women felt in love with Hermes
Insight: In a rushing, anonymous world with
over populated cities also luxury consumers are
looking for attention and unique experiences.
Concept: Hermes took-up this desire when they
introduced its new collection of luxury finesse.
With a handwritten, poetic letter store manager
Li Dan indulged the senses of Beijing’s luxury
elite. It took three days to write all letters but
in response many women felt in love with the
French luxury brand Hermes.
Output: And as its said Li Dan indulged not
only the senses of his upscale clients but also
their wallets and credit cards.
Faces of Luxury 2010
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64. Consumers look for new, inspirational shopping experiences that excite
the senses.
Three on the Bund opens Men Only Zone
Insight: China‘s Connoisseurs are spending
more for cosmetics and fragrances. They look
for shops that cater to their special needs –
shops which are bold, clean and cool.
Concept: Together with Lacôme Homme
Shanghai’s luxury shopping venue Three on the
Bund has established a pink-free world for male
toiletries, providing everything indulgent men
need to look and feel great.
Output: The royal comfort experience helped
Lacôme to introduce many other products and
made Three on the Bund the first choice of
men.
Faces of Luxury 2010
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65. Shopping cathedrals are playgrounds for all senses and a great
opportunity for sense branding at the point of sale.
Q206 opens a World of European Style
Insight: Many Chinese luxury consumers get
bored by luxury offers. Shopping should be
more like a journey to a desirable place.
Solution: Berlin based luxury department store
Q206 feels challenged and opens a World of
European Style in Beijing. It will be more like a
shopping palace where the cafe bar, library,
social club and gallery are part of the brand
experience.
Output: Customers can taste, smell, read and
touch brands facets and meet new friends in an
exclusive environment.
Faces of Luxury 2010
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66. The staff in showrooms are important communicators of the brand and a
strong influence on the nouveau rich who have little brand knowledge.
LV succeeds with sophisticated staff
Insight: Customers complain about pushy badly
trained staff in luxury stores.
Solution: Louis Vuitton recognized this
challenge early and educates its staff partly in
Hong Kong. They offer specific courses and
international staff exchange to push their staff
to the same sophisticated level as their
customers.
Output: Since LV also offers home visits to save
customer’s time, customers begin to build
personal relationships with their style
consultants during their “style-time” together.
Faces of Luxury 2010
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67. Luxury consumers expect the same professionalism and quality of
experience they enjoy outside in the comfort of their own homes.
Ritz Carlton sells Grand Home Sweet
Insight: China‘s rich expect maximum comfort
and technology at home. After the kitchen,
attention is now focused on bed- and
bathroom, also installing specialty rooms such
as game rooms, yoga and wine rooms.
Concept: The upscale hotel chain Ritz Carlton
is successfully marketing their furnishings for
private homes. What people are looking for is
better relaxation – but also an exciting
atmosphere for certain moments.
Output: Ritz Carlton brings the mood of a
luxury hotel into people‘s home for sweeter
dreams and a stronger customer relationship.
Faces of Luxury 2010
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68. Curious to learn more about Chinese luxury consumers – their aspirations,
life-drivers and longings? Contact us!
This summary illustrates only
the highlight of our research
results. Please send us specific
questions about your luxury
consumer of tomorrow.
Faces of Luxury 2010
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70. From the big picture to the detail
1. Desk Research
online media, books, reports, white papers
2. Focus Groups
24 focus groups (1,5 hours) in Beijing, Shanghai, Shenzhen: 60% of the participants were
female, 40% male; aged between 20 to 40 years with an available monthly income of about
3000 RMB. The majority of the participants hold a college or university degree.
3. In-depth Interviews
12 interviews (1 hour) with luxury consumers: 4 female and 8 male interview partner, aged
between 30 to 55 years with personal assets of about 250,000 EUR
4. Expert Interviews
15 interviews (1 hour) with marketing/sales representatives of premium and luxury brands
Research Methodology www.trendbuero.com >> 70