1. Submitted for the partial fulfilment of the award of
the degree of bachelor of business administration
A project report on
Study on creation
of a luxury brand
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2. Defining luxury..
Luxury, luxury brand, luxury good.
Luxury is a state of great comfort or elegance, especially when
involving great expense.
Luxury good is a good for which demand increases more than
proportionally as income rises. It is in contrast to a “necessity good”, for
which demand increases proportionally less than income. A luxury good
is often synonymous with “superior” or “Veblen goods”.
A luxury brand or prestige brand is a brand for which a majority of its
products are luxury goods. 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.
price, or high quality, though few, if any, of their goods are currently considered luxury goods.
3. Luxury at its best.
Birth of luxury
LVMH (Louis Vuitton Moet Hennessy) is the largest luxury good producer in
the world with over fifty brands, including Louis Vuitton, the brand
with the world's first designer label. The LVMH group made a profit of €2
billion on sales of €12 billion in 2003. Other market leaders include
Richemont and Kering (previously PPR, after it purchased the Gucci
A rather small group in comparison, the wealthy tend to be extremely
influential. Once a brand gets an "endorsement" from members of this
group, then the brand can be defined as a true "luxury" brand. An
example of different product lines in the same brand is found in the
automotive industry, with "entry-level" cars marketed to younger, less
wealthy consumers, and higher-cost models for older and more wealthy
The advertising expenditure for the average luxury brand is 5-15 percent of
sales revenue. This rises to about 25 percent with the inclusion of other
communication such as public relations, events and sponsorships.
4. Faces of luxury brand
Who are you?
•High brand awareness.
•Available in Flagship
•Very high in quality.
What about you & me?
•Status & stories.
•Satisfying role play
•Symbolic & iconic
•Class of own.
What are you?
•Not known for extensive
What about you?
•High on hedonism.
7. 8 pillars of luxury
Performance refers to the delivery of superior experience of a
luxury brand at two levels – first, at a product level and second, at
an experiential level.
At a product level, fundamentally it must satisfy the functional and
utilitarian characteristic as well as deliver on its practical physical
attributes – a recipe of quality or design excellence ingredients like
craftsmanship, precision, materials, high quality, unique design,
extraordinary product capabilities, technology & innovation.
A luxury brand must perform at an experiential level as well, i.e.
the emotional value of the brand the consumers buy into – beyond
what the product is to what it represents. For example: Rolex
stands of symbol of heroic achievement & Tiffany is a
symbol of love and beauty.
Many luxury brands have a rich pedigree and extraordinary history that turn in to an inseparable
part of the brand’s mystique. This mystique is generally built around the exceptional legendary
founder character of the past, making up an integral part of the brand story and brand
So, when consumers buy say a Cartier or a Chanel product - it is not only because of the product
performance factor, but subconsciously they are also influenced by the brand’s rich lineage, herit
age and the years of mastery.
Coco Chanel started her business in 1913 and within
a few decades, became a
With Chanel Coco
Mademoiselle Campaigns in
1981,2008, 2009 & the
recent 2011, Chanel has
its pedigree / brand
Over-revelation-and-distribution of luxury brand can cause dilution of
luxury character, hence many brands try to maintain the perception
that the goods are scarce. Case in point - Burberry diluted its brand
image in the UK in the early 2000s by over-licensing its brand, thus
reducing its image as a brand whose products were consumed only by
Natural paucity is triggered by scarce
ingredients like platinum, diamonds
etc. and/or those goods that require
exceptional human expertise for
example handcrafted quality that
constraints the mass production.
Technology-driven paucity is as a
result of conception-time involved
in continuous innovation and research
-&- development process.
Tactical- driven paucity are more
promotional in nature such as the limited
editions or the special series to
generate artificial desire and demand.
The persona of a luxury brand is largely a result of – first, its distinctive projection plus
coherence of its applications across consumer touch-points and second, the brand communication
through its advertising. The visual brand identity captures the brand’s personality, mystique &
emotional values in a nutshell. The distinct and consistent orchestration of the identity is central
to establishing the visibility, familiarity & common identifiable brand imagery.
11. Public Figures
Public-figure or celebrities have been traditionally employed as one of the mark
eting mix in luxury brand advertising and they still continue to garner attention,
credibility and impact.
Chopard has been official partner of the Cannes Film
Festival since last 14 years, showcasing and
premiering their collection by accessorizing celebrities
on the red carpet.
The Lebanese singer and UNICEF goodwill
ambassador Nancy Ajram was Cartier’s special
guest at the Cartier International Dubai Polo
Challenge held in Dubai, UAE in 2010.
The retail branded environment in luxury branding is all about heightening the consumer’s brand
experience and amplifying the brand aura. Hence, the branded environment, the movement of
truth, is where it must “live” the brand by orchestrating immaculate detailing that engages all
senses of the discerning audience.
Rolex associates itself with
more than 150 events in golf,
sailing, tennis, motor-sport,
arts and at equestrian
tournament vs. associating
with sports like football
/ cricket that have more mass
13. PR(Public Relations)
PR in luxury branding plays an enormous role in image proliferation of the
brand, thereby subtly influencing public opinion. It is also employed to convey
other supporting messages and attributes of the brand which cannot be
explicitly captured in advertising, but by no means are less important to
create brand’s personality, mystique and emotional values – whether it’s via
the pedigree factor or via public-figure any of the previous 7 P’s mentioned.
PR is utilized to generate buzz & convey the brand news, point of views of
inspirers and influencers (celebrity talk or the designer speak), a crucial
support for brand activation (like the fashion weeks, sport-events, themed
Pricing plays a quite a big role in the way consumers perceive luxury brands. Consciously or
sub-consciously, consumers tend to generate a mental luxury stature or image with the
price-range that the brand operates. Therefore, it is important for luxury brands to price
themselves right – as setting the price lower than the consumer expectation and willingness to
pay can potentially harm the brand value, whereas the reverse can potentially not given enough
justification for consumers to go ahead and buy.
Another way employed by luxury brands is by creating an extension into a secondary line with
relatively lower price points like Giorgio Armani’s - Armani
Exchange, Roberto Cavalli’s - Just Cavalli, Prada’s –
Miu Miu, Alexander McQueen’s - McQ lines.
20. The Indian Picture
The Indian customer is aware of world trends be
cause of growing travel overseas for business &
Leisure travel, where they get exposed to best
of the brands & luxury trends.
Demand value for money which is mostly
because of traditional & cultural values.
21. Personalized connect
It is very important because Indian
consumer has high emotional association
with products they own or acquire.
High standards of service expectation
as the luxury consumer will mostly have
long term association with the product.
22. Victims of Habit
Consumers get accustomed to shopping abroad.
They ‘d rather spend 200 pounds on a shirt
There, than Rs. 200,000 here. It is tough
getting them to change.
Import duties are a headache
Steep duties translate to prices 15% higher than
in Europe. Jet setting wealthy Indians hence
shop abroad- means luxury brands often struggle
to make a profit in India. Indian presence is
often seen as just a branding exercise.
23. Indian men love to shop
Around the world, the mix is
a 60:40 (women vs. men),
but in India, its Skewed in
favour of Menswear.
Men's formal wear is the
fastest Growing segment
in India. So it makes
Sense to focus on this
24. This seasons trends are missing!
Luxury retailers offer a
limited product range &
stock second rung products
at astronomical prices.
The customer thus, opts to
buy from the stores abroad
India needs New
York’s Fifth Avenue
Luxury retailing in India
is limited to a few shopping
Plazas, select high locations,
Malls & five star hotels
lobbies. Just 3 centres
which are in the Luxury
segments are DLF
Emporium in Delhi,
UB City in Bangalore &
Palladium in Mumbai.
However the Right
location & retail
ambience for a brand
25. Indian market : the to do list.
Brands should be in for a 10 yr. Wait.
Doing business in India is definitely not a wham bam thank you mam & certainly not a “ aao toh
welcome, jao toh bheed kam” formula.
Its a slow process but one that will eventually pay long term dividends.
26. Brands can JV with local partners which can help them to understand local markets better.
with India’s FDI rules having a local partner becomes profitable.
Prime examples are Reliance brands with Diesel
Genesis colours with Burberry.
DLF brands with Boggi.
Partnership is the key.
27. Softer Price points.
Brands would benefit by keeping their price competitive & offering entry level
products as well.
Pricing products at a comparatively lower level than its international price can
be a great investment towards brand building.
The Indian customer seeks the thrill of making a ‘steal’ bargain.
Initially the brand can bear the higher import duties partly helping the
customer to get oriented with the brand.
Foreign brands need to understand
Indian Personality & fashion elements
to Indianise their products.
A win win situation for global
brands is to utilise the talented &
cost effective Indian designers.
It worked So well for others
so why not India.