The Internationalization

Process

Of

High Fashion

Companies

A literature review on common

methods for internationalization

in the high fashion industry

Arnhem Business School

G-Cluster Spring/Summer 2014

Marketing 6 – Period 2

Lecturer: Matthieu van den

Bosch

Liv Roxanne Thürer 486793

Hand-in date: 02nd of June

2014 Amount of Words: 4,805

Abstract

Most high fashion brands are already operating internationally for decades. Current

opportunities through the rise of fast developing economies have increased the international

commitment of luxury fashion brands.

The main research question this report is going to answer through a review of secondary data

sources is ‘How do high fashion brands internationalize?’

Internationalization is defined as process where the company’s business activities shift beyond

domestic borders. High fashion brands can be seen as designer brands that just like luxury

brands add value to the consumer by heritage and exclusivity of the product delineated by high

prices, high quality, packaging, and the firm’s communication efforts.

For the purpose of this paper, the process of internationalization is subdivided into four

question-based stages: (1) ‘What is the reason to internationalize?’, (2) ‘which country should

be targeted?’, (3) ‘how should the expansion look like?’, and (4) ‘what is the marketing strategy

in the new foreign country?’.

For all high fashion brands an important issue is the empowerment of the brand through the

presence in “fashion capitals” like New York, Paris, Milan, London, or Tokyo (Calvo Porral &

Calvo Dopico, 2011). Fashion brands have to internationalize only to be present in these cities

and thus being identifiable as high-end fashion brands. Market selection is heavily determined

by these factors. Moreover, cultural and geographical proximity as well as economical

development influence the market selection.

Usually a four-stage process can be observed, where market entry is done through wholesalers

(high-end department stores), and then followed by openings of flagship and boutique sized

stores, first in the fashion capitals and later in second and third-tier cities. When the perceived

risk is high, franchising and joint venture agreements with partners in the foreign country are

often made.

Most high-end fashion brands apply a global marketing strategy. This protects the global image

of the brand, which is very important in this segment. In some countries like in China

communication is extended in order to take an informative function. This is due to the fact that

not all consumers there have already cultivated the meaning of a sustainable luxurious lifestyle.

It can be concluded that the Uppsala Internationalization model is the one mostly applied in this

sector.

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Table of Contents

ABSTRACT 2

1. INTRODUCTION 4

1.1 MAIN AND SUB QUESTIONS 4

1.2 RESEARCH METHODOLOGY 4

1.3 STRUCTURE OF THIS REPORT 6

2. MAIN PART – ANALYSIS PER SUB QUESTION 7

2.1 WHAT ARE HIGH FASHION BRANDS? 7

2.2 WHAT IS INTERNATIONALIZATION? 9

2.3 WHAT ARE THE KEY ISSUES IN INTERNATIONALIZATION GENERALLY? 9

2.3.1 DECIDING WHETHER TO INTERNATIONALIZE 9

2.3.2 DECIDING WHICH MARKETS TO ENTER 9

2.3.3 MARKET ENTRY STRATEGIES 10

2.3.4 THE MARKETING PROGRAM 10

2.4 HOW CAN THESE KEY ISSUES BE APPLIED IN THE INTERNATIONALIZATION OF HIGH

FASHION BRANDS? 11

2.4.1 DECIDING WHETHER TO INTERNATIONALIZE 11

2.4.2 DECIDING WHICH MARKETS TO ENTER 11

2.4.3 MARKET ENTRY STRATEGIES 12

2.4.4 THE MARKETING PROGRAM 15

3. CONCLUSION 17

REFERENCES 19

3

1.Introduction

Fashion retailers have been expanding aggressively in the past two decades (Lu, Karpova, & Fiore, 2011),

making the topic of internationalization an important field of study for this industry. Further, due to a fast

increase in wealth in Asian countries (apart from Japan, which has an outstanding position already for

decades), the luxury segment in the fashion industry is experiencing fast changes in terms of external

landscape. Whereas luxury brands used to focus their business activity primarily on North America and

Europe, nowadays there is a trend in opening new Flagship Stores in Asian metropolises. Even in the

traditional markets the companies are targeting more specifically also Asian customers. Although having

operated internationally for decades already, these brands see a further increase in international commitment

because of the changing economic environment nowadays. Despite the industry’s long history and being

“perhaps the one most readily associated with branding” (Fernie, Moore, Lawrie, & Hallsworth, 1997),

comparably little research has been conducted on internationalization of high fashion brands (Kuang-Ying Loo

& Hackley, 2013).

The scope of this review is to discuss the internationalization factors as well as strategies that affect

the process and are implemented by high fashion brands. A focus is put on marketing and communications

aspects during internationalization of the fashion company.

1.1 Main and Sub Questions

The main question of this paper is: ‘How do high fashion brands internationalize?’

Additionally, sub questions are introduced that serve to answer the main question. These are the following:

1. What are high fashion brands?

2. What is internationalization?

3. What are the key issues in internationalization generally?

4. How can these key issues be applied in the internationalization of high fashion brands?

1.2 Research Methodology

For the purpose of this research only secondary sources have been used. The Internet has been consulted, by

using Google Scholar and EBSCO Host for journal articles and previous reports; Google and FashionUnited

have been used to retrieve relevant up-to-date articles. Further, the book “Global Marketing” of Svend

Hollensen (2011) has been examined.

1) Online research to answer Sub Question 1: What are high fashion brands?

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a) Keywords: high fashion, luxury fashion, high end fashion

b) Relevant sources found:

Heine, K., The Concept of Luxury Brands.

Kapferer, J.-N., Abundant rarity: The key to luxury growth

Kapferer, J.-N., & Bastien, V.,The luxury strategy.

Karpik, L.,Valuing the unique.

Ko, E., & Megehee, C. M., Fashion marketing of luxury brands: Recent research issues and

contributions

Casciscia, L., Internationalization of luxury fashion companies: a penetration project in Poland

for Salvatore Ferragamo

2) Online research to answer Sub Question 2: What is internationalization?

a) Keywords: internationalization research

b) Relevant sources found:

Ruzzier, M. H., SME internationalization research: past, present, and future.

Welch, L. S., Internationalization: evolution of a concept

3) Offline research to answer Sub Question 3: What are the key-issues in internationalization

generally?

a) Keywords: none

b) Relevant sources found:

Hollensen, S., Global Marketing: A decision-oriented approach

4) Online research to answer sub question 4: How do these key issues apply in the internationalization

of high fashion brands?

a) Keywords: high fashion internationalization, luxury fashion internationalization, luxury brands in

China

b) Relevant sources found:

The Economist, Desillusioned hedonist shoppers.

Ahlert, D., Große-Bölting, K., Heinemann, G., & Rohlfing, M., Internationalisierung im

Bekleidungseinzelhandel

Calvo Porral, C., & Calvo Dopico, C., "Carolina Herrera" Internationalization Strategy:

Democratic Luxury or Maximum Exclusiveness?

China Daily, Intl brands' pricing strategy in China.

Durland, T., Anillo, N., Chen, A., Vega, A., & Tobin, C., Globalization and Rapid New Market

Growth: How the International Fashion Market is Evolving to Capture Shifting Consumer Desires

Fernie, J., Moore, C., Lawrie, A., & Hallsworth, A., The internationalization of the high fashion

brand: the case of central London

5

KPMG. (2007). Luxury brands in China

Kuang-Ying Loo, B., & Hackley, C., Internationalisation strategy of iconic Malaysian high

fashion brands.

Lu, Y., Karpova, E. E., & Fiore, A. M., Factors influencing international fashion retailers’ entry

mode choice .

Moore, C. M., Fernie, J., & Burt, S., Brands without boundaries: The internationalisation of the

designer retailer's brand.

Nagasawa, S., Luxury Brand Strategy of Louis Vuitton: Details of Marketing Principles.

Oh, S., & Kim, J., Analysis of the Marketing Strategy of a Luxury Brand and its Success in

Selected Asian Countries

1.3 Structure of this Report

This report is structured into three parts: an introduction, a main part and a conclusion. The main part includes

the analysis of secondary sources by sub question and a discussion of the different views in literature. The

conclusion will answer the main question based on the findings of the three sub questions.

6

2.Main Part – Analysis per Sub Question

2.1 What are high fashion brands?

Although widely used, there is no clear definition of high fashion. Nevertheless, while conducting research on

the subject on the Internet a relatively clear depiction of high fashion comes across: designer brands,

connected to high prices and exclusivity. Additionally, high fashion brands have in common that they are all

present in one or more of the four major fashion weeks in New York, London, Paris, and Milan. Interestingly,

this view overlaps with the little clearer definition of luxury fashion brands with a “high level of price, quality,

aesthetics, rarity, extraordinariness and a high degree of non-functional associations” (Heine, 2012). With the

subjectivity lying in the term luxury (Heine, 2012) and the missing definition of high fashion, the boundaries

of these two terms are not completely clarified. For the purpose of this paper, high fashion brands are luxury

fashion brands.

Further Ko & Megehee (2012) state that by creating the best designs, using the best materials, having the best

merchandising, and the best packaging, luxury brands lead the way for the rest of the marketing world. This is

contrasted by the view of Karpik (2010) and Kapferer (2012) who state that luxury brands do not adhere to

most present business models in any sector and have created some “anti-laws of marketing” (Kapferer &

Bastien, 2009).

Examples of these anti-laws are:

1. No delocalization of production to maintain the heritage of the brand

2. No advertising to sell but to build a dream

3. Communication to non-targets, as the target group needs a wider group of informed people who

recognize the brand

4. Maintenance of full control of the value chain to ensure 100% control on quality

5. Distribution should be fully-controlled to ensure that the experience of buying the brand is

exclusive

6. No issue of licenses because it makes the brand lose control

7. Steady increase of the average price

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Another interesting issue in high and luxury fashion is that a lot of former exclusive high-end brands have

diluted or diffused their product assortment and are therefore serving both the high fashion and the middle

retail market (Moore, Fernie, & Burt, 2000) (Durland, Anillo, Chen, Vega, & Tobin, 2013).

Table 1: Brand segmentation strategies of international fashion designers (Moore, Fernie, & Burt, 2000)

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2.2 What is Internationalization?

As soon as firms get involved internationally and by conducting any kind of business activities in foreign

markets, they can be said to be in the process of internationalization. Although there is no global definition for

the term, it basically describes the geographical extension of business activities beyond national boarders

(Ruzzier, Hisrich, & Antoncic, 2006; Welch & Luostarinen, 1988).

2.3 What are the key issues in internationalization

generally?

Hollensen (2011) presents a decision-oriented approach to a firm’s internationalization as presented here:

1. Deciding whether to internationalize

2. Deciding which markets to enter

3. Market entry strategies

4. Designing the global marketing program

5. Implementing and coordinating the global marketing program

2.3.1 Deciding whether to internationalize

Motives and barriers characterize the pre-internationalization process. Motives can be of proactive and

reactive nature. The first ones “represent internal stimuli to attempt strategy change, based on the firm’s

interest in exploiting unique competences or market possibilities”. The latter “indicate that the firm reacts to

pressures or threats in its home market or in foreign markets and adjusts passively to them”. Triggers

(someone or something inside or outside the company) must initiate internationalization and carry it through.

Some barriers mainly affect the export initiation whereas other are encountered in the process of exporting

(Hollensen, 2011).

2.3.2 Deciding which markets to enter

According to Hollensen (2011), there are different factors contributing to the international market selection

such as simple coincidences, personal networks, the synergy between the possible new target market and its

own strengths, objectives and strategy, the existence of complementary markets and marketing knowledge

gained in these markets.

The main internationalization theories presented by Hollensen are the Uppsala Model, the Network Model,

and the Transactional Cost Model.

The Uppsala model is characterized by the view that firms internationalize on a step-by-step approach, while

the psychological distance to new countries, as well as the amount of investment in each country increases

with time. The Network model on the other hand points out that the interpersonal contacts play a much more

9

significant role when internationalizing. The last theory focuses on the minimization of transactional costs

when deciding to expand in different countries. Transactional costs can arise for market researches, travelling

expenses, and other activities carried out prior to internationalization.

Further, the Uppsala Model takes into account geographical as well as psychical distance implying that a

company should first enter nearby countries before entering more distant countries.

The Network model in contrast suggests that market choice is a more proactive decision based on contacts in a

given country that encourage the entry there. Finally, the Transaction Cost Model implies that the right market

to enter would be the one generating fewer costs for any kind of reason.

2.3.3 Market entry strategies

The modes of entry differ from each other by the degree of equity a firm invests into the new country. There

are the Export, Intermediate, and Hierarchical Modes ( (Hollensen, 2011). With rising investment or equity,

the level of control but also the level of risk rises.

Graph 1: International Entry Modes (Lu, Karpova, & Fiore, 2011)

2.3.4 The Marketing Program

After having selected a market and having decided on an entry mode the firm will have to craft and implement

a marketing strategy. The most important elements in marketing strategy are the four Ps (Product, Price, Place,

Promotion) (Hollensen, 2011).

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2.4 How can these key issues be applied in the

internationalization of high fashion brands?

2.4.1 Deciding whether to internationalize

Calvo Porral and Calvo Dopico (2011) cite the classification of retail internationalization reasons into ‘push’

factors, those that encourage the company to search for international opportunities, and ‘pull’ factors, those

that involve attractive conditions in foreign markets (Alexander, 1995; Treadgold and Davies, 1988). Moore,

Fernie, & Burt (2000) take a similar view of push and pull factors; “push factors include limited opportunities

in the home market through saturation, regulation or adverse trading conditions, while pull factors relate to

seeking opportunities in markets conducive to the retail offer.” The relative reactive idea of push and pull

factors can therefore be merged with the existence of proactive and reactive motives as described by Hollensen

(2011) by putting the factors as a sub category of reactive motives, where the company is either pushed or

pulled.

It is difficult to find exact information on why the big high fashion brands internationalized in the first place

given the fact that most well known high fashion brands operate internationally for decades already.

Taking the example of Carolina Herrera (in the following CH) the motives were rather reactive as the limited

growth opportunity in the domestic market was the major reason to internationalize. Further, brand awareness

in foreign countries, uniformity of consumption through ‘sharing of a unique fashion culture’, the demand for

the brand from foreign customers, the decrease of export and import barriers, and the development of IT were

other rather reactive motives.

Another important issue was created by the empowering factors (Calvo Porral & Calvo Dopico, 2011).

Empowering factors are the phenomenon of the so-called ‘fashion capitals’ and their extreme competitiveness.

These factors have influenced CH for instance to open its store on Madison Avenue in 2010 and its plans at

that time to open others in Paris and Tokyo only for enhancing the brand image.

Hindering factors on the contrast were trade barriers in Mexico, Colombia, Venezuela, and Argentina, the

different seasons in the southern hemisphere, the cultural distance to the Middle East and the geographical

distance to Asia (Calvo Porral & Calvo Dopico, 2011).

2.4.2 Deciding which markets to enter

Ahlert et al. state that the question of upmost importance is whether the brand’s competitive advantage in its

home country can be transferred to the new country (2006).

Generally, the internationalization of high fashion retailers implies choosing new markets with a low

geographical and psychical distance. Alexander (1997) found that US retailers have tended to operate first in

11

Mexico, Canada and even Cuba (geographical close markets) before going to Europe by entering the UK

(psychical close market). The major designers have therefore developed from the key fashion capitals in the

world (New York, London, Milan and Paris), where the empowering factor played an important role, to other

main cities (as cited in Moore, Fernie, & Burt, 2000). Also Calvo Porral and Calvo Dopico (2011) recognize

the importance of firm-specific factors by citing Dupuis and Prime (1996) and Evans, Treadgold and Movondo

(2000) who underline the importance of physical distance and level of uncertainty a company has to certain

foreign markets.

Loewe, a Spanish luxury fashion brand, went a different way from the very beginning by first entering the

Japanese market which was neither geographically nor psychically close. It can be assumed that a main reason

for this behavior can be the size of the luxury products market. The second destination was Germany, which is

geographically much closer but culturally different. Germany was entered because of the origin of the

company’s founder. This makes it an “emotional expansion reason” (Calvo Porral & Calvo Dopico, 2011).

Nevertheless, while cultural and geographical factors might have been taken into account in the past,

nowadays South East Asian countries have become the center of attention. When Japan was penetrated by

luxury brands in the 1980s neither cultural nor geographical proximity played a role. The country simply had

the largest middle class of all developed countries with an average income per household of US$60,000.

Despite its egalitarian culture it made Louis Vuitton the world’s number one luxury brand (Kapferer &

Bastien, 2009). Asia’s increasing demand for luxury products has made LVMH (the group inheriting some of

the world’s leading luxury brands s.a. Louis Vuitton, Loewe, and Givenchy) focus on the Asia-Pacific region.

The 62 Louis Vuitton stores in 14 Asia-Pacific markets have contributed to 20% of the brand’s worldwide

sales in 2002. Recently, the company is further investing in the region, which is contributing even greater to its

success (Oh & Kim, 2011).

KPMG (2007) does not only observe a trend towards China in general but the move from the “cluster cities” of

Beijing, Shanghai, and Guangzhou, to smaller Chinese cities, due to the plans of the brands to expand in

second and third tier cities because of the increasing brand awareness and willingness to spend there. Kapferer

(2012) discusses the risk though that entering such cities might make the brand provincial itself.

2.4.3 Market entry strategies

According to Lu, Karpova, and Fiore (2011), three groups of factors were identified influencing the choice of

mode of entry in the fashion retail market:

1. Firm-specific factors: asset specificity, brand equity, financial capacity, and international

experience

12

2. Country-specific factors: country risk, cultural distance, and government restrictions

3. Market-specific factors: market potential and market competition

Degree of Ownership

Foreign market involvement is extensive, particularly in terms of wholesale distribution, but also in relation to

the operation of retail outlets (Moore, Fernie, & Burt, 2000).

In 1997, Fernie, Moore, Lawrie, & Hallsworth state that in terms of entry modes, a lot of varieties exist. These

can reach from wholesaling in up-market department stores to the full ownership of flagship stores.

Nevertheless, because of the high quality demands of the core, actual, and augmented product of high fashion

brands, capital investments are always very high when internationalizing. This has created a transformation of

ownership structure of those firms.

Another observation of the authors above was about the origin of the brands. Whereas French and Italian

brands tend to prefer higher control, US brands have expanded a lot through franchisees especially in

England’s provinces (Fernie, Moore, Lawrie, & Hallsworth, 1997).

Louis Vuitton does not do anything less than owning all its retail channels. This is because of the company’s

conviction that the exclusivity of its own stores enhances the brand’s image and gives complete brand control

over the point of sale and customer contact (Calvo Porral & Calvo Dopico, 2011). Whereas Louis Vuitton

might be able to own its stores and expand quickly, due to its parent, LVMH, for smaller or more independent

brands the move to China entails higher perceived risks and more patience. They need to find partners or

advisers to enter the market at a decreased level of risk. (KPMG, 2007)

CH first opened its own point of sales or branches (hierarchical mode) in most European countries, the US and

South America. Now the company is planning to use joint-ventures (intermediate mode) in Asian countries

due to the geographical and psychical distance and the higher perceived risk. For countries with the highest

perceived risk like Saudi Arabia, Kuwait, and Central American countries the company plans to enter the

market by using franchising as the mode of entry.

Another example is Loewe: the brand sells through 125 own stores and a hundred of multi-brand point of

sales, something that neither CH nor LV would ever take into consideration (Calvo Porral & Calvo Dopico,

2011).

Retail Formats

Moore, Fernie, & Burt (2000) present four distinct stages or waves of activity, reflecting the broad patterns of

international fashion designers. They are shown in fig. 1.

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Figure 1: The four stages of fashion designer foreign market development (Source: Moore, Fernie, & Burt, 2000)

The authors describe that, at the beginning, high fashion brands expand through wholesale channels such as

luxury department stores. This presents a very effective and relatively low-cost opportunity to get a foothold in

the market. Thereafter, the brand opens own flagship stores presenting their Ready-to-Wear (RTW) and

Couture lines. These lines are the less commercial and therefore the most expensive and exclusive one. This

leads to a fortification of the brand image. In the third stage, bigger flagship stores are opened, selling only the

diffusion lines aimed at higher sales and at enhancing the awareness of the brand’s RTW and Couture lines.

Until this stage, all activity is focused on the capital cities. The fourth stage though is the continuation of stage

three but introducing smaller stores in more provincial cities.

The authors proved to be right. Today, major luxury retailers are expanding dynamically. Louis Vuitton for

example had announced in 2011 that it would open retail locations in third-tier cities in China, mainly

provincial capitals, to attract more customers. Gucci, Zegna, Coach, and Burberry are following into the same

provinces (Kapferer J.-N. , 2012), therefore entering the fourth stage as depicted by Moore, Fernie, & Burt

(2000).

2.4.4 The Marketing Program

Oh & Kim (2011) as well as Ko & Megehee (2012) underline the importance of market research for

understanding cultural differences when internationalizing, as “consumers in different countries have different

perceptions of what constitutes a luxury product and use different criteria (i.e., price, guarantee, design, and/or

advertising) in making purchase decisions” (Ko & Megehee, 2012) and “the reasons why Asian consumers

14

purchase luxury brands may be different from the reasons Western consumers purchase luxury brands” (Oh &

Kim, 2011). Further, when it comes to Asia, differences between customers of each country such as Japan,

South Korea, or China should not be neglected (Oh & Kim, 2011).

This is contrasted by the view of Moore, Fernie, & Burt (2000) who state that due to high fashion brands being

“truly global in nature” they comply to Levitt’s (1983) approach of standardization in world markets by

exercising tight controls over merchandising, distribution, and pricing strategies. According to the authors, the

brands’ foreign heritage has a positive effect on the new country. This is also demonstrated by New York’s

Madison Avenue, which is mainly occupied by Italian designers, whereas high-end locations in London are

shaped by French, Italian and US designers (Moore, Fernie, & Burt, 2000). Ko & Megehee (2012) respond to

this hypothesis by highlighting that the heritage of the brand influences the buying decision to a lesser extend

than the brand image itself.

Lu, Karpova, & Fiore (2011) combine these two views. They mention that high fashion brands are global but

not for the reason of heritage but merely due to the values of “cosmopolitanism, exclusivity, and design

excellence” which make the brands appealing to consumers across the globe “alleviating some of the

challenges of adapting to local market conditions” (Lu, Karpova, & Fiore, 2011).

In the following the four Ps of high fashion brands will be examined in terms of changes and adaptations to

local circumstance.

Product

As already explained before, high fashion brands tend to segment their markets into two or three ways (Moore,

Fernie, & Burt, 2000) by creating diffusion clothing ranges and product line extensions to reach more

customers.

Luxury brands have brought these lines into foreign countries although they might not yet be needed in those

countries that are still developing like China, but markets mature and competition intensifies, a rise of high

fashion brands extending the lines is expected (KPMG, 2007).

The risk with these extensions is the dilution of the brand. By making it more and more available the actual

trait of exclusiveness might decrease and the increase of different distribution channels decreases control over

the image of the brand. Therefore, while having to please shareholders’ wish for growth, high fashion firms

have to carefully assess the thin line between being a luxury brand with diffusion lines or a mass-market brand

with some luxury lines (Moore, Fernie, & Burt, 2000).

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Besides diffusion and extension lines, some brands find local relevance by creating products specifically for

that region. For example, Louis Vuitton marketed a range of Lantern Charm accessories for the Chinese

market (KPMG, 2007).

Price

Prices in Asia are about 60 -70% higher than in Western countries. This is the reason why Chinese customers

love to buy luxury brands abroad (The Economist, 2014). Gau Xudong, senior research fellow and vice-

director of the Tsinghua University Research Center for Technological Innovation seems to echo Yip. “It is a

rational choice for high-end brands to price higher in China,” Gao says. “China is still a hierarchical society

where people need brands to label their social status, and there is demand for every social class” (China Daily ,

2012). The pricing strategy itself though is not really different globally. Luxury brands are known for

exorbitant prices that reflect the image of exclusiveness.

Place

Similar to the pricing strategy, also the strategy of place has not seen major changes due to a global

positioning. “Just as who buys the exclusive brand is important, so is the location of the outlet. The image

associated with a particular location has an effect on the brand” (Fernie, Moore, Lawrie, & Hallsworth, 1997).

In China this has been adopted positively as consumers there embrace the internationality of those retail

concepts. High fashion brands maintain mega-stores, often the brand’s worldwide flagship store because of the

high need to introduce the Chinese clientele to the brand due to their low levels of brand awareness and fuel

their appetite for spending (KPMG, 2007). Here, the sales staff can make the difference with the ability to not

only inform consumers of the benefits of their brand, but also sway them towards making a purchase because

of low brand loyalty in China (KPMG, 2007).

Already in 1997 Fernie, Moore, Lawrie, & Hallsworth explain that these large flagship store are part of the

globalization process and the diffusion line strategy of the brands.

Promotion

Due to an aim of a shared international understanding of brand identity and meaning, a standardization of

communications strategy is what most high fashion brands exercise (Moore, Fernie, & Burt, 2000).

The example of Louis Vuitton fortifies this thesis as the brand has one advertising strategy and concept

worldwide (Oh & Kim, 2011).

KPMG (2007) has found that a lot of communication in China is directed to inform customers about the brand

in order to fortify the luxury culture. Although the fast increase in wealth in China has created a boom for

16

luxury products, only a sustainable cultivation of such a culture high fashion products will not see demands

decline.

Kuang-Ying Loo & Hackley (2013) describe another important if not crucial promotion tool for luxury brands:

publicity. KPMG (2007) also reports that luxury events like Louis Vuitton’s America’s Cup yacht racing (Oh

& Kim, 2011) and shows and customized lifestyle publications nurture brand building by creating a luxury

culture environment in China.

3.Conclusion

An important reason for high fashion brands to engage in internationalization is the empowerment of the brand

through the presence in “fashion capitals” like New York, Paris, Milan, London, or Tokyo (Calvo Porral &

Calvo Dopico, 2011). Market selection is heavily determined by these factors as well. Moreover, cultural and

geographical proximity as well as economical development influence market selection.

Usually a four-stage process can be observed, where market entry is done through wholesalers (high-end

department stores), and then followed by openings of flagship stores first in the fashion capitals and later in

second and third-tier cities. When the perceived risk is high franchising and joint-venture agreements with

partners in the foreign country are often made.

Most high-end fashion brands apply a global marketing strategy. This protects the global image of the brand,

which is very important in this segment. In some countries like in China communication is extended to take an

informative function. This is due to the fact that not all consumers there have already cultivated the meaning of

a sustainable luxurious lifestyle.

After looking into the internationalization motives, choices and processes, it can be argued that the main

model high fashion brands use for internationalization is the Uppsala Model (as presented in Hollensen, 2011).

Just as the model suggest, the majority of luxury brands have expanded into geographical and cultural close

markets first. They increase their investment by time as the perceived risk shrinks because of an increase in

market knowledge and experience.

17

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Calvo Porral, C., & Calvo Dopico, C. (2011). "Carolina Herrera" Internationalization Strategy: Democratic

Luxury or Maximum Exclusiveness? European Research Studies , XIV (2).

Casciscia, L. (2011). Internationalization of luxury fashion companies: a penetration project in Poland for

Salvatore Ferragamo . Università degli Studi di Siena , Economy.

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