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Do you know what's common in all?
Preserve the Luxury or Extend the Brand?
What is luxury?A material, object, service, etc, conducive to sumptuous living usually a delicacy, elegance, or refinement of living rather than a necessity.
Luxury vs premium
Exclusivity of service
Functionality vs hedonism
Uniqueness
Luxury vs fashion
Fashion changes, luxury timeless
Luxury merchandise more pricey
Differentiating Prestige Brands
Emotional Value
Level of Prestige
Functional Value
Volume Up Market Premium Luxury
Luxury Brand Associations
Authenticity
Premium Price
Exclusivity
Self-Image
Luxury Brand Pyramid
Brand Loyalty
Brand PerformancePremium Price
Brand ImageryHeritage
Customer FeelingsStatusSelf Image
Customer JudgmentsPerceived QualityAuthenticityExclusivity
Case Analysis
2 PRODUCT LINES
Grand Vin du Château de Vallois
Puinȇ
€1000 €100
150, 000 Bottles/Year
200, 000 Bottles/Year
Château de Vallois
Stakeholders Gaspard de Sauveterre
50%
Claire de Valhubert
25%
Franҫois de Sauveterre
25%
So what’s the problem?
LOOSING NEXT GENERATION
MARKET
YOUNG GENERATION IS
PRICED OUT
Claire’s Proposal
To enter “Affordable Luxury” Category!
A THIRD WINE
What is this third wine?
• Branded wine, not aged well
• € 20-25 a bottle
• Younger wine enthusiasts, priced out
• Direct Selling or through website
PRODUCT
DISTRIBUTION
TARGET SEGMENT
PRICE
SOURCING
• Import or Grow on separate land in Bordeaux
PRESERVE THE LUXURY OR EXTEND THE BRAND
How others did ?
Success
Failure
Success
Failure
Failure
Success
Success
ConclusionsLuxury fashion brand’s collaboration with a non-luxury brand creates
positive impact on the parent luxury brand if the extension keeps the luxury criteria, and the non-luxury collaborator has a good reputation
Downward brand extension enhances the parent luxury brand if the “luxury” criteria and its qualities and values are maintained
Usually licensing, unless strictly controlled, dilutes the luxury brand as we saw in case of Pierre Cardin
The luxury brands business has to be enhanced for the entire portfolio to be successful
Customer FeelingsStatusSelf Image
Customer JudgmentsPerceived QualityAuthenticityExclusivity
Recommendation 1/3
Brand Loyalty
Brand PerformancePremium Price
Brand ImageryHeritage
Customer FeelingsStatusSelf Image
Customer JudgmentsPerceived QualityAuthenticityExclusivity
Recommendation 2/3
If they were to extend, they should create
Recommendation 3/3
References http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=2542245&fileOId=2542248
http://www.lspr-education.com/uploads/lspr-publications/LSPR_LuxuryBrands.pdf
https://archive.ama.org/archive/ResourceLibrary/MarketingManagement/documents/Slippery%20Slope.pdf
https://hbr.org/2003/04/luxury-for-the-masses
http://www.forbes.com/2010/03/08/saturn-gm-innovation-leadership-managing-failure.html
http://www.wsj.com/articles/SB116836324469271556
Prof. Sameer MathurIndian Institute of Management, LucknowMarketing Professor: August 2013 – Present
McGill UniversityMarketing Professor: July 2009 – July 2013
Carnegie Mellon UniversityPh.D. in Marketing : August 2003 – June 2009PGP359 PGP087 PGP333 PGP348 PGP313
Group 8Akshita SnehalTanviPriyank
aManjot