Welcome to

Luxury Products
Dr. Satyendra Singh
Professor, Marketing and International Business
University of Winnipeg
s.singh@uwinnipeg.ca
www.uwinnipeg.ca/~ssingh5

History of Luxury
King and Queens always appreciated beauty/luxury
1010 BC 100 BC King David/Solomon, Queen of Sheba
1150 BC 700 BC Egypt, Greece
800 BC 500 AD Etruscan Empire and Roman Fashion
450 AD 1500 AD Byzantine Empire
15th 16th Century Italian fashion
1600 1750 Baroque fashion
1715 France
1828 Modern luxury fashion
21st Century Democratization of Luxury

High Net Worth Individuals (HNWI)

People with $1m assets excluding home, car
Affluent (Sub HNWI) .1m 1m
HNWI
1m-5m
Very HNWI
5m-50m
Ultra HNWI
>50m

13m HNWI in 2013

3m in Europe
4m in USA
3m in Asia-Pacific
2m in Japan
.5m in Latin America
1m in Germany
.4m Middle East
.5m in China
.1 Africa .5 in UK

Charles Frederick Worth -- 1838

Avenue-de-Champs-lys-es-Paris

Luxury is Dream
Creates social gap Exclusivity
Sensory experience Feel, touch, smell
Luxury is beauty
You may suffer in the name of it, or for it
Vibrates your emotions feelings
Object of worship needs respect

Gucci

Jackie

Gucci la pele Guccissima

Shows mrf process

Herms Cap Cod -- Craftmanship

Chlo
Material

You wish!
Liya Kebede

Swarovski Tangara

Characteristics of Luxury
History
Heritage
Culture
Message
Innovation
High Price
High quality material
Differentiation
Value creation

Luxury Differentiation
Porshe Craftsmanship, proof or expertise, engineering, aesthetic
Ferrari Red color, unique sound, make 8000 only per year, F1,
100 yr of exp
Ducati Red motorcycles
Hermes Kelly and Birkin bags
Harley Davidson distinct sound
Lamborghini Monster of technology
Rolls-Royce like living room, wood

Value Creation
Elegance not only perfume, but also bottle
Handmade gold, diamond, watches, bags,
Rarity animal skin, silk, make clients wait
Made in Europe
Precision in craftsmanship
.

Creativity and Innovation

British History typical lines

Ferrari: red, speed, precision, power

0nly 8000 per year

18 hours of single craftsmanship

Rolls Royce 2600 hrs, wood, living room

x10 Fords price

Hotel with private jet for guests

www.SemesterAtSea.org

Bathroom in Flight

Bar in Flight

Bicycle Lightest

Luxury Product or Dream Categories

Fashion (Apparel, bags, shoes, belt)
Perfumes and cosmetics
Watches and jewellery
Eyeware
Other
Restaurant
Hotels
Car
Home

Luxury Depends on
Wealth

Wealthy >$.5m / year

Affluent > $.2m / year

Status

Income, Education, Occupation

Where do you live?
Quality of residence

Luxury: Wealth vs. Status

HI Wealth
Russians
Emerging
markets

Discreet
Authentic
French
Small logo

LO Status
Niche
Need to prove
Creators
Counterfeit
British
Poor countries
Heritage
Big logo
LO Wealth

HI Status

Luxury Industry
+1500 # of billionaire worldwide (2014)
7% more billionaires every year

$150b / year (People spend on luxury)

20% sales growth / year
200-300 luxury brands

Major Luxury Groups

Louis Vuitton Moet Hennessey (LVMH) 30
Louis Vuitton, Givenchy, Marc Jacobs, Fendi,
Donna Karen

Richemond (Switzerland) 15

Cartier, Chlo, Montblanc, Lancel

Gucci (Italy) 10

Gucci, YSL, Sergio Rossi

Prada (Italy) 5

Prada, Miu Miu, Azzedine Alaia

Levels of Luxury
Luxury or prestige Lifestyle setter
Bulgari, Hermes, Hugo Boss,

Premium Aspire to become Luxury

HI Calvin Klein, Tommy Hilfiger,
MI LaCoste, Furla,
LO Zara, GAP,

Fashion Changes quickly

Several

Product Structure
Product Line/Length

Bag, Shoes, Belts

Product Breadth
Hand bag
Evening bag
Weekend bag

Product Depth

Variety of hand bags in this category

Luxury: Design vs. Modernity

Design

???
You decide

Lamborghini
Ferrari
Aston-Martin
Modern

Traditional
Morgan
Bentley
Rolls Yoyce

BMW
Mercedes
Lexus
Comfort