Contents
Introduction xv
CHAPTER 1 The Concept of Luxury 1
A Problematic Definition 1
The Paradox of Contemporary Luxury 2
Chronicle of a Semantic Evolution 2
Modern Dispersion 2
Etymology and Transformations 3
The Advent of Intermediate Luxury 5
Classification of Existing Definitions 6
Perceptual Approaches 7
Productive Approaches 8
Social and Individual Aspects 8
The Brand and Its Manifestations 9
Luxury Values 11
The Three Scales 11
The Semiotic Square of Consumption Values 13
True Luxury, Intermediate Luxury 15
Eccentric Luxury 16
Reasonable Luxury 18
Authentic Luxury 18
Luxury, Being and Appearing 19
The Square of Veracity 19
Five Sources of Legitimacy 22
Conclusion 24
Notes 25
CHAPTER 2 Specificities of the Luxury Industry 27
What Is So Different About the Luxury Goods Industry? 27
Company Size 27
Sales Figures Are Difficult to Compare 28
Limited Number of Staff 29
Financial Characteristics 30
A Very High Break-Even 31
A Limited Cash Need 32
Time Frame 33
The Fashion Cycle 34
Turnaround Time 35
The Key to Success in Luxury Goods 36
The Need for a Strong Name 37
Brand Extension and Legitimacy 37
Identifiable Products 39
The Primacy of Design 39
The Raison d’Eˆtre 39
The Social and Cultural Environment 40
Keeping Up with Social Trends 41
The Response to Changing Trends 41
The Major Operators 42
What Is the Size of the Luxury Market? 42
Oligopoly or Open Market? 44
The Big Three Corporations 44
LVMH 45
Richemont 46
PPR Gucci 48
Can the Single-Brand Company Survive? 48
Note 49
CHAPTER 3 Major Luxury Sectors 51
Ready-to-Wear Activities 52
The Fashion Business and Its Operation 52
The Players 52
How to Develop a Brand 57
How to Make Money 57
Key Management Issues 58
The Creative Process 58
A Worldwide Presence 58
Why Is It Difficult to Make Money? 59
The Most Common Organizational Structure 59
Perfumes and Cosmetics 60
The Market 60
Consumer Expectations 61
Product Types 61
The Financial Aspect 62
The Major Operators 63
The Major Brands 63
The Major Corporations 64
Is There Room for Outsiders? 67
Key Management Issues 68
Sophisticated Marketing 68
Worldwide Advertising and Promotion 68
Managing Distribution Networks 69
Organizational Structures 69
Wines and Spirits 70
The Wine and Spirits Market 70
The Brown Products 70
The White Products 71
Champagnes 71
Other Categories 72
The Major Operators 72
The Major Brands 72
The Major Corporations 73
Key Management Issues 75
Dealing with Mass Merchandisers 75
The Need for a Worldwide Structure 76
Financing Inventories 76
The Need for Pull Marketing 76
Organizational Structures 77
The Watch and Jewelry Market 77
The Market 77
The Jewelry Market 77
The Watch Market 79
The Major Operators 80
The Jewelry Brands 80
The Watch Brands 81
Key Management Issues 84
Retail versus Wholesale 84
Pricing and Product Lines 84
The Risk of the Major Customer 85
Organizational Structures 85
The Leather Goods Market 85
The Market 85
Ladies’ Handbags 85
Luggage 86
Small Leather Goods 86
The Major Operators 86
Key Management Issues 87
The World of Hotels and Hospitality 88
Conclusion 90
CHAPTER 4 The Power of the Luxury Brand 91
The Value of a Brand 92
The Interbrand Methodology 92
Luxury Brands in the Total Brand Universe 93
The Luxury Brands in the Top 100 94
The Characteristics of a Brand 97
The Brand as a Contract 97
Brands and Time 99
Brands and Society 101
The Brand and Its Signs 103
Brand Names 103
Logos 104
The Functions of the Logo 105
A Few Types of Logo 107
Managing Logos 108
Logomania 109
Other Signs of Recognition 110
The Legal Aspects and the Defense of a Brand 111
Brand Protection 111
Brand Registration 111
Registration Renewal 112
The Original Registration 114
Fighting Counterfeit Activities 114
Knockoffs and Tables of Correspondence 114
Chinese and Korean Counterfeits 115
The Lenient Countries 116
Notes 116
CHAPTER 5 The Luxury Client 117
Who Are the Luxury Clients? 117
The Rich, the Very Rich, or Everybody? 117
The Excursionists 119
The New Consumer 121
New Customer Expectations 121
New Customer Behaviors 122
Are Clients from Different Nationalities Similar? 123
Differences in Consumption Patterns Among Nationalities 123
Ready-to-Wear and Accessories 124
Perfumes and Cosmetics 125
Wines and Spirits 126
Differences in Attitude Among Nationalities 126
The RISC Study 130
Notes 137
CHAPTER 6 Brand Analytical Tools 139
Brand Life Cycle 139
The Birth of a Brand 143
Growth of a Brand 145
Sectoral Growth 145
Geographical Expansion 145
New Product Categories 147
Optimization of Internal Processes 150
Brand Repositioning 151
Conclusion on Brand’s Growth 152
Brand’s Maturity 153
Decline, Relaunch, and Death 153
Continuing Decline 154
Brand Death 154
Relaunch 156
Brand Identity 157
A Still-Too-Unfamiliar Concept 158
Tools for Analyzing Brand Identity 160
The Identity Prism 161
The Brand Hinge: Ethics and Aesthetics 163
The EST-ETr Diagram 167
The Semiotic Square 168
Other Semiotic Analytical Models 172
Semiotic Mapping 173
The Narrative Scheme 174
Other Analytical Models 175
From the Semiologist to the Manager 177
General Considerations on Brand Identity 178
Brand Identity and Consumer Identity 178
Single Identity/Multiple Perceptions 179
The Need to Evolve 181
The Limits of the Concept of Identity: Strategic and
Operational Implications 183
Operational Implications 183
The Place of Brand Identity in Company Strategies 184
Limitations of the Concept of Identity 184
Notes 186
CHAPTER 7 Managing Creation 189
The Nature of Creative Activities 189
Organization of the Creative Function 193
Leather-Goods Brands 193
Mass Market versus Luxury Brands 196
Managing the Product 199
The Collection Plan 199
The Collection Calendar 203
The Product Empowerment Teams 203
Brand Aesthetics 205
Relevance of Brand Aesthetics 206
Issues Better Treated with the Notion of Brand Aesthetics 206
Communication Issues 206
Organization Issues 207
Cultural Issues: The Missing Dictionary 207
Possible Tools for Managing Brand Aesthetics 207
Conclusion on Brand Aesthetics 208
Brands and the Arts 208
From Brands to Arts 209
From Episodic Associations to an Art-Based Brand Identity 209
From Arts to Brands 212
Campbell Art versus Warhol Brand 212
Museum Business 213
Note 214
CHAPTER 8 Communication 215
Obsolescence of the 4Ps 215
The Communication Chain 216
Brand Manifestations 218
The Communication Program 219
Advertising 222
The Media 222
The Advertising Process 224
The Advertising Agencies 226
PR, Events, Promotion, and the Internet 227
Creating the Buzz 227
Events 228
Promotion 229
Internet 230
The Place of the Product 234
Tangible Attributes 234
The Key to the Brand’s Relationship with the Consumer 235
The Principal Dimension of Creation and Innovation 235
Always in Context 235
Company Behavior 236
Uncontrolled Behavior 236
Controlled Decisions 236
Actual Consumers 237
What Is Good Communication? 239
Notes 240
CHAPTER 9 International Distribution 241
International Distribution Systems 241
The Different Distribution Systems 242
Exclusive Sales from Paris or Milan 242
Subsidiaries 243
Local Distributors 244
The Joint-Venture System 245
Price Structures 245
The Advertising Budget and Advertising Policies 248
The Special Case of Duty-Free Operations 250
The Duty-Free System 251
The Major Duty-Free Operators 254
The DFS Group (Duty-Free Shoppers) 254
Heinemann 254
Dufry 254
Autogrill 254
Nuance 255
Aer Rianta 255
Lotte Duty Free 255
Dubai Duty Free (DDF) 255
Aelia 255
Duty Free Americas 256
The Negotiation 256
The Parallel Market: Reasons and Consequences 256
The Reason for Parallel Markets 256
Collecting Products for Parallel Markets 258
How to Fight Parallel Distribution 259
CHAPTER 10 Retailing 261
Background Analysis 262
Store Location and Site Selections 262
In-Store Behavior 263
Retailing Indices 265
Rules of Thumb for Internal Display in Supermarkets 266
Retailing in the Luxury Field 267
Store Location and Leasing Systems 267
Store Location 267
Different Leasing Systems and Their Costs 269
Budget, Planning, and Control 271
The Sales Target 271
Inventory Forecast 271
Purchasing Plan 272
Margin Control 272
The Store Information System 273
Staffing, Training, and Evaluation 273
Staffing 273
Training 274
Evaluation and Motivation 274
Retail Consumer-Response Management 275
The Store as a Communication Tool 275
Landmark Projects 277
The Communication Power of the Store 279
Personnel Communication 279
Internal and External Display 281
Selling Online 281
The Retail Model versus the Wholesale Model 281
The “Ideal” Model 282
Exceptions to the “Ideal” Model 282
The Management of Retail and Wholesale 283
Notes 284
CHAPTER 11 Licensing Strategy 285
Brands Developed Exclusively Through License Deals 286
Calvin Klein 287
Hugo Boss 289
Sectors in Which the Majority of Brands Use
Licensing Deals 289
Perfumes and Cosmetics 289
Watches 291
Optical Frames 292
Companies Specializing in License Contracts 293
Luxottica 293
Safilo 293
Children Worldwide Fashion 294
The Process of Development Under License 294
Selecting a Licensee 294
Product Development Under License 295
The Control of Licensees 296
Different Phases of Licensing Activities 298
Phase 1 298
Phase 2 299
Phase 3 300
Phase 4 301
CONCLUSION 303
No Place in the Middle 303
Bling-Bling Will Prosper 304
The Strengthening of Custom Products 304
The Extension of the Concept of the Luxury Experience 304
The Century of Asian Luxury 305
Index 307