1. Welcome to Luxury Consumer Behavior Dr. Satyendra Singh Professor, Marketing and International Business University of Winnipeg s.singh@uwinnipeg.ca www.uwinnipeg.ca/~ssingh5

2. What is Consumer Behaviour?

3. Luxury Consumers Traditional Head-to-toe covered, loyal to single brand,… Buy established brand  Hermes, Dior,… Modern Not brand loyal, or loyal to one brand,… They know what they want Different desire and expectations Smart, educated, savvy discerning consumers High status

4. Modern Consumers Parent and children dress alike  ↓ gap Cosmetics, surgery,… Luxury market cannot be segmented 40s, 50s, 60s does not matter Presidents: Zimbabwe, Italy  80s Group pressure > individual taste ↑ group pressure in Japan, France, Spain…

5. Types of Consumers Purchaser They’ve knowledge to buy products Browser For entertainment May come back  need more time to make decision Opinion leader Meeting point  Sephora store (10,000 visits weekend) We display our history and heritage That’s why we have museum section in luxury stores

6. Product Display Level Eye: ↑50% Hand: ↓30-40% Floor:??? End-of-aisle Not brand loyal, or loyal to one brand,… Stand alone Windows displays  brand image, communications…

7. In-store Consumer Behaviour Time spent Women (W) + W = 8 min W + child= 7 min W alone = 5 min W + Man= 4 min Stealing  33% by customers, 66% by staff Always take receipt  staff makes fake returns RFID  Radio Frequency Identification

8. Online Consumer Behaviour Online  Pull consumers to store Offline  sales people use knowledge for $ Debate  Luxury cannot be sold online Prada  www for info only Some brands sale limited (e.g., old) products online. Others sale through luxury e-stores

9. Bluefly.com

10. designerimports.com

11. Forzieri.com

12. Glam.com

13. Neimanmarcus.com

14. Net-a-porter.com

15. Yoox.com

16. Attitude towards Luxury Products? (10-pt scale) China = 8.2 Mexico = 8.0 India = 7.3 UK = 7.3 USA = 6.8 S. Korea = 6.4 Germany = 6.1  difficult relationship with luxury Italy = 6.1 and France = 5.7  Catholic countries Helping poor and controlling desire is important Japan = 5.6  Symbolic revenge of WWII Not liking may not mean  customer’ll not buy luxury products

17. Europe -- UK, Italy, Spain Germany 25% of population > 60 Older people in Europe than USA

18. Italy Inspired by art Flashy watches  mechanical Curves in jewellery

19. Germany Quality is important Simple watches  Quartz

20. Japan Like cosmetics, ready-to-wear,… Do not like perfumes It hides natural body odour Encroaches personal space

21. India 70,000 millionaires 50% of population < 50 by 2020 Jewelleries  gold, diamonds, gems,… Industrial names  Sony, Mercedez, BMW… Own luxury  world’s thinnest watch Saries  even becoming popular abroad To be served  Indian palace train,…

22. World’s thinnest (3.5mm) Indian watch

23. Hilton in Sari

24. Victoria Bechman in Sari

25. German model Claudia Ciesla in Sari

26. Palace on wheel Indian Service Luxury

27. Palace on wheels -- Inside

29. HK/SP/Thailand/Taiwan Full of young people Stylish, sleek Ready-to-wear Brand visibility is important

30. China Largest emerging luxury market in the world 300,000 millionaires in China 12% of luxury goods are sold in China To be 26% by 2020 Cosmetics  ↑ whitening products Silk, Wine, whisky,…

31. Russia 90,000 millionaires Moscow alone spends $2b/year on luxury Russians love luxury  banned before Flashy New wealth  Skiing Courchevel French Alp

33. Other Emerging Luxury Markets Columbia Indonesia Vietnam Egypt Turkey South Africa CIVETS

34. Types of Fake Luxury Products Counterfeit industry $600b (x4 luxury industry!!) Counterfeit  100% copy Deceive customers as real Pirated  Copied Customers know it Imitation  Not 100% identical Customers know it Custom-made  Could be real Replica made by legitimate craftsman through some connection

35. Where are Fake Luxury Products? China, HK, Thailand, Morocco, Taiwan, Turkey, S Korea  Customers age: 25-35 London  Oxford Street Manhattan  Canal Street Shanghai  Xiang-Yang Road (Closed now!) …

36. Fake Luxury Products Prevention France: criminal activities  buyer and seller If caught, 2 years in jail LV sued Carrefour for $40,000  Shanghai store Hermes post warnings on Internet LV, Burberry,… and police raid fake shops LV spends $15m-$20m/year to combat fake luxury How to detect it? Click 