Meaning of Luxury Author: Jacky Cheung 2011 Sept
CHINA LUXURY MARKET OVERVIEW China has surpassed the U.S., following Japan, as the 2nd largest country in luxury spending There were a total of 875,000 individuals with personal wealth over RMB10M • 55,000 of them with over RMB100M; 1,900 with over RMB1B 80% of luxury goods / services purchasers aged under 45 • Vs. Japan 19%, the U.S. 30% Gucci Group has recorded a 42% growth in China in 2008 Source: VIP Magazine (2010 Aug)
AND THE MOST LIKED LUXURY BRANDS… Category: Hotel Category: Apparel Category:Super Luxury Sport Cars Category: Jewelry Category: Luxury Sedans Category: Accessories Category: Watch Source: VIP Magazine (2010 Aug)
LET’S LOOK AT WHAT “LUXURY” MEANS IN WORDS... Oxford English- Chinese Dictionary / n 1 [U] (regular use and enjoyment of) the best and most expensive food and drink, clothes, surroundings, etc 豪华; 奢华; 奢侈:
WHAT IS IMPLIED IF IN CHINESE? 豪 华•person of extraordinary ability magnificent;gorgeous•hero beautiful•powerful and rich flashy; extravagantbold and unconstrained; forthright splendor 奢 侈 extravagant arrogant;selfconceited excessive excessive exaggerate;magnify indulge enlarge;aggravate;extend; surpass broaden
TO SUMMARIZE... 豪 华 奢 侈 Be bold, magnify & exaggerate what you have, we don’t care even if that is unnecessarily excessive And then show-it-off, tell the world we’ve got it, even if that could be considered arrogant
TO SUMMARIZE... 豪 华 奢 侈 When it comes to the culture of LUXURY, it contradicts some fundamental Chinese values, e.g. be modest中庸, be in harmony和 谐 , blending in with the rest (people, surroundings) BUT WHY??????
TAKE A LOOK AT THE FUNDAMENTAL HUMAN / CULTURAL VALUES FIRST... ME US Individualism CollectivismLuxury starting point – Chinese culture starting personal indulgence point Luxury in China... ME VS. THEM The fulfillment of INDIVIDUALISTIC value / desire / vanity with a REFERENCE / BENCHMARKING to the GROUP
A closer look of “Me vs. Them” in Chinese context…THE RUBBER BAND THEORY Totally “US” ME VS. THEM Totally “ME” The “Rubber Band” that To “show-off” means But NOT to BREAK away, binds a group together – how far you can STRECH detach from the group. representing shared within this rubber band Otherwise, it is “Weird”, “Strange”, “Ostentatious” cultural values and lifestyle preferences
THE KEY IMPLICATION…Aspiration to own luxury is NOT onlydriven by personal desire, or “self-indulgence”, in Chinese culture, it isjust as important (if not moreimportant) that it is driven byCOVETOUSNESS 攀比It is still originating from Collectivism,but in a rather twisted manner to whatwe usually expect; we move from theneed to blend in, to the desire tostretch
AN AD WE SAW SHARING THE SAME INSIGHT… “As a gift that comes with this car... JEALOUS EYES” “ATTENTION FROM THE CROWD”
HOW IMPORTANT CAN THIS COVETOUSNESS (COLLECTIVISM) BACKGROUND BE…？The 2 largest markets for Luxury are bothfrom a strong collectivism culture – theJapanese even scrutinize others to gaugehow much OT work they do to judge theirincome and job security; a core reason forthe proliferation of those 24 hour cafes! Next?
TO MARKETERS , ADVERTISERS, AND RESEARCHERS…It is NOT just to understand what she wants, likes It is just as important to understand her FRAME OF REFERENCE: -What is the rubber band like that binds the group together? - How far could this be stretched?
MARKETING NOTION #1KNOWN but not owned By default, luxury means exclusivity – only a few could own / enjoyBut even though the MASS may be unable toaccess the brand, it has to be WELL KNOWN to THEM (remember the rest within the rubber band – their peers)
MARKETING NOTION #1KNOWN but not owned DEFINITELY LUXURIOUS!!! Even a 5 year old child can name it “Drink Louis XIII with Fan Zhi Yi (China National Football Team Leader)” The first time when China entered the World Cup Finals (2002), the government and national football team celebrated using Louis XIII, which was widely reported in newspapers
MARKETING NOTION #1KNOWN but not owned Hear the consumer voice directly as he comments on luxury watches (next page)
MARKETING NOTION #2A STORY TO TELL – be legendary- be it true or not (even rumors will do) A conversation with respondent perhaps self-explanatory: Moderator: Why LV is luxurious in your mind?” Respondent: You know what, it is said that when they found the sunken Titanic, the first thing they dig out from the ruins was an LV suitcase! Moderator: Wow!...(but so what...???) Respondent: Even more, when they open that suitcase, there was no single drop of water found inside (amazing water proof function)!!! Moderator: Wow, wow!! How did you know that? From where have you heard of this? Respondent: mmm....cannot remember exactly, may be my friends, on the Internet...? Moderator: Oh!? Is it true? Do you believe that? Respondent: er...???? (Who cares????)
MARKETING NOTION #2A STORY TO TELL – be legendary- be it true or not (even rumors will do) Panda Cigarette – the most expensive brand of cigarette . Only PUBLICLY launched after 2000. But all smokers “KNEW” this brand long before – there was a MYTH shared by all smokers that our great leader Mr. Deng Xiao Ping only smoked a special cigarette that was MADE EXCLUSIVELY FOR HIM, and that was called Panda But NO ONE have ever seen it nor tried it before 2000.
MARKETING NOTION #2 A STORY TO TELL – be legendary - be it true or not (even rumors will do) No sexy story or story of intrigue yet? Don’t worry. At least get yourself into a “TOP 10Refer to a website called “China BRANDS” ranking.Top 10 Brands” (www. China-10.com) in which you can find -No one cares what are the evaluation criteria.numerous top 10 brand rankings,anything one could, and even -No one cares who conducts the evaluation behindcould not, imagine. Phones, the ranking.laptops for sure, and even building -No one cares how you define the competitive set.materials like concrete, electricalwiring is also included with aranking of top 10 brands. All they care about is the result – “YOU ARE NAMED AS TOP 10”
MARKETING NOTION #2A STORY TO TELL – be a “Top 10” At least in the Luxury Watch market, these “Top 10” rankings are highly influential to the extent that it is a prerequisite to consider a brand worth owning. “We just search “Top 10 watches” via a search engine before we buy”
MARKETING NOTION #3 BE BOLD WITH YOUR PRICE – Highest possible, even out of normal frame of reference (remember luxury implies magnifying, excessive)How to justify the price? Don’t worry in a culture that shares the following wisdom:“1 cent more means 1 per cent better一分钱，一分货” Price Value“Cheap things can’t be good便宜没好货” Price Value“Expensive things have their reasons for being expensive贵的一定有它的道理” Price Value Where, Price defines value, Instead of value justifying price
MARKETING NOTION #3BE BOLD WITH YOUR PRICE An episode from the Chinese Movie (Da Wan) to further illustrate in the next page
WATCH OUT!LOW KEY LUXURY低调的奢华 What!? I thought you just said to be as flashy, high profile as possible!!! Yes, yes…be patient… Things aren’t so straight forward, are they? Let us explain…
IT ALL GOES BACK TO THEIR FRAME OF REFERENCE, THEIR RUBBER BAND Entry Level “Richies” As China becomes stronger and(Personal Liquid Asset stronger economically, we also see that the “Richies” in China RMB1M+) nowadays can be further stratified. Real “Richies” For those Entry Level “Richies “: (Personal Liquid Asset RMB10M+) • Their frame of reference is still the general mass, from where they have recently emerged. Super” Richies” – Billionaires • Brands with high profile amongst the general mass is still necessary.
IT ALL GOES BACK TO THEIR FRAME OF REFERENCE, THEIR RUBBER BAND But for those Real & Super “Richies”, they have left the general mass for a long time. Entry Level “Richies” They start forming small social circles of(Personal Liquid Asset RMB1M+) comparable affluence levels, i.e. their rubber band is re-defined. Within these particular social circles, there is almost no barrier to attain most of the luxury brands the seek. Real “Richies” (Personal Liquid Asset Consequently, those “popular” luxury brands RMB10M+) (eg Cartier, Gucci, Audi) are just “standard” items. Super “Richies” – -To stretch this new rubber band, they need to Billionaires go for those low awareness but niche, low key brands (eg Harry Winston, Bentley) – avoid being “me-too”.
Having said that, “lowawareness” only refers to thepublicity amongst the “generalmass” – it should still befamous, high profile within theniche circle of reference (hearthe consumer voice directly innext page)