The global luxury market has grown up dramatically over the period of last several decades. From 2000, global luxury consumptions have experienced a waxed and waned
Overview of global luxury market
The global luxury market has grown up dramatically over the period of last several decades. From 2000, global luxury consumptions have experienced a waxed and waned. The global luxury report 2007 reported the condition of luxury consumption all over the world from 2002 to 2007. Despite the negative effect of 9/11, Iraq War and Sars, global luxury consumptions had a dramatic increase in these five years. The demand for luxury goods at end of 2007 was worth 3 billion, which was around 1.3 times than that at 2002. The most outstanding markets were Europe, USA and Japan, whose luxury expenditure were 38.4%, 24.4% and 16.5%, respectively. Moreover, Asia Pacific countries except Japan and Middle East, which were ranked behind those three markets in term of expenditure, were considered the fastest growing luxury markets. Analysts kept an optimistic expectation: the expenditure of luxury goods would increase to 0 billion till 2012, namely around 70 % increase in the following five years (Verdict, 2007)
However, due to the economic crisis, global luxury consumptions decreased sharply in 2008. The luxury products expenditure at the end of 2008 showed a slump of up to 10%, stated by Gabriele Zuccarelli in the Atualuxo conference in Sao Paulo. Sales of luxury apparel were considered as the worst segment, influenced by the credit crunch. This segment declined around 15%. The important luxury market in US, Europe and Japan all showed dejection as their consumers purchasing power was erodes. Only China‘s luxury sales increased around 7% and were showing a continued growth in appetite for expensive and exclusive products (AFP, 2009).
Besides, it is estimated that the luxury sales would be negative growth in 2010, but positive growth would occur in 2011. The demand of luxury has already rebounded gradually in some markets, such as China, India and Middle East (Reuters, 2009 b). Some other researchers considered the effect of economic crisis to the rules of luxury market. Kim Winser from Aquascutum stated that consumers would have more dominant than before. Those companies which are customer-oriented might run well in the market competition (Reuters, 2009 a). It reminded us how important for marketing researchers and market practitioners to understand customers, especially in the difficult time of global economic crisis. Just as Scilla Huang Sun from Julius Baer said, the luxury market will not disappear, because people are always attracted by beautiful things (Reuters, 2009 b). Therefore, it is believed that knowing what consumers really want is the key to success in the difficult time and in future.
Overview of Internet marketing
Internet is a new social phenomenon because it is more and more popular. The impact of the Internet on society lies in its extraordinary potential for being all things to all people. There is a statics chart which presented the world Internet usage and population condition from 2000 to 2010. In 2000, the number of users on internet was only 304millions, and the penetration rate was 5 percent while in the end of 2011, the number of host on internet increased to 2,267millions, and the penetration rate was as high as 37.7 percent, which was around 7 times than that of at 2000. Clearly, the fast evolution of Internet is incredible.
At the same time, the consumer behaviour and the way business of company are also being gradually changed, including luxury fashion management. According to research institution reported that the worldwide retail web sales were worth 2.5 billion in 2010 and 8 billion in 2011, respectively. While in 2012, the worldwide retail sales on the Internet shot up, arriving at 0.5 billion. Moreover, the Goldman Sachs also predicted that the global retail web sales will hit a whopping nearly trillion by 2013. ( Goldman Sachs,2011) Therefore, it can be clearly seen from these dates that the impact of the digital revolution on consumers in the recent years is over-whelming.
Research Reason and Objectives
The emergence of Internet has definitely changed the landscape of consumer behaviour and the way business is conducted such as in luxury fashion management. Today, the luxury market has a new phenomenon that more and more luxury consumers decide to purchase luxury products from an online channel. However, the question of why luxury consumers buy luxury product on online was not researched in the past. Previous studies maybe just focus on traditional luxury consumers behaviour, and did not involve luxury customer's purchasing behaviour on online. Therefore, the purpose of this study is to investigate the luxury consumers motivations for purchasing luxury products on online.
Two questions will be answered for the purpose of this research:
1) why do customers decide to buy luxury products from online rather than offline?
2) What are the main motivations for customers to purchase luxury products online ?
The Definition of Luxury
Many researchers have defined luxury in different ways. It is difficult to find a consensus definition of luxury products. Around one century ago, Veblen (1899) argued that it was better to consider the socio-economic context as the underlying context for giving definition of luxury. He defined the luxury products as the symbol of social class and wealth, and he considered the consumption of luxury goods as a 'conspicuous waste'.
However, as the theory grows, the luxury market, which was considered as a traditional conspicuous consumption model, has been altering to a new experiential luxury sensibility. This process has been witnessed by the change of the concept of luxury.
In term of economic, luxury goods are those whose price and quality ratios are the highest of the market and even more the ratio of functionality to price might be low with regard to certain luxury goods, the ratio of intangible and situational utility to price is comparatively high (McKinsey, 1990).
Vigneron and Johnson (1999) also defined luxury as the highest level of prestigious brands encompassing several physical and psychological values. Cornell (2002) defined luxury as a strong element of human involvement; very limited supply and the recognition of value by others were key components. It provided esteem for the owner and satisfies psychological and functional needs.
Luxury represents a system of tangible components, such as clothing, cars and buildings, as well as intangible components, including ideals, expected behaviors and beliefs in a group specific value system (Wiedmann et al. 2007).
Also, Silverstein and Fiske (2003) mentioned new luxury in their book. They stated that the concept of new luxury should focus on both functional and emotional experiences to users. This kind of product is distinctly better than the mass product and it is more accessible than old luxury goods.
Some researchers have also emphasized that the concept of luxury is now more concerned with emotion than possession (ie, Precision Marketing, 2006; Weinstein, 2005). Thus, it is concluded that luxury is the highest level of prestigious brands that delivers high psychological and functional values to consumers. Consumers may have better functional and emotional experiences from luxuries than the mass product.(代写assignment案例由Tzessay代写网提供)