Categories for Brand

To Investigate the Branding Importance in Food and Beverage Industry Essay

To Investigate the Branding Importance in Food and Beverage Industry Essay

For that different existing companies develop branding strategy and introduce their new products using a well established brand name as leverage. To capture the market share of new segment, and get benefits of goodwill associated with their existing brands. For example – McDonald, pizza hut come in market with new meals with a specific name and it all offer accept by the customers as it have leverage of a strong brand name like pizza hut , McDonald etc.

In beverage industry, also have different product with brands like fanta, Miranda, coke diet with its parent coke brand in compare to other beverage parent brand like PepsiCo with mountain dew, mist natural, Tropicana, slice Etc .

and they all brands compete for different segment in market like PepsiCo’s slice, coke’s maza and Parle’s frooti compete in same mango drink segment of market. 1. 2 Overview of food and beverage industry in UK As food and drink is a flourishing industry in UK, it is very mature and intensely competitive.

It has impacts on the UK economy far beyond its significant contribution to GDP and employment. It provides various job prospects to the various youngsters in UK. Every other industry was affected economically in recession except food and drink sector which remains a major beneficiary amongst. Also the exports of food and drink items have been increased continuously from decades and won’t affect by the recession. The industry achieves Excellency by producing significant number of new products, because of a remarkable R&D centre, which keeps on spending a large amount on innovation.

This project define about the branding in food and beverage industry and it show the different effect of branding on the customer, how a specific brand repeated by the consumers , this paper show the impact of branding on the market , organisation culture and the working style of employee within the company. In chapter 2, this paper will explain the “brand” in general with put the light forward on the related topics like- brand equity, brand image , brand loyalty , brand awareness, brand association etc, and allow the reader to understand the broad concept of the branding , its impact and importance in the industry.

Then research product look in to the importance of growing a brand strategy for the products. Then researcher will propose and examine the case of different food and beverage companies focused on brand strategy. From the reading of the literature review and collected data analysis, reader will aware about a multinational food and beverage company‘s brand importance and how much it influence its sales. Then researcher discusses the analysed data and identifies the problem areas and proposes the conclusion along with valuable recommendation for short out the problems to make the brand strong. 1. Research limitation – * Researcher selected the ambiguous topic which is very vast and difficult to the research on entire sectors, food and beverage sectors of UK deals in multiple chain like –retail, canned, service, processing, alcoholic, non alcoholic etc so this research only focused on the multinational retail food restaurant like – McDonald, burger king , and the beverage serve in these restaurant(coke ,Pepsi etc) . this present research study is confined to only retail food restaurant alone and the finding may not be applicable for the other field of food and beverage industry.

Brand equity Essay

Brand equity Essay

How much a product can earn over its identical competitor by virtue of its brand, determines its brand equity. It can be a neat result of many factors like years of experience, proven track record of quality, legacy, emotional bondage and company outlook, where it adds more value to the product and thereby helps the product to score over its identical competitors. Without brand equity a product loses its competitive advantage, and for that matter some companies “measure brand equity relying on financial measures of brand performance” (Dobney, 2007).

Thus Brand India should be able to score over its Asian counterpart. Figure – 3 The brand management chain (Based on Wood, 2000; Kapferer, 2004) Integration of the theoretical constructs brand equity (Aaker, 1996) and brand orientation could be instrumental in the understanding of brand value, where brand equity commands more attention as it aims for generating long-term values for the company by “understanding the conceptual basis for the value of brand and its implications” (Keller, 1993). Brand loyalty.

Brand loyalty refers to the customers’ consistent preference to buy a selected brand in a particular product category, irrespective of other provocative options presented by the competitor of that brand. This situation occurs after the customers make a trial run of the brand and get convinced about the efficacy of that brand towards fulfilling certain needs of theirs and decide to buy that brand again and again. That practice “forms the habit and thus customers continue purchasing the same brand because the product is safe and familiar” (Giddens, 2002).

This situation speaks of the dual responsibility of branding too, where on one hand it should influence the rationality of its prospective customers, while invoking the emotional response among them on the other. As for example, a particular meal in a restaurant might declare about a possible health benefit with the inclusion of tomato in it by saying, “lycopene in tomato lowers the risk of cancer”, thereby influencing the rationality of the customers, and at the same time it can evoke the nostalgia in customers by labelling the meal as “grandma’s special recipe”.

In this strategy lies the clue of embedding medical/healthcare tourism with general tourism and Incredible India should utilize it. Figure – 4 Brand Awareness: Brand awareness is “a gauge of marketing effectiveness measured by the ability of a customer to recognize and/or recall a name, image or other mark associated with a particular brand” (Waters, 2008). Though brand awareness cannot measure the customers’ approach towards the brand, yet it is very helpful in forming a positive attitude among the target audience about the brand. Incredible India Campaign should take care of that.

Figure – 5 The above diagram shows that recollection or identification ability first created ‘aided awareness in the prospective customers, which might convert into a top-of mind awareness, if the brand convinces customers either with its logistics or direct service. Thus, brand awareness can work on two folds, primarily making its way into the mind of the customer and then working on its way to achieve the recognition, where the brand first generates strategic awareness in customers, where the customers understands the distinctive qualities of the product and associates them with their need.

Current campaign strategy of Incredible India lacks that finesse. Brand Value While brand loyalty proves to be a cost-saving yet effective tool to garner higher sales, brand value “reflects how a product’s name, or company name is perceived by the marketplace” (Free, 2004), which involves both target audience and the general audience. Brand value can be tangible too, in the event of a brand being sold, where extracting the value of the brand from the value provided by other, tangible, resources becomes possible (Simon, C. J. & Sullivan, M. J. , 1993, Conchar, et al, 2005).

From this perspective, even the title of the campaign in discussion, Incredible India needs to be reviewed and if needed may be replaced. The name should denote the power and strength of a brand. As for example, “if Coca-Cola’s facilities Atlanta were to burn overnight, the company would still be able to start up the next day due to its brand value” (What, 1998). Therefore it is the success story of a company that earns its brand value. However, to gauge the impact of brand value, the company needs to take help of empirical research. The process might then looks like below (Persson): Figure – 6

Brand value is the outcome of consistent and successful brand building, where the action of the company would speak louder than words, besides proving its ethical standings in the marketplace. IV. 7. Brand personality Much like a human being, a brand too serves as the ambassador of the company personality, depicting its outlook and aspirations, besides its services and promises. Thus much depends on the carriage of the brand, because it is the coveted message of the company to the outer world about its activities, aims, aspirations and promises – in short, a package of total company outlook.

From this angle too, the campaign in discussion needs to be reviewed. Figure – 7 A strong brand does more than it meets the eye, however, its activity should be powered towards achieving the targeted benefit out of it. For that matter, the first step towards creating a strong brand “is to identify the benefits” (Saarte, 2008). Target benefit would surely help to determine the nature of the branding, which would help the company to identify the necessary elements into branding, such as company image, the USP of its product, type of promises, and desired platforms of bonding and more.

Incredible India is yet to create a clear USP to position itself. V. Conclusion/Recommendation The detailed discussion and analysis above clearly shows that Incredible India Campaign falls far too short in achieving its desired outcome and thus needs to be thoroughly reviewed and modified to meet the demand of the time and position India as a strong brand in the global tourism market. Thus this study recommends following steps towards achieving the target of building a strong Brand India in the global market: 1. Incredible India needs to review its name, packaging, price and its history and modify it concerning the current demand.

2. Ensuring that it becomes capable of Delivering the message clearly.  Confirming the credibility of the company. Connectingthe target prospects emotionally. Motivating the buyers.  Concretizing the user loyalty 3. Incredible India has to focus more on emphasizing emotional bond with UK through exploiting the earlier history of close communication. 4. It must study and research other Asian countries pros and cons in this sector to ensure that Brand India should be able to score over them. 5. It should embed medical/healthcare tourism with general tourism to generate brand loyalty.

6. Through constant, consistent, cohesive and cogent campaign, it should create the brand awareness (UK still have a poor awareness, around 30%) 7. Periodic assessment of the campaign is a must to check the brand value. 8. Campaign should get facelift periodically with a central theme of personality. Ends.

References Aaker, D. A. (1996) Building Strong Brands. The Free Press, New York. ISBN 0-02- 900151-X Atithi Debo Bhava. (2004) Incredible India [online] available from http://www. incredibleindia. org/newsite/atithidevobhava. htm [accessed 4 September 2008] Bizhelp.

(2008) What is Branding? [online] available from http://www. bizhelp24. com/marketing/what-is-branding-. html [accessed 4 September 2008] Brand Definition. (2008) [online] available from http://www. investorwords. com/568/brand. html [accessed 3 September 2008] Brand. (2008) [online] available from http://whatis. techtarget. com/definition/0,,sid9_gci211703,00. html [accessed 4 September 2008] Brandguru Inc. “What IS Branding? ” Viewed 24 March 2008, http://www. brandidentityguru. com/popUps/whatisBranding. html Conchar, M. P. , Crask, M. R. & Zinkhan, G. M.

(2005) Market Valuation Models of the Effect of Advertising and Promotional Spending: A Review and Meta-Analysis. Journal of the Academy of Marketing Science, Vol. 33, No. 4, 445-460. Dobney. com. (2007) Brand equity and brand value [online] available from http://www. dobney. com/Research/Brand_equity_research. htm [accessed 4 September 2008] Dolak, D. (2001) Building A Strong Brand: Brands and Branding Basics [online] available from http://www. davedolak. com/articles/dolak4. htm [accessed 5 September 2008] Dunn, S. (2008) What is Branding and Why Do You Want It?

[online] available form http://www. ecomhelp. com/KB/Branding/kb_what-is-branding. htm [accessed 5 September 2008] Free Definitions: Define Brand. What is Brand? (2004) [online] available from http://www. learnthat. com/define/view. asp? id=279 [accessed 4 September 2008] Giddens, N. (2002) Brand Loyalty [online] available from http://www. extension. iastate. edu/AgDM/wholefarm/html/c5-54. html [accessed 4 September 2008] Incredible India campaign woos more Americans (2008)

The Press Trust of India Ltd [online] available from http://www. accessmylibrary.com/coms2/summary_0286- 34809894_ITM [accessed on 4 September 2008] Indian Tourism’s ‘Incredible India’ Campaign (2005) Research paper [online] available from http://www. icmrindia. org/casestudies/catalogue/marketing%20communications/C LMC010. htm ] India’s rise in medical tourism (2007) News [online] available from http://www. timesonline. co. uk/tol/travel/destinations/india/article2257994. ece [accessed 4 September 2008] Kapferer. (1994) Strategic brand management: new approaches to creating and evaluating brand equity. Free Press, New York. Keller, K. L.

(1993) Conceptualizing, measuring, and managing customer-based brand equity. Journal of Marketing,Vol. 57, No. 1, pp. 1-23. King, T. E. (2007) Incredible India? Campaign has Incredible Budget [online] available from http://www. travelmole. com/stories/1118243. php [accessed 5 September 2008] Lake, L. (2008) What is Branding and How Important is it to Your Marketing Strategy? [online] available from http://marketing. about. com/cs/brandmktg/a/whatisbranding. htm [accessed 4 September 2008] McCall, K. (2003)

Marketing Angel [online] available from http://business. mainetoday.com/smallbusiness/mmm/030601. shtml [accessed 5 September 2008] O & M (2003). Incredible India [online] available from http://www. ogilvyindia. com/work/incredibleindia. asp [accessed 5 September 2008] Persson, N. Understanding of the nature and relevance of brand orientation and brand equity in B2B brand management – implications for future research. Ph. D. Thesis [online] available from http://www. nhh. no/Admin/Public/DWSDownload. aspx? File=%2FFiles%2FFiler %2Finstitutter%2Ffor%2Fconferences%2Fnff%2Fpapers%2Fpersson. pdf [accessed 1 September 2008] Saarte, L. A.

(2008) Fitting It All Together. EzineArticles. [online] available from http://ezinearticles. com/? Branding—Fitting-It-All-Together&id=1043858 [accessed 1 September 2008] Simon, C. J. & Sullivan, M. J. (1993) The Measurement and determinants of Brand Equity: A Financial Approach. Marketing Science, Vol. 12, No. 1, pp. 28-52. UK Indian doctor sets shop in Goa for medical tourists (2007) News [online] available from http://www. newkerala. com/topstory-fullnews-14322. html [accessed 4 September 2008] Waters, S. (2008)

Brand Awareness [online] available from http://retail. about.com/od/glossary/g/brand_awareness. htm [accessed 1 September 2008] What is the Value of a Brand? [online] available from http://www. csom. umn. edu/Assets/3478. pdf [accessed 31 August 2008] Why Brand Loyalty is Important? [online] available from http://www. brandloyalty- int. com/site. asp? pagina=8 [accessed 1 September 2008]

Why India? (2007) Government report [online] available from http://www. medical-tourism-india. com/medical_tourism_india. htm [accessed 5 September 2008] Wood, L. (2000) Brand and brand equity: Definition and management”. Management Decision, Vol. 38, No. 9, pp. 662-669.

The Concept of Luxury Brands Essay

The Concept of Luxury Brands Essay

Paper about the Definition and Categorization of Luxury Products and Brands consisting of a Taxonomy of Luxury and a Handbook for the Creation of Luxury Products and Brands This paper defines both luxury products and brands and also distinguishes similar concepts such as premium and masstige and differentiates between major types of luxury products and brands such as accessible vs. exceptional luxury products and connoisseur vs.

Star brands. In that way, it should create a better understanding of what actually constitutes luxury products and brands, and thus should be useful for both researchers and managers within the field of luxury brand management.

As luxury is constantly on the move, this paper will be constantly up-dated. Therefore, please feel free to send me your feedback and ideas. The latest publication can be foundhere and previous publications below.

According to its objectives, the paper is split into the following two major components: Taxonomy of Luxury: The tasks of distinguishing between luxury and non-luxury and of categorizing luxury into different types reminds one of the work of taxonomists, who try to order organisms into groups based on their similarities and differences.

The classification of organisms is not that simple, not only because of their vast variety, but also because boundaries between species are diffuse.

However, similarly to the taxonomy of organisms, the taxonomy of luxury should provide a definition of “luxury products” and “luxury brands” that, for any products and brands, allows one to decide as best as possible if they are part of what is meant by these terms. In addition, the taxonomy should give an overview of the major types of luxury products and brands, as well as of similar concepts. Handbook for the Creation of Luxury Products and Brands: For mankind, classification had to be carried out from the very beginning, because the accurate identification of food, predators, mates, fuel, building materials etc.

was crucial to survival. This demonstrates that classification also leads to a better understanding about the objects of investigation. Besides their value in the classification of luxury, the characteristics of luxury products and brands thus also help to develop an understanding about how they are actually created. As this is a distinctive area of application, the explanations about their characteristics are consolidated in a separate part of the paper, which should serve as a handbook for the creation of luxury products and brands.

PART I – LUXONOMY The task of distinguishing between luxury and non-luxury and of categorizing luxury into different types is reminiscent of the job of taxonomists, who try to order organisms into groups based on their similarities and differences (Stace 1991, p. 5). “Taxonomy” is more generally used today for classifications of any types of objects of investigation, including, for instance, shopper motivations (Westbrook and Black 1985), vehicles (Pirotte and Massart 2004, p. 2) and luxury consumers (Han et al. 2010, p. 16).

This part of the paper presents a taxonomy of luxury particularly for use within the field of luxury brand management. Starting from a basic definition of luxury, it distinguishes between the major understandings of luxury put forth by different areas of research, defines luxury products and brands and gives an overview of the major types of luxury products and brands and also of similar concepts. The definitions of “luxury products” and “luxury brands” should allow one to decide as best as possible, for any products and brands, if they are part of what is meant by these terms. 1.

The Basic Definition of Luxury 1. 1. The Necessity-Luxury Continuum Despite confusions, researchers across all disciplines share a basic understanding of luxury. To begin with, luxury is defined as something that is more than necessary (e. g. by Bearden and Etzel 1982, p. 184; Muhlmann 1975, p. 69; Reith and Meyer 2003, p. 10; Sombart 1922, p. 85). In contrast to necessity, some authors also characterize luxury by non-necessity and superfluity (e. g. by De Barnier et al. 2006, p. 5; Dubois et al. 2001, p. 15; Csaba 2008, p. 3; Geerts and Veg 2010, p. 2; Jackel and Kochhan 2000, p. 75).

The distinction between necessity and luxury is based on the availability or exclusivity of resources. While necessities are possessed by virtually everyone, luxuries are available exclusively to only a few people or at least only on rare occasions (Bearden and Etzel 1982, p. 184). Bearden and Etzel (1982, p. 186) imagined the necessity-luxury dimension as a continuum ranging from absolute necessity to absolute luxury. Accordingly, they developed a six-point Likert scale ranging from “a necessity for everyone’” to “a luxury for everyone” in order to measure the luxuriousness of a number of product categories (see also Kemp 1998, p.594).

Today however, people spend the biggest portion of their income on goods that satisfy more than their necessary or basic human needs, but most of these goods might still not be considered a luxury. Therefore, Chaudhuri (1998, p. 158 et seqq. ) criticized the necessity-luxury continuum produced by Bearden and Etzel (1982) and measured necessity and luxury as two separate variables on a seven-point agree/disagree scale (“This product is a luxury [necessity] for me. “) No significant relationships were found among these variables (p.163), which supports the approach of these authors.

However, there were goods with low ratings on both variables such as cornflakes, frozen dinners, and potato chips, indicating the need for another category of ordinary goods. Bearden and Etzel (1982, p. 186) actually already considered this category, as they defined luxuries “as not needed for ordinary, day-to-day living. ’” Instead of subsuming ordinary goods into the necessity category, the scale can also be extended to the necessity-ordinary-luxury scale, which might be more intuitive for today’s consumers.

In very old lexica, luxury is defined as anything that is more than necessary (e. g. Brockhaus 1846, p. 179). After the increase in the standard of living over many social classes in the late 19th century, the definition was further narrowed by luxury being also that which is more than ordinary (e. g. Meyers 1890, p. 1035). Since then, most lexica share the notion of luxury as anything that is more than necessary and ordinary (e. g. Meyers 1995, p. 189). However, not everything that is neither necessary nor ordinary is a luxury.

For instance, most people rarely have moths in their wardrobe, but still do not consider this extraordinary occurrence a luxury. This demonstrates that the characterization of luxury as non-necessary and superfluous can be misleading because luxury is always meant to satisfy some human needs and desires (Berry 1994, p. 4 et seqq. ; Geerts and Veg 2010, p. 2; Giacalone 2006, p. 34; Goody 2006, p. 341). Accordingly, luxury is also associated with “dream” (e. g. by Seringhaus 2002, p. 5; Dubois and Paternault 1995, p. 69).

While necessary and ordinary goods are also desirable (or required), a study by Kemp (1998, p. 599; 603) points out an essential difference: “similar items [are] more likely to be perceived as a luxury if they [produce] a positive effect for the recipient than if they [relieve] a state of discomfort [… so that luxuries are…] positive instead of negative reinforcements. ” Therefore, Kemp (1998, p. 592) compares the necessity-luxury continuum with the hierarchy of needs produced by Maslow (1970), which ranges from basic physiological needs such as hunger (necessities) up to needs of self-actualization (luxuries).

These facts demonstrate that the luxuriousness of any resource is not only based on its availability, but also on peoples’ desire for it. Accordingly, the basic definition of luxury may be summarized as follows: Luxury is anything that is desirable and more than necessary and ordinary. | Luxury usually refers to single items, in which case it is described as qualitative luxury. In contrast, quantitative luxury refers to the profusion of an excessive amount of resources, which are not necessarily luxurious. For instance, this includes lighting a cigar with a handful of matches (Sombart 1922, p.86).

1. 2. The Relativity of Luxury The decision of what is desirable and more than necessary and ordinary is relative and depends on the perspective (Buttner et al. 2006, p. 9; Jackel and Kochhan 2000, p. 75; Kapferer 2008, p. 96; Nyeck 2004, p. 1; Sombart 1922, p. 85; Valtin 2004, p. 20 et seqq. ). The relativity of luxury splits into a regional, temporal, economic, cultural and situational relativity, which is illustrated in figure 1 and explained below. Regional relativity refers to the classification of resources on the necessity-luxury continuum depending on their local availability.

Some goods are widely available and worth very little in some regions, but acquire luxury status by virtue of their rarity in another environment (Merki 2002, p. 85; Reith and Meyer 2003, p. 10). For instance, in the 19th century, kola nuts could be freely collected in the forests of West Africa and became a luxury in Europe, where they were used for kola biscuits and kola wine (Goody 2006, p. 347). In addition, a sunny day at the beach might be considered a luxury in most parts of Europe, while it is almost an everyday experience for people living in Miami.

Temporal relativity refers to changes in the perception of the luxuriousness of resources over time, which are based on changes in their availability and desirability (Fuehrer 2008, p. 214; Kisabaka 2001, p. 119 et seqq. ; Matsuyama 2002, p. 1038). The major causes of these changes are technological progress and societal trends (see also Konig 2002, p. 118). Technological progress is also the main reason for the decreasing relevance of the regional relativity of luxury goods. For instance, modern production methods enabled the development from luxury kola to mass-marketed Coca-Cola (Goody 2006, p.348).

There are many other examples of the metamorphosis of luxury goods into mass market commodities such as butter, chocolate, coffee, spices, sugar, and tea (Reith and Meyer 2003, p. 10). This process runs especially fast for technical products, as exemplified by TV’s, PC’s, and mobile phones. However, this process can also run in the opposite direction, as seen with some historically ordinary resources, such as clean air, silence and space, which have become increasingly rare, at least in some regions (see also Koschel 2005, p. 41).

Temporal relativity represents the particular character of luxury as being not stable and constantly changing over time (Kapferer 2008, p. 96; see also Jackel and Kochhan 2000, p. 89; Mortelmans 2005, p. 504). Economic relativity refers to differences in peoples’ perceptions of luxuriousness depending on their access to resources (Kapferer 2008, p. 96; Kisabaka 2001, p. 121; Meffert and Lasslop 2003, p. 4; Vickers and Renand 2003, p. 461). While mostpeople consider a watch costing 50€ as an ordinary item, there are some who see it as a luxury, and still others who would not even regard a watch costing 5,000€ as a luxury.

Economic relativity also refers to differences among countries with varying states of economic development. For instance, cars are generally considered as ordinary goods in Western Europe, but remain a luxury in developing countries (Christodoulides et al. 2009, p. 397; Matsuyama 2002, p. 1038). Culutural relativity: In any cultural context, luxury refers to something that exceeds necessity and ordinariness. However, in contrast to the previous categories, cultural relativity does not refer to the availability, but to the desirability of resources to people depending on their culture.

The same resource might be considered luxurious in one culture, but just ordinary or even useless and undesirable in another culture (Kapferer and Bastien 2009b, p. 314; Kemp 1998, p. 604; Kisabaka 2001, p. 121 et seqq. ). For instance, champagne can be considered as a luxury in European countries, but generally is not desired in Islamic societies. The same is true for a Lamborghini from the perspective of someone from a secluded Amazon tribe (Berthon et al. 2009, p. 49). However, Mortelmans (2005, p. 497) argues that “every social group can be said to have its own luxury.

” There are culture-specific symbols of good taste and luxury, which are determined by the elite of any cultural group or subculture and are used for social distinction (Bourdieu 1994, p. 64 et seqq. ; Fuehrer 2008, p. 135 et seqq. ; Merki 2002, p. 90; Reith and Meyer 2003, p. 24). While gold teeth grills are considered a luxury in the hip-hop scene, the majority of people do not find them desirable.

The preferences of luxury are rooted to a great extent in cultural values (Kemp 1998, p. 596; Sombart 1922, p.87), which differ by demographic variables such as gender, age, and education (see studies by Hudders and Pandelaere 2009, p. 6 et seqq. ; Jackel and Kochhan 2000, p. 75). However, the members of a cultural group also differ in their knowledge of the symbols of luxury (Kisabaka 2001, p. 121).

These facts demonstrate that there are also differences in the perception of luxury among the members of a cultural group. Therefore, Berthon et al. (2009, p. 47) state that luxury “has an intensely individual component as well: what might be luxury to one person will be commonplace, or perhaps even irrelevant and valueless, to another.

” As the culture-specific symbols of luxury are a result of social learning, it must also be possible to influence peoples’ ideas of luxury using marketing measures (Jackel and Kochhan 2000, p. 81). For instance, De Beers managed to position diamonds as a symbol of love and luxury. Situational relativity implies that the same resource could be differently classified as necessary, ordinary or luxurious depending on the circumstances. For instance, ordinary food might become luxurious if a person has not eaten it for a long time, and any luxury food could be considered ordinary after eating it for several days (Kemp 1998, p.598).

1. 3. General Perspective for the Definition of Luxury These types of relativity can be used as follows to determine a general perspective from which luxury should be defined, particularly with regard to the requirements within the field of luxury brand management: Regional relativity: Due to the globalization of business, especially of the luxury industry, luxury should be defined from a global perspective, which leads to the omission of regional specialties from the definition of luxury for the sake of a broad international coverage. Temporal relativity: The definition of luxury should refer to the present.

Economic relativity: Luxury should not be defined from the perspective of the very poor or the very rich, but of the entire society of developed regions. Despite the differences in the notion of luxury between the poor and the rich, Kemp (1998, p. 596) found that to a large extent, a gross-societal consensus exists concerning the classification of goods as either luxury or non-luxury. Culutural relativity: The desirability of resources and the appearance of luxury are determined by the upper class, which also includes the relatively homogeneous segment of the global elite (Vickers and Renand 2003, p.461).

Consequently, hip hop-style gold teeth grills cannot be considered luxuries (as long as they are not adopted by the upper class). Basically, luxury appeals to everyone, if defined as something that is desirable and more than necessary and ordinary from his or her perspective. However, studies on the attitudes towards luxury usually refer to luxury as determined by the upper class. Consequently, the attitudes of respondents range from admiration to rejection (Reich 2005, p. 33), which often reflects their general opinion of the societal system.

Besides that, the upper class also consists of different segments, which means that a variety of luxury tastes and lifestyles exists. Situational relativity: Finally, the definition of luxury should generally not consider any temporary or individual circumstances, but should be restricted to normal conditions. Accordingly, the basic definition of luxury may be complemented as follows: Luxury is anything that is desirable and which exceeds necessity and ordinariness. As a general rule, this is defined from a global perspective, for the present and for normal conditions.

While the exclusivity of resources is evaluated by the entire society, the desirability of resources and the appearance of luxury are determined by the upper class. | Based on that, table 1 exemplifies some of the many resources that can be differentiated from luxury. Accordingly, theextended basic definition limits the scope of luxury from almost anything to a more reasonable level and therefore already helps to dissolve a large part of the controversies about its definition. Table 1: Examples of Non-Luxury Items| Example of Non-Luxury| Type of Relativity| Explanation|.

Clean air| Regional relativity| A luxury in Jakarta, but not from the perspective of most people| Color TV| Temporal relativity| A luxury in the 1950’s, but not from today’s perspective| VW Polo| Economic relativity| A luxury for a student, but not from a gross-societal perspective| Gold teeth grill| Cultural relativity| A luxury in the hip-hop scene, but not from the perspective of the upper class| McDonald’s Hamburger| Situational relativity| Might be a luxury after a strict diet, but not under normal circumstances|.

However, there are two limitations: First of all, the necessity-luxury continuum indicates that all luxuries are not equally luxurious, which means that there is also a hierarchical relativity. Consequently, it seems reasonable to distinguish different levels of luxury (see Kisabaka 2001, p. 120 et seq. ; and section 8. 4. 1). In addition, even though the extended basic definition limits the scope of luxury, it still covers a wide variety of resources such as musical talent, self-determination or Daikin air conditioning systems, which are not relevant within the field of luxury brand management research.

Therefore, the scope of luxury will be limited further in the following chapter by differentiating the understandings of luxury by area of research. 2. The Major Understandings of Luxury The literature analysis suggests differentiating luxury definitions by area of research into three main categories, which will be explained below.

3. 1. The Philosophical-sociological Understanding of Luxury The proponents of a philosophical-sociological understanding of luxury concentrate mainly on the evolution of attitudes towards luxury and its societal benefits (e. g. Berry 1994; Mandeville 1724; Sombart 1922, p. 86 et seqq.) and on the changes in the appearance of luxury and preferences for luxury (e. g. Dohrn-van Rossum 2002; Fuehrer 2008, p. 185 et seqq. ;

Koschel 2005 and Reitzle 2001, p. 26 et seqq. ). According to these research objectives, this understanding represents the broadest scope of luxury that can be referred to as luxuries or luxury resources. Examples include musical talent, time, and true love (see also Sombart 1922, p. 85). Luxuries are defined as follows: Luxuries correspond to the philosophical-sociological understanding and the broadest scope of luxury, comprising all resources which are desirable and exceed what is necessary and ordinary.

| 2. 2. The Micro-economic Understanding of Luxury The proponents of a micro-economic understanding of luxury investigate the relationships between price and the demand for luxury (e. g. Chaudhuri 1998; Kemp 1998; Lipsey 1975, p. 107 et seqq. ; Poll 1980, p. 38), as well as between income and the demand for luxury (e. g. Deaton and Muellbauer 1980; Lancaster 1971, p. 68; Poll 1980, p. 30). There are also some researchers who focus on the moderating sociological effects (e. g. Bearden and Etzel 1982, Leibenstein 1950, Veblen 1899) and on the benefits of the luxury goods industry for the economy (e.g. Thomas 2007, p. 53 et seqq. ).

In light of its research objectives, the micro-economic understanding of luxury represents a middle scope that is limited to goods that are suitable for exchange on the market. In microeconomics the term luxury goods was established for that and mainly refers to entire product categories (see Meffert and Lasslop 2003, p. 4; Reich 2005, p. 36). The marketability of micro-economic luxury represents its major difference from the philosophical-sociological understanding of luxury.

According to Chaudhuri (1998, p.162), product categories such as barbecue and golf equipment are (still) regarded as luxury goods. The definition of luxury goods can be summarized as follows: Luxury goods correspond to the micro-economic understanding and the middle scope of luxury, comprising all goods which exceed what is necessary and ordinary, and are suitable for exchange on the market. | Luxury goods are distinguished from necessary or ordinary goods by consequence-related measures; thus the luxuriousness of any good is not determined by its characteristics, but by peoples’ reaction (changes in demand) to exogenous stimuli.

These measures include price and income elasticity of demand (Poll 1980, p. 29). 2. 3. The Managerial Understanding of Luxury 2. 3. 1. Areas of Research The proponents of a managerial understanding of luxury focus on the development of business and in particular, on marketing strategy guidance for a relatively small group of luxury product manufacturers. The areas of research can be categorized into studies focusing on luxury brands (including products and industry segments) and on studies which rather focus on their consumers. The first group includes image analyses about luxury brands (e.

g. Matthiesen and Phau 2005, Wong and Zaichkowsky 1999) and studies about the luxury brand identity (e. g. Dubois and Czellar 2002, Heine 2009a, 2010a,b, Heine and Trommsdorff 2010a). The existing studies about luxury consumer behavior focus on the characteristics of luxury consumers, their consumption preferences and on environmental influences affecting luxury consumption. Studies about luxury consumer characteristics cover consumers’ purchasing motives (e. g. Tsai 2005), attitudes (e. g. Dubois et al. 2005), values (e. g. Dubois and Duquesne 1993, Heine 2010a, Sukhdial et al.1995) and demographics (e. g. Dubois and Duquesne 1993).

Results of these studies serve as a basis for the segmentation of luxury consumers (e. g. Dubois et al. 2005). Additionally, there are studies focusing on luxury consumer preferences (e. g. Nia and Zaichkowsky 2000, about country-of-origin preferences) and studies about environmental influences on luxury consumption incorporating the impact of reference groups (e. g. Bearden and Etzel 1982; Wiedmann et al. 2007), culture (e. g. Casaburi 2010), product types (e. g. social/private by Bearden and Etzel 1982) and situational factors (e. g.Dubois and Laurent 1996).

On top of that, there is a growing interest in the phenomenon of counterfeit luxury products (e. g. Perez et al. 2010, Phan et al. 2010, Phan and Lu 2008, Phau and Teah 2008, 2009, Phau et al. 2009, Wilcox et al. 2009). 2. 3. 2. Scope of Luxury The managerial understanding represents the smallest scope of luxury. The major difference separating it from the micro-economic perspective is that the managerial understanding of luxury does not usually refer to entire product categories, but only to the best products of a category, or to products with certain characteristics.

Accordingly, products that fall within the managerial scope of luxury should be referred to as luxury products. The broad definition of luxury products can be summarized as follows: Luxury products correspond to the managerial understanding and the smallest scope of luxury, comprising all products which exceed what is necessary and ordinary compared to the other products of their category. | The definition of luxury brands is closely linked to the definition of luxury products and usually refers to specific associations about their products’ characteristics.

Accordingly, the broad definition of luxury brands is summarized as follows: Luxury brands are associated with products which exceed what is necessary and ordinary compared to the other products of their category. | These definitions allow one to state some typical examples of luxury products and brands including Louis Vuitton bags and Rolls-Royce automobiles. For the sake of simplicity, the luxury product business will be referred to as the luxury industry. The managerial scope of luxury becomes even clearer in comparison with the other understandings of luxury.

This is not a horizontal differentiation (such as dog, cat and bird), but a vertical differentiation (such as dog, animal, living being), which refers to the relation between terms of different levels of abstraction (Eckes 1991, p. 120). As demonstrated in figure 1, luxury products constitute a subset of luxury goods, which, in turn, form a subset of luxuries. This means that the characteristics of luxuries also apply, to a large extent, to luxury products (see also Hoffmann 1986, p. 31 et seqq. ). 2. 3. 3. Limiting the Scope of Luxury.

Despite its small scope in comparison to luxuries, the definition of luxury products still covers a wide variety of different products. Therefore, and according to the basic idea of definition by reduction sentences, the scope of luxury products is further limited by differentiating the major luxury market segments as follows: Luxury Products, Services and Real Estate: The managerial luxury understanding usually refers to movable assets (“products” in the classical sense), as the luxury industry was and is characterized by craftsmanship and engineering (Belz 1994, p.648; Berthon et al. 2009, p. 50).

Beyond that, luxury services and luxury real estate form distinct luxury segments. Marketing knowledge about products offers a basis for other luxury segments, but still needs to be adapted to their specific characteristics. Branded vs. Unbranded Luxury Products: Unbranded luxury products are usually made on commission by craftsmen. Because of the high relevance of brands in the luxury segment, this paper considers only branded luxury products (see Kisabaka 2001, p.104; Vigneron and Johnson 2004, p. 486). Private vs.

Public Luxury Products: Instead of public luxuries such as altar pieces or national monuments, the term luxury products usually refers to private luxury, which is owned by a person or a private organization (Sombart 1922, p. 86; see also McKinsey 1990, p. 13). B2B vs. B2C Luxury Products: B2C luxury products, also referred to as personal luxury products, are marketed to end consumers and can be used by a person to enhance his or her personal life (Sombart 1922, p.86; Reith and Meyer 2003, p. 10; Valtin 2004, p. 186).

In contrast to that, there is a distinct B2B luxury segment, which includes luxury-specialized suppliers to luxury brands. One such supplier is Peter Bock, a manufacturer of nibs for luxury fountain pens. Founder-independent vs. Founder-dependent Luxury Products: This paper considers only founder-independent luxury products, which means that the existence of brands and the manufacturing of products should not depend on the life of their creators.

The manufacturers of luxury products should possess a distinct brand personality and at least the capacity for infinite business operation. Although an artist could become a brand, these requirements are not fulfilled as he or she may only create founder-dependent products. Compared to other products, the luxury art market follows very specific rules and therefore forms a distinct luxury segment. The same is true for other industry segments such as (star) architect offices and the relatively complex and fast-changing market of (fashion) designer products. Uni-regional vs.

Multi-regional Luxury Products: This paper disregards uni-regional luxury products, which are only available in specific regions. For instance, shopping in the KaDeWe is only possible in Berlin and spending the night in Le Bristol is only possible in Paris. However, many uni-regional luxury brands have the potential to become global. For instance, the luxury group Hilton developed the New York-based Waldorf Astoria into a global luxury hotel chain. Contemporary Luxury Products vs. Luxury Antiquities: With reference to temporal relativity (see above), only new products are considered.

Luxury antiquities (including antique cars) form a distinct luxury segment. Accordingly, the broad definition of luxury products may be complemented as follows: Luxury products correspond to the managerial understanding and the smallest scope of luxury not comprising services or real estate, but products which exceed what is necessary and ordinary compared to the other products of their category. These products are branded, founder-independent, multi-regional, contemporary and possessed or used by a person to enhance his or her personal life. |

Differentiating between the various understandings of luxury and major luxury market segments helps to further limit the scope of luxury in the area of management studies. Based on that, table 1 exemplifies some of the many luxuries that can be differentiated from luxury products. However, this is still not enough to distinguish clearly between ordinary and luxury products. Therefore, the broad definition of luxury products needs to be specified further, which will be addressed in the subsequent chapter. 3. Luxury Products 3. 1. The Definition of Luxury Products

Although the term “luxury products” is broadly defined and therefore basically comprehensible (see previous section), it still needs to be operationalized because it is not yet clear which products are actually “more than necessary and ordinary compared to the other products of their category. ” The broad definition of luxury products can be modified and further specified by an operational definition. For this purpose, adequate indicators for a term need to be determined. According to the dimensional analysis, it was decided to operationalize luxury products by their characteristics.

The operationalization relies on a literature analysis and an empirical study (as outlined in the paper). The results suggest that consumers perceive that luxury products have six major characteristics including price, quality, aesthetics, rarity, extraordinariness and symbolism. These constitutive characteristics and their typical sub-categories are explained in detail in one of the following chapters. In that way, the operationalization helps to decide for most products if they are part of what is meant by the term “luxury product” (see also Kromrey 2009, p. 110).

The definition of luxury products can be summarized as follows: Luxury products have more than necessary and ordinary characteristics compared to other products of their category, which include their relatively high level of price, quality, aesthetics, rarity, extraordinariness, and symbolic meaning. | Comparative terms such as luxury rely on continuous characteristics (as explained in the paper). Therefore, the major characteristics of luxury products can be considered as dimensions ranging from a minimum level that is also necessary for non-luxury products to a maximum level that corresponds to the highest form of luxury.

As these major characteristics must apply to virtually all luxury products at least to some degree, they are therefore referred to as constitutive characteristics. Although luxury products require a relatively high rating for all of the major characteristics, there still exists a wide range of possible ratings within the luxury segment. According to the principles of the prototype theory, luxury products therefore differ in the degree to which they are qualified as representatives of their category.

The luxuriousness of a product increases when the level of at least one of these characteristics increases. Not surprisingly, the luxury level therefore is one of the major means of differentiation for luxury products and brands (Esteve and Hieu-Dess 2005). The characteristics of luxury products are not independent of each other.

Luxury Brands Essay

Luxury Brands Essay

Luxury Brands: What Are They Doing About Social Responsibility? David S. Waller, Marketing Discipline Group, University of Technology Sydney Anurag G. Hingorani, Marketing Discipline Group, University of Technology Sydney Abstract Although luxury goods may be synonymous with extravagance, lavishness, and even waste, it may appear to be a contradiction that a number of companies that manufacture and sell luxury brands have also discovered the value of being socially responsible. With growing criticism of the high costs and exploitation in the manufacture of luxury goods, some companies are increasing the extent to which corporate social responsibility and sustainability issues feature in their business practices.

This paper will look at the issues regarding luxury brands and social responsibility, and will focus on LVMH Moët Hennessy Louis Vuitton, the world‟s largest luxury goods conglomerate.

Introduction Despite the recent global financial crisis and continuing economic troubles worldwide, sales of luxury brands are growing. According to the Luxury Goods Worldwide Market Study, luxury spending in 2011 rose 8% to €185 billion ($US274 billion) in 2011, with growth in the US, Europe and China, which was after a fall in sales in 2008 and 2009 (Holmes 2011).

Brand names like Chanel, Yves St Laurent, Louis Vuitton and Tiffany & Co. have become household names and brands that some people aspire to purchase and wear. However, luxury brands have also been often criticised for being extravagant, overpriced, exploiting third world suppliers, and wasteful when many people are struggling financially. As luxury brands promote themselves to the global audience, some companies are increasing the extent to which corporate social responsibility (CSR) and sustainability issues feature in their business practices.

This paper will explore the issues related to luxury brands and social responsibility, with a particular focus on LVMH Moët Hennessy Louis Vuitton, the world‟s largest luxury goods conglomerate which includes internationally recognised brands such as Christian Dior, TAG Heuer, Fendi, Marc Jacobs, Guerlain, Kenzo and Givenchy. A content analysis of the 2010 Annual report will reveal the CSR initiatives/activities undertaken by LVMH and some implications for CSR disclosure will be discussed.

Background Since some embarrassing corporate ethical and financial disasters, many organisations are taking steps to improve their corporate governance, ethical practice and CSR activities (Agrawal and Chadha, 2005; Margolis and Walsh, 2001). There has been particular interest in CSR, in which there is a “concern for the impact of all of the corporation’s activities on the total welfare of society” (Bowman and Haire, 1976, p. 13). CSR activities and disclosure have increased with organisations identifying different types of CSR initiatives that they undertake, including those that relate to work output, HR activities, social/community commitment, and environmental initiatives (Gray, Owen and Maunders, 1987; Luo and Bhattacharya, 2006; Waller 2009; Waller and Lanis, 2009). These CSR activities can help promote a specific image that management would like to portray to its various stakeholders, and counter criticism for other issues that may affect the company.

The luxury industry thrives on the creation of an image and the communication of brandassociations. This contributes to the interest in luxury brands by many consumers who might want to portray a particular image or feel a certain way by acquiring and consuming luxury goods and services. Not only consumers but also academic and industry researchers are interested in luxury brands (Bendell and Kleanthous 2007; Fionda and Moore 2009; Kapferer and Bastien 2009; Phau and Prendergast 2000). Most consumers prefer to purchase a wellknown, reputable brand over a cheaper, unknown brand, especially when making highinvolvement purchases, or products that reflect a buyer‟s personality. Luxury provides selfexpression which reflects class, status, and quality. However, at a time when there is increasing unemployment, economic troubles around the world, and a downturn in sales, there is a concern that a luxury brand is elitist and uncaring for the wider community.

In 2007, the WWF-UK measured 10 luxury brands on their environmental, social and governance (ESG) performance – and the brands did not fair well (Bendell and Kleanthous 2007). In relation to the marketing of luxury brands in a world of rich and poor, the report states: “Luxury brands are experiencing rapid expansion in societies that contain both very rich and very poor people. Such societies can view displays of conspicuous consumption as a threat to social cohesion. This is true, for example, in China, where the authorities in Beijing have banned the use of billboards to advertise luxury products and services. In this context, the credibility of luxury products and services will be derived from their ability to generate wellbeing, not only for consumers, but also for those involved in (or affected by) their production, use, reuse and disposal.”

The report ranked the top 10 largest luxury goods companies on an environmental, social and governance (ESG) performance ranking. This was based on: (1) what the companies report to the community; and (2) what media and non-governmental organisations have said about the companies. The companies were given a score out of 100, and graded from A (the best) to F (the worst). Out of the 10 companies, none were graded more than a C+ with L’Oreal topping the ranking, followed by Hermès and Louis Vuitton.

By being more proactive in their civic responsibilities and keeping within government regulations in their business operations, an organisation can build a reputation as a good corporate citizen. Some CSR activities that luxury brands can undertake include eco-friendly ingredient sourcing, fair pricing, eco-manufacture, and efficient non-wasteful distribution, as well as corporate sponsorship. This study will examine the CSR activities run by LVMH Moët Hennessy Louis Vuitton, the world‟s largest luxury goods conglomerate, via a content analysis of the LVMH 2010 Annual Report. The main company information about LVMH is found in Table 1.

Table 1: LVMH Moët Hennessy Louis Vuitton Company Information Luxury goods, retail Industry Founded Headquarters Products Brands 1987 Paris, France Clothing, cosmetics, fashion accessories, jewellery, perfumes, spirits, watches and wines Includes: Moët et Chandon, Hennessy, Glenmorangie, Fendi, Donna Karan, Givenchy, Kenzo, Louis Vuitton, Marc Jacobs, Parfums Christian Dior, Guerlain, Bulgari, TAG Heuer, Zenith, Hublot, DFS, Le Bon Marché €20.32 billion €3.032 billion 83,540 Methodology Organisations can communicate their CSR information through a variety of sources such as advertising, annual reports, public relations and their websites. In this study, the annual report was analysed as this is the only document produced regularly to comply with regulatory requirements and is central to the organisation‟s own image (Gray, Kouhy and Lavers 1995). After finding the LVMH 2010 annual report online from the company website (www.lvmh.com), a search was made for a social responsibility section in the report.

You may also be interested in the following: how global brands compete