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Can luxury brands outclass a struggling global economy?

Created by : Shashi Prasad, Media Planning, Mudra Communications  | 11 23 2008 10:55:27 +0000
Industry : Advertising/PR/MR/EventsFunctional Area : Branding(Sales & Marketing)
Keywords : Stock Market Real Estate Income Global Economy Luxury Brands Struggling Outclass
Activity:  568 views;  last activity : 07 06 2010 20:18:09 +0000
The prevailing wisdom holds that luxury brands are immune to a struggling global economy for two reasons:1.       The wealthy are not affected by a recession as dramatically as middle and lower classes , and they will continue to purchase luxury items and maintain the lifestyle to which they are  1.accustomed  emerging Markets in nations such as India, Russia, and China are exploding with economic prosperity and a new class of consumers who crave luxury as symbols of success

Luxury brands, therefore will  survive the troubled global economy with little or not significant negative impact

  
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Yes, they can but one will have to relook at their margins and costs. They will not be able to survive at the premium rates that they are used to. They will gain a lot of loyal customers if their rates are brought down to earth by way of new upper middle income segment who will not mind acquiring a premium brand once in a way.

The premiums charged by them on brand value etc. will no longer be applicable as even the rich diaspora will be afraid of flaunting their wealth at such times.
By Jaygopal Raghavan, Marketing Manager, Landmark Group  03 24 2009 13:46:12 +0000
 
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I think that luxury brands will not suffer a too badly. Recently, with the easy access to credit, luxury goods have become more available to the middle class – it is common place for average wage earners to have a Channel bag or a Gucci dress. This has not normally been the case with such brands reserved for only the very wealthy due to their price tag. Now due to the global credit crunch they will not be so easily accessible to those on an average income. However, I do believe the emerging Asian markets will help keep sales a float and compensate for the lost middle class consumers as well as the fact that the wealthy/super rich have always purchased luxury goods through many recessions and will continue to do so.
By Shashi Prasad, Media Planning, Mudra Communications  11 23 2008 11:08:34 +0000
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The luxury brands command vey high premium or margin, does not get much affected by recession & grows with time ( albeit at very low rate) but the segment being very low ( in numbers) the overall gain is still very minuscule. 
By santosh kumar, Marketing Manager, AUTOMOBILE  | 09 07 2009 10:37:12 +0000
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I agree with Mr Mittal. Luxury brands cannot outclass a struggling global economy since different different procut will have different target audience at that time............
By Ramdas Pawar, Sales/BD Manager, Flex  | 09 02 2009 14:28:31 +0000
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No i dont think so, because every product will have their own target audience. Yes i do believe that it will be very slow moving but will have their own Importance and weightage. We should not forget a group of people who believe in status.
By Mittal Shah, Sr. Manager - Sales & Marketing, Infratech Real Estate Pvt. Ltd.  | 09 02 2009 12:20:36 +0000
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Yes, they can but one will have to relook at their margins and costs. They will not be able to survive at the premium rates that they are used to. They will gain a lot of loyal customers if their rates are brought down to earth by way of new upper middle income segment who will not mind acquiring a premium brand once in a way.

The premiums charged by them on brand value etc. will no longer be applicable as even the rich diaspora will be afraid of flaunting their wealth at such times.
By Jaygopal Raghavan, Marketing Manager, Landmark Group  | 03 24 2009 13:46:17 +0000
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market or economy slows down it effects all your purchasing habits weather it may be a luxury product or any other economy product...

There may be a case when consumers still go for luxury products but the no of purchases reduces sustantially ....so economy slowdown certainly impacts your purchasing decisions
By Rajesh Kanwar, Media Planning,J Walter Thompson  | 11 23 2008 11:30:19 +0000
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With the slowdown in the economy even the luxury brand are bound take a hit .. there are two categories of people who buy these brands - the upper class and the upper middle class.
the upper class consumer, typically entrepeneurs, stock market / real estate investers etc incidentally would be the worst affected .. and the upper middle class who aspire to buy such brands going out of their regular spending habbits will prefer to keeps their spends tighter in such scenario
By Arvind Shastry, PR & Media Relations Manager, Ogilvy & Mather  | 11 23 2008 11:23:51 +0000
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Interesting debate indeed!!

Luxury is NICHE and that remains its positioning till the brand or the earth dies its natural death!! So for me a luxury brand may find itself moving slowly off the shelf but with the price point it is at and the margins, it will anyways survive ... economic slowdown or not
By Makrand Bhave, Marketing & MICE, WIZCRAFT International  | 12 20 2009 04:20:29 +0000
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In a developing economy, the size of the rich households segment grows with the economic growth. A slowdown will necessarily bring down the growth rate of this segment as well, thereby impacting the consumption of high end luxury brands in durables, cars and real estate. The IT sector in India brought forward a new set of senior managers who entered the rich families segment but the slowdown is likely to make these households cautious and may postpone consumption. Though in small size, there are holdholds which lost their lifetime earnings in the meltdown, in some cases making them bankrupt. The super rich though may be untouched by the meltdown and their consumption will not be affected
By Neelima Pandey, PR & Media Relations Manager, Group M  | 11 23 2008 11:32:09 +0000
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 think luxury goods market will be the least affected by the global slow down because luxury has different meanings in the developing and the developed worlds ,in the developed countries luxury has always been enjoyed by a very selected few and understanding of luxury is very mature but in the case of countries like india after decades of socialist ideas the economy is at its bourgeois best 
By Venugopal K, PR & Media Relations Manager, Ogilvy & Mather  | 11 23 2008 11:31:17 +0000
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