2.1 Justifies issue as important to marketers

Justifies issue as important to marketers

Due to the rapid increase of the rich population, as well as the high-speed development of the economy, luxury markets in China are also expanding greatly. However, while we see plenty of beautiful and exiting data, no one cannot ignore some new situations or changes in China market. How to face these changes and problems become the important point for luxury brands gain further development in China.

The big character for the China luxury market is the continued trend of increased domestic shopping ability. So this growing popularity of demands should help to increase the market size for luxury products which can strengthen brand awareness and aspiration(Debnam and Svinos 2007). Although plain living and hard work have been revered virtues of the most part of Chinese people or authority, there has been a growth in demand for foreign-branded or imported goods (Growing economy lifts demand for int'l brands 2004). That’s the reason why consumer can continue to see growth of store openings by all brands in China. However, lower price and better product selection still remained top two reasons for Chinese customer spend for luxury brands. So it is very important for luxury brands understanding Chinese consumers more clearly and more deeply (Lu 2008, 4). Luxury brands want to gain sustained growth must to review their situation in China.

The next trend is Chinese consumers expect comprehensive and differentiated service experience (China luxury market study 2010). It is fact that with economic boom China consumers are becoming more sophisticated and demand better service experience both within and outside of China. Brands begin to build large flagship stores for gain better consumer experiences(Asia Luxury: Chinese luxury brand strategy for breaking dislocation 2010). Moreover, some brands have already localized after sales services which hope to further improve their after sales system. In addition, many retailers “buying back” franchise operations to regain control over the brand(China luxury market study 2010). If we ignore this important trend, it is easy to make luxury brand in China losing its competitive advantage, so to analysis the China market, we can ensure that luxury brand in China continue to grow.

Third, luxury in e-business and social media tools in China is becoming more and more popular, but still in the primary or mediate stage and is still too risky which has different business model at the same time (Luxury e-commerce finding its way in China 2012). Surveys have shown that the majority of Chinese consumers of luxury products are now aged between 20 and 40, while the main population of internet users ages between 10 to 49. There is considerable overlap of the two groups. This is the main reason for luxury e-business rapid development in China (Debnam and Svinos 2007). Those main groups born after 1978, and after the ‘one child’ policy was introduced in 1979 by the Chinese government. Their parents doted on their single child, assisted enthusiastically by the grandparents, so they prefer buying the most expensive items they can afford to suit their lifestyle. Therefore, how to deal with the relationship with these groups has also become an important problem for luxury brands keep growing in China.

Fourth, according to Debnam and Svinos (2007) explain that “while the Chinese luxury goods market is growing rapidly, an equally fast-growing segment of local industry has been counterfeiting”. It is a fact that counterfeit goods are illegal, low-priced and often lower quality replicas of products that typically possess high brand value (Lai and Zaichkowsky 1999, 182). Due to that counterfeit products grab the parts of the market share, some product even beyond the genuine brand sales, consequently, make brand owner sales rate and benefit becoming decline, even some factory collapse. Counterfeit products damaged the reputation of the luxury brand product, let the consumer resembles the authentic (Hieke 2010, 160). It is , therefore , many consumers had taken after the vendor comes down to the responsibility of the head and seriously undermined the credibility of the brand manufacturers. Moreover, many retailers “buying back” franchise operations to regain control over the brand, it is widely acknowledged that fighting for the counterfeit product will be required to pay a plenty of fee, which will make the brand owner in the economic and spiritual aspect is overwhelmed (China luxury market study 2010). In other words, How to face the counterfeit products and how to improve the product quality are both sharp issues for luxury brands which cannot avoid it in China.

Above four questions is current luxury brand in China wants to maintain sustained growth and keep market share must have to think about the problems, as well as the confusing place. These four problems are also the barrier for luxury brands keep growing market share in China. Therefore Luxury brands need to be careful and make sound strategic decisions regarding the future development.

Reference:

Asia Luxury: Chinese luxury brand strategy for breaking dislocation. 2010. http://eng.hi138.com/?i263279_Asia_Luxury:_Chinese_luxury_brand_strategy_for_breaking_dislocation (accessed March 20, 2012).

China luxury market study. 2010. http://www.bain.com/publications/articles/china-luxury-market-study-2010.aspx (accessed March 20, 2012).

Debnam, N., and G. Svinos. 2007. Luxury brands in China. http://www.kpmg.com.cn/en/virtual_library/Consumer_markets/CM_Luxury_brand.pdf (accessed March 20, 2012).

Growing economy lifts demand for int'l brands. 2004. http://english.peopledaily.com.cn/200407/26/eng20040726_150791.html (accessed March 20, 2012).

Hieke, S. 2010. Effects of counterfeits on the image of luxury brands: An empirical study from the customer perspective. Journal of Brand Management 18(2): 159-173.

Lai, K., and J. Zaichkowsky. 1999. Brand imitation: Do the Chinese Have Different Views?. Asia Pacific Journal of Management 16 (2): 179-192.

Lu, P. 2008. Elite China: Luxury Consumer Behaviour in China.Singapore: John Wiley & Sons.

Luxury e-commerce finding its way in China. 2012. http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20120212000042&cid=1202 (accessed March 20, 2012).