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Chapter 2

RMG 914 Chapter 2: Week 2

Retail Management
Course Code
RMG 914
Donna Smith

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The reality of corporate brand portfolio management, publicly traded luxury brands and the
efficiencies of modern global production have all impacted todays luxury business model
Less and less space for handmade/artisan
o Yet the business model still seeks to maintain an aura of craftsmanship
Role of the artisan
Simply put, craftsmanship is less prominent and therefore less of a purchase driver in the 21st century
as luxury companies more and more mass produce in global factories
o Reaction to the pressures of global demand and quarterly corporate earnings calls
Pressure on luxury brands to develop growth strategies that could further limit the role
of the artisan in favor of mass production
No agreed upon definition of luxury
o Assertions regarding the role of the artisan and craftsmanship in the creation of luxury products
still need to be stated in a measured manner
Some luxury brands more heritage and history focused
o Emphasize craftsmanship with greater frequency Hermes
Other brands have begun to underplay the past and are constructing a more contemporary history
o Burberry
What they share in common
An anchorage in a fabled history which they honor with differing degrees of
ritual plus an unyielding commitment to excellence and creative innovation
Values from the original artisans and their workshops + workbenches that remain the bedrock of all
things luxury
o Reflected in a brand management strategy exercised by every major luxury house
o Often present products as “wearable art”
Luxury brand narratives the pedigree of the brand in terms of its ancestral and
genealogical line is woven into the present tapestry of marketing communications
Commitment to heritage is not limited to accessories brands
o The Geneva Seal
Originated by Patek Phillipe
Certification has become the industry standard for creating and measuring the highest
skills of watchmaking craftsmanship
Luxury brands are united in their commitment to and conversations regarding the lure of handmade
and corresponding concept of craftsmanship
Based on timelessness as its primary dimension
Craftsman who labour/laboured with their hands represent a tradition of passing down from
generation to generation the skills and the spirit of what creativity means to human fulfillment
Masters teach journeymen and journeymen teach apprentices
o Hermes still operates on this system
A multigenerational transfer of skills and craftsmanship
It is timeless in the sense that each handmade product is seen as a monument to imperishable beauty

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o The craftsman seeks immortality by leaving behind an impression of his soul
When something is handcrafted by an artisan
o It has a legacy of stories, traditions
o Passed down through generations
o A soulful feel
The introduction of the concept of soulfulness opens a portal to another unique dimension of luxury
o The power of desire in animating consumer behaviour
Brand managers now have to understand what motivates different types of consumers to purchase
which products
o Needs became identified with must have commodities
Things necessary for daily living
o Wants are products/services that weren’t necessary but were perhaps aspirational choices
How we make needs vs wants decisions
o Needs are made in a rather nonreflective manner
o Wants are made in a more reflective process
Desire raises the bar by adding the role of the passions and of the soul
Consumer desire is a passion born between consumption fantasies and social situational contexts
o Such social situations could include the influence of social stratification and our quest for social
recognition both engenders + obstructs
Many desire it but few can afford to enjoy it thus such fantasies could be the quest for
social recognition that some consumers seek through displays of luxury ownership
This is part of the luxury strategy for maintaining a highly ordered system of value
o The exclusive element of luxury is that it should always be beyond the reach of many people
The greater the inaccessibility the greater the desire
Luxury brands tap into deep desires
The basic product corresponds to a need
o The luxury product corresponds to a dream
Fashionista consumers who follow fashion and want to be the first to wear the latest trends
Italian fashion is driven by a spirit to create desire
Fast fashion is to satisfy a need
Products are more than just the fulfillment of needs or wants
o What we purchase becomes social markers by which we claim membership in select social
groups by dint of our purchase as well as how we define ourselves
Fashion is based on creating obsolescence
o The current seasons merchandise is meant to offer a temporary satisfaction which makes way
for next seasons merchandise successor
The very satisfaction of the desire regenerates the desire
Luxury brands are not in the business of causing obsolescence
o Luxury is based on a timeless innovation and this provides the foundation for differentiating
their relationships with consumers and their desires
Luxury brands face a different challenge
The desire of luxury is tethered to deeper issue of personal identity and social
Different business model of luxury

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o Luxury seeks to transmit the soulfulness of its creative process to the souls of its core
Seeks to generate an experience based on authenticity
For consumers, luxury brands offer the opportunity to be connected to this dream experience through
the purchase and through the participation in the brand narrative
Twin principles of today’s luxury
o Exclusivity
o Availability
We find talent within the concept of exclusivity
Accessibility the limitation of access to the select few
Today has morphed into strategies for maintaining brand value
These strategies manifest themselves as part of brand management with unique product identity or
innovative design
o Commensurate with the image and person of the brand exclusivity
o And coupled with controlled retail distribution and/or limited inventory availability
These 2 elements that together imply rarity and create the perception of value
In luxury, rarity or controlled scarcity a function of the intersection of exclusivity and availability can
be understood on different levels
o One aspect is found in the product
Which may be made of rare and exotic elements such as a special issue timepiece
Other is the number available
o Rarity also aligns with the rarity of the consumers financial standing
Which is generally much greater and therefore rarer than others in the social system
o Confirmed by the final element
High premium pricing solidifies the exclusivity and availability dynamic
o Together with exclusivity + availability quotient it can establish luxury as a
class of objects, however price on its own cannot
Also confirms the perception of consumers who often use price alone as a
heuristic (mental shorthand confirmation by which to arrive at a decision) for
Timelessness relates to luxury
Test of luxury is that objects appear fresh far past their launch date
Objects seem timeless and often appreciate in monetary value as well as in intrinsic beauty
Luxury products do not age as steeply as in the accelerated life cycle of fashion
o Where trends come and go quickly
Not beholden to the market but claim the market as their own
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