奢侈品分销策略困境:Exclusivity vs Expansion

奢侈品分销策略困境:Exclusivity vs. Expansion

 

The Central Dilemma of Luxury Distribution: Exclusivity vs. Expansion 

 

When consider the choices between keeping the brand rare vs. massively available, we need to ask ourselves: Where does your luxury brand stand?

 

Luxury is about longing and desire for something nearly unattainable; after being granted such a rarity it creates a sense of satisfaction therefore luxury is about fulfilling pleasure. When it comes to luxury distribution, if a brand is struggling with the choice of Exclusivity or Expansion then the reason for this dilemma maybe because: 1) the Brand Goal/Vision and its Brand Message is not clear, for it fails to understand its own luxury purpose and its targeted segment. 2) The management team of the brand/corporation maybe only wants to achieve quantity = profit sales ratio of the normal-goods demanded for market growth at the expense of quality. Expansion in luxury distribution may cause the demand to decrease. A corporate strategy that uses a mass-market sales approach to push for increased revenue is mistake, especially when it runs counter to the special nature of luxury. The results of such corporate efforts to strive for profitability by using Expansion in distribution will not help but will damage the brand.

 

Less is more. Knowing what your brand stands for and maintaining Exclusivity allows for better control of your brand growth and focuses on the development of the unique point of the brand is far more effective in terms of achieving profitability. J.N Kapferer and V. Bastien's book "The Luxury Strategy" introduces Anti-Law Marketing theory as a useful tool to analyze the importance of Exclusivity in luxury distribution, with this tool we will use of the examples of American fashion designer Zoran Ladicorbic's strategy and his exclusive marketing/distribution methods and also look at the first Chinese luxury fashion brand NE-Tiger's distribution strategies comparing how both brands have used Exclusivity distribution strategy as their central marketing methods to increase brand value successfully. By examining their methods to find a set of principles and solutions for non-traditional distribution strategies and also help to establish practical guidelines for exclusive control over the brands' distributions to maintain their ultra luxury status and stimulate its market demand. 

 

Exclusivity vs. Expansion

 

There are vastly different answers when asked to define luxury. Luxury is not considered a category but an extreme limit on a certain number of attributes, none of which (for example high price) would be sufficient by itself to define luxury (Kapferer and Bastein 2009, p40). If we misunderstand the luxury market, as if one could add more quantity of product to the luxury market and you would thereby gain more consumer activity and gain more profit; the luxury has no comparable market limitation but the brand value itself creates demand. It will make no difference if a luxury jeweler makes one diamond necklace or he makes ten pieces, the number of clients will not increase or decrease because the jeweler has made nine more diamond necklaces. Because the luxury goods can not be compared to ordinary goods (serves basic need) but its characteristic attributes should stand out on its own and creates desire and aspiration, therefore there should be no dilemma between a choices of Exclusivity vs. Expansion but remain exclusivity at most of its luxury distribution.#p#分页标题#e#

 

Rarity is central in the identity of luxury (Kapferer and Bastein 2009, p91). Everyone wants a luxury item when its hard to obtain, especially when this luxury is so unique and "superlative" it can not be compared (Kapferer and Bastein 2009, p62), then the brand itself has the liberty to define its own market size, and design its distribution channels and implementation strategy; for this "one of kind" luxury it can name its own price and sets the rules of the game.

 

We also should realize the fact that no one NEEDS luxury; luxury is about craving, the dream and a deep sense of longing to live or to maintain a lifestyle beyond the normal daily routine. When creation of a luxury product is of such an unnecessary purpose or it can be so out of touch with the mundane, then the entire apprehension of making such luxury possible to the market is to fulfill its affirmation so that its uniqueness and extraordinary existence is self-justified. What makes people dream, want and desire a luxury product in fact can be manipulated and controlled by the use of exclusive distribution strategies to create a virtual scarcity making the desire for this luxury brand and product even stronger.

 

To capture a larger portion of the market share, to manage and control the product's availability can not be accomplished simply by using Expansion without caution. Protecting brand identity and constructing a purposeful and clear focused distribution channel(s) requires clarity about the brand's segment targets, the idea of increasing and expanding does not equal gaining more brand benefits. The brand damage to Burberry is a timeless lesson; let's further exam the cause: the Burberry baseball-cap and Louis Vuitton bag as in above picture (even though both of these examples are visually repellent), however, selling luggage is Louis Vuitton's normal and central trade, but what is baseball-caps to Burberry? Such blind disposition for the idea of Expansion when it is irrelevant to the brand as well as overly distributed can cause a repeat of the "Chav" tragedy.

 

The choice between Exclusivity vs. Expansion should not be an issue if the luxury brand is clear about their brand purpose and understood its segments and targeted audience, all others should be considered as "excludes". Taking care of the brand's exclusive clientele to whom the brand intends to target is the premier concern. Luxury exclusivity is all about: I am the only one to have it, limit the others to have it; even though the luxury market eventually has to become less exclusive in order to grow. (Kapferer and Bastein 2009, p94)

American fashion designer Zoran Ladicorbic is an eccentric, unique minimalist (Table 2.2). Over the past 35 years, he has steadfastly guarded his "unknown" status and maintains the perception as a mysterious artist with his product representing the art of timelessness. "Artist incarnates the idea of the unique and the rare, which is the very foundation of luxury" (Tungate, 2009, p105) Zoran’s limited product was only distributed through one luxury store in each of a few major capital cities of the world's richest countries. As (Table 2.3) shows Zoran's Distribution and Channel Structure model: Vertical only, direct control to all selling process no advertising, shows or press.#p#分页标题#e#

Purity - Zoran's signature: Choose only the most expensive fabrics, use no buttons, zippers, or lining and shoulder pad. He never approves of his exclusive clients wearing high heels, make up or jewellery. His limited high quality production is never out of style and never on sale. It is minimally cut with a few colours available but it costs thousands of dollars and upward...

 

NE-Tiger, a Shanghai-based firm with eight flagship stores inside China and design-studios/showrooms in United States, Italy, France and Russia is the first internationally recognized Chinese Luxury Fashion Company which uses traditional Chinese style as its brand DNA. The product is specially made for Chinese or for the international clientele who appreciates Chinese culture. With an average of 6,000 orders annually, the owner, Mr. Zhang, has once stated: "I can afford to be little cheaper" in response to reporter who compared NE-Tiger's price to Chanel's; NE-Tiger's haunt-couture is very high priced in China, but it is lower ranged price in the international market (price of ¥50,000 Yuan to ¥300,000 Yuan (£4,926.06 GBP - £29,556.37 GBP). Mr. Zhang is determined to change the perception of “Made in China” to be the future luxury symbol. His strategy starts with product that is only available in China; you have to fly to China to obtain it.

 

Table 2.5 NE-Tiger's Distribution and Channel Structure model: Vertical only direct control Advertising only in Chinese accessible magazine. Hosting annual National Fashion Week show

 

反常规营销-Anti- Laws Marketing

 

- Forget about “positioning,” luxury is not comparative

When it comes to luxury, a brand cannot think by comparing the brand to any other brands in the industry. Maintain your brand uniqueness so that no other brands have the same level of capacity or quality then nothing can compare to you. The essential principle is: setting your brand totally outside of the ordinary standard market!

 

Zoran as a designer loves to criticize his clients and wants them to give up all of their jewelry and give them to the maids. He thinks they should go to Zoran to attend lectures; make up, nail polish or high heel are strictly "taboo" and he may just pick up a pair of scissors and start cutting their hair. However, once achieving his approval and affection, his clients are more attached to him. Zoran's unique style and belief system makes him a "cult" for his clients; you either "get it" - his idea of ultra luxury or stay away.

 

- Does your product have enough flaws?

The brand has to find some unique characteristic as a luxury, but those characteristics that some see as drawbacks are in fact benefits to the clients.

Zoran’s product is too "plain", so pure that "nothing can be added"; you can match them perfectly with the one you had 20 years ago because they are timeless and forever chic.#p#分页标题#e#

 

NE-Tiger’s formal Chinese style, one hardly has the chance to wear it in daily life but for this "one of the kind" luxury clients love to fly to China from all over the world, only to be able to place an order and wait for 3 months to pick up the finished creations in their flagship stores.

 

- Don’t pander to your customers’ wishes

Luxury is not about pleasing people, it is not about asking what clients want. The brand message is to tell them what and why they want it. The brand has only one option – Do it your own way!

 

With limited annual dinner parties in his New York and Milan lofts showing Zoran’s new creations where no press is allowed but only invite exclusive guests each time, whoever can get on to this guest list would see it as an honor. He will decide which stores he likes to sell his design to, only one store per Capital city of the richest nations. He accepts checks only, no credit cards or lay-away payments.

战略对比-Tables of Strategy Comparison

 

- Keep the non-enthusiasts out

Zoran does not allow anyone who doesn’t believe his design-value near him. He will also drop a retail store in seconds if their payment has delayed or they questioned his product. A few luxury department stores have worked years to regain his favor.

Ne-Tiger's special traditional Chinese imperial style requires a certain understanding and appreciation; if you are not a fan of such style, they will not work with you or sell to you.

 

- Don’t respond to rising demand

This is the best answer to the dilemma of Exclusivity vs. Expansion. Keep the exclusivity not the expansion; however, the brand can always raise its price if it needs to raise revenue.

 

With the NE-Tiger production able to only meet 6,000 made to order products, no matter how much market demand there is the three month waiting period is unavoidable. With its 50% plus annual growth since 2008, NE-Tiger can respond to the rising demand by ignoring it with a longer waiting list or raising their prices.

 

- Make it difficult for clients to buy

Zoran makes the client or retail store jump through hoops to get his product. If it is easy to get it would not be valuable; so direct distribution is the best way to control such demands. He only produces a handful sweaters in a given season and will directly send them to the luxury retail stores (for example Tokyo) in certain day, so the client has to literally fight for it. 

 

- Dominate the client

Once again, true luxury does not ask the client what they want, but dictates to them what they desire in the brand. Never compromise on your prices, never have sales or offer discount, maintain your policies and process to keep up the true meaning of the brand. Zoran will not allow clients to look at the mirror when he is putting together a look, as he often tells his clients: I am your mirror and I will tell you what is good on you!#p#分页标题#e#

 

- Protect clients from non-clients, the big from the small

By maintaining a well protected A-list clients social circle, Zoran kept the "excluded" out and never will be able to get in.

 

- Do not sell

Zoran is never about selling but it sells! The brand story is about the ultra state of independence and a lifestyle requires no one's approval, owning the highest quality and purest aesthetic value product; it is all about a luxury lifestyle that an trend-chasing person never will understand or will be able to maintain. No comparison to anyone and no ordinary consumer will ever find out about this privileged brand (the label can be easily torn off, in 1998 Zoran was fined for having no proper label).

 

Using limited vertical distribution demonstrates the brand value. No public advertising but "Word of mouth" - often through his luxurious all-white minimalistic and simple dinner parties to communicating his brand image and telling the story, he has created a timeless and ultimate luxury.

 

- Don’t relocate your factories

Heritage and history are the important part of the brand story and brand value.

Ne-Tiger is determined to establish “Made in China” as luxury, so set its resources mainly based inside China only. 

Zoran has only set his production in his New York studio/factory with employment of a handful of seamstresses. He also uses small production/factory for his cashmere production in Milan, Italy.

 

- Consideration

As Zoran is now more than 65 years old, his unique work is perceived not as fashion but artistic work of aesthetic value, however, due to lack of information on his brand, it is difficult to investigate its current position or progress. However, as his older generation of clients all will past away how will the brand maintain its image, who will carry on his legacy?

 

结论- Conclusion
 

The encouraging outlook for the future is that using anti-marketing method and exclusive distribution to maintain a high brand status is effective. It especially can be used for the "unique" luxury brands to have the direct control over their small short channel and eliminate unnecessary exposure and expense. Although the story behind the brand which can reach to such high level of demand and remain within the elite society is not as simple as it seems but we have to admit the "extreme" unique brand identity is the central element that creates demand for the brand. The Expansion should only be conducted internally by creating more extreme "unique" luxury and utilizing the exclusive distribution to expand the buying activities within the targeted audience but not to expand its availability towards the "excluded".#p#分页标题#e#