Luxury China: Market Opportunities and Potential Review

Luxury China: Market Opportunities and Potential
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Luxury China: Market Opportunities and Potential ReviewBoth authors have maintained that China offers ample market opportunities and potential to luxury brand owners because of its phenomenal GDP growth and huge consumer demand for high-quality and brand products. In this book, both authors offer relevant market information and useful tips to readers how to start up and sustain their businesses in this double-digit growth competitive market landscape:-
1. Market characteristics - Market size for luxury products is huge but luxury brand owners cannot view China as a single market because different tiers of cities (Big Four, Climbers, Niche, Mainstream, Next Frontier, and Poor Cousins) (Chapter 5) can generate different luxury product potentials.
2. Consumer attitudes and behaviors towards luxury products - There are four major consumer groups in terms of attitudes and behaviors towards luxury products, namely luxury lover, luxury follower, luxury intellectual, and luxury laggard (Pp.54-63). Based on a quantitative survey of "Chinese elites" in 4 Chinese cities (n=312), there are more luxury intellectuals (42.2%) in Beijing than in Chengdu (16.6%) while Shanghai has less luxury lovers (13%) than luxury followers (26.1%) (P.69). Luxury brand owners should formulate different effective marketing strategies to fulfill customer wants of these four consumer groups.
3. Long-term vision - Luxury brand owners cannot solely rely on return on investments made from start-up operations to fund business expansion activities because they have to make huge investment in establishing sufficient market presence (i.e. new store opening, bulk brand building campaigns, new inventory investment, and hiring of capable personnel) (P.13) and being one of the leading brands in order to keep up with double-digit market growth.
4. Operations and communication strategies - Chapter 4 and 5 describe pros and cons of different operations strategies for luxury brand owners (Importer-distributors, subsidiaries, joint venture, licensing). They also include a comprehensive list of major distributors in Hong Kong, Singapore, and China. Chapter 6 focuses on different above-and-below-the-line communication tools available to luxury brand owners (press, TV, outdoor media, and internet, celebrities and events).
According to both authors, China is still a hard nut to crack for iconic and weak luxury brand owners because it is a vast and complex market. Thus luxury brand owners cannot view China as a "El Dorado" for short-term gain.
There are limitations of this book:-
1. This book was published in 2010 but some of the information contained in this book is inaccurate and out of date. For example, rental prices for ground level shops in Nanjing West Road in 2010 was 60-70% higher than 2007 (P.218). According to Boston Consulting Group (2011), China has a million millionaires which is more than what the book has stated (415,000 persons, P.28). The well-known department store, Shin Kong Place, is located in Beijing East CBD instead of Beijing West CBD (P.87). The Chinese luxury market is still male-dominated because of the customs of gift-giving to business partners and government officers (P.43) but according to Newsweek (2010), women will account for at least 55% of luxury product market in 2015.
2. The quantitative survey in Chapter 3 does not cover respondents from super-rich and vulgar-rich segments (they are regular consumers of luxury brand products). The survey solely covers middle-to-upper middle class in 4 key Chinese cities and representativeness of the survey respondents in the luxury market remains in question.
3. Social portals ("weibo") have generated huge online traffic and consumers can express their views on luxury lifestyle and products in China. Besides, an online shopping portal, "Taobao", has also demonstrated significant growth in luxury product transactions. This book contains no information on this available communication tools.
Despite its limitations, this book has served its purpose of convincing readers of market opportunities and potential of luxury brand products in China. This book is highly relevant to MBA students and luxury brand owners (plan to have start-up operations in China) who aspire to have broad understanding of the overall market landscape.
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