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Luxury Brands Web Ranking in China Reveals Louis Vuitton, Hermes, and Chanel as Top Brands
Labbrand, the leading China based branding consultancy, has released its Best Branding Practices in China - Luxury Industry report.
The report reveals that Louis Vuitton ranks as number one on the Luxury Brands Web Presence Ranking with 76% of luxury & fashion communities discussing the brand. Number two is Hermes with 75% and Chanel comes in 3rd with 74%.
2012 Luxury Brands Web Presence Ranking in China
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Key Trends in Chinese Luxury Industry
Established brands continue to move toward 2nd and 3rd tier cities
There are four reasons behind why many established brands expand their based outside the 1st tier cities. 1) 2nd and 3rd economic situation levels with 1st tier cities. 2) 1st tier cities consumers often purchase outside of China, sale targets need to be reached with new stores in other cities. 3) 2nd and 3rd tier cities’ demand is rising due to conspicuous consumption phrase. 4) Using luxury goods as business gifts in more popular in 2nd and 3rd tier cities.
Chinese domestic prices are higher than foreign markets but purchase intention is strong
Government tariffs and duties on luxury goods may explain why the same product can cost up to 80% higher than what one may find in other countries. Yet it seems that the high demand triggered by strong purchase intention also contributes to what one sees on the price tag; even if tariff drops, prices would remain at similar levels.
The association of “luxury” and “art” through museums
Luxury brands want to associate themselves with the status of art and to be regarded as a symbol of art both directly and indirectly. Besides sponsoring art events, they now favor renowned museums in China as their top-choice venue for branded exhibition.
Chinese luxury consumers are categorized with distinct characteristics
Based on factors such as price sensitivity, purpose of purchasing, and socioeconomic status, the report has identified three groups of Chinese luxury consumers with unique characteristics. This finding could give luxury brands some insight into how to best serve their clients whose wants and needs for luxury products are distinct.
High domestic prices drive consumers to purchase overseas or through “daigou”
Aware of the significant price gap between the domestic and foreign markets, more and more Chinese consumers choose to purchase luxury goods overseas. Those consumers who do not go abroad opt for other channels, most notably through a 3rd party---a phenomenon known as “daigou” in China, to avoid high domestic prices.
Chinese domestic luxury e-commerce faces sourcing and quality challenges
Domestic luxury e-commerce platforms have difficulties in ensuring the source and quality of the luxury products they sell, as many of these e-commerce websites are not recognized as authorized sales agent by the luxury brands. Consumers also bear the risk of being denied for benefits such as after-safe service and product warranty.
New wave of foreign luxury e-commerce platforms entering China
As local luxury e-commerce fail to promise the authenticity of products sold on their website, foreign platforms start to take over. With their professional knowledge and experience, as well as their adaptation of local payment system, foreign e-commerce players are winning over both the domestic luxury consumers and the foreign luxury brands.
Best Branding Practices for Chinese Luxury Industry
Deepen brand knowledge and transcend brand culture through acclaimed platforms—Louis Vuitton
Brands strive to move beyond the simple notion of luxury, to be recognized for their deep cultural connotation. Louis Vuitton pioneered this concept in China through exhibitions such as the “Louis Vuitton Voyages” showcasing its brand legacy in the National Museum of China—an act which was soon followed by many others.
Leveraging on Chinese elements to draw connections with consumers –Gucci
A foreign brand cannot solely rely on its foreign identity to survive in the evolving and competitive luxury market in China. Gucci handled this challenge by appointing superstar Li Bing Bing as their new brand ambassador in the Asia-Pacific region, integrating Chinese elements into their marketing campaign.
Mastering brand storytelling to anchor brand knowledge—Chanel
In China, the home of a multitude of brands, having storytelling in the branding “tool kit” is a necessity to anchor the brand’s esteem and knowledge. Chanel demonstrated the effective use of this strategy by establishing emotional connections with potential customers and transcends the association between Chanel’s signature designs (aesthetic symbols) with the iconic Mademoiselle Chanel (story).
Step out of comfort zone to leverage digital strategy for differentiation –Burberry
With over 513 million Chinese internet users and growing, the need to build comprehensive digital strategy for luxury brands becomes more evident, especially in a market where the average consumer is much younger than other countries. While some luxury brands choose to stay rather conservation, Burberry successfully positioned itself as a brand champion on five social media platforms with its integrated and innovative online presence.
Extensive market research to understand consumer habits –Coach
Understanding local consumers is the key to the sustainability of the brand growth for foreign luxury brands in China. With its extensive investment in and dedication to comprehensive market research, Coach continues to unlock the specific needs and requirements of Chinese consumers through customized designs of its lady handbags tailored to female shoppers in 2nd and 3rd tier cities. For other luxury brands, market research can also be applied accordingly to their target brand image.
Labbrand is the leading China based branding consultancy that provides market and consumer research, brand strategy, and creative services to develop and manage successful brands. With headquarter in Shanghai M50 Creative Industries Park and featuring an international team of market research and branding experts, Labbrand combines creative and scientific methods to inspire, guide, measure, and create local and global branding practices.
About Best Branding Practices in China Report
How brands become strong, not how strong brands are
With solid understanding of the economic and cultural context of China, Labbrand investigates inside the practices companies embark to establish strong brands. Unlike previous rankings which heavily base results on financial performances, Best Branding Practices in China integrates brand equity performance evaluation matrix, in-depth expert interviews, and extensive research to present and demystify the ever-changing environment.
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