MBA Luxury Brand Management

MBA Luxury Brand Management
Class of 2016-2017

Friday, March 21, 2014

A Little Bit of Home in Dubai?

By Emily Albright, MBA in International Luxury Brand Management 2013-2014, United States

After eight months in Paris without a trip home to the US in the meantime, I’m a bit starved for American comforts. You know, 24-hour pharmacies, bad chain restaurants, indoor malls, and no-frills nail salons. I thought I would need to wait five more months to enjoy these heartland splendors, but low and behold, I found paradise during our class field trip to Dubai this week! On the way to the hotel from the airport, I passed by a plethora of North American wonders: Applebee’s, Tim Horton’s, Tasti-D-Lite, Bennigan’s, Outback, Tony Roma’s, TGI Friday’s…the list goes on. I haven’t even seen some of these restaurants in the US in a few years!

I was already in love with Dubai at this point, but the feeling of being in the US only intensified when I entered the Dubai Mall: more restaurants, late-night services, and amazing nail salons. I thought that only the North Americans in the class were feeling at home in the Middle East, but other classmates were also sharing similar sentiments about Dubai. Our Indian classmates enjoyed some Hindi films this week, our Brazilian classmate found the weather reminiscent of Latin America, and the Southeast Asian classmates felt at home with the expats in an emerging country. Dubai is much more international and accommodating than many of us first assumed. For a city that’s located in the middle of the desert, it feels anything but! Who knew that all we needed to do was visit Dubai to feel more at home away from home?

Tuesday, March 11, 2014

Stéphane Truchi, director of Ifop, presents the latest findings on emerging markets of Luxury Living to the students of the MBA in International Luxury Brand Management at ESSEC

By Anne-Claire Gillig, MBA in International Luxury Brand Management 2013-2014, France

On February 18th, on his way back from Shanghai and before catching a flight later in the afternoon to Moscow, Stéphane Truchi came to speak to the students of ESSEC MBA in International Luxury Brand Management. Mr Truchi is the director of Ifop, an opinion poll, market research and media research institute with presence in Europe, North America, South America, and Asia. He was invited by Xavier Bertrand, himself a specialist of how to conduct business in emerging markets and an expert of India where he set up Chanel’s subsidiary nearly 10 years ago. Mr Bertrand invited Mr Truchi as a guest speaker in his series of lectures dedicated to luxury in emerging markets.

Market research is key to consumer understanding. Mr Truchi introduced us to the latest version of a study called “Living luxury” with a focus on BRIC countries. The study is conducted every 2 or 3 years with an exclusive focus on people who actually buy luxury goods, in order to provide a clear understanding of luxury consumption trends. Mr Truchi’s introduction instantly captured the attention of the whole class. “Every time a specific brand asks Ifop to conduct a study,” he explained, “Ifop goes back to consumers. This process enables Ifop to stay close to customers at all time and spot new trends of luxury consumption.” Besides, Ifop produces a yearly professional trend report, based on interviews of professionals of the sector whom Ifop enquires about their visions on the luxury market and what their priorities are.

Living luxury” is conducted following several criteria: lifestyle and values, how luxury customers consume (in order to capture consumption trends rather than category trends), luxury living and what brands customers associate with luxury. “The latter,” explained Mr Truchi, “Enables us to see how a market is structured, and appreciate the differences from one market to the other. Knowing what brands are associated with luxury also gives us a very clear vision on the level of maturity of a market”. Consumers are also asked what is influential for them and how they connect to the Internet and use social networks.

I can’t cover the entire presentation in just one post, so I will focus on a few key findings. Some of them reinforced some existing knowledge, but most of them broke down a few well-established clichés. Of course, when we talk about BRIC countries, we immediately think of China. Despite a 20% decrease in the luxury market from 2012 to 2013 explained by 1) a saturation of the market, which cannot support double-digit forever and 2) a very specific issue about gifting, Mr Truchi insisted that “China still has beautiful days ahead.” While this sudden drop naturally raised an alarm, professionals insist that while China has become a little less dominant, it remains by far the most strategically important market. China’s rising middle class and youth generation aspires to luxury. They aren’t impressed by big international brands; they want much more and demonstrate increasing expertise. Their most demanded criterion is quality, followed by value for price, brand history, customer experience, and customer service. It’s a very demanding market which has rapidly evolved over the past 10 years. “Chinese customers have become more education,” said Mr Truchi. “Of course, we are talking about the top 10% of customers, so it’s not everywhere, but the aspirational crowd is moving up very fast. Furthermore, there’s a kind of local pride in being Chinese. It’s a new trend, it’s moving fast, and it gives local luxury brands the chance to emerge in the future. This will be the dominant trend in the years to come.” Subsequently, there is a growing interest in niche brands with increasing logo strength and visibility. Hong Kong remains very influential in China and is the 4th luxury hub in the world. Luxury consumption is strongly linked to market confidence.

“The more a market is confident, the more luxury consumption is going to be strong.” Because luxury consumption is linked to pleasure and attraction to spending money, customers with more confidence in the future will tend to buy more luxury. Looking at the confidence index of the BRIC countries, one can see that they are always more confident in their domestic market than in the global situation of the world. They feel that they are in a good place whereas a few years back, the mature markets had a very positive image. “But today, the western crisis has shown a different picture. BRIC consumers feel much better about their own countries. The most optimistic countries, such as India, Brazil and Mexico are also the most strategic for luxury markets.” Indian people in particular are very optimistic. Indian youth are very optimistic and have a real ambition for success and making money.” Indian people are extremely entrepreneurial.” Mr Bertrand commented.

After being hit by the crisis 2 or 3 years ago, Russia is back to being a strategic and stable market for luxury goods. Just like in China, there is a new trend in Russia for national pride. Russians customers are still very exuberant in the way they consume luxury goods, but they aspire to an experiential relationship with luxury. Their preferred products are jewels, watches and cognac. Just like Brazil, Russia is a very emotional market, where luxury consumption is associated with pleasure and reward.

Although it’s not an emerging market, Mr Truchi also gave us an update on the United States’ return to the role of a leading luxury market. “The US is a mature market in the bigger cities, but the center of the US is like an emerging market. It has huge potential for luxury brands. Finding strategies to penetrate this market would unlock a new world of opportunities.” In fact, Mr Truchi confessed his surprise that there is no specific strategy from the major luxury brands to penetrate the US market. “They prefer to investigate new territories rather than concentrating on the US,” which, according to M. Truchi, “is a real question”.

The United Arab Emirates have a small, but extremely wealthy population. Furthermore, they have built an impressive distribution network that provides an equally big opportunity for brands to develop their visibility and distribution. Additionally, these markets are very approachable as far as tax is concerned.

On the contrary, Brazil has very high taxes and barriers to entry, which has even led some global brands to leave the country. But now, it has become such a major market that it cannot be overlooked.

Japan is recovering slowly but surely and has grown 10% from 2012 to 2013. After a decade of natural disasters, Japan is back as the important luxury market it used to be.

When asked what brands embody luxury, consumers answered in patterns following three major trends:
  1.  There is a global consistency about what brands embody luxury;
  2. Most of them are European: Louis Vuitton, Chanel, Dior, Cartier, Hermès;
  3. Luxury is mostly associated with fashion and jewelry.
India’s ranking of luxury brands stands apart from the global patterns; this distinction is indicative of luxury brands’ main issue in India: exposure. Consequently, Indian consumers associate luxury with Gucci as well as Reebok, Adidas, Mercedes, Sony or Nike.

Finally, Indian and Chinese customers are the biggest lovers of luxury brands. Their most demanded criteria while shopping abroad, to which luxury brands should pay attention, are:
  1. Product availability
  2. Product variety
  3. Service
There is one topic on which all emerging markets unite: the relationship between luxury brands and their customers is moving from a vertical relationship to a peer-to-peer relationship. As far as innovation goes, particularly digital, it seems that we are entering an era of maturity. Instead of desperately trying to win the innovation race that we have witnessed over the past few years, companies are understanding how to use the existing pool of innovations and digital tools to improve customer services and experience. They are looking for local innovative strategies to consolidate and grow their local positions, as well as new inspirations from brand categories to create synergies.

For more information on Ifop and "Living luxury," check out the Ifop website.

Monday, March 3, 2014

Language Barriers

By Emily Albright, MBA in International Luxury Brand Management 2013-2014, American

If there’s one aspect of moving your life to a foreign city that probably everyone can agree is the most daunting, it would have to be the dreaded language barrier. On top of the expected stresses of relocating one’s life, saying buh-bye to your friends and family for a bit, and the endless fun of securing one’s visa, not being able to order a coffee without fear of embarrassment or confusion is the last thing one wants to be faced with. Unfortunately, this is just a fact of life when moving abroad, and unless you’re lucky to be moving to the country whose language you studied even a little in school, you really will be starting from square one.

Having said that, with very recent experiences in this department, this blogger is particularly well qualified to dispatch a little helpful advice to help you cope with the transition. It all can be boiled down to this: Get a head start.

At least two months before your departure, take a little time each day, and I mean each and every day, and go through some language exercises. There are plenty of language websites and apps for beginners. One in particular that I have found really helpful is Their website and app work the same way. Sign up (it’s free), and get going. You’ll start with the very basics and move through their various levels and categories. Don’t miss a day with this. Even if you take five minutes one day, it’s better than nothing.

Also encouraged while you are still living in the homeland is podcasts. As in, on your way to or from work, have some language lesson podcasts downloaded to listen to on your mobile device. I recommend checking out Coffee Break French.

Lastly, watch French videos or movies on YouTube, preferably those with English subtitles. It always helps to hear natural French speakers converse. Those ears won’t train themselves.

Having said all of this, my last word of advice in terms of getting a head start on learning the language before you leave is not to rely on just one of the above methods. Use them all to supplement one another. The more you speak, read and listen to the language, the better off you will be. And again, don’t skip a day.

Of course, no method for learning a language compares to immersion, or, “living the language,” as they say. It’s daunting, but you just have to jump right in and do it. You will learn out of necessity. If you have time, find a conversation group to attend now and again, and continue the steps laid out above in your free time, especially if you go through a day without having to speak.

Be fearless! Be patient! Au revoir et bonne chance, mes amis!