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Chinese Luxury Market: Brand Architecture Essay

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Updated: Mar 17th, 2022

Over the years, the world’s appetite for luxury goods has grown at an encouraging rate. This has worked in favor of the various luxury brands that have grabbed the moment by increasing their production. Economic scientists suggest that luxury goods are income elastic and their demand therefore heavily relies on the change in income.

In any market, particular merchandise conquers a luxury class performance, quality and durability matched with other substitute products. Others are perceived as luxurious due to their role as status symbols in the social economic arena. They may not necessarily be of high quality performance style and appearance but they are highly priced as compared to their substitutes.

The global market has more than enough room for luxury products. It has accommodated these brands by maintaining a constant demand for the products that constitute its segment. There are several global luxury brands in the global market such as Louis Vuitton and Mercedes Benz.

These brands began with a sole local market and built their way into the global arena. The market has developed mechanisms that set a product into the global path. One such mechanism is endorsement. Members of a category of a product have specific organizations which are entrusted with the responsibility of evaluating the superiority or otherwise of a brand.

Once such a brand is endorsed it joins the competition. After endorsement the burden shifts to the proponents of the brand in as far as marketing and creating a consumer base. The company supporting the brand develops marketing strategies that propel the product in the sea of consumers.

China presents a great opportunity for luxury products. Sales in the Chinese luxury market have been on an upward trend standing at US$2billion by 2004 making China the world’s third largest consumer of luxury goods.

The market according Ernst & Young an authority in market research is expected to grow by 10 percent annually up to 2015 with sales expected to exceed $11.5 (Chung, pp 1-30). Historically Brands have opted to partially shift their production to china while retaining their main plant in their parent home countries for certain pertinent reasons.

Besides economic structural and political concerns the Chinese market has developed a negative image for the label “Made in China” with most consumers associating it with low quality products. This has tremendous influence a brand’s value which is core to a luxury brand (Law, pp1-13).

Despite the fact that a great proportion of their production comes from China, most companies choose to brand their products from their home countries. A Chinese luxury brand therefore will require a lot of time and money invested in changing the consumers’ perception. The Chinese Administration of products quality inspection indicate that 78% of the products they inspect achieve the quality and safety policy required in the market.

These products were however overwhelmed by the negative impression caused by the 12% that failed to pass (Law, pp1-13). A Chinese brand would be attempting to venture into a saturated market that is flooded with well-established western brands that pose heavy competition. This means that the brand will demand a heavy initial investment to set it on the path to the global market.

Shanghai watch, Chinas first high end product company in the watch and clock market has had to undergone several re-inventions to incorporate the nostalgia of the modern Chinese consumer. This is an important strategy that any other prospective luxury brand should adopt if it intends to reach the global market.

The re- invention of a brand keeps the consumer anxious and eager to acquire the latest version. China is the home for 875,000 millionaires. This presents an ample opportunity for a new luxury brand. Endorsement by these individuals puts the brand on the world market and the regional market and provides ample basis for the brand to build its way into the world market and give it global recognition.

Brand architecture is the most fundamental step in the branding process. It requires an employment of the 19 constituent building blocks in the brands structure (Dunn, p 1-33). The most important of these elements to a Chinese luxury brand are differentiation, pricing and quality. The brand must ensure that it stands out from the competition within the global and local market. This will work to counter the negative impression that the market has on products made in china.

The brand should have an equal or higher price as compared to all other competitor brands. The luxury market is price elastic since consumers tend to buy more of a highly priced product due to the connection between the products price and the quality. The brand should ensure that it maintains high quality to allow the players of the market to endorse it.

Launching a brand requires strategic positioning and planning. For instance, if Shangai Watch were to launch a new brand of wrist watches it would organize a two-way concert that will entail two separate events. Considering the fact that 61.5% of the Chinese affluent consumers fall within the age of 25 and 39 years(Law, pp1-13) the first concert will provide a common arena for these middle aged customers to view and even sample the product.

The concert will invite globally acknowledged music artists who will entertain and endorse the product. In the concert it will involve a modeling competition that will have began a month prior to the launch to attract participation from the greater consumer base. The winner of the competition will then be crowned as the brands advocate and will form the face of the brand.

The second concert will target the older population who fall between above the age of 34. The concert will have in attendance a host of eminent personalities drawn from the political social and economic divide. The event for instance could procure attendance of the president.

All global brands share an inspired sense of style and quality. They have continually convinced the consumer that their product is worth the very high price they pay for. These brands have invested heavily in advertising and re- invention with many of them letting up to 15 percent of their budgets into advertising. This has ensured that they keep the consumer impressed and created new markets.

Works Cited

Chung, Olivia. China’s global luxury brand workshop. Asia Times. 2007. Web.

Dunn, Dave. Brand architecture. 2011. Web.

Law, Steve .The Luxury Brand Market in China. 2009 pp1-13. Web.

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