6. Luxury as a Business

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From the course by Università Bocconi

Management of Fashion and Luxury Companies

1626 ratings

Università Bocconi

Management of Fashion and Luxury Companies

1626 ratings

Learn how fashion and luxury companies work and understand their brands, products, retail, and communication strategies. Travel through business models, international development, and product categories with industry influent experts. Adopting a case-study approach, the course presents strategic brand management in luxury and fashion companies as a balancing act: tradition vs. innovation, expertise vs. experimentation, casual vs. stylish; in order to increase the brand value by nurturing the brand heritage and at the same time staying fresh, relevant, and contemporary in the global marketplace. Topics such as the impact of new retail channels, new media channels, and new business declinations for the brand and emerging markets will be discussed in the course.

From the lesson

What is Fashion? What is Luxury? Defining Complex Competitive Systems and Business Logics

Welcome to the first week of our course! Before moving this week contents, please dedicate some time to read the About the Course section where you can find a series of useful information to approach the course the best way. The Trips&Tricks section contains some insights and best practices that Lucia Paladino (an industry expert) shared with our community. Once you have done with these introductory readings you can finally move to the first contents! This first module is dedicated to a general introduction to fashion and luxury concepts: what they imply, how they are perceived, how they differ, and what other basic ideas in this industry are.

4. What Is Luxury?6:57

5. Luxury as a Product4:16

6. Luxury as a Business3:57

7. Luxury as a Culture4:05

8. Luxury as a Customer3:10

9. What Is Luxury Not?4:55

10. Fashion, Luxury, and Millennials: Interviews (Additional Material)5:53

Meet the Instructors

Erica Corbellini
Director
MAFED - Master in Fashion, Experience and Design Management
Stefania Saviolo
Director
Luxury & Fashion Knowledge Center - SDA Bocconi

When we think about luxury as a know how, as an industry, as a business model.

One thing that is very important to take into consideration is that

luxury should be associated with the idea of human touch,

with the idea of craftsmanship and with the idea of excellence.

So in the last years many companies have been trying to

go back to what used to be their craftsmanship and their

heritage because they understand that actually, this is what the market wants.

So quality, but

a quality is very much associated with manufacturing that is superior.

So, luxury should not be much associated with serious, with actually,

massive volume with the industry, but rather with the human touch of craft.

So let me tell you that there are many

definitions of the business model of luxury and what luxury should

be about in terms of growth and value drivers, and value propositions.

The first definition about what luxury stands for

from a business perspective comes from Colmite Colbert and McKinsey,

who at the beginning of the year 2000, started defining this phenomenon,

or actually this market segment, let's say better.

Stating that luxury is a business, there should at least four elements.

The first is a strong branding related to an aspirational and exclusive lifestyle.

And this tells you why many luxury brands, for instance, are French: the art

de vivre; but some are also Italian and we will discuss a little bit more about that.

A second element is, of course, as I said before,

a superior quality and a certain timelessness of the product itself.

This is what makes luxury different from fashion for

instance we have high fashion that might be expensive but

one of the the characteristics of high fashion is to be fashionable. So thereâs

âgoing out of fashionâ after a season or even a longer period but being out of fashion;

While luxury has this timelessness.

If we think about real and true luxury brands, they have iconic products

that last for a long time and are always contemporary

but timelessness is a very important element of their offer.

Of course the third element is pricing.

So how high on the fence of the market segment, but usually

we think about luxury as something,

as I said, at least selective if not exclusive;

so pricing, pricing power, and premium pricing should be high.

The last element of a luxury business is its importance of aestheticsâ-

so the importance of design.

And, it is not just an ordinary design.

It is not just about an ordinary style.

Usually luxury products have some extravagance, some stylish touch

which can be by the designer, by the story of the brand, the legacy.

But the aesthetic content has to be strong, has to be unique.

So, let me say that a luxury good and a luxury brand

at the end of the day has to balance two elements.

First, I mean, intrinsic value of the product itself, that has to be,

as I said, precious and made by hand,

unique and an intangible element that has to do with branding, has to do with

a lifestyle and gives this âdream effectâ that the customer is looking for.

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