I'm happy to be joined by Hye-Won Lee, who will help us to learn about the luxury market here in Asia. - Nice to meet you. - Nice to meet you. For the benefit of our viewers, can you briefly introduce yourself? - My name is Hye-Won, I'm from Korea, I'm currently working for Swarovski consumer goods Asia-Pacific as a regional marketing and communication director. I have been in the luxury and premium luxury industry for about 15 years, both in local market and headquarter levels. - Okay. The lux market we know that it's a very big market, but how big is it? -It really depends on the definition of luxury because luxury includes not only tangible things but also intangible things. So it's actually projected this tangible things around 230 billion euro market but it's actually projected to grow by 2020 around 5 to 7%. - Okay, and a lot of that growth as been here in Asia. - Definetely. - Okay so, when we talk about the target market, who is the target market for many luxury brands such as maybe Chanel and Swarovski? - So right now, the target market it really now are focusing on those female ones because a lot of luxury industry has driven, the growth has been coming from these fashion, shoes and accesories, and in terms of geographical regions, Asia has been really the driver of the growth in luxury market, particularly because of the increasing number of Chinese consumers with a higher disposable income. - So you mentioned geography, you mentioned gender, do you also try to get maybe income levels or certain lifestyles here in Asia? - Actually, a lot of luxury brands they do target consumers based on different attributes. But in Swarovski actually, we have identified 3 main consumer segments based on various attributes like the attitude towards purchasing jewelry brands and also the brand perception, etc. So, all in all, these 3 different segments actually show different characteristics including different age and different income. But not particularly we are only focusing on the income range, but more on the potential of those consumers and then the purchasing habit of jewelry. - So, when you talk about potential you are talking about the aspirations of consumers? - Right. - You want them to want to buy maybe not only now but especially in the future. - Exactly. Definetely. Because right now, in China, actually the population of China is around 1.3 billion, right? But actually the percentage of those who hold a passport, do you know what is the percentage of those who hold a passport? - I do not know, you tell me. -It's actually only 4 to 5%. So people estimate those are the ones who can travel and who can spend on luxury goods. But can you imagine that population is growing by 10% and 20% year on year. You cannot immagine the number of people who have this disposable income to be able to buy luxury goods for the future. So, we are not only targeting those consumers today, but we are also targeting those consumers for the future. - Okay, so the upside is very high. Even though the growth is high, it can be even higher. - Of course, yes. - In terms of understanding these consumers, -Yes. - What are some of the types of research that you conduct to attain this profile of who they are and why the buy? - Yes. In Swarovski particularly, actually we have an in-house research group who is conducting a lot of different services including consumer shopping in size and also to understand the consumer segmentation which I just mentioned earlier. So there are many various researches that have been conducted really to understand fully our consumers and who they are, and what are their purchasing behaviors. And when I was working for Chanel also we had an internal research group and research department who actually did a lot of various studies. - Okay. In terms of some of the insights that you obtain from your research, what are some of the reasons why people buy a lux product or a lux brand? - So, people buy luxury goods for sure not for practical reasons, but at the same time is not that simple to just draw one conclusion why they're buying luxury. I've been in the industry of luxury sectors for 15 years and I have observed this motivation of buying luxury goods has drastically evolved and changed in the past years, espcially in Asian markets. Probably it's very much linked to the development of economy and also the number of growing people who are having more disposable income. So at the very beginning, when people were exposed to luxury goods, I think a lot of them buy luxury goods really to show off their wealth. - Social reasons. - Very social reasons. They want to show off, they want to make a status. But then, going through different stages and different phases, it kind of becomes a part of their lifestyle and consumers tend to be more mature, then they do more the low-key consumption like, you know, buying some products without logos, etc., because they really want to purchase luxury goods for their own satisfaction, very individual reason. I might have oversimplified the process, but this is more or less the evolution I see and I observe when it comes to the purchasing motivation of luxury goods. And I think also these stages exist even in a same country, to different individuals. So that's why it's not very easy to draw one conclusion but if I just come up with a few key words when it comes to a motivation of purchasing luxury, I think people want to have a sense of status really to show off their wealth. At least, that they pretend that they are wealthy. I just give you a small example. When I was a university student, like 2 years ago. - [LAUGHTER] I wish, but 20 years ago. Actually it was quite a common scene in Korea, probably even now, the women, they retouch or redo their makeup with this compact powder in public, in subways or classrooms. Do you know what the compact powder is? I actually prepared it just for you. This is kind of a face powder. - Oh, I know! - [LAUGHTER] Like hard format, just to retouch your face. Because I didn't have much money because I was just a student and also including my friends, we would buy all the makeup products from small corner shops with no name brand. But when it came to compact powder, it had to be Chanel. - It had to be Chanel. - It had to be Chanel because when you open your Chanel compact powder actually it had a very prominent CC logo on top of the case, therefore when you open it, for instance, - It's black and white right? - It's black and white, and when you open it, people really easily recognize that you are using Chanel brand. Now I don't use it but I use a local brand. So even though I didn't have any social status besides being just a university student, even back then I really wanted to show off my status, I mean, that I could buy a Chanel product. So, it was really an early stage of my experience in luxury goods, and I believe even today, there are lots of millions and millions Hye-Won Lee of 20 years ago sitting everywhere and experiencing and going through this first stage of luxury. - Right, right. - But then, another key word I would think and another motivation of purchasing luxury is really to have a sense of exclusivity, and sense of uniqueness. Because people want to stand out from crowds, so they want to feel different from all this people. So these people, at this stage, they tend to go for more small luxury goods, because they don't want to buy products that everybody buys. Then the last but not least, people buy luxury goods because they want to have a sense of achievement, very individual. And they want to have a sense of inner happiness. So it's very individual, and these people who are at this stage, they don't really care about what other people think, so they purchase luxury goods really for their own satisfaction. And I even see more and more in these Asian markets, the trend actually goes even further, that these people look for even intangible luxuries like quality time of the year with your friends and loved ones, and health or it could be experiences on top of those tangible...
