new business proposal
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Internship 2012 summerTRANSCRIPT
Luxury Brand ProposalDavy Chai Flair Li
2012.8
THE GLAMOUR MARKET
“Luxury market soon recovered from the economic downturn.”
worldwide luxury market overview
207 billion
US $ retail value of global luxury goods in
2015
174 billion
US $ retail value of global luxury goods in
2010
19%
Market forecast
“The Asian market rises”
The emerging market drives the growth of the global market
“Asian market shines during the dark economic recession.”
“Emerging economies are becoming the main driver of today’s luxury goods industry.”
43%Worldwide
Emerging market value grew between
2005-2010
6%Worldwide
Developed market value grew between
2005-2010
The market growth of emerging market
2010 2011
6570
8086
58
69Americas +8%Europe +7%Asia-Pasific +19%
The potential of Asian market
The comparison among top 3 biggest luxury markets(2010-2011) $Billion
Source: http://www.bain.de/Images/Bainbrief_Luxury_Goods_Study_10thEdition.pdf
OUR TARGETSWhowhy
Asian shopper
US market
Target market
travelersWe
Asian shoppers
Target market
Asian travelers
Asian-American residents
Why should we target Asian travelers?
The estimated contribution of Asian travelers to US luxury market (2011)
The estimated expenditure of the Asian-Americans in U.S. luxury market (2011)
$2.6 billion
$8.3 billion
Resource: the data of AA market is calculated by timing the population percentage of AA with us whole luxury market sales
of US luxury market
15%of
Europe luxury market
50%
Why should we target Asian travelers?
The expenditure comparison of Chinese luxury
Shoppers spent in outside Asia and inland market (2011) $15B~$18B
The sales of luxury goods contributed by Asian travelers account for
$16Bvs.
Asian trevelers market profile
Market volumeBuying power
Characteristics Key findings
26%
74%
The number of Asian travelers to the US and proportion
7.2 millionThe number of Asian travelers arrived in the U.S. in 2011 v.s.
27.9 million in total
24%the growth of Asian travelers to the U.S. from 2009 to 2010
Resource: U.S. Department of Commerce International Trade Administration Office of Travel and Tourism Industries
Top 6 regions of Asian travelers to the U.S.
RankRegion/ Country of
Residence2011
% Change (2011/2010)
1 Canada 21,028,000 5%2 Mexico 13,414,000 0%3 United Kingdom 3,835,300 0%4 Japan 3,249,569 -4%5 Germany 1,823,797 6%6 Brazil 1,508,279 26%7 France 1,504,182 12%8 South Korea 1,145,216 3%9 People's Republic of China 1,089,405 36%
10 Australia 1,037,852 15%… … … …13 India 663,465 2%22 Taiwan 290,313 0%36 Philippines 166,829 -6%37 Singapore 159,302 14%41 Hong Kong 128,512 -2%
TOP AISAN COUNTRY VISITORS TO US(2011)
Resource: U.S. Department of Commerce International Trade Administration Office of Travel and Tourism Industries
$23,968
$16,660
$13,223
$9,366
$6,769 $6,590 $5,743
$4,694 $4,601 $4,475
2011 top 10 markets to U.S. ($Million)Asian travelers' contribution to
2011 U.S. travel market
Resource: U.S. Department of Commerce International Trade Administration Office of Travel and Tourism Industries
Asian travelers buying power
24%
29%
AsiaEuropeOther regions
$23billion
Asian travelers buying power comparison by regions
Household income(median average) v.s.
per capita spending on each trip(2011)
Japanese Korean Chinese Indian Taiwanese$0
$20,000
$40,000
$60,000
$80,000
$100,000
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$3,500 $3,262
$3,903
$4,864
$4,014 Household Income (median average)
per capita spending on trip(excluding fare)
Asian travelers buying power comparison by regions
Per capita spending on each day v.s.
per capita spending on each trip (2011)
Japanese Korean Chinese Indian Taiwanese$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$427
$141 $102 $106
$193
$3,500 $3,262
$3,903
$4,864
$4,014 per capita spending on each day (excluding fare)
per capita spending on trip(excluding fare)
Who are Asian travelers?
Pure purpose of trip of Asian travelers (2011)
Taiwanese
Indian
Chinese
Korean
Japanese
38%
57%
37%
37%
16%
79%
50%
72%
72%
86%
Business & Conven-tion
Leisure & Visit Friends/Relatives
Japanese Korean Chinese Taiwanese Indian
56% 62% 62%49%
75%
44% 38% 38%51%
25%
Female
Male
Gender portion of Asian travelers (2011)
Japanese
Korean
Chinese
Indian
Taiwanese
4038
36
42
37
Average age of Asian travelers(2011)
22%
22%
18%13%
9%
U.S. Top destinations 2011 for Asian travelers (cities)
New York City-WP-Wayne
Honolulu
Los Angeles
San Francisco
Las Vegas
Washington, D.C.
Chicago
Boston
Where do Asian travelers go?
2011 Rank
Airport 2011 Enplaned Passengers
1 New York JFK 11,704,7002 Miami 8,821,9003 Los Angeles 8,065,2004 Newark 5,710,0005 Chicago O'Hare 5,144,8006 Atlanta 4,675,5007 San Francisco 4,316,0008 Houston Bush 4,198,4009 Washington
Dulles3,117,700
10 Dallas/Ft. Worth 2,603,000
Top 10 busiest airports in general travelers market to U.S. (2011)
Top 3 most common activity participation of Asian travelers while in the United States(2011)
Shopping Sight seeing Dining in the restaurant
What do Asian travelers do in the US?
91% 80%46%
Korea43%
Japanese
Korean
Chinese
Indian
Taiwanese
0%
10%
20%
30%
40%
50% 40%
24%19%
3%
24%
prepaid package
Japanese
Korean
Chinese
Indian
Taiwanese
0
10
20
4 711
21
7
Length of Stay in United States (median nights)
Japanese
31%
China55%
India37%
Taiwanese 31%
% of first trip to the US
1.7Average party size
OR
Asian travelers characteristics
Information Sources Used for Trip Planning(multiple response: top 4 of 12)
Japan South Korea China India Taiwan
Travel Agency 48 % 37% 29% 43% 54%
Personal Computer 45% 49% 35% 23% 27%
Tour Company 24% N/A N/A N/A N/A
Travel Guide 17% N/A N/A N/A N/A
Airline Directly N/A 14% 25% 13% 19%Corporate Travel Dept. N/A 11% N/A 24% N/A
Friends/Relatives N/A 11% 15% N/A 15%
Asian travelers characteristics
o The average age of Asian travelers to the US are 40, which’s around middle age. Chinese are the youngest whose average age is 36.
o Based on the household income, they are considered as middle to
upper middle class in their own societies, which means they have more economical flexibility.
o Shopping is the most common activity when they are travelling in the U.S across all these regions.
o Destination preference: metropolis + resorts.
o Most of the Indian travelers come to U.S. for business trip, thus, they are more likely to be males, stay longer and travel alone
o Over half of the Chinese travelers came to U.S. for the 1st time which implicates that they have less acknowledge and information of traveling in U.S. comparing with other Asian regions.
Key findings
Asian Travelers Insights Study
Brand preferencePsychological motivation
Segments of purchasing behaviorSegments of tourism demand
Top 3 luxury groups and 2011 global sales volume of Asian favored brands
PPRLVMH
Louis VuittonBulgariFendi
GivenchyMarc Jacobs
LoeweCéline
Parfums Christian Dior
TAG Heuer
Richemont
Cartier Montblanc
Alfred DunhillChloé Lancel Piaget
Ralph Lauren watch and jewelry company, 50%
Gucci Bottega Veneta
BrioniYves Saint
Laurent Sergio Rossi
BoucheronAlexander
€7 Billion€15 Billion€23 Billion
Asian favored brands
TIER 1
TIER 2
Ermenegildo Zegna Dunhill MIU MIU Givenchy Valentino Bally Fendi Hugo Boss Celine Aigner Canali Estee LauderLongines Patek philippe Max Mara DKNY Moschino Tag Heuer Jimmy Choo Calvin Klein TOD’s SWAROVSKI Piaget Ralph LaurenLancome Testoni Shiseido Marc Jacobs
1.Louis Vuitton2.Cartier 3.Bulgari4.Gucci5.Chanel6.Tiffany7.Versace8.Dior9.Prada10.Armani
1.Louis Vuitton2.Coach 3.Hermes4.Gucci5.Chanel6.Bottega Veneta7.Bulgari8.Cartier9.Dior10.Tiffany
1.Louis Vuitton2.Gucci3.Burberry4.Chanel5.Hermes6.Prada7.Cartier8.Armani9.Etro10.Ferragamo
*Data for Indian not availableSource:China: http://www.yxqing.com/article-2620-1.htmlJapan: http://www.jmrn.com/UserFiles/File/DCLB_JMRN.pdfKorea: by combining 'the Financial Supervisory Service' and 'Duty-free shop sales data'.
Self-driven
Social-driven
Functionality
Conspicuousness
Individualism
Collectivism
Why Asian shoppers want to buy luxury goods?
Perceived value
product-related
segments of luxury shoppers based on different motivations
Social-driven self-driven
Individualism
Luxury lover
Intellectual shopper
Luxury follower
Status seeker
Streetwise purchasers
Luxury trip explorer
Premium luxury
tourists
IDENTITY
o Younger o Less purchasing powero Search for the best possible value for the trip
Standard luxury
travelers
o Super-active, independent-minded and educatedo Look for highly personalized and authentic travel
experienceo regardless of the price due to the precious time
o Primarily look for relaxation and a change of paceo Prefer resort places
o Focus on high quality of service and comforto Pay more attention to social status o More followers than pioneers in their choice of
destination
4 types of Asian luxury travel tourists for different tourism demand
segments
HighFrequency
Streetwise purchasers
Luxury trip explorers
Premium luxury
tourists
Standard luxury
travelers
Characteristics of each type of Asian luxury tourist
Budget concern
High demand of
personalized trip
Long Self-preparing time
New touch points of luxury market
OnlineSmartphone
wholesale Sales through third party distributors
Distribution managed in-house
Sales transactions are completed online. It can be operated as both a retail as both a retail and wholesales distribution channel
Retail
Online retail
Distribution channels
Emerging trendAll-Digital platformsE-storesSocial networksPersonal mobile devices
wholesale Retail Online Retail
Traditional
formats
•Department store•boutique
Company owned/franchised branded stores
Websites operated by established retailers such as department stores, wine clubs ,fashion e-boutiques
Emerging
formats•Outlet stores•E-boutiques
•Brand websites•social networks
Transactional branded websites, luxury outlet e-stores, iPad apps, social networking
Current trend
o Use the Internet to gain a better understanding of luxury brands and products
o Luxury online shopping is dramatically growing and people shop for discount and brands that are not available in China.
Online is an important channel for research but not buying
o A recent survey shows accelerating shift to online purchasing among luxury consumers
o Department-store doors and sales have been steadily declining
Channel of purchasing
Channel of information gathering
Luxury customers online behavior
Source: http://www.jingdaily.com/chinas-female-driven-luxury-e-commerce-market-to-surpass-3-billion-in-2012/18347/
AUTHENTIC
SERVICEDEVIATION
The reasons of why they chose retail stores for purchasing
over e-stores
Size Real appearance
Why Asian luxury shoppers prefer physical stores?
Taiwan Urban India
Urban China
korea Japan0%
25%
50%
36%
9%
35% 34%
14%smartphone pene-tration rate
Smartphone penetration rate of target Asian regions
Source:http://www.ipmirror.com/gomobi/whyGoMobi.htmlhttp://communities-dominate.blogs.com/brands/2011/12/smartphone-penetration-rates-by-country-we-have-good-data-finally.htmlhttp://www.livemint.com/2012/06/20165308/Smartphone-usage-on-the-upswin.html
under 19
20~29
30~39
over 40
0% 25% 50% 75% 100%
49%
53%
51%
40%
18%
26%
27%
25%
32%
21%
22%
36%
currently I'm using one smartphone or more
currently I 'm using both the smart phone and feature phone
I only have feature phones
Chinese
Tier1 cities
Tier2 cities
Tier3 cities
0% 25% 50% 75% 100%
55%
50%
47%
21%
27%
25%
24%
23%
28%
Smartphone penetration rate by age groups and top tie cities among the internet users
Source: http://www.d2c-china.cn/news_detail-5.html
Smartphone penetration rate by age groups
Korea
Source: https://wiki.smu.edu.sg/digitalmediaasia/Image:Mobile_Internet_Users-Demographics.jpghttps://wiki.smu.edu.sg/digitalmediaasia/Digital_Media_in_South_Korea#Mobilehttp://www.newmediatrendwatch.com/markets-by-country/11-long-haul/63-south-koreahttp://nielsfootman.com/android-winner-korea-smartphone-boom/
• The smartphone penetration rate is relatively higher across all the age groups compared with other target Asian markets.
• Smartphone market in Korea is currently dominating the whole industry which left less choices for consumers.
Korean
0% 20% 40% 60% 80% 100%
90%92%
74%56% 40s
30s20sunder 19
Penetration rate of smartphone by age groups
Japan
Japanese
-10% 10% 30% 50%
15%
27%
34%
40%
20s
30s
40s
50s
Source: http://nielsfootman.com/android-winner-korea-smartphone-boom/
Japanese
20s
30s
40s
50s+
0% 10% 20% 30% 40% 50% 60% 70% 80%
36%
26%
20%
12%
68%
53%
46%
27%
luxury purchases
General public
n=224
n=497
n=414
n=323
Using smartphone is more common among Luxury shoppers than the general public across all age groups.
Source: mckinsey
Japan
Indian
India
Smart phone penetration rate % of the mobile phone users
(Mar. 2012)
Source: nilsen
Indian
0% 10% 20%
5%13%
8%8%8%
5%
over 40
36-40
31-35
25-30
18-24
under 18
THE END.Thank you.
QUESTIONS?