Luxury Industry is recession proof, and in 2012 alone, the industry has seen a growth of 10% with revenues reaching $275 billion. An emerging niche within luxury industry that is expected to reach $1.3 trillion in 2015 is “Luxury Experience”. Before we go into the intersection of skills that MBAs and Masters in Luxury Management students can leverage in this niche, let us look into what it means to offer a Luxury Experience.
High Cost Not Luxury
Before 2008, experts considered cost as a big differentiator for Luxury Goods and Services. With the change in the economy, even high spending luxury consumers started waiting for special sales and offers for their purchase. The market segment has not developed new price sensitivity but the “value” that the brand offers has become a much bigger criteria for purchasing decisions. According to McKinsey’s survey, 38% of handbag consumers bought luxury goods on sale and only 25% conveyed that they had no change in their behavior, after the economic downturn.
Experience Compensates High Cost
The exclusivity in Luxury Goods and Services were primarily driven by cost, and brands have realized that to offer value, the experience of the customer in different stages: online research, in-store visit, sale and after- sale service, should be personalized according to the customer’s preference.
What skills should the Luxury Experience professional possess to succeed in this industry?
1) Attention to Details
What doesn’t meet the eye for a traditional customer is often checked and double-checked by Luxury Goods and Services customer. Attention to detail throughout the purchasing experience is important. MBAs and Management students, who dig deeper into details through processes and checklist, often find the Luxury Experience industry to be a perfect fit.
Another character trait that cannot be faked is empathy. Although MBA programs and Luxury Management courses develops the skills for empathic listening, and understanding the consumer problems from their perspective, listening skills and empathy are skills that are part of the personality. “Customer is always right”, literally holds true in Luxury Experience industry.
To offer personalization in Luxury Experience, details of customer behavior should be monitored and understood. The sensitivity of customers to attention, from the brand varies, and understanding when to interrupt, and when to stay away and work behind the scene is critical in offering personalization services. More importantly, a little bit of showmanship is essential to make the customer feel noticed and special.
What are the pre-MBA Job Functions that would be valuable for a successful career in Luxury Experience?
This would be least expected job function to excel in Luxury Experience. But not all Luxury Experience interactions happen in-person. More than 50% of the Luxury Brand research happens online and management professionals with a technology background understands the challenges of tweaking user experience and managing technology infrastructure to meet brand goals. With a specialization in Luxury Management, these professionals will be well equipped to leverage technology for a complete luxury experience.
2) Customer Service
Another job function that is valuable for Luxury Experience is Customer Service, preferably experience in after sales service in high-end products. The training and experience interacting with irate customers develops a level of sensitivity in professionals that cannot be easily developed with an MBA program. Customer service in itself is no guarantee for success, as pre-MBA experience would have desensitized the professional from empathic listening.
A major part of luxury experience is influenced by the expectations that the brand set for the customers. The message that is conveyed through co-branding, advertisements, social media interactions and personalization through websites, is set by the values that the brand communicates through their marketing message. Professionals who understand the importance of consistency and differentiation in the marketing message will play a major role in leading a luxury brand to market dominance.
Why Luxury Experience Professionals should focus on Chinese Market?
The interesting statistics to take note is that the luxury market in China is not led by newly formed millionaires and billionaires, who were influential in China’s 8-9% growth in the past decade, but is driven by middle income consumers with $37,000 annual salary. Although purchasing power needs to be considered to understand the equivalent income in China, the $37,000 income category is not rich even in Chinese terms. This is more of a cultural phenomenon that has led experts to believe that China will lead the growth in Luxury Management industry.
Here are some more facts to prove it:
• 2012 Chinese Luxury Market growth rates were at 18%.
• China overtook Japan to become the #2 market after USA.
• 1 in 4 Luxury Goods purchased by Chinese ( ½ Luxury Goods in Asia, 1/3rd in Europe)
• Luxury Industry online market in China was at $6 billion in 2012.
Luxury Management Professionals should start specializing in Chinese markets, and understand how customers in these markets behave. US still holds the #2 spot offering professional with a familiar market but growth in the industry will be driven by emerging economies, especially China.
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