1. Using the four Ps of marketing, explain how luxury goods makers can enhance their effectiveness in marketing to Chinese consumers.
2. From an institution-based view, explain why Chinese luxury goods consumers emerged to become a major group of consumers of such fancy items.
3. From a VRIO standpoint, explain how luxury goods makers were able to capture the hearts, minds, and wallets of Chinese consumers.
4. If you were CEO of a Western luxury goods firm, how would you respond to a Chinese reporter who asked you to comment on the two main criticisms of luxury goods consumption in China?
Pumping out fancy clothing, handbags, jewelry, perfumes, and watches, the luxury goods industry had a challenging time in the Great Recession. In 2008, banks were falling left and right, unemployment rates were sky high, and consumer confidence was at an all time low. In 2009, total luxury goods industry sales fell by 20% globally. How did the industry cope? Marketing to Chinese emerged as one of the leading coping strategies for the luxury goods industry.
Since 2008, Chinese consumption (both at home and traveling) had been growing between 20% and 30% annually. In 2009, China surpassed the United States to become the world's second largest market. In 2011, China rocketed ahead of Japan for the first time as the world's champion consumer of luxury goods- splashing $12.6 billion to command a 28% global market share. Everybody who was somebody in luxury goods had been elbowing their way into China, which appears like the New World to old European brands.