Finance
A business model in luxury brands
Business models play significant roles in representing firms’ internal logic. A business model tends to give managers an opportunity to visualize and simplify the firms’ internal workflow because managing a business is a tedious exercise and involves a complicated process (Wadera, & Kaur, 2019). Business models are used in the fashion industry by focusing on four key factors, such as the proportional value, communication, segmentation of the customers, and the distribution channels and the complexity degree of the firm’s value chain (CHAILAN, 2019). The main element of any business model exists in the connection formed by the value of the company’s proposition, the target market, solution, or the customers with which the company might offer assistance. Therefore, a business model canvas is a very important and special tool used to define any organization or company’s value proposition properly. This fact sheet discusses the importance of a business model with much focus being directed to luxury brands.
Luxury is a connection that exists between timelessness and exclusivity. The sensitive heritage values and timeless luxury of a brand are normally stretched to cover various products such as watches, leather products, and cosmetics (Kapferer, & Valette-Florence, 2019). For an effective luxury business model, a few elements need to get considered.
For instance, the market area for luxury brands needs to get determined. Kapferer and Valette-Florence (2019) add that before conducting extensive and intensive research on both local and the international market, it is vital for the luxury company to ensure it understands its target population and its size market. That is, how far their customers will come to purchase their products. Therefore, it is evident that luxury products are purchased by most youths and young people, both locally and internationally. Some of the main factors considered when determining the target population are the type of product or service provided by the company and the availability of other similar organizations or companies providing the same products or services (Wadera, & Kaur, 2019). The company’s luxury products happened to be unique, hence attracting people from every corner of the world. The luxury product store was guided by the rule of thumb, which acted as a driving force for most customers to travel from many places of the globe to come and purchase their products.
Most of the luxury brands are an attestation of achieving social status. The proportion of these luxury brands’ value entails giving room for customers to set themselves apart from the regular fashion ads and high-paced trends by owning the iconic pieces of style that will fail to get old or outdated (Wadera, & Kaur, 2019). The market consists of customers who are well described to be high net, worth individuals. Most of the customers purchasing these luxury products tend to be very influential while making purchasing decisions. In most cases, customers from well-developed countries and high-income earners managed to make much purchase of the luxury products. For instance, 60% of customers making purchases of luxury products were from well-developed countries or high-income earners (CHAILAN, 2019).
Notwithstanding that, most luxury products were sold to international markets compared to the local markets. People from foreign countries made frequent and lots of orders when compared to the available local market. In a nutshell, the market population for luxury products entailed 70% from the foreign market, and the remaining 30% was from the locally available consumer market. Such findings were identified as a result of the luxury company using an exclusive form of distribution. For instance, the company delivered a shopping experience capable of conveying its brand narrative’s full potential. The luxury company created an environment capable of informing, training, and entertaining most of its customers.
Noteworthy, all the relevant data provided was achieved due to a qualitative and quantitative analysis of using the statistical packages for the social sciences (Wadera, & Kaur, 2019). A survey was conducted where various questions were asked and collected from both local and international markets. Based on the result obtained, most respondents were customers from the international nations who provided a positive response for the luxury goods and gave a positive criticism on the best ways possible of improving the quality of services.
References
CHAILAN, C. (2019). Luxury Brands Management, gr. 1 (EM023M06B1).
Wadera, D., & Kaur, J. (2019). Comparing sustainability practices in luxury brands: A conceptual model. Journal of Asia Entrepreneurship and Sustainability, 15(3), 151-194.
Kapferer, J. N., & Valette-Florence, P. (2019). How self-success drives luxury demand: An integrated model of luxury growth and country comparisons. Journal of Business Research, 102, 273-287.