There is a simple saying” the challenges and opportunities are co-existed”. As a new manager, he shall find out what the major challenges and the most valuable opportunities in the chaos, to lead the company into an industry from the right road towards the right direction. Since 2008, the finance crisis has made the whole world economy completely different. The rate of unemployment keeps quite high in most of developed countries, the price of real estate dropped to the historical low in America.
Then the following Euro debt crisis again pushes the weak world economy into an unprecedented difficult situation. The fallout from the Greek debt crisis will definitely impact the still weak recovery in Europe, Said Hong Pingfan, the head of the global economic monitoring center of the UN Department of Economic and Social Affaire (DESA) And the a massive aid package and unclear American economy will keep leading to a weaker euro and weaker US dollar in the medium to longer term.
So the entire economic environment is not so optimistic, all different industries are being influenced more or less. Comparatively speaking, in fashion marketing, the power of purchasing is relatively reduced since Finance Crisis all over the world. According to the statistics, the Consumer Confidence Index (CCI) has been kept relatively stable in the low level since finance crisis, especially in European countries and America, mainly in the developed countries (Isabella 2010).
At same time, it shows the consumers expect less for the future; they spend most of their money on the necessities, reducing the budget on the luxury products and expenditure on the entertainment. As the above mentioned, as the income of whole family reduced rapidly in lots of developed countries, which influenced the behavior of purchasing luxury goods, or even stop buying it. But in China, it is completely different, the luxury market is booming and huge, and still fast expanding in the recently years.
And the majority of consumers of the luxury products are below the age of 35. As we all know that the Chinese luxury market is the most attractive market, nearly all the well known luxurious brands have entered into Chinese market. According to the research of (Tony Hines and Margaret Bruce 2007),China luxury market will become the biggest market in 2015 . And at same time, the Chinese consumers would like to spend more on luxury products from their total income, accounting for 14%, comparing with European consumers, accounting for 4%.
Those data clearly show that, as a new manager, entering into Chinese luxury market, first of all, you shall compete with other luxury brands; secondly, in order to have more market share in China, to identify the real and specific requirements of Chinese consumers is a must; thirdly comparatively speaking, Chinese market is brandy new market, although the forecast of the luxury market is optimistic, but the owner of luxury company still need to have 100% confidence to increase the investment to expand the market because the chance of market is limited; fourthly, the well trained team and localized organization are needed for the expanding of market and operation; fifthly, the well established system of marketing or distribution channels is also the main attributor to the total sales performance, the Burberry withdrew the right of agent last year in China, but the relevant distribution system have not been well prepared and formed, so its sale performance is not satisfied in 2011 and 2012 in China market. There is one thing shall be mentioned hereinafter, the piracy. If a girl bought a real one, it’s really embarrassed, if other people think it’s fake, should that girl explain to everyone that it’s real? The making and selling of counterfeit luxury goods is big business in emerging markets such as China and India. (Luo Man 2005) But the most attractive fact is that the Chinese purchasing ability is rising rapidly, people wants spend more on the luxury products, which will drive more intensive competition in this market.
Prada, as an Italian brand, achieved quite good sale performance recently in China market, it is listed in Hong Kong stock market, got enough money as capital for the investment mainly in China market, the total profit increased 72% in 2011, and 59. 5% comparing with the same time last year in the first half year of 2012. (Strategy Team 2012). But other brands, like Burberry and group LVMH have gotten the step forwards slowly in this year in the far eastern market. Analyst said, that as the speed of Chinese economy development slows this year, the behavior of the irrational, short term luxury consumption reduced, but the product containing with valuable cultural elements, and chic personal design features would have more wide market expectation in China.
Prada actually have been taking very accurate measures and effectively find out the real requirement of consumers in Chinese market, then Prada has been achieving quite good sale performance so far, that is a key to a potential market, especially to the Chinese market.
Reference: Tony Hines and Margaret Bruce (2007) Fashion marketing: contemporary issues Oxford: Butterworth-Heinemann. Strategy Team (2012) ‘Market Vision Luxury’: Challenges and opportunities in the new luxury world: winners and strategic drivers PwC [online] 2(1), 17-21, Available frome Luo Man (2005) ‘Fake luxury goods have sinister tag’ China Daily, [online] 1-2,Available frome;lt; http://www. chinadaily. com. cn/english/doc/2005-05/21/content_444521. htm ;gt; Isabella (2010) ‘The European debt crisis: Is there an ea, [online] Available from