Stakeholders’ Analysis
The luxury goods industry has grown rapidly over the years following the initiative taken by the players in the industry. One of the major reasons for the success in this industry is the move towards the implementation of policies geared towards satisfying the needs of the customers and proper management of the companies when it comes to production and distribution of the products. All the key stakeholders in this industry have different features that make them unique as analyzed below.
Customers Analysis
The customers of luxury products are unique in that they are well informed and understand the need of quality service. Most of the customers are very big spenders, but are always conscious of the services provided by the companies. The customers demand information regarding the luxury products and always give feedback on the satisfaction level of the products. More (n.p) reveals that customers take much time researching about the products via online services before buying. For instance, the customers for fashion brands will take their time to visit various fashion providers' websites and compare the products based on their quality. As a result, the companies take the initiative of using the new technologies to ensure that the customers have up to date information regarding the products. The customers make a decision regarding which products they should consume depending on the degree of satisfaction that products may provide. Besides, they also make decisions on the type of products that the designers need to produce as per their preferences.
Designers
The designers of the luxury products are conscious of quality when designing their products. The baseline of their production is subject to the quality sensitiveness of their customers. They are ever busy doing research about the changing customer preferences, thus able to design products that meet the quality required by the customers. They are ever under pressure from the government, competitors and the customers. The designers are also committed to meeting the needs of varied customers in different world environments. The designers make a decision regarding the types of the products they need to produce to satisfy the customers. They also make a decision regarding where the products they produce should be marketed depending on the qualities attached to their products.
Government
The government has great hopes for the luxury industry. It focuses on setting policies that regulate the operation of the industry. It requires the designers in the industry to consider the cultural practices of the nation in its production. It uses them to enhance the culture of their citizens by producing brands that are geared towards meeting cultural needs. For instance, China luxury goods designers always consider the Chinese culture practices thus use various symbols used by its cultural groups. Besides, the government is very strict in compelling the players in the market to comply with environmental regulations so as to ensure a clean environment for all. Finally, the government takes the initiative of promoting the luxury industry to the outside world a good example being the tourism products and services. It does this with an aim of encouraging world customers to enjoy the luxury products in the country so as to yield high revenues from the same. The government makes decisions regarding the policies that the industry players need to follow.
Suppliers Analysis
The suppliers of the raw materials in the luxury industry are very few compared to the buyers. They suffer the problem of lack of consistency in the supply chain of the products in the industry. However, they are ever committed to offering materials as and when required to ensure that the production in the industry remains stable. They make decisions regarding when to supply the materials to their customers so as to enhance efficiency in production.
Management
The management of luxury companies is key to the growth of the industry. The management is ever concerned with the quality of products and services that the employees need to offer to the customers in this industry. They make set goals and strategies that the companies need to follow to ensure satisfaction to their customers. They provide resources for conducting research and development in the industry. They are ever committed to impacting knowledge and skills to the employees to foster quality customer care. The management makes decisions regarding the markets that the company needs to venture. It also makes decisions regarding research and development of the luxury products.
Porters Analysis
Threat of New Entrants
There are high restrictions on entry to the luxury industry by new companies following the emergence of the new technologies. Besides, the government laws and regulations in the industry become tougher in most nations due to changes in the business environment. Furthermore, the industry players do not have strong distribution channels, making it hard for new entrants’ products to receive a serious reception from the customers.
Bargaining power of suppliers
It is worth noting that luxury products are yet to build consistency in the market. As a result, it makes the bargaining power of the suppliers low. The products are yet to gain some confidence from the customers in the entire world. This issue is different with other brands which have already secured enough confidence from the customers.
Bargaining power of buyers
Many customers in this industry are the elites who are highly informed and have good educational background. This makes the bargaining power of the buyers in the luxury industry very high. This is to mean that the customers have a high influence on the operations of the businesses in this industry (Gustafson n.p).
Threat of Substitutes
In luxury industry, substitution of product to a product is very difficult since each good has its different satisfaction level to the customers. In the case of any substitute product, the quality is very poor compared to the original product. As a result, this makes the threat of substitutes to be very little since it is not easy for substitute products to emerge. This is to mean that the customers in this industry may feel uncomfortable using different products other than the luxury products.
Rivalry
The luxury industry is dominated by a few large companies, thus operating in an oligopoly market structure. This is to mean that the rivalry in the industry has been high since any action taken by one group impels the other groups to respond. The aim of each group in this industry focuses on remaining competitive in the market.
SWOT Analysis
Strengths
Growth and Development- The Luxury industry has grown and developed very fast over the recent past, thus receiving a substantial amount of expansion in the world. Information technology is the main accelerator of the growth and development of the industry.
Customer Care – Luxury industry has managed to provide quality customer service to their customers. This is because there is enough time that allows the groups in the industry to handle customers very well (Gustafson n.p).
Product image and reputation- The products in the industry have a strong image and reputation within the market due to their quality.
Weaknesses
Lack of flexibility – Companies in the luxury industry handle very many products in many sectors, it becomes hard for them to ensure flexibility.
Cash flow problems – the cash flow of the companies in the industry is very unreliable, especially during the first stages of the product development. This is because there is the lack of consistency of the channels of distribution in the industry.
Opportunities
Expansion into emerging markets- It is worth to note that the companies in this industry operate in few countries of the world. This is to mean that there is a large market in the world that the companies in the industry need to explore.
Advanced technology –The growth and development of the technology networks present the industry players with an opportunity to take advantage of its benefits in production and marketing to remain competitive.
Threats
Competition- The competition in the luxury products industry is very stiff thus posing a great challenge to the new players in the market.
Political risks-Companies in the luxury products industry operate globally hence subject to various political problems existing in different nations of the world.
Works Cited
Gustafson, Krystina. Big Spender: Luxe buyer not who you may think. CNBC news. 29 December 2014. Web. http://www.cnbc.com/2014/12/29/consumer-luxury-goods-buyer- is-not-who-you-may-think.html
More, Booth. The future of luxury is now, as heritage meets new demands. Luxury Institute News. 21 April. 2016. Web. http://luxuryinstitute.com/blog/?cat=10
