The luxury goods consumption market is dominated by China and other Asian countries. It accounts for almost 60 percent of the global luxury goods sales volume. The luxury goods industry is witnessing a rapid expansion in Asia as a result of rapid economic growth in these regions. Luxury goods can be consumed leisurely or professionally and are now catching up in developed and developing nations such as the US, UK, Japan and South Africa. The demand in Asia is increasing at a pace that is faster than the overall growth rate of the Asian economy.
The global luxury goods consumption market started to recover slowly in 2021 following a multi-year recession. However, in the last few months, the slowdown in the global economy has pushed consumers to look for alternative sources of spending their money. In recent times, China has continued to dominate growth in the luxury goods consumption market, especially in the lower-tier market. In 2021, Chinese consumers spent USD 147.6 billion on luxury goods, an increase of 7 percent year on year and accounting for about 42 percent of the entire global luxury goods sales volume.
A majority of consumers in Asia are searching for products that offer greater value for their money. The first step towards successful marketing is to provide products that consumers find useful and attractive at the same time. This is what the new luxury goods consumption marketer needs to focus on to attract more buyers to his business proposition. To achieve this, the marketer must adopt unified marketing science principles of attraction and differentiation. We can divide these into the following three components – desirable and non-desirable characteristics, complementary characteristics and unique selling proposition.
Unique selling proposition refers to the features of a product that sets it apart from other similar products available in the market. The reza tajaddini is a perfect example of a highly desired luxury good. The demand for real tajaddini is high in Asia and consumers in the region have been able to price it relatively low compared to other luxury goods consumption items. Consumers have been able to make significant savings by adopting this strategy of purchase. It is therefore imperative for luxury goods consumption marketers to identify desirable and non-desired characteristics of the product and build a differentiation to increase its demand among target consumers.
A second component of luxury goods consumption is personal well-being. The well-being of a consumer is determined by the extent of his positive interpersonal relations, his personal well-being, and the level of his wealth. As the quality of life of consumers gets higher, they become willing to spend more. They also become capable of investing a larger share of their income and thus increasing their wealth and personal well-being.
Global luxury goods competition is high and is yet to reach its peaks. The potential for lower-tier brands to replicate their success in developed markets is very low. However, there are chances of emergence of new brands that focus on some lower-tier markets that may offer much better margins. It all depends on how well a brand has adapted to local market conditions. Despite the fact that the global luxury goods competition is very high and is expected to remain so in the future, it can still be possible for lower-tier brands to improve their sales in some countries.
In addition, the consumers in developed countries have realized the importance of lower-tier cities in terms of consumption. In developed countries, people opt for city life over commuting to work every day. This is because the lifestyle of city people is conducive to spending leisure time. This realization has led to the gradual increase in the number of people who are willing to spend their money and time in a place where they get quality time with their family.
This has resulted in an increase in luxury goods consumption. The smart youths are the ones who set the trends. In affluent nations like the US, Canada and the UK, fashionable ladies and trendy businessmen spend more than the average consumers. This is because the fashionable youths spend more to make them feel good about themselves and in return, they will tell other people about their lifestyle. Thus, the demand for luxury goods among lower-tier cities is expected to grow tremendously in the coming years.