Microenvironment Forces Facing the Luxury Brand Industry

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Factors affecting the luxury brand industry

There are many micro environmental forces affecting the luxury brand industry, and these include customers. Customers tend to come from different places hence inhabiting different characteristics and behaviors regarding spending. Depending on how they raise their incomes, consumers tend to spend in different ways. For instance, people with high incomes tend to purchase quality products regardless of their prices.

This means that some people can afford expensive luxurious products while others can only afford cheap goods. This factor affects the luxury brand industry in a great way because if in a given location people are extremely poor then the profitability ends up being high and vice versa. Customers are dynamic, and they change with various factors within their environments and these changes have significant impacts on industry performance (Earl and Kemp, 2000, p.76).

Competitors pose enormous challenges to other players in the industry because they come out to fight for their stake in the market. This is tremendously significant because different players have to make sure that they consider providing the best to their customers. Customers’ purchasing decisions are guided by quality and affordability hence they opt to purchase goods from favorable sellers.

In fact, customers prefer purchasing luxurious goods from providers who offer quality products at considerable prices (Lantos, 2010, p.67). Therefore, competitors play key roles in price stabilization, in the market, because they compete on price in order to offer their customers the best.

Political factors have a lot of influence to the industry, as well. This means that leaders in any country or state may determine the type of business environment in which an industry operates. Politicians make decisions that affect people’s lives. Therefore, their decisions have a direct impact on consumer behavior. For instance, if they develop fiscal policies influencing consumption positively, then people may tend to buy a lot of luxurious brands and vice versa.

In case, there is political instability in any country, consumer behavior is affected, and this affects the luxury brands industry in a great way (Lantos, 2010, p.67). For instance, violence caused by political actions may affect businesses leading to accumulation of losses. Losses can occur where people loot stores taking away stocks or destroying business premises causing losses for the business people.

Factors increasing younger consumers’ interests in luxurious products

Consumption of luxurious good is in rampant increase among young people in the society today. This is caused by the fact that young people are exposed to a lot of online marketing of luxurious brands hence creating awareness among the lot. This means that marketing is extremely crucial as creation of awareness leads to increase in buying.

Young people have a lot to do with the internet as compared to the elderly and this provides a scenario where customers learn about current affairs in the world. For instance, majority of young people are subscribed to social networks such as Facebook and twitter. Through these social networks, they get opportunities to meet and know other people from different parts of the world.

Some of these people are professionals who may be out to look for customers from all over the world. For instance, a marketer may come up with a group in a social network to discuss their products with friends (Lantos, 2010, p.67). This may involve adding many people to the group regardless of where they come from hence creating a platform for advertising their products.

People learn about their products and they acquire as much information as possible from the site hence making purchasing decisions. This has led to the increase in the number of young people involved in purchasing of luxurious brands.

Young people are so much into movies and latest music, and they become fans of given artists. Artists are used by companies to market their brands, and the strategy has actually worked for many organizations. For instance, many young people buy clothes with brands similar to those worn by their favorite actors or musicians.

This is the reason why young people are spending a lot of money to buy luxurious brands. In addition, young people are after showing off to their friends (Earl and Kemp, 2000, p.76). This has led to increase in purchasing of expensive luxurious products because young people want to make sure that they have best brands.

In fact, they compete on brands hence making substantial money for players in luxury brands industry. Finally, young people have few responsibilities hence opting to spend their incomes on luxurious brands. Most young people have no families hence end up with a lot of money due to limited responsibilities.

Reasons for the growing interest in fake luxurious brands among young people

Higher income among the youth has led to increase in demand for luxurious goods. Manufactures have come out to take advantage of the situations by developing products which are not necessarily original to get a share of the increasing demand in the market. They have come up with products which are slightly different from the known ones hence confusing the situations on the ground.

For instance, Nokla has been produced to compete with Nokia and the brand has created an uphill task for the original Nokia. Copying well-known brands have made many customers choose brands without knowing about fake products since the difference is slight (Earl and Kemp, 2000, p.76). This means that marketers of fake products are remarkably specific when developing their brand names.

This is because they know darned well that consumers are never keen about products names hence a slight change can work out for them exceptionally well. Governments have been unable to control this copying of brands because they get a lot in terms of revenue generated by fake brands.

In fact, fake products are selling more than original ones because they normally sell at lower prices. In addition, marketers of fake products are extraordinarily sharp hence putting a lot of efforts to make sure that they win consumers’ minds hence influencing their purchasing power.

Fake brands earn consumer credit easily because they are aimed at offering to consumers what the original brands do not. In fact, this has created perfect competing grounds for fake producers as they argue on additional features. Consumers prefer acquiring products with additional features without considering their quality. In fact, most of the fake products have shorter lives as compared to original products.

This is the reason why they sell at comparatively low prices hence becoming appealing to consumers (Michman and Mazze, 2006, p. 46). In addition, many products keep on upgrading their status aimed at increasing perfection and productivity.

This gives fake producers a chance to come up with their copied versions of the original versions hence being able to feature in the market effectively. In fact, products, which do not need upgrading, may not have fake versions since consumers get used to the original version and they enjoy its satisfaction.

Issues that are giving rise to the consumer trend towards ironic purchasing of products

Ironic purchasing of products is instigated by factors such as poverty. This is where people are poor, but they need luxurious goods in their lives. This leads them to purchasing fake products in order to satisfy their urge. These people purchase fake brands knowing exceedingly well that they are purchasing fake products. In many cases, people end up purchasing fake brands thinking that they are purchasing the original brands.

This can be attributed to lack of sufficient information regarding original brands. Majority of consumers in the market today deliberately purchase fake products because of their own reasons. Some may purchase such products just because they are cheap and justify their decision (Michman and Mazze, 2006, p. 46). This happens where people purchases fake products and when asked about the purchase, they defend their actions.

This is particularly dangerous because people may end up consuming fake products hence denying original producers their rightfully owned benefits. In addition, there is a lot of marketing on the internet whereby fake products are advertised and displayed for customers on the internet. This leads to increase in purchasing of fake brands as consumers learn about them from the internet (Lantos, 2010, p.67).

In fact, they can even get a chance to learn more about fake products from their marketers. These marketers convince online customers until they buy their products hence promoting ironic buying because customers buy these products thinking that they are original. The perception comes up where they believe that fake products should not be marketed on the internet.

References

Earl, P. E. and Kemp, S. 2000. The Elgar Companion to Consumer Research and Economic Psychology. Edward Elgar Publishing, Sydney

Lantos, G. P., 2010. Consumer Behavior in Action: Real-Life Applications for Marketing Managers. M.E. Sharpe, London.

Michman, R. D. and Mazze, E. M. 2006. The Affluent Consumer: Marketing And Selling the Luxurious Lifestyle. Greenwood Publishing Group, New York.

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