Sunday, February 21, 2010
Korea Lux 2010
By Don Southerton
Within academia, I see myself as a cultural historian. From that perspective, consumables can tell us much about a society. Korean Lux and upmarket trends are an area I research and follow carefully. It explains much and helps define what I call Korea 2.0.
It has also manifested in, for example, Hyundai Motors' move toward luxury cars like the Genesis. They will soon launch the Equus (pictured above) in the states to compete against Lexus, MB, etc. Another example is Samsung's quest for exceptional and upscale designs.
In previous posts, I have shared the link to Korea's upmarket and Lux trends to its Confucian past. That said, it's a society where Lux and upmarket goods serve as status markers. This Chosun Ilbo article notes that high costs do not defer sales, but it encourages some to buy-- since it drives up status value.
Interested in entering the Korean market? Need to better understand Korea's drive upmarket? Wondering how status and Korean culture will impact you work, business, or partnership with Korean global business. I can help. Call ( 310-866-3777), Skype ( online access available), or email firstname.lastname@example.org
Luxury brands like Chanel, Hermes, Gucci and Dior have put up their retail prices in Korea, according to a Chosun Ilbo survey. Dior raised prices by as much as 30 percent on Jan. 25, and Hermes by about 10 percent on many goods on Jan. 15. Prada, Fendi and Louis Vuitton are also planning price hikes, and Chanel and Gucci already hiked prices in November.
Since April last year, the won has been creeping up against the euro, from W1,774 to W1,614, which was a 10 percent gain of the April trough, but the price of luxury brands goods rose by 20 percent, in stark contrast to what is going on in China and Japan. In China, Vuitton, Gucci and Dior lowered the price of popular items as the yuan rose. Some brands like Ferragamo and Bally did reduce price in Korea up to 10 percent.
But Chanel and Gucci in Korea said headquarters decided to raise the price regardless of the situation in the Asian market, so the Korean office has to adjust the price according to the decision by the headquarters. Many other things such as shipping fees apart from the original price were also considered, they added.
One reason why the price hike is steeper in Korea than in other countries is because luxury brands believe higher price reflects the ranking of luxury brands in the eyes of Korean customers. The more expensive, the rarer and therefore the more desirable the brand. Consumers who equate value with price are mostly to blame, being easily trapped in the marketing strategy.
Kim Ran-do, a professor of consumer behavior at Seoul National University, said, "A mentality among Koreans that confounds the value of the self with a luxury item is encouraging the increase in the price of luxury items. Consumers should refuse to buy into the marketing strategy to prevent prices from being inflated."