Luxury represents a product category that seemingly was able to weather the storm of financial and economic crisis hitting global markets in 2008 better than could be expected. In this scientific essay, the author Angela Alunni credits two main factors for this trend: Successful luxury companies cater to the emerging markets of the nouveau riches, which are at the center of nurturing the demand for these goods. Internationalization provides the financial and managerial framework for these Italian companies, while not betraying the essence of the luxury concept per se. The portrayal of the Bulgari case highlights these strategies and at the same time points to the challenges that the luxury industry Made in Italy has to face as a whole.
Table of Contents
INTRODUCTION
CHAPTER ONE
THE MARKET OF LUXURY GOODS: GENERAL CHARACTERISTICS
1.1 The concept of luxury
1.2 The supply and demand of luxury goods
1.3 Luxury and Made in Italy
CHAPTER TWO
THE DIVIDE OF SEPTEMBER 2008
2.1 The market of luxury goods during the crisis years
2.2 The trend of Italian companies in the luxury goods industry
2.3 Beyond the crisis: new markets and new strategies
CHAPTER THREE
THE BVLGARI CASE
3.1 The areas of business: a changing environment
3.2 The kickbacks of the international financial crisis
3.3 Getting past the crisis: creativity, cost containment and the LVMH factor
CONCLUSIONS
Research Objectives and Key Topics
This research aims to analyze the impact of the 2008 global economic crisis on the luxury goods market, with a specific focus on the resilience and strategic shifts of Italian luxury brands. The central research question examines whether the Bvlgari case reflects a broader industry pattern where internationalization and foreign capital acquisition become mandatory for survival and growth, and to what extent this compromises the essence of "Made in Italy."
- The evolution and characteristics of the luxury goods market.
- The impact of the 2008 financial crisis on Italian luxury companies.
- Strategies for market repositioning, including internationalization and e-commerce.
- The Bvlgari case study: from independent family business to LVMH acquisition.
- The paradox of "Made in Italy" in an era of globalization and foreign ownership.
Excerpt from the Book
3.1 The areas of business: a changing environment
The expansion of the Bvlgari group followed the same path of production specialization, and after that, a pronounced horizontal diversification, which was the base of success for many other luxury companies. As highlighted beforehand, the initial specialization aims to create an aura of exclusivity and quality around the brand; once those characteristics are achieved, the brand can considerably increase its income by testing the water in other product categories, without obviously distorting its original identity.
At the origins of the Bvlgari group is the story of a man, Sotirio Bvlgari, from a country in the Epirus, in which for centuries the processing of precious materials, especially silver, had been common. He chose to try his luck by immigrating to Italy at the end of the eighteen hundreds, where he founded his first store in Rome in 1894. To his talents as a craftsman/artist, Sotirio combined his abilities in marketing, which definitely helped the success of his business. This was demonstrated by the opening, in 1905, of the famous store in via Condotti 10, in Rome, still open to this day: the slogan back then recited Old curiosity shop, the title of a famous novel by Charles Dickens; having sensed that the potential Anglo-Saxon clientele constituted the main target for his products, Sotirio had chosen to lure it in this original way, at least if compared to the largely provincial mentality that still dominated Italian advertising back then.
Summary of Chapters
THE MARKET OF LUXURY GOODS: GENERAL CHARACTERISTICS: This chapter defines the concept of luxury and analyzes the fundamental characteristics of demand and supply in this sector, highlighting the emergence of the "Made in Italy" brand.
THE DIVIDE OF SEPTEMBER 2008: This chapter examines the impact of the global financial crisis on the luxury industry, focusing on the performance trends of both general luxury companies and Italian firms during the downturn.
THE BVLGARI CASE: This chapter provides a detailed study of the Bvlgari brand, analyzing its business evolution, its struggle during the financial crisis, and its eventual acquisition by LVMH.
Keywords
Luxury Goods, Made in Italy, Economic Crisis, Bvlgari, LVMH, Internationalization, Market Diversification, Consumer Behavior, Brand Identity, Italian Industry, Small and Medium Enterprises, Financial Performance, Retail Strategy, Global Market, Corporate Acquisition.
Frequently Asked Questions
What is the primary focus of this work?
The work examines the impact of the 2008 global financial crisis on the luxury goods sector, using the Italian market and the Bvlgari case study as focal points to explore broader economic trends.
What are the core thematic areas?
Key themes include the transformation of the luxury market, the specific challenges faced by Italian businesses, the role of internationalization, and the impact of foreign capital on national brand heritage.
What is the central research question?
The study asks whether the acquisition of Italian luxury brands by large foreign groups is an inevitable consequence of the structural limitations of Italian family-run firms in a globalizing economy.
Which methodology is applied?
The author uses qualitative analysis of economic reports, academic literature, historical data on the luxury industry, and specific company financial statements from Bvlgari to evaluate market trends.
What is covered in the main section?
The main section investigates the transition of luxury companies through periods of crisis, discussing cost-containment strategies, shifts in distribution channels like e-commerce, and the necessity of vertical integration.
Which keywords characterize this work?
Key concepts include luxury market dynamics, Made in Italy, internationalization strategies, the impact of the 2008 crisis, and corporate governance in family-owned enterprises.
How did Bvlgari manage the 2008 financial crisis?
Bvlgari initially relied on aggressive cost-containment and debt-reduction strategies while trying to protect marketing investments, but ultimately faced significant challenges due to its heavy reliance on traditional, stagnant markets.
What does the Bvlgari acquisition by LVMH represent?
It represents the broader trend where Italian luxury firms, despite their brand value, lack the capital and organizational scale to compete globally, leading them to be absorbed by international luxury conglomerates.
- Quote paper
- Angela Eva Alunni (Author), 2014, The Effects of the Economic Crisis on the Luxury Brand Market, Munich, GRIN Verlag, https://www.grin.com/document/299352
