Luxury fads

L UXURY FA D S Bachelor Thesis Olga Loboda 2014 supervisors: professor Silvia Zancarli, professor Bianka Renn Istituto Europeo di Design Fashion Marketing Level 6 -1-

CO N TENT S

List of figures and charts......................................................................4

I. Introduction...............................................................................6 II. Methodology.............................................................................8 III. Luxury.......................................................................................12 IV. New Luxury.............................................................................20 V. Counterfeit...............................................................................26 VI. New Luxury Target..............................................................30 VII. Decision making.................................................................42 MANAGING FADS.........................................................................48 VIII. Limitations and future development........................65 IX. Conclusion ..............................................................................66 Bibliography.......................................................................................68 Appendix I: Survey results...................................................................78 Appendix II: Interviews.......................................................................80

3.1 Clothing as the reflection of social factors.................12 3.2 The definition of luxury............................................12 3.3 Growing demand and its consequences....................14 3.4 Disintermediation....................................................16

5.1 Conspicuous consumption........................................34 5.2 Aspirational consumption........................................38

6.1 Reference groups....................................................43 6.2 Celebrities Endorsement..........................................44 6.3 Opinion Leaders.....................................................44

-3-

List of Figures and Charts

3.1. Clothing and Social Factors...........................................................................13 3.2. Innovating Brands......................................................................................17 4.1. Demand Relationship..................................................................................20 4.2. New Luxury Demand Relationship.................................................................20 4.3. New Luxury Categories of Products................................................................21 4.4. Saint Laurent Performance...........................................................................23 5.1. Counterfeit Effects 1...................................................................................29 5.2. Counterfeit Effects 2..................................................................................29 6.1. Survey Results: Bags Selection.......................................................................31 6.2. Survey Results...........................................................................................32 6.3. Kering revenues........................................................................................34 6.4. Survey Results: Purchase Decisions by Geographical Markets...............................35 6.5. Survey Results: Aspirational Consumers...........................................................38 6.6. Rocketing................................................................................................39 6.7.Consumers Spendings..................................................................................39 6.8. The Speedy Bags......................................................................................40 7.1. Survey Results: Heavily Advertised Products......................................................42 7.2. Survey Results: Making an Impression.............................................................43 7.3. The Path of Fads.......................................................................................46 MANAGING FADS.........................................................................................62

-4-

-5-

I. INTRODUCTION

Consumer behaviour changes with time. Our tastes and styles are formed under the circumstances of modern society. Academic literature rarely studies how the world of luxury is linked to the social trends and global movements. But the together of different social and demographic elements underlies different types of luxury consumption. The trickle-down (Veblen, T., 1899) and bottom-up theories (Polhemus, T, 2010) of consumption patterns, described in the previous research, are rarely seen in its pure nature nowadays. Origins of trends are much more complex because different social classes set, adopt and transform trends nowadays (Crane, D., 2000).

Neither of the models can be applied separately and precisely fit in the contemporary society. Only one-sided picture of consumption presented by sociologists and economics cannot describe neither luxury consumption due to its increasing demand and accessibility of products. Scientists adhere to the trickle-across theory, where trends have different routes but pass through all layers of the market (Blumer, 1969).

The phenomenon of fads, widely spread short-lived trends and products (Stevenson, A., 2010), is related to many concepts of contemporary society. They contaminate all the social levels during their lifetime, sometimes without any changes, sometimes in different interpretations. For instance, in fashion we see conceptually the same products introduced by both mass and luxury markets. In the current fashion market, where the offer and the demand are increasing, the product cycles accelerate and fads become common even in the luxury fashion industry.

However, the phenomenon of fads is seriously understudied. Although theoretical knowledge can be found in the trend research and analysis literature, focus on fads in a particular segment of the market has never been made. They evoke social disapproval and are perceived as bizarre and irrational (Bernard L. L., 1926, Sapir, E., 1931). They are avoided by the companies, but on the today fashion scene they seem to become more important than ever.

The paper aims to reappraise the common views on what fashion fads are and to examine how they behave in the luxury markets. Specifically, the main goals of this research are to find out the profitability and advantages of fads for the fashion brand, if management of such products is possible and how it can help in re-innovating the strategy of a fashion house. Findings are based on the critical evaluation of past strategical moves of the brands, that experienced fads, related consumption patterns and social factors. In order to understand the psychological basis of this -6-

consumption behaviour, characteristics of people who engage such behaviour and purchase fad products, their demographical, psychological and sociological specifics are also described in the paper.

The research also provides an example of application of the findings to the real business situation.

-7-

II. METHODOLOGY

The study is based on the relevant literature and articles describing the luxury markets, brands and other related topics, current demographic trend reports and primary research results.

In the beginning this research paper describes how luxury is changing its face in the current environment of an increasing demand and democratization of fashion, how companies adapt successfully their strategies and what are the general perspectives of this industry. Relevant literature on luxury fashion business was used in order to determine the areas of study, related concepts and to understand academical points of view, theoretical knowledge and terms. The review of all the current happenings in the luxury fashion industry is based on the recent articles and web sources. A deeper insight on the topics was achieved through the interviews with fashion experts: Laura Minuti, product manager at McQ, the second line of Alexander McQueen, and Giacomo Piazza, co-founder of Volta footwear and 247 showroom. McQ, Alexander McQueen, Kenzo and Pyrex, that are presented in 247 showroom, have already experienced what fads are and how to deal with them, therefore they are important case studies of the paper.

In order to better understand how different patterns of fads work, a research on different types of target and consumption behaviours was produced. The following significant block of the study is the description and the analysis of the shopping behaviour in developed and emerging markets. Interviews with Liubov Popova, manager of the Womenswear department in TSUM department store (Moscow, Russia) and Wei Yang, owner of “New York fashion studio� multibrand store (Shanghai, China) helped me in a better understanding of consumer behaviour patterns of Chinese and Russian customers, who are among the most important and affluent spenders in the luxury market. Conspicuous and status consumption, aspirational and bandwagon effects were found to be the most important concepts regardless the fad phenomenon in luxury. They were afterwards tested in the survey that revealed how these consumption types work in different geographical regions. It was carried out on Eval&Go, the online survey software and questionnaire tool. One hundred young women (20-27 years old), without any geographical limitations, were asked the following questions: 1) Where are you from?

-

Italy France Germany UK Other: Southern Europe Other: Northern Europe Other: Central Europe Other: Eastern Europe -8-

-

Russia China Far East Middle East, North Africa, and Greater Arabia North America Central America and the Caribbean South America Australia and Oceania

2) The things I possess say a lot about my achievements and social status.

- Yes - No 3) I like to own things that attract other people’s attention.

- Yes - No 4) I respect individuals who wear expensive and fashionable apparel and accessories.

- Yes - No 5) I envy people who buy whatever they want.

- Yes - No 6) When I purchase certain products, I think of making good impression on others.

- Yes - No

7) Higher prices usually mean higher quality.

- Yes - No 8) Which bag would you prefer (without price consideration) to buy?

Shopstyle.com, 2014.

Shopstyle.com, 2014.

- Givenchy Antigona Clutch

- Moschino Fast Food Clutch

Shopstyle.com, 2014.

Shopstyle.com, 2014.

- Alexander McQueen Skull Clutch

- Kenzo Tiger Tote

-9-

Shopstyle.com, 2014.

- Rick Owens leather case

Shopstyle.com, 2014.

- Saint Laurent Foldover Ligne Y satchel

9) People I know and admire can influence my purchase decision.

- Yes - No 10) Purchasing heavily advertised products means paying for the brand name, not for higher quality.

- Yes - No 11) How do you earn money for living?

- I entirely finance myself - I depend on my parents financially - Both

12) Which of the following statements describes your shopping behaviour best?

-

I I I I

can afford many things but I never waste money buy whatever I want give different priorities and I spend more on more valuable things try to save money on everything

13) Sometimes I buy things that I go crazy for at a specific moment but I never (or once) actually wear them.

- Yes - No

The results of the survey not only proved the generally acknowledged customer habits in different geographical markets, but also strengthened the hypotheses regarding fads and decision-making. The factors that influence these habits and behaviours are described in the following chapters. It is a critical evaluation of all material collected, both primary and secondary research.

Well-known “opinion leaders” and “reference groups” concepts are revised, tested and applied as the major principles of fad management.

Further, the effects of counterfeit on luxury fads are outlined. Contrary to the common belief, original companies actually profit from the counterfeit activities when they refer to luxury fad products. Apart from summarizing the results of the secondary research and interview outcomes, I also monitored the offer of two major counterfeit retailers online in order to find out their reaction to the Fall/Winter 2014 fashion weeks' hottest pieces. Three factors that influence the positiveness of counterfeiting on luxury fads were brought out in the end of the chapter.

-10-

The following chapter suggests directions and recommendations for marketing managers and advertisers of fashion luxury brands. It explains what are the main signals of the occurrence of fad behaviour, how these products can be better managed and promoted. Fads have also drawbacks that can be regulated by certain activities regarding each effect. These regulating activities are afterwards summarised in a graph. Furthermore, the findings are applied to McQ - the second line of Alexander McQueen - in order to demonstrate how the proposal works when applied to a real case. The limitations of the luxury product categories analyzed in the research and the survey realization are also included in the paper.

Further recommendations for the development of the research are formulated in the last part of the research. The work is concluded with the description of the arguments brought out. The importance of the study and the final directions are additionally highlighted.

-11-

III. LUXURY

3.1 Clothing as the reflection of social factors.

“Fashion is merely a product of social demands. … This is clearly proved by the fact that very frequently not the slightest reason can be found for the creation of fashion from the standpoint of an objective, aesthetic or other expediency. … Judging from the ugly and repugnant things that are sometimes in vogue, it would seem as though fashion were desirous of exhibiting its power by getting us to adopt the most atrocious things for its sake alone.”

(Simmel, G., 1957).

Clothing is a very complex fusion of culture, customs, living conditions and personal tastes. It is a form of nonverbal communication (Poyatos, F., 2002) that conveys gender, age, social rank, occupation, wealth, interests and many other individual characteristics.

The two main features identifying clothing have always been the social class and the current situation in the society. Therefore, in order to analyze the macro trends influencing fashion, first of all, it is essential to better understand the actual social specifics. Nowadays we live in a postmodern society that can be characterised as a materialistic consumer society (Firat, A., Venkatesh, A., 1993). Materialism is defined as “the importance a consumer attaches to worldly possessions” (Belk, R.W., 1985). Richins and Dawson (1992) later characterised materialism as a life concept of certain individuals, who see material possessions and acquisitions as the key factors of their achievements and success. Even though many individuals are searching for different means of happiness nowadays, materialistic ideas remain the key social norms of Western civilization (Belk, R.W., 1985; Campbell, C., 1987; McCracken, G.D., 1988; Ger G., Belk, R.W., 1990; Wong, N.Y., Ahuvia, A.C., 1998).

This causes a race for the better lifestyle through purchasing products. The number of products offered therefore increases in different segments of the market. Fashion is not an exclusion.

This situation is perfect for the appearance of fads, widely spread short-lived trends and products (Stevenson, A., 2010). Many products fail, others become essential, but in general most of the products’ life cycles are accelerating. What is happening to luxury, where goods are associated with exclusivity and durability?

3.2 The definition of luxury Luxury products are attractive to people for many reasons. Many discussions on this aspect with opposite points of view have been done.

-12-

3.1. Clothing and Social Factors

-13-

The word “luxury” has Latin origins: “Luxus”, that means “...rankness, excess, debauchery, also lush fertility and describes ways of behaviour, expenditures, and products considered to exceed what society holds to be necessary or sensible...”

(Spring Reference, 2014). Sociologically, luxury clothes and accessories are recognized as the goods signaling wealth, social status, high-class affiliation and opulent lifestyle. Scholars argue that the main values of luxury are tradition, exclusivity, craftsmanship and attention to the client (Berry, C. J., 1994; Lent, R., Tour, G., 2009).

Dana Thomas (2007) claims that Old luxury was driven by an aim to produce the finest product possible. But nowadays most of these reasons are symbolic aspects that consumers attach to them rather than the actual ones (Berthon, P., Pitt, L., Parent, M., Berthon, J. P., 2009; Han, Y. J., Nunes, J. C., Dreze X., 2010). Luxury is not anymore an unapproachable exclusivity because of the circumstances that are described further.

3.3 Growing demand and its consequences.

A luxury brand’s portfolio can be divided into different levels of the offer: exclusive (or supreme), selective and accessible luxury (Corbellini, E., Saviolo, S., 2009). Brands either specialize their products in one of these categories or occupy several segments. A few decades ago only affluent consumers could afford wearing luxury clothes and accessories. The whole brands’ strategies and communication were based on this demand coming from the upper social classes: tradition, heritage and exclusivity were the irreplaceable dogmas of the fashion houses (Dubois, B., Duquesne, P., 1993).

However, the three following factors have changed the perception of luxury:

Considerable development of the textile industry Democratization of luxury Changes in purchasing behaviours, due to the target expansion far beyond wealthy consumers.

(Bellaiche, J.-M., Mei-Pochtler, A., Hanisch, D., 2010).

Luxury brands are claimed to become commercial because of the growing demand that companies have to tune to. While the economics in most countries still recover slowly after the recession period with many individuals cutting down on expenses, sales in the luxury sector do not seem to decline. Quite the contrary, several luxury brands can barely keep up with the volume of demand, even before the seasonal sales periods. Director of Kenzo, a brand that is an important case study in this research, Humberto Leon said that their first experience with fads - tiger sweatshirts - was overwhelming. Leon and his partner Carol Lim produced 2000 pieces, planning to sell them even during the Christmas holidays, when consumers could get them as gifts. Instead, they were sold at the Opening Ceremony store in two days. “Carol was thinking she’d get a sweatshirt for her husband,” Leon said. “And they were gone … We said, “Wait, this can’t be—we just got them in yesterday.” But they were gone.”. And the same reaction happened throughout the whole world: with social media the fad of the tiger sweatshirt was spread faster than it physically achieved the stores.

“We got the tiger sweatshirts into our Paris stores [in October], and they were sold out within three hours.” he said, “Three hours just through Facebook, and they’re all gone.” (Pinson, L., 2012).

But this success did not happen for the reason that Kenzo is a brand that has a history and heritage behind. The past now is the closed chapter of the brand that has undergone a complete repositioning.

-14-

“We got the tiger t sweatshirts into our Paris stores, and they were sold out within three hours...

“We got it into our Paris stores, and it [the Kenzo tiger sweatshirt] sold out within three hours.

Three hours just through Facebook, and they’re all gone.”

Three hours just through Facebook, and they’re all gone.”

Humberto Leon & Carol Lim Creative directors at Kenzo

-15-

Giacomo Piazza, Fashion Director of 247 showroom, in the interview for this research said that Pyrex Vision, a brand that came out of a blog and became one of the most powerful streetwear brands, is sold out in hours in New York. And there is even a queue before the merchandise at ridiculous prices ($400-plus for flannel shirts) arrives at the stores. In the recent years physical and online retail managers invented a specific term describing this type of experience when sell-outs are performed in seconds - “Seckill”. The analysis of this phenomenon proves that such behaviour is driven by the digital behaviour of opinion leaders (Yu, J., 2011).

Undoubtedly, the new demand means new opportunities and additional revenues for luxury companies. Nevertheless, many brands face the question whether exclusivity - that is essential for the luxury concept - is diluted by numerous product lines and price ranges (Catry, B., 2003).

Today luxury appeals to everybody, so the main task for the marketers of the luxury fashion brands is to find the balance between the exclusivity, uniqueness and the market share increase. Fads, as widespread and short-life products, can be perceived as goods endangering the brand image, unless they are carefully managed.

The lines between fashion and luxury tend to blur. This overlap is now seen in the language of mass media, inside the stores, where iconic goods mingle with trendy items. People treat luxury differently. Luxury fashion brands try to keep up with this shift and develop both short-term and long-term strategies that suit different markets and clients. The new demand is centered in the “hip” part of luxury, that is appealing young consumers. A brand that is cool today might be boring a few months after. If Pyrex is going to become a fad depends on the designer, but for now it looks like all these products are bought by the desire than by the need. Though fads are not such a negative phenomena for the brand, instead we see how even big fashion houses are successfully adapting their strategies to fit in accelerated fashion cycles. Brands that rapidly approach new challenges will achieve great results.

The heritage does matter still, but fashion houses do not have to stick to their past. Riccardo Tisci was among the first ones to understand this tendency when he was appointed as a creative director at Givenchy in 2005. Then we have seen how Humberto Leon and Carol Lim brought out Kenzo to the frontline of innovative fashion brands. Alexander Wang at Balenciaga, Hedi Slimane at Saint Laurent, Jeremy Scott at Moschino, M.I.A. capsule at Versus, Versace,- an increasing number of brands are hiring young and innovative designers to introduce these new moves. The following chapters will bring a better insight on why and how this is happening.

3.3 Disintermediation.

The Internet enables the disintermediation of entities and individuals between the producer and customers, therefore making the whole process of fashion adoption faster, broader and more accessible. Consumers become more aware and get to know the latest news right away.

Moschino has proved it in their Fall/Winter 2014 fashion show, which generated enormous media reaction. Everybody was talking only about them in the day of their show. Giacomo Piazza has mentioned that the collection appeared right away in the stores: “How could they maintain all this buzz until the campaigns appear in July? … It was very smart. The question is what they are going to do next season… ”.

Moschino collection was the perfect case study of how fads are generated, sold out and disappear in a short period of time. The “McDonalds” collection was worn by bloggers once, caused enormous discussions around the world, was sold very fast and disappeared -16-

3.2. Innovating Brands

-17-

“Technology plays a major t role in the fashion industry.

“We got it into our Paris stores, and it [the Kenzo tiger sweatshirt] sold out within three hours.

Three hours just through Facebook, and they’re all gone.”

Models, designers, photographers and stylists all have huge followings of eager people wanting to be updated on upcoming fashions.”

Winsdor, D., 2014.

-18-

in a month. The brand has also introduced accessible jersey line and gadgets’ accessories. This entire collection of fads proved to be a successful move to introduce the new face of Moschino.

On the other hand, Laura Minuti, product manager at McQ, has mentioned that the main line’s managers do not care about all the consequences of disintermediation. For them this is simply not happening: “…the main line is too niche and I do not think they really need it: the individuals buying Alexander McQueen do not search for it online. Our website is not very entertaining… for them it is enough to sell a thousand dresses for 20000 Euros and the plan is done!”.

The main revenues are anyway coming from McQ, the second line of Alexander McQUeen, where, as Laura agreed, the brand is lacking the socialization online. Though, since plain selling is not enough, she said that something has to be done on the social activity of the second line, because it is appealing to younger consumers.

The Internet has destroyed the exclusivity of fashion. This is what made Cara Delevigne a star; she showed what being at a Hollywood celebrity’s party is like through the filtered photos.

Why should consumers watch fashion shows if they could experience the whole event with selfies from the backstage and front row on Instagram? Disintermediation forms the new concept of luxury, lifestyle-, not exclusivity-, oriented. Either a brand adjusts its strategies to the situation or it remains the ultimate luxury that is above all these trends, like in the case of the first line of Alexander McQueen.

Materialistic ideas of happiness are the key social norms of Western civilization today.They explain the acceleration of fashion cycles and an increasing demand and offer on the market, even in luxury.

Luxury brands are therefore claimed to become more commercial, because they have to tune to these macro economic and social trends.

Sales continue to grow and the brands that clearly understood how to adjust their strategies to the current situation barely keep up with the volume of demand for their products. The new demand is centered in the “hip” part of luxury, that is appealing to young consumers. Heritage matters, but fashion houses redirect their strategies, launch fad products and hire young and creative designers in order to fit in the new situation.

However, brands face the question whether exclusivity can still be a characteristic element of luxury. Disintermediation of fashion through the Internet aggravates this problem. But a brand can play it another way and make an advantage out of it.

-19-

IV. NEW LUXURY

ip

d

an

em

D

D

em

an

ip

d

sh

Re

on

la

ti

ti

la

on

Re

sh

Price

Word-of-Mouth

New luxury has changed the perceptions of traditional luxury and attracted numerous consumers from different social classes. The new luxury fads do not fit in the generally accepted price-quantity volume curve - the higher the price is the lower demand is and the lower quantities are sold(Heakal, R., 2013). These three parameters are not the main ones anymore.

Quantity

Emotional appeal

4.1 Demand Relationship

4.2 New Luxury Demand Relationship

Investopedia (2014).

This segment has to be re-thought because the general patterns and relationships do not work with such products anymore. New luxuries appear in different product segments, from food and beverages to fashion goods. The main feature of new luxury, differentiating it from mass market and traditional luxury is the emotional appeal and the engagement of such products. There is a switch from what product is to what it represents. Fashion fads that a celebrity is wearing at a fashion show appear on social media right away and are sold out in the stores in a few weeks.

Scholars also use the terms “democratization of luxury” (Kapferer, J.-N., 2005.; Rémaury, B., 2002) and “mass affluence” (Nunes, P. F., Johnson, B. A., 2004) to describe this phenomenon.

-20-

The new luxury can be divided into the following categories of products:

· Brands’ extensions Lower-priced product lines offered by the fashion houses, for example, Giorgio Armani and his numerous brand extensions (Silverstein, M. J., Fiske, N., 2008). · Accessible super premium products Top-priced inside the new luxury category, but less expensive in comparison to the old luxury. They are considerably more exclusive and sophisticated than conventional offerings, still affordable for the middle-class consumer (Silverstein, M. J., Fiske, N., 2008). For example, the lower-priced merchandise inside the main line offer of Kenzo. · Masstige goods Prestige to the masses. Priced below the previous ones, but are still above the conventional goods. Definitely, masstige brands offer prestigious characteristics such as better quality and control, but what is most important in these products is the emotional appeal (Silverstein, M. J., Fiske, N., 2008). Even masstige brands have to create an image that is on the level of a traditional luxury brand, so that consumers could feel special when wearing such garments. Examples: Opening Ceremony, Riccardo Tisci for Nike, Stella McCartney for Adidas, Boy London.

4.3 New Luxury Categories of Products

Fads in new luxury can occur in all the three segments listed above and can attract different groups of target consumers, because they are accessible to the middle class and are also bought by the upper class consumers, who like “mixing and matching”. Predicting fads in luxury is very challenging; Giacomo Piazza and Laura Minuti confirmed that the success of Tiger sweatshirts and skull scarves was not planned. It is different from trend forecasting, that is afterwards dictated by the fashion houses. Fads are the phenomena that happen quite spontaneously. Everybody is -21-

Macaroonsinparis.wordpress.com, 2014.

Galleryhip.com, 2013.

Galleryhip.com, 2013.

Front Row, 2013.

Fashionmagazine.com, 2014.

crazy for the product and after a month it is boring. However, a few important characteristics can be noticed among all fad products occurring recently: 1) They do not require any fitting specifics and can be purchased online without any doubts regardless the size. That is why Givenchy, Kenzo and Moschino also transfer the concept of their collections on t-shirts and sweatshirts. The interviews proved that these items are sold out as soon as they arrive in the stores.

2) A significant product category of fads is the accessories that have become the fundamentals of the look. These products also do not require any sizing specifics (apart from extraordinary feet sizes one might have) and can be easily ordered online. Accessories are also better noticed on social media. Generally, they are most often the “bread and butter” of the brands, especially if we think of Chanel and Louis Vuitton (Corbellini, E., Saviolo, S., 2009).

Fads are not perceived negatively for the brands that aim to be more flexible, fresh and contemporary, even partially. For example Chanel successfully targets both sides of the market: the young fashionistas, using fashion fads, and the mature elites, selling the heritage classics of the brand.

Saint Laurent as well has experienced a significant growth in revenues after Hedi Slimane was appointed as a creative director of the brand. «Leading Yves Saint Laurent into a new era, Hedi Slimane recaptured the impulses of ‘youth, freedom and modernity’ that inspired the founder to launch Saint Laurent Rive Gauche ready-to-wear in 1966» (Kering, 2014). The brand has collaborated with such musicians as Daft Punk, Marilyn Manson and Courtney Love, has become more youthful and «cool» since then.

-22-

4.4 Saint Laurent Performance (Kering, 2014).

Affluent consumers can “mix and match” new luxury garments with traditional luxuries in order to create fresh looks and be quality secure. Customers, who do not earn enough to buy traditional luxury and, probably, do not need the products for a lavish lifestyle, also benefit from the new luxury offer.

Jonathan Saunders has once mentioned: “Fashion is a business, I am in the service industry. My job is about meeting consumers’ needs, which is totally different from fine art, which is about personal expression.” (Smith, K., 2013).

New Luxury helps to differentiate the target and product offer, as well as to retain a fresh and updated brand image. It has also been found that new luxury goods can compete with counterfeit products, because they are offered at a lower price and still provide high status and fashion characteristics.

-23-

New luxury phenomenon is described by scholars as the “democratization of luxury” and “mass affluence”. Demand relationship in new luxury depends on word-ofmouth and emotional appeal of these products, not on quantities of sales and prices, like in traditional luxury.

New luxury products can be classified in three categories: brands’ extensions (See

by Chloe, McQ by Alexander McQueen), accessible super premium goods (lower priced merchandise inside the main lines) and masstige products (accessible “chic” like Opening Ceremony). Fads in new luxury occur in all three segments.

New luxury fads might seem to appear quite spontaneously, but certain characteristics are common for all of them. Fads do not require any fitting and size specifics, can be purchased online without arising any doubts and are easily noticed on social media. They are usually easy-to-wear “street” garments like T-shirts, sweatshirts, bomber jackets and fashionable accessories.

Brands that aim to enter in new luxury, become more flexible, fresh and contemporary do not have to perceive fads negatively. Fads could differentiate their target and keep their offer updated.

-24-

Tastethestyle.com, 2014.

-25-

V. COUNTERFEIT

According to the International Anti-Counterfeit Coalition the global market for counterfeits exceeds 600 billion USD annually (IACC.org, 2014). Counterfeit activity is a criminal venture that threats producers' health, safety and violates human rights. (NaĂŹm, M., 2005; Midler, P., 2009).

It is usually criticised as a global economic problem, harmful for companies' profits and business development.

Nevertheless, several authors argue that original companies actually benefit from counterfeiting of luxury fashion products. Ritson (2007) explains that counterfeit products are the first signals of the brand's raising awareness and demand. The genuine product becomes even more desirable and valued when counterfeiting takes place, especially for the status consumers who try to stand out from the masses. Analysing Taobao.com and iOffer.com1 counterfeit products appear to be either the pure status iconic products or fads that are highly desirable for a short time. Both categories are generally very recognisable even among the individuals, who are big experts of fashion.

Because of the wide awareness of the goods that are the objects of the counterfeiting activities the owners of the original goods have an additional superior standing and are envied just for the authenticity of what they are wearing. Romani, Gistri and Pace (2012) proved that the motivation and psychological drivers justify the willingness to pay for the authentic goods when counterfeit products are present in the market. Counterfeiting may increase this willingness to pay even for fad items, because the production of fakes has become even faster than the famous Zara pipeline2. Copying encourages creativity of the brands and consumption of authentic goods. It has been discovered that after the Fall/Winter 2014 fashion shows the copies of the most remarkable items were placed on sale on the websites listed above less than in a few weeks. So brand have to be faster in delivering products to the market and more creative to make products difficult to copy.

Analysis of the websites has also proved the importance of local marketing. Product integration with the local specifics is effective also regarding counterfeit ones. The Moschino iPhone case represented with local endorsers and specifics is the top-selling product: 4011 purchases realized in 30 days (translated from Chinese). The same phone case placed with a picture from Two important platforms for the sales of counterfeit goods. iOffer.com is also translated into various languages.

Zara, a mass market fashion brand (Inditex group) designs, produces and delivers garments to the stores in three-four weeks time. The company has become famous for this fast pipeline that allows to quickly respond to the market and sales data (Robin, M., 2012).

-26-

1 2

(iOffer.com, 2014).

Moschino fashion show has only 61 purchases in 30 days (translated from Chinese). A higher price in comparison to the previous example does not make a difference: the same picture was used for lower-priced options that still have not sold any items on the same website. The two items were found among the first results and were, therefore, taken into consideration. Therefore brands have to adjust fads to the market faster than illegal companies do. The buzz has to be brought out into another markets through the endorsement of local influencers on the media.

(Taobao.com, 2014).

(Taobao.com, 2014).

-27-

Counterfeit products allow consumers to pay less for the status acquiring, eliminating the costs of the high quality production and brand value. But the status is not achieved when the counterfeit aspect of the product is unveiled. Aspirational consumers sometimes purchase fakes at first to imitate the fashionable elite lifestyle. However, these products might not deliver what they were planning to achieve. So the willingness to pay for the authentic products will increase and the next time they would rather choose to wait for the sales period and purchase the authentic ones at a reduced price. According to Ritson (2007), “fakes are also often the first place where consumers develop an awareness and aspiration for genuine luxury. After all, a third of consumers of fake luxury said they would be more likely to buy the real thing in the future as a result”.

Raustiala and Sprigman (2006) also discovered that counterfeiting generates demand for new original items by accelerating the fashion cycles.

Analysing the counterfeit websites and literature it can be concluded that the effects of counterfeiting on the luxury fads depends entirely on three following factors:

1. Amount of the so-called "snob"1 consumers and their influence on the rest of the consumers.

If the target consists mainly of snobs and they have a big influence on the decision making of other consumers, counterfeit products will have null to minimum success among the buyers and will not influence the brand’s activities. For example, Rick Owens is not a popular subject of counterfeiting.

2. Awareness of the brand and the amount of its aspirational consumers Louis Vuitton and its aspirational clientele all around the world best illustrate the positive impact of counterfeit activities on the brand. They generate additional word-of-mouth, brand awareness and willingness to pay for original products.

3. Quality of a counterfeit product If the counterfeit product is of a low-medium quality, the consumer is more likely to purchase the original product after realizing that the fake one does not deliver the same features.

Leaving aside the positive effects of counterfeiting, a solution for copying luxury fads remains still a big question. The counterfeit companies are more and more capable of delivering high quality goods. However, the same aspirational effect with original products can be reached by introducing cheaper products that are still representative and recognisable. Thanks to the favourable mixand-match way of dressing among the opinion leaders, such products can be still distributed and promoted by them. It will not eliminate the desire of acquiring the “top” pieces. If the brand team manages to play it both ways, without diluting the image this strategy can bring revenues and decrease the willingness to pay for counterfeit products.

The Snob effects were described by Veblen and are seen as the opposite to the Bandwagon ones. Snob effects are negatively related to the market demands and mainstream products. These customers purchase goods that are not popular 1

among others, sometimes expensive and hard to find (Leibenstein, H., 1950).

-28-

CO un

s

te rf ei t

ct fe Ef

Ef fe ct

t ei rf te

s

Brand Awareness

Demand for a product

un

Co «Snobbism»

Aspirational clientele

5.1 Counterfeit Effects 1

5.2 Counterfeit Effects 2

Counterfeit activities are usually criticised as global economic problems, nevertheless, the original companies actually benefit from them in specific cases. Genuine products become more desirable when counterfeiting takes place and individuals wearing them receive an additional superior standing.

Counterfeit effects increase the willingness to pay for genuine products if: amount of “snob” consumers and their influence on others is low, the brand awareness is high, products are recognisable and the brand has a big cluster of aspirational consumers, if the quality of counterfeit products is low.

Since fads are recognisable branded products that are not purchased by “snob” consumers and the short period of time does not allow counterfeit companies to produce high quality fakes, counterfeiting of fads increases the willingness to pay for the original products.

Introducing low-cost fads can even decrease the sales of counterfeit ones, because they would deliver the same status effects consumers need.

-29-

VI. NEW LUXURY TARGET

Social class, age and nationality are the most important factors in the analysis of luxury consumption. For instance, in Europe luxury is often associated with high birth, whereas in United States or Russia it can be achieved (Corbellini, E., Saviolo, S., 2009). Another interesting example of such combination: in the developed markets baby boomers are the biggest spenders, while in China young people buy more. However, it is not necessarily related to income (interview with Mr. Yang). Social class is not determined by the amount of money an individual spends, but rather how he or she spends it.

For consumers of fads the distinctiveness and recognisability of a product are much more important than its actual utility and use benefits. Both Liubov Popova and Wei Yang confirmed that these are the main purchasing drivers in the developing countries. A study produced by Goldsmith and Clark (2008) revealed that consumers perceive the louder designed handbags, fads of the specific time as the more high-class and chic goods in comparison to the quieter versions. But when the logos like LV and Chanel were present on the last ones they received a boost in rating.

It has to be mentioned that the participants did not include traditional luxury consumers.

Survey produced for this research paper revealed similar data. Participants were asked to choose a bag they would consider to purchase. Consumers from Germany, France and North Europe did not show interest in fads: Moschino Fast Food Clutch, Kenzo Tiger Tote and Alexander McQueen Skull Clutch. Only two respondents from France out of all these regions chose the Skull Clutch. Respondents from Asian and Eastern markets were much less discreet in their choices and said that they would also purchase the “fad� bags.

The satisfaction after purchasing fad products to a great extent depends on the opinion and the reaction of the audience, which starts from opinion leaders. The research showed that the purchase decision of 70 respondents (70%) can be influenced by the opinion of people they admire (see the next page). Even though fads last little, consumers are not regretful of such purchases if, when wearing these products, they make a good impression in the society.

People care about what their persona is like in the eyes of other people, they are constantly connected to the society, but everybody has different perceptions on what attractive self-image is like. 69 respondents (69%) confirmed that they like possessing and wearing things that attract other people’s attention. Various types of consumption depend on different levels of this sensitivity.

-30-

-316.1. Survey Results: Bags Selection

6.2. Survey Results

-32-

But these types can coexist in one individual regardless different product categories: clothing, housing, cars, etc. An individual might live in a traditional house and frequently buy the trendiest pieces. So, when speaking about fads behaviour in fashion, all the findings regardless decision making and markets can be applied only to this specific sector.

Several studies prove that consumers usually spend their money according to where it is earned (Tversky, A., Kahneman, D., 1986; Thaler, R., 1985). For instance, it was found out that easy money is more likely to be spent frivolously compared to the regular income. Indeed, new rich consumers are never associated with rational spending. “Fashionista”, whose lives are centered on the world of fashion, spend large sums on fashionable clothes and accessories. Generation Y (people born between 1980’s and 90’s (Wieczner, J., 2013)) is also more likely to purchase fad products, because they are mainly financed by their parents and do not have personal income.

10 respondents of 15, who entirely finance themselves (the age range 20-27 years old explains such a small number), said that they have never bought anything that they could go crazy for and never actually wear. Generally, 67% of the respondents, all of them of the Generation Y age range, confirmed that they had this experience.

Generation Y, which makes up the foremost part of the society, has been formed in a materialistic environment (Bakewell, C., Mitchell, V. W., 2003). Even though the majority of generation Y consumers are rational in their shopping behaviour, giving different priorities (53%), it seems that visually exposed goods, that attract others, are essential for them (69, or 69% positive answers). Richins and Dawson (1992) also stated an essential for this research paper point of view - materialistic people, including generation Y and emerging markets’ consumers, tend to give more importance and, consequently, spend more on products that can be worn or exposed somehow in public. The research also proved that many individuals respect the ones who wear expensive and fashionable clothes (56% of respondents). Consumers of fads choose products they desire to be associated with and brands they would like to resemble the typical users of (Escalas, J. E., Bettman, J. R., 2005). They search for better social recognition and standing. Thus, they are more driven to display their wealth through the status goods. Further, in this chapter the main types of consumption patterns related to fads will be discussed.

Tastethestyle.com, 2014.

-33-

6.1 Conspicuous consumption

The main aim of purchasing fashion products, especially luxuries, is building the picture of what one is like or would like to be. They serve the elite value-expressive functions, or “what the product says about him or her (individual) as a person” (Solomon, M., Bamossy, G., Askegaard, S., Hogg, M. K., 2010). Purchasing status goods has always implicated a will for “distinction” and “privilege” (Veblen, T., 1899). As a person becomes distinctive, he or she attracts attention of other people, becomes the opinion leader of the crowd. And afterwards this product or total look becomes a symbol of high status and goes down through different layers of our society. However, today this chain is almost invisible - everything is accelerated by the Internet that spreads pictures, opinions and critiques in seconds.

Social classification does not always reflect the amount of money a person, or a family, spends. People composing the so-called “old money” cluster of consumers never flaunt money.

They do not have a necessity to prove their wealth - they were born with it. Spending is more about being and enjoying for them, not possessing or displaying. Whereas the new rich consumers allocate their spending differently (Corbellini, E., Saviolo, S., 2009).

While fads might seem an exception rather than a rule of behavioural patterns among rich consumers, putting the data of the purchasing volumes together reveals the opposite. The Wall Street Journal argues that the spending rates have increased enormously in the recent years. Whilst the share of income has doubled (increased by 100%), the share of possessed wealth among the rich people has augmented by 50% in the past 30 years. (The Unstable Upper-Class - The Wealth Report. 2014). Kering (2014) reported an increase in revenues acquired in 2013 in comparison to the 2012 results. The reason of this discrepancy is that these consumers purchase much more than they need.

Conspicuous consumption is “an expenditure on or con-

sumption of luxuries on a lavish scale in an attempt to enhance one’s prestige”

(Stevenson, A., 2010). The term was introduced by the American sociologist and economist Thorstein Bunde Veblen in his book “Conspicuous consumption takes place when individuals purchase products with the aims of impressing others and displaying the wealth. Later Eastman, Goldsmith and Flynn (1999) described the status consumers as individuals who “strive to improve their social standing through the conspicuous consumption of consumer products that confer and symbolize status both for the individual and surrounding significant others”.

In the countries with high power and assets distance the importance of status consumption and self-image is higher than 6.3. Kering Revenues in the countries where middle class prevails. The research has (Kering, 2014). proved that Asian, Eastern and South-European consumers are anyway inclined to less reasonable purchases, so they are the main consumers of fads. 21 Southern and Eastern Europeans (approx.

81% of the region, 21% of total) confirmed that they sometimes purchase pieces they like, but actually rarely wear, contrary to only 5 citizens of the same regions (approx. 19% of the region, 5% of total) who responded negatively (see the chart on the next page). Russian consumers’ -34-

answers have shown a similar distribution of results: 20 positive (80% of the region, 20% of total) contrary to 5 negative (20% of the region, 5% of total). Asian and Arabic respondents are also more likely to purchase fads: 12 positive answers (70% of the region, 12% of total) to 5 negative (31% of the region, 5% of total). In Central Europe (including France) has shown balanced behaviours: 6 positive (50% of the region, 6% of total) and 6 negative answers (50% of the region, 6% of total). In the Northern regions of Europe and Germany, which are usually associated with rational shopping behaviour, respondents said that they almost never purchased fads (2 positive (22% of the region, 2% of total) and 9 negative answers (88% of the region, 9% of total)). Liubov Popova confirmed that the big gap among the classes in Russia is the main reason of a high level of fad consumption. This is the case in most of the developing regions, where affluent customers search for such differentiating signs (Souiden, N., M’Saad, B., Pons , F., 2011).

Emerging markets, especially Asian economies are now experiencing changes in structures of the society and traditional values (Podoshen, J. S., Li, L., Zhang, J., 2011). In a study “Personal taste and family face: Luxury consumption in Confucian and Western societies” Wong and Ahuvia (1998) developed a theory of “interdependent” Asian consumer, who tend to give importance to other people’s opinions. They see publicly visible possessions as the fundamentals of their social standing and perceptions, which is not so strong among their “independent” Western counterparts.

They state that Asian demand for symbolic goods is characterised by socio-economic status characteristics they see in the products, rather by personal taste, age, sex differences, and so forth. It was confirmed in the interview with Mr. Yang, that most of the regions in China, especially in the North, still have a big gap between rich and poor, causing a high level of conspicuous consumption, even in such big cities as Beijing. The same is happening in the eastern countries and Russia. Liubov Popova said that even though in Moscow consumers start buying more rationally, the majority and other regions’ habitants still like to show off their possessions, purchasing the latest IT pieces. All these nationalities now see luxury as a mean to ‘catch up’ with the developed countries, break the uniformity of their previous regimes (China, Russia are the widely known examples of this situation). Therefore now they became the biggest spenders in high-end fashion, purchasing trendy status goods in huge volumes (Pambianco News, 2013).

6.4. Survey Results: Purchase Decisions by Geographical Markets

-35-

However, the profits coming from the emerging countries’ residents are never stable and are influenced by different factors. Europe has seen a decreased number of Russian consumers because of the Ukrainian crisis’ consequences: Tax Free Shopping by Russians was down by 16% in Milan during March (Global Blue, 2014). It was not led by the economical side of the question, but rather by the strained relationships between the two regions. On the other side, Hong Kong and Taiwan residents increased their spending by 23% and 17% consequently in the first quarter of 2014 in comparison to the same period in 2013 (Global Blue, 2014). However, emerging markets are more than just the BRIC (Brazil, Russia, India and China (Business Dictionary, 2014)) countries. Harrods has also seen an increasing spending by consumers from countries such as Thailand, Singapore and Nigeria (Pambianco News, 2013).

M.thestar.com.my, 2014.

Interviews with fashion specialists from Russia and China showed that, interestingly, both in Russia and China the Western social media and opinion leaders, for instance on Instagram, are not popular at all. Everything that happens on the local scale, is stimulated by the local trend-setters and celebrities. In the end of January 2014 Jimmy Choo heeled glittery shoes (approximately priced at 625$) were flying off the store shelves in China and Seoul. Consumers were coming with the snapshots of a Korean soap opera on their phones. “My love From the Star” is a phenomenon in Korea and China, where Korean soap operas always attract huge audiences. The series has become a hot topic on both online video platforms and Weibo, Chinese Twitter. A Korean film star Jun Ji-hyun was wearing the Jimmy Choo Abels in the second episode and unconsciously boosted the sales of the pumps (Binkley, C., 2014). It was the perfect example of how fads are introduced by the local celebrities, get spread on social media and sold out in extremely short time.

This is why attention to the local specifics is really important even regarding fads, that might seem suitable for different markets.

Additional insights on consumption differences come from researches on the racial differences in purchasing clothing, jewelry and other luxury goods. Charles, Hurst and Roussanov (2009) found out that Black people and Hispanics spend more in fashion visible goods in comparison to the White people (approx. 30% more). They consume less in every other category of products in order to maintain the high level of visible consumption (17% less on education, 50% less on entertainment, 56% less on health expenditures). This is another dimension of conspicuous -36-

consumption, which is not region, but history/culture based. These purchasing priorities have an important historical and social basis. Although slavery was prohibited many decades ago it remained as a standard for many generations afterwards. It was difficult for an individual who had neither proper education nor possessions to become an all-sufficient citizen. Black people have “made both ends meet” by taking lowest-payed jobs and committing criminal activities. That is why the disrespectful perception of minorities retained for decades. Nowadays instead we see a significant improvement in people’s attitudes. Two recent movies on slavery issues “Django” and “12 years a slave” prove the consciousness of the modern society. Black people are now among the most important leaders in music and fashion (Forbes, J., 2013). People who are “swagging” around the world nowadays grew up in ghettoes and had a shameful background. Now they have brought out this overloaded, show off style that points out that they had reached the top. They are important influencers of the fashion industry, many recent trends (return to the logo-mania, for example) originate from the lifestyle of these minorities.

-37-

Olivecocomag.com, 2014.

Pinterest.com, 2014.

MANIA

Yucksauce.com, 2014.

LOGO-

6.2 Aspirational Consumption

Lifestyle of the upper classes has always been the point of reference throughout all the social levels. Consumers tend to believe that the social position affects the self-perception and self-image (Crain, R. M., 1996). Aspirational buyers are consumers who would like to purchase and wear expensive brands but do not have means to do so (Fashion's Collective, 2014). Aspirational consumers’ analysis is especially important in the categories of visible and observable products, apparel and accessories. They usually buy status and fad products, striving to possess luxuries and look fashionable. The most popular products among aspirational consumers match the typical fad categories: accessories and “easy-to-wear” pieces. They represent the largest consumer segment - 37%, with the following regions of major concentration: India - 42% and China - 53%. In developed regions, they make up about a third of the total (Godelnik, R., 2012.).

Even though aspirational consumers comprise the most numerous group, they are not the biggest spenders in luxury. Aspirational shopping is possible mainly because of the commonly practiced “rocketing". This means trading up and down in different categories, spending more in the ones that are more visual or aspirational, and searching for lower priced or discounted offers in the less important ones (Silverstein, M. J., Fiske, N., 2008). Instead of spending less, consumers shift their priorities in purchasing goods by reducing their expenditures in household and low-end categories, while approaching luxury clothing and lifestyle ones. It is similar to the shopping preferences of Black and Hispanic consumers, that has been explained before, but is mainly related to the lower income consumers. This selective extravagance may be explained by attractiveness of the quality or fashion aspect of the higher-priced luxurious items. Thanks to aspirational purchasing rates, highend fashion continues to grow and is unaffected by the global economic downturn, as stated by economic reports on luxury clothing and accessories (Brand Finance, 2012).

6.5. Survey Results: Aspirational Consumers

-38-

6.6. Rocketing

Bellaiche, J.-M., Mei-Pochtler, A., Hanisch, D. (2010)

6.7. Consumers Spendings

-39-

Brandnamecollection.info, 2014.

Brandnamecollection.info, 2014.

Brandnamecollection.info, 2014.

Brandnamecollection.info, 2014.

6.8. The Speedy Bags

Aspirational consumption is closely related to the “bandwagon effect” that means basically the same purchasing behaviour. Bandwagon effects describe the reaction of individuals to the ones they admire by referencing their purchases to them (Kastanakis, M. N., Balabanis, G., 2012). “Bandwagon consumers try to satisfy the need for status gains by consuming luxuries that high-status others consume. Bandwagon luxury consumers are not just passive followers; in addition to searching for affiliation, they actively use luxury products as a visible evidence of the superior rank they are claiming within the social hierarchy.”

(Kastanakis, M. N., Balabanis, G., 2012). Bandwagon consumers are not the usual adopters and followers, they constantly search for the newest status fashion products and actively use and expose them on public (Kastanakis, M. N., Balabanis, G., 2012). When it comes to word-of-mouth and brand awareness, aspirational consumers appear to be very important.

They are active online, searching for conventional offers, styles and communicating the latest news and product releases. Aspirational consumers find out about what the first receivers, fashion insiders, wear on social networks and then continue the buzz, like it happened with Kenzo tiger sweatshirts.

Aspirational purchases can even cause fads: when distinctive status products start being purchased by aspirational consumers, they are not attractive and representative anymore for the higher social classes. We have seen how the Speedy bag passed through this pattern three times: in the graffiti version (2001) by Stephen Sprouse, in the multicolor version (2003) by Takashi Mu -40-

rakami and the with the Cherry blossom patterns (2005) by Takashi Murakami. Until Speedy has lost its attraction as the actual bag, three times only prints became fads, not the model of the bag which was actually classic and existed since the 1920s. Aspirational consumption is closely related to fads and can be even a tool of predicting them. It can help in monitoring of products. When this buying behaviour takes place, opinion leaders are already searching for something new. However, this is when the biggest sales come, because a relatively small group of consumers, opinion leaders, has already passed. Pieces that these consumers purchase are very recognisable, representative and adored by a huge number of people.

Several brands have already caught up with this tendency and introduced lower priced apparel and accessories, the “new luxury” pieces, affordable and distinctive products that have been described before. Analysis of this consumer segment is important because aspirational customers are young or low-assets individuals who might become potential affluent customers of a brand in the future. Fads for aspirational consumers allow the companies to retain their loyalty to the brand.

Analysis of the target is undoubtedly important, but in order to see the whole path of the product life cycle an understanding of the decision-making drivers is essential. Its analysis provides the company with many hints on how the communication and marketing strategies can be built.

Consumers of fads see the distinctiveness and recognisability of a product a a much more important factor than its actual utility and use benefits. Moreover, the product satisfaction to a big extent depends on the feedbacks they receive while using it.

The three main target clusters that can be distinguished are: emerging market consumers (including new rich), so-called “Fashionista” and Generation Y people.

They all strive to resemble the typical consumers of famous brands and show off their possessions through luxury fads.

However, analysis of the purchasing behaviours is much more important in understanding of fashion fads than the description of the target itself.

Conspicuous consumption is a growing purchasing power that is mainly centered in Eastern and Asian markets, as well as is characteristic for Black and Hispanic customers. Conspicuous consumers are typical users of fads, since for them socio-economic characteristics of the products are essential. Their purchases are stimulated by the local trend-setters and celebrities, which underlines the importance of local promoting in emerging markets.

Aspirational consumers segment appears to be the largest one and is therefore a very important cluster to focus on, even if their purchasing power is not that high.

They are typical users of status and fad goods and the most active customers online.

Moreover, the analysis might be useful when an increase in the aspirational purchasing can be interpreted as a sign for a brand to stimulate the declining interest of opinion leaders.

-41-

VII. DECISION MAKING

Nowadays the paradox that many companies face is that the more they advertise about their products, the less reliable they become (Solomon, M. R, 2003). It has also been proved by the consumer research produced specifically for this project: 65 respondents (65%) agreed with the statement «Purchasing heavily advertised products means paying for the brand name, not for higher quality», opposite to 35 people (35%) who disagreed.

7.1. Survey Results: Heavily Advertised Products

What works today is the consumer himself talking to others. The influence the social communication has on the expansion of fads and other trends is enormous. It is called buzz, the term used for the authentic, customers-generated discussion. (Goldsmith, R.E., 2006). Buzz usually takes place when a certain remarkable fad is introduced, when a connection to a certain event or a celebrity takes place.

“The brand is what they say it is, not what you say it is.”

(Silverstein, M. J., Fiske, N., 2008).

-42-

7.1 Reference groups

Attitudes towards brands and products are never formed in a vacuum. Decision making of customers is based on their experience, social rank and, most importantly, on the way they see themselves as individuals (Solomon, M., Bamossy, G., Askegaard, S., Hogg, M. K., 2010). They reference themselves to a particular style, way of behaviour and to other individuals they admire.

Unless a person is an absolute freak, he or she belongs to a style tribe (or refers to a specific group of people), even unconsciously.

Theoretically, reference group effects are most relevant for the purchases that are: “1) luxuries rather than necessities, because products that we buy using discretionary income are subject to individual tasted and preferences, whereas necessities do not offer this range of choices; 2) socially conspicuous or visible to others, because we do not tend to be swayed as much by the opinions of others if no one but ourselves will ever see what we buy.”

(Bearden, W. O., Etzel, M. J., 1982).

Therefore, reference groups, or style tribes, as they have been described in the previous research, are essential in the analysis of fads, because of these products’ public exposure and fashion aspects. If an individual admires the look of a person or a group, he or she imitates those qualities referring to them as a guide to forming consumption preferences. Referent power is an important tool in many marketing strategies because consumers easily modify their purchasing behaviour in order to be identified with a referent (Solomon, M., Bamossy, G., Askegaard, S., Hogg, M. K., 2010). Nowadays, consumers are very sensitive to reference groups: in the survey the majority of respondents agreed that they care about their self-image and others’ opinions. On the question “When I purchase certain products, I think of making good impression on others” 55 respondents answered positively (55%).

7.2. Survey Results: Making an Impression

Such influence has an important connection to the purchasing decisions and can lead to the status driven consumption. In other words, reference groups typically generate the ”bandwagon effect” and aspirational consumption.

-43-

7.2 Celebrities endorsement

Important referents are celebrities who use distinctive fashion statements or have a particular style (Madonna’s use of lingerie as outwear) (Solomon, M., Bamossy, G., Askegaard, S., Hogg, M. K., 2010). Celebrities can spread fads also in other lifestyle product categories besides fashion, for example, in cosmetics or food industries. While a celebrity endorsement strategy is expensive, it can successfully pay off. Celebrities’ reference power is able to increase brand awareness, attract different types of target or even change the whole brand concept. A careful use of their representative meanings can precisely define what has to be communicated: status and social class (business icon Steve Jobs), gender (feminine and sensual Scarlett Johansson), age (boyish Justin Bieber, mature Sean Connery) and even personality types (the noble humanitarian George Clooney) (Solomon, M., Bamossy, G., Askegaard, S., Hogg, M. K., 2010). Celebrity endorsement on social media is proved to be much more useful and credible nowadays. Even Tom Ford, the founder of one of the most upscale brands on today’s fashion scene, was shocked when Rihanna’s Instagram account was deleted because of the copyright issues (as it has been surmised in mass media). He declared: "Something new is happening that I'm just clueing into now — this

probably won't go down well — but customers don't care any more about reviews or hard copy publications. They care what picture Rihanna just Instagrammed while she's naked in bed, what new shoes she has on, how she's talking about them. That's what they respond to."

(Mandybur, J., 2014).

7.3 Opinion leaders

Besides the dreamworld that celebrities are able to transmit, most consumers are also attracted by the stylistic and personal features of opinion leaders of specific style tribes. Opinion leaders are influencers of communities and social groups, to whom others address for advices and opinions(Business Dictionary, 2014). Opinion leaders in fashion are the most important referents in spreading new fads through social media and target social groups. For celebrities and innovators Instagram and Facebook are ways to show off and create the buzz around them. Consumers try to acquire their looks and the lifestyles by purchasing the products they use and wear. Celebrities and trend-setters and their fancy lifestyles are powerful purchasing behaviour influencers on the today fashion scene.

Opinion leaders of a specific product category are more informed and interested in it, they are generally more convincing and are the first ones to talk about products. They start the fad phenomenon, and unintentionally influence the others in a form of casual interaction. Unlike the commercial endorsers, opinion leaders are more credible and powerful among the people with similar values and beliefs, they take all the risks as the first users and, different to the celebrities’ feedbacks, can express also negative opinions about the products. Individuals spreading fads are socially active and important, they are present throughout the social networks and have a big number of followers (Venkatraman, M. P., 1989). Influencers of a particular field enjoy sharing their experiences and opinions about products. Both Giacomo Piazza and Laura Minuti confirmed that the fad phenomena of the companies they work for (Kenzo sweatshirts and McQueen skull scarves and T-Shirts) started spontaneously. Fashion experts, bloggers and other celebrities of this industry sometimes purchase eye-catching and distinctive products just to stand out among the others.

This way they are noticed by the publicity and create a “buzz” that very often creates fads among customers. In case of Kenzo and Alexander McQueen fads, influencers first spread the products inside the styletribes, with digital “buzz” mainly, and then the companies took over at the right -44-

”Something new is happening that I’m just clueing into now — this probably won’t go down well — but customers don’t care any more t about reviews or hard copy publications.

“We got it into our Paris stores, and it [the Kenzo tiger sweatshirt] sold out within three hours.

Three hours just through Facebook, and they’re all gone.”

They care what picture Rihanna just Instagrammed while she’s naked in bed, what new shoes she has on, how she’s talking about them.

That’s what they respond to.”

Tom Ford, 2014

-45-

7.3. The Path of Fads

-46-

moment. Opinion leaders who become enormously influential on the fashion scene even become the silent advertising tools of the brands. Forward fashion companies study these social patterns and target opinion leaders and influencers directly (or even give out products for free to them) (Solomon, M., Bamossy, G., Askegaard, S., Hogg, M. K., 2010).

After the opinion leaders the rest of consumers adopt fashion fads. The degree of risk taking in terms of utility and social acceptance of early adopters are lower than the ones of innovators.

This is why we usually see the greater number of adopters who purchase the fad, rather than innovators who start it. However, fads not always reach the very late adopters and laggards. Sometimes, by the time adopters abandoned the product, its hype had already passed.

Clearly the cycles of fashion accelerate because the online sources are updated every minute. With all the leaders present online monitoring becomes more complex and tense. Kenzo has understood this new challenge and dedicated a part of their communication department to the social media manipulation, communication and online user-generated content tracking (as Giacomo Piazza claimed in the interview). The Internet has increased the awareness of consumers and decreased the barriers between them and the brands. There are two big challenges in achieving consumers nowadays: get their attention and attraction and retaining the buzz around the brand, not allowing it to pass together with a fad.

The more brands advertise today the less reliable they become.

Much more powerful tools are reference groups and opinion leaders talking to other consumers. Reference groups were found to mostly influence the purchases of luxuries and socially conspicuous and visual goods, and fads as a consequence. Reference power can be used in the promotion of fads through celebrities and opinion leaders, causing aspirational consumption and bandwagon effects.

Celebrities endorsement was found to be more credible when used through social media channels that seem corporately untouched. Though opinion leaders are generally more reliable, because they seem much more realistic to consumers than celebrities. They take the majority of risks as the first adopters and share both positive and negative experiences about the brand. Focus on opinion leaders can become a powerful silent advertising tool.

-47-

MAN AGING FA D S

Even if a company does not earn on the same hype of a tiger sweatshirt, it can be managed in order to obtain higher profits. Giacomo Piazza told in the interview that Kenzo has found the way to regulate this phenomenon within the same product category. They continue producing successful tiger sweatshirts for adopters, while introducing each season new motives for opinion leaders (fish and eyes). Laura Minuti has confirmed that the quantity of sales of this kind of products makes them highly profitable for the company, even if they do not last long. The further your product spreads the more you earn and fads appear to be even more profitable than many other boring pieces that are not sold even on final sales (Amaldoss, W., Jain, S., 2005). Fads do and have to exist in the current luxury market.

The creative team, merchandisers and managers who can anticipate what is coming next and how big it will become will succeed in the marketplace. But prediction is important as much as management of the process, that allows companies to encourage and regulate the distribution of their products. In addition to the critical analysis of the present literature about fads and consumers’ behaviour, as well as empirical testing of several hypotheses stated, the study also provides suggestions and advices for fashion marketers and managers. They are applied to McQ, the second line of Alexander McQueen, that has an undeveloped potential to become one of the forward fashion brands. Application of fads, digital development and opinion leaders endorsement – that are now lacking in the brand’s strategy (interview with Laura Minuti) - could draw more sales and international attention the brand. It would also strengthen the commercial purpose of the brand, that Laura Minuti has mentioned in the interview.

-48-

“Business is a process, not an entity.

Successful businesses are those that continually adapt to changes in the marketplace, the industry, the economy and the culture.

They behave more like organisms than organizations, shifting and growing and dividing and combining as needed.

Unlike the old corporate identity paradigm that prised uniformity and consistency, the new brand paradigm sacrifices those qualities in favor of being alive and dynamic.�

Silverstein, M.J. Fiske, N. 2008

-49-

In order to manage fa strategy, as well as ga of them, managers sh PRODUCT

Being original and unique.

The distinctiveness of your product will make it favourable by numerous customers. Distinctiveness can be reached both through stylistic and pricing features of the products offered. Like we have seen, Chanel applies both and targets completely different groups of consumers. However, an important challenge here is maintaining the brand core concept, even when revolutionizing like Kenzo. Brand is like a person: whatever he or she wears, in the night or during the day, people still recognize this person. Even if Kenzo changed its look so radically, word-of-mouth spread their new concept in hours. From that time on, they maintain this new style in everything they do and everybody knows what Kenzo looks like today.

Must-have product.

Out of the whole collection a few must-have items have to be stated and communicated to the target. The “buzz” has to be created around these specific products in order to increase the brand equity1. It has to be advertised through suitable opinion leaders and influencers. If possible, it is better to make a trial of several fads and to find out the ones that work better. These musthaves should be slightly adjusted to seasonal trends, but maintained as the recognisable brand’s core products.

”The value premium that a company realizes from a product with a recognisable name as compared to its generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognisable and superior in quality and reliability” (Investopedia, 2014).

1

-50-

ads and make them fit in the brand’s ain maximum benefits and profits out hould focus on:

McQ by Alexander McQueen:

Alexander McQueen had an unlimited imagination that has always brought his collections on the edges of common perception of fashion. Indeed, the inspirations have always been dark and frightening. McQ, its second line, has to bring out a recognisable concept each season. Unfortunately, their only iconic garment is the cocoon dress (see the next page). The recognisable shapes have to be developed for “casual” products as well.

This season McQ offered the logo t-shirts and cropped shirts that have a great potential (see the next page). They could stand in one line with other label t-shirts offered by successful streetwear brands (Pyrex, Hood by Air, Boy London). Moreover, McQ offers a few types of sweatshirts, that, however did not demonstrate sufficient results (interview with Laura Minuti). The concept was not strong enough to generate the success of seasonal fads. McQ could be more bizarre even in the design of jersey, which would not overstep the brand’s limits.

Probably McQ should better focus on their colourful assymetrical prints that characterise both lines. They could be transferred also on the jersey garments. We have seen the success of County of Milan by Marcelo Burlon pattern T-shirts (Harris, J., 2014), and McQueen has even a bigger potential with these rich prints. These patterns and fits of these fads could be modified each season, thanks to the rich archives of Alexander McQueen inspiration sources.

Since McQ is more directed towards sales than its first line, it has to attract aspirational and younger consumers. The introduction of fads would also be able to compete with the counterfeit products of the first line (for example, skull scarves and clutches).

-51-

-52-

Streetwearmuse.com, 2014.

Farfetch.com, 2014.

Farfetch.com, 2014.

McQ by Alexander McQueen Cropped Logo T-shirts

Cuttintrend.com, 2014.

Cuttintrend.com, 2014.

Fusionswag.com, 2014.

Farfetch.com, 2014.

Farfetch.com, 2014.

McQ by Alexander McQueen Logo T-shirts

Pyrex and Boy London Logo T-shirts

Hood by Air Logo T-shirts

Farfetch.com, 2014.

Farfetch.com, 2014.

McQ by Alexander McQueen Swallow Sweatshirt

Farfetch.com, 2014.

McQ by Alexander McQueen Angry Bunny Print Sweatshirt

-53-

Farfetch.com, 2014.

Farfetch.com, 2014.

Ssense.com, 2014.

Proposed Assymetrcial Prints

PROMOTION

Viral Marketing

In advertising fads to the 2.0 society viral marketing is essential. Viral marketing is “a tech-

nique by which social networks are used to spread ideas or messages, through the use of affiliate programs, co-branding, e-mails, and link exchanges on-line, or off-line, through the use of word-of-mouth advertising and memes” (Neumeier, M., 2005). Viral marketing is not the annoying mailing; it is

the new concept of “word-of-mouth”, achieving the buzz and shares through qualitative engagement online. Viral marketing can be used both for spreading fads, iconic products, as well as advertising in an engaging way. For example, Louis Vuitton produced a cartoon to promote their collaboration with Takashi Murakami. Another way of engaging was their flirty film “Small is beautiful” with famous fashion bloggers, featuring Alma BB and Monceau BB bags, that have been spread on online video channels.

Status Product

Content marketing1 has to become the key of advertising and representation of the product that could “filtrate” the buzz. Your product has to become “what most successful people (of your field of interest) buy”. But it does not have to be heavily advertised using the luxurious above the line campaigns. Customers are bored of leafing through hundreds of advertising pages in fashion magazines. Whereas out-of-home advertising saturates the image of the brand. As the survey has proved, consumers are conscious of the huge sums that companies spend on above the line advertising. 52% of respondents agreed with the statement “Higher prices usually mean higher quality”. Nowadays they rather define their leaders and follow their opinions and advices. The communication has to look like it is untouched by the commercial world.

The best way is the use of celebrities and opinion leaders on social media and content sources (articles and interviews in relevant magazines). There should be a clear social benefit: differentiating from the mass.

Qualitative Brand Awareness

Purchase of luxury fads is driven emotionally and is right-brain controlled (Miller, J., 2012).

These are not always cautious and careful actions, so luxury brand’s image and reputation allow the left brain to justify the purchase. The positivity of the relationship between fads and a consumer willingness to pay depends on the awareness and equity of a brand. “You rarely find a luxury consumer saying “I am going to buy this bag because it is by Louis Vuitton.” Rather, you are much more likely to hear, “I am going to buy this bag because I really love it, and it is by Louis Vuitton so it costs

“Content marketing is a marketing technique of creating and distributing valuable, relevant and consistent content to attract and acquire a clearly defined audience – with the objective of driving profitable customer action” (Content Marketing Institute, 2014).

1

-54-

more, but it is worth it.””

(Danziger, P. N., 2005). So the luxury brand guarantees that the product will be noticed and approved by people, that its quality is verified and is worth the price.

The brand has to build strong relationships with consumers to make them believe in it. Wordof-mouth has to become the new mantra of the brands. It is credible, less expensive and much faster.

McQ by Alexander McQueen:

Alexander McQueen should be closer to the consumers through all the means that social media provides today. McQ targets young consumers so it has to speak their language. For now, they communicate in a “cold” commercial way, that is not engaging for them (see the next page).

The brand has a well-established name, it is associated with creativity and exclusivity, thanks to the first line. McQ could therefore speak louder and broader, inviting opinion leaders and celebrities to create the McQ fantasy world every day. The benchmark on social media is Kenzo, the brand embraces the whole lifestyle, reporting about trips Carol and Humberto take, dinners they attend to, about how it is being on the backstage of Kenzo fashion show. Compare to McQ, which Instagram photos do not look like they have been taken with this application and are generally product-oriented. Their activity on Twitter is also very varied: posts tell about what celebrities are matching with Kenzo, what music to listen to this summer and what to visit in Los Angeles, their favourite city. Twitter account of McQ should not be that focused on the products, it should create the brand engagement and brand equity through a charismatic language and appealing content. For now it has plain information, for instance six posts in a raw starting with a plain “see…” ( for example, “…how this celebrity or that magazine represents McQ”). The overall digital strategy has to make consumers believe that wearing McQ means to be unique and to belong to the “cool” styletribe, even if it is the second line of a big brand.

McQ could engage the audience through both world famous influential celebrities and local opinion leaders. It has to seem untouched by the brand itself: for instance, having A$AP Rocky posting a selfie in a McQ T-shirt on Coachella festival. McQ could also be more transparent and tell more about the managers of the team, its creative director and what it is like being a part of their world.

-55-

Instagram.com, 2014.

Instagram.com, 2014.

Kenzo Instagram Profile

McQ Instagram Profile

-56-

Twitter.com, 2014.

Twitter.com, 2014.

Kenzo Twitter Posts

McQ Twitter Posts

-57-

TARGET

Clear Identification of Target

As it has been proved in the research, the main target of fads are people interested in visual exposure of clothes and accessories, who are active online and are curious about new products.

There is no clear identification of the social class and wealth possession of this target, because it varies from aspirational consumers to new rich and affluent customers of the emergent markets.

Though, the whole strategy does not work one way only. The brand has to help the consumer to identify his or her reference group. Precise choice of trend-setters is important. Moreover, the brand and its communication has to be closely related to the identity of actual people buying it. It has to create the desirable lifestyle. It can be done through the techniques described in the “Promotion” section (opinion leaders endorsement, blog section on the website) and collaborations with other companies, even with the ones that are out of the brand’s portfolio. For instance, Kenzo has collaborated with New Era and Vans that produce streetwear accessories and footwear, and is recently collaborating with Toilet Paper magazine for “Kenzine” limited edition magazine (Kenzo, 2013, Kenzo, 2014).

-58-

McQ by Alexander McQueen:

McQ should work on the target segments of different geographical markets separately, involving local celebrities and communication channels. Again, the brand has to communicate the whole lifestyle of his final consumers.

McQ could focus on young and emerging markets’ consumers, who are especially attracted by the big brand names and are the major consumers of fads, as it has been proven in the research As it has been shown in the case study of Jimmy Choo Abel shoes putting efforts and investments also in the local integration defrays better than any other advertising strategy.

For emerging markets local social media and celebrities could be a solution. Whereas, young people need a specific approach in communication and marketing that has to be strategical, consistent and engaging.

-59-

DISTRIBUTION

Scarcity Techniques

Summarizing all the analysis produced before, it can be concluded that the main difficulty in managing fads is balancing between the hype, popularity and exclusivity of these products. When viral marketing and other 2.0 strategies are applied, the exclusivity of fads is questioned. An important outlook has been developed out of the interview with Giacomo Piazza. He explained that Kenzo never places on sale more than a particular amount produced. So the sweatshirts are sold out very fast, they are spread all over the world, but never exceed the strategical amount. This is a well-known tool of the marketers and advertisers. “Last chance to buy”, “limited collection”, “only today we offer” are advertisers’ favorable phrases used to attract the customers. Even, fast fashion retailer Zara successfully uses the scarcity methods in their stores, placing just a few of available pieces on the racks (ICFAI Knowledge Center). However, psychological effects of scarcity have never been emphasized in the marketing and consumer-behaviour related literature, especially regarding luxury.

Scarcity effects are comprised in the commodity theory by Karl Marx. The famous economist defines a commodity as an “external object, a thing which through its qualities satisfies human needs of whatever kind” (Marx, K.. 1990). “In commodity exchange, one exchanges a commodity for money, which one then exchanges for some other commodity.” (Purdue University: College of Liberal Arts, 2014). According to Karl Marx, scarcity increases the value and the desirability of possessing an object.

Elle.ru, 2010.

Possession of limited products evokes the feelings of distinctiveness. Scarcity tactics are more effective in the industries where consumers’ need for uniqueness is important, evidently, in fashion above all. Our outfit is an extension of ourselves; so scarce commodities express the self-uniqueness, even if the garments purchased are fads. Therefore, marketers can increase the value and the positive feelings towards fads by applying the scarcity methods to their businesses. Such practices as exclusive distribution channels, prestige pricings, limited editions can be applied by the brands. Sometimes it could be a combination of all three, when luxury brands launch special editions for specific location only. For example, Yves Saint Laurent (that already has exclusive pricing strategy) produced the famous Tritoo pumps exclusively for Moscow boutiques. The colors inspired by the megapolis and the “Moscow” signature on the sole made their classical shoe model more special.

-60-

Unfortunately, apart from the Zara case, very little research has been done about the effects of scarcity in real practices in fashion. Scarcity effects might have even a greater influence on individuals seeking for uniqueness. They secure consumers that except from them only a limited number will own a product. So brands that would like to introduce fads, or have already started experiencing them, should consider the scarcity effects’ benefits. This way the uniqueness and the mystery remain and the tail may last longer. It causes tension, even though a product is not positioned as an exclusive luxury good.

McQ by Alexander McQueen:

Today almost all McQ products reach the sales period. McQ could take in consideration scarcity techniques for the perspective development of the brand’s distribution strategy. In the beginning the proposed strategy of fads adoption has to be tested on the market. If a certain product receives the expected boost in sales, the number of SKUs offered each season has to be limited. It would allow to retain exclusive aspects of the product.

Scarcity techniques could be applied to a product when aspirational consumers start purchasing it. As it has been described in the chapter “Aspirational consumption”, the big sales come at this step. So the brand has to be prepared in order to maintain its luxury image.

-61-

MANAGING THE AGGRAVATING FACTORS

ACTIVITIES TO APPLY

-62-

FADS

-63-

“Fashion is not frivolous.

It is a part of being alive today.”

Mary Quant (Brainy Quote, 2014)

-64-

VIII. LIMITATIONS AND FUTURE DEVELOPMENT

The luxury goods industry includes a huge range of product categories and services that covers the entire lifestyle of the rich. Due to the discrepancies in purchasing behaviours in different categories, sectors have different distribution specifics and performance data. Fads are usually related to the goods that are publicly exposed and are not supposed to be extremely durable (jewellery or housing, for instance). Hence, this study is limited to luxury accessories and apparel. Other luxury branches’ fads, in food and beverages (for example, recently popular molecular cuisine) or in cosmetic and skincare products (for example, argan oil was the latest fad promoted by Hollywood stars), could also be analysed in order to obtain practical information for the brands that are specialized in these types of products.

Further limitations are related to the financial data about the sales volumes and their regional distribution that are not publicly published by luxury companies. Therefore, this aspect limits the study, as the precise data information cannot be included. The critical evaluation of the patterns of certain fads, which has been discussed in the work, is based on the related sources, primary research and personal observations.

Moreover, most of the fashion houses are owned by bigger parent companies. For instance, Kenzo actually operates under LVMH and Alexander McQueen - under Kering. In order to simplify the structure of the analysis, they are perceived as independent companies.

The survey produced also has several limitations. First of all, it is limited to the individuals living in big cities and towns around the world (Milan, Paris, Stockholm, Moscow, Beijing, etc.).

Their lifestyles and values, as well as the media usage and the purchasing power, may differ from the ones living in the countryside, who tend to have a different shopping behaviour. Second of all, participants were asked about purchasing a particular product without considering the price.

The effects may vary in the real life experience, because the bags offered for the selection had significantly different prices. Sensory evaluation of a product (the materials, quality, textile/leather feeling), which was not possible in this online survey, is also an important point in the purchase decision. Moreover, respondents were not rationally considering the real consequences of these purchases. Nevertheless, the image of the product and its status aspect were more important for the findings. It would be also interesting to analyse what happens when such rational features are included. It could provide also the financial aspects of purchasing behaviour of fads.

-65-

IX. CONSCLUSION

“There is no mystery left anymore in fashion” (Craig

Green, 2014).

On today’s fashion scene, with all the latest trends and the hottest products available online globally within seconds, fashion brands and luxury fashion marketers do not have to wait for people to catch up with new products and fresh fads. Consumers are not so easy to surprise and please anymore, they see and know too much and see everything that will be in the store months before, right after the fashion show. The fashion market is constantly changing and the luxury segment, that has always had the “snob” attitude in sales, now has to watch out and to adapt itself.

Fashion brands have to be in a conversation with consumers, become their friends and talk the same language. The main challenge for the fashion brands is surprising, innovating and maintaining the interest until the next season. The brands have to adjust their strategies in order to fit in the current fashion environment. This paper proves that fads are not to be avoided in the fashion business. Quite the opposite, these products can be the main drivers of the interest and digital exposure, as well as of the short-term high profits,.

The findings of this research broaden the understanding of how fads behave in the luxury fashion industry, what are the positive aspects about them and how they can be managed. It has been found out that fads, however, are not the only solution for the brands that need to re-innovate their strategies. Fads are able to create a buzz “of the moment”, but brands do not have to totally rely on them. Application has to be done in a weighted way, otherwise the strategy might face the same uncertain future that Moschino has now. It is rarely true that brands need to focus on only one segment. Brands can target different consumers groups simultaneously by varying the price range and the exclusivity impact within the same line. While the major spenders are the affluent consumers who can afford the brand’s products, other target sectors might also be interesting, like aspirational consumers and the millennials, or Generation Y. The future consumers of luxury are different. The research has proved that these two groups become very interesting when the brand needs to raise its awareness, generate more profits or modify the image. It has been found out that fads are able to transmit the desired status and associations at a lower price to these consumers. Aspirational and young consumers can become the future big spenders so brands have -66-

to already dedicate branches of their strategies to attract their attention. Moreover, these are the consumers who are much more active online, who communicate and share experiences regarding brands.

From a theoretical point of view, this research paper discovers the niche of luxury that has never been deeply described before. It explains how fads in the luxury fashion industry can be implemented to adapt the brand strategy to the situation on the fashion market. “Management of fads� part of the research describes which drawbacks fads have and how they could be regulated.

So the brand could make a full use of fads and still fit them in its portfolio, maintain the brand image and achieve the desired goals without damaging the exclusivity. With this knowledge and ability to apply fads, taking in consideration the suggested tips, brand managers are equipped for the today unstable fashion industry. They can use and bring on the new level the key brand’s elements that induce desire, purchase rates and conspicuous behaviour with the help of fads and the related strategies online that have been described in the work. Adoption of fads allows the brands to develop their full potentials and become stronger players on the contemporary fashion market.

-67-

BIBLIOGRAPHY

0-9 A

Amaldoss, W., Jain, S. (2005). Conspicuous consumption and sophisticated thinking. Management Science, 51/10, pp. 1449-1466.

B

Bakewell, C., Mitchell, V.W. (2003). Generation Y female consumer decision-making styles. International Journal of Retail & Distribution Management, 31/2, pp. 95–106.

Bearden, W. O., Etzel, M. J. (1982). Reference group influence on product and brand purchase decisions. Journal of Consumer Research, 9/2, pp. 183-94.

Belk, R. W. (1985). Materialism: Traits Aspects of Living in the Material World. Journal of Consumer Research, 12, pp. 265-280.

Bellaiche, J.-M., Mei-Pochtler, A., Hanisch, D. (2010). The New World of Luxury: Caught Between Growing Momentum and Lasting Chance, The Boston Consulting Group report. Boston, USA: Boston Consulting Group.

Bernard, L. L. (1926). An Introduction to Social Psychology. New York, USA: Holt.

Berthon, P., Pitt, L., Parent, M., Berthon, J. P. (2009). Aesthetics and ephemerality: observing and preserving the luxury brand. California Management Review, 52/1, pp. 45–66.

Berry, C. J. (1994). The Idea of Luxury: A Conceptual and Historical Investigation. Cambridge, UK: Cambridge University Press.

Binkley, C. (2014). A Jimmy Choo Shoe's Path to Being a Global Best Seller: The Abel Sells Out in Asia After an Appearance on a Korean Show. [ONLINE] Available at: http://online.wsj.com/ news/articles/SB10001424052702304178104579533840140883978. [Accessed 28 May 2014].

Blumer, H. (1969). Symbolic interactionism: perspective and method. New Jersey, USA: Prentice-Hall.

Brainy Quote (2014). Mary Quant Quote. [ONLINE] Available at: http://www.brainyquote.com/ quotes/quotes/m/maryquant348216.html. [Accessed 28 May 2014].

Brand Finance (2012). Brand Finance Global 500. The annual report on world's most valuable global brands. [ONLINE] Available at: http://www.brandfinance.com/images/upload/bf_g500_2012_ web_dp.pdf. [Accessed 02 May 2014].

-68-

Business Dictionary (2014). Opinion leaders. [ONLINE] Available at: http://www.businessdictionary. com/definition/opinion-leaders.html. [Accessed 11 May 2014].

Business Dictionary (2014). BRIC Countries. [ONLINE] Available at: http://www.businessdictionary. com/definition/bric-countries.html. [Accessed 27 May 2014].Bureau of Labour Statistics (2014).

Consumer Expenditures in 2012. [ONLINE] Available at: http://www.bls.gov/cex/csxann12.pdf.

[Accessed 02 June 2014].

C

Campbell, C. (1987). The Consumer Ethic and the Spirit of Modern Hedonism. London, UK: Basil Blackwell.

Catry, B. (2003). The great pretenders: The magic of luxury goods, Business Strategy Review, 14/3, pp. 10-17.

Charles, K. K., Hurst, E., Roussanov, N. L. (2009). Conspicuous consumption and race. The Quarterly Journal of Economics, 124/2, pp. 425-467.

Coleman, R. P. (1960). The Significance of Social Stratification in Selling. A Maturing Discipline, Proceedings of the American Marketing Association 43rd National Conference, ed. Martin L. Bell.

Chicago: American Marketing Association, pp. 171-184.

Content Marketing Institute (2014). What is Content Marketing? [ONLINE] Available at: http:// contentmarketinginstitute.com/what-is-content-marketing/. [Accessed 03 June 2014].

Corbellini, E., Saviolo, S. (2009). Managing fashion and luxury companies. Milan, Italy: Etas.

Crain, R. M. (1996). The influence of age, race, and gender on child and adolescent multidimensional self-concept. In Handbook of self-concept: Developmental, social, and clinical considerations. New York, USA: Wiley.

Crane, D. (2012). Fashion and Its Social Agendas: Class, Gender, and Identity in Clothing. Chicago, USA: University of Chicago Press.

D

Danziger, P. N. (2005). Let Them Eat Cake: Marketing Luxury to the Masses — as well as the Classes. Berkshire, UK: Kaplan Business.

Dubois, B., Duquesne, P. (1993). The Market for Luxury Goods: Income versus Culture. European Journal of Marketing, 27/1, pp. 35-44.

E

Eastman, J. K., Goldsmith, R. E., Flynn, L. R. (1999). Status consumption in consumer behavior: scale development and validation. Journal of Marketing Theory and Practice, 7/3, pp. 41–51.

Escalas, J. E., Bettman, J. R. (2005). Self-Construal, Reference Groups, and Brand Meaning.

Journal of Consumer Research, 32/3, pp. 378-389.

F

Fashion’s Collective (2014). The Aspirational Consumer. [ONLINE] Available at: http://fashionscollective.com/FashionAndLuxury/05/the-aspirational-consumer/. [Accessed 11 May 2014].

Firat, A., Venkatesh, A. (1993). Postmodernity: the age of marketing. International Review of Research in Marketing, 10/3, pp. 227-249.

-69-

Forbes, J. (2013). Why Fashion Brands Should Be Marketing to Black People. [ONLINE] Available at: http://fashionista.com/2013/10/black-people-are-spending-more-on-clothes-than-ever-sowhere-are-all-the-black-faces-in-fashion#awesm=~oGNLyq7BvVeqJV. [Accessed 28 May 2014].

Frank, R. (2011). The Unstable Upper-Class. [ONLINE] Available at: http://blogs.wsj.com/ wealth/2011/10/24/the-unstable-upper-class/. [Accessed 18 May 2014].

G

Ger, G., Belk, R.W. (1990). Measuring and comparing materialism cross-culturally. Advances in Consumer Research, 17/1, pp. 186–192. Global Blue (2014). Hong Kong and Taiwan show strong growth. [ONLINE] Available at: http://business.globalblue.com/news-archive/hong-kong-andtaiwan-show-strong-growth/. [Accessed 09 May 2014].

Global Blue (2014). Russia & Ukraine crisis impacts Tax Free Shopping. [ONLINE] Available at: http://business.globalblue.com/news-archive/russia-ukraine-crisis-impacts-tax-free-shopping/. [Accessed 09 May 2014].

Godelnik, R. (2012). 7 Things You Need to Know About Aspirational Consumers. [ONLINE] Available at: http://www.triplepundit.com/2012/12/aspirational-consumers/. [Accessed 11 May 2014].

Goldsmith, R.E. (2006). Electronic word-of-mouth. In Khosrow-Pour, M. (Ed.), Encyclopedia of E-Commerce, E-Government and Mobile Commerce. Hershey, USA: Idea Group Publishing.

Goldsmith, R. E., Clark, R. A. (2008). An analysis of factors affecting fashion opinion leadership and fashion opinion seeking. Journal of Fashion Marketing and Management, 12/3, pp. 308-322.

Green, C. (2014). Interview with Craig Green for Dazed and Confused. Dazeddigital.com. [Accessed 11 May 2014].

H

Han, Y. J., Nunes, J. C., Dreze, X. (2010). Signaling status with luxury goods: the role of brand prominence. Journal of Marketing, 74/4, pp. 15–30.

Harris, J. (2014). Interview: Marcelo Burlon Speaks on His Work With Pusha T and Virgil Abloh, and His Plans to Transform Pitti Uomo. [ONLINE] Available at: http://www.complex.com/ style/2014/02/interview-marcelo-burlon-pusha-t-virgil-abloh. [Accessed 04 June 2014].

Heakal, R. (2013). Economics Basics: Supply and Demand. [ONLINE] Available at: http://www. investopedia.com/university/economics/economics3.asp. [Accessed 27 May 2014].

I

IACC.org (2014). International Anti Counterfeiting Coalition Report [ONLINE] Available at: http:// www.iacc.org/index.html. [Accessed 12 May 2014].

ICFAI Knowledge Center (2005). Zara: Expansion Blues. [ONLINE] Available at: http://www. studeersnel.nl/download_file.php/Case_Zara_tekst.pdf?download=YToyOntzOjI6ImlkIjtzOjU6IjExNjI3IjtzOjQ6Im5hYW0iO3M6MTk6IkNhc2VfWmFyYV90ZWtzdC5wZGYiO30=. [Accessed 13 May 2014]).

Instagram.com (2014). Kenzo Instagram. [ONLINE] Available at: http://instagram.com/kenzo. [Accessed 04 June 2014].

-70-

Instagram.com (2014). McQ Instagram. [ONLINE] Available at: http://instagram.com/MCQ. [Accessed 04 June 2014].

Investopedia (2014). Brand Equity. [ONLINE] Available at: http://www.investopedia.com/terms/b/ brandequity.asp. [Accessed 03 June 2014].

Investopedia (2014). Economics Basics: Supply and Demand. [ONLINE] Available at: http://www. investopedia.com/university/economics/economics3.asp. [Accessed 03 June 2014]. iOffer.com (2014). Moschino McDonalds Short-sleeved T-shirt. [ONLINE] Available at: http:// www.ioffer.com/i/moschino-mcdonalds-chic-short-sleeved-t-shirt-569036105. [Accessed 14 May 2014].

J K

Kapferer, J.-N. (2005). The two business cultures of luxury brands. Oxon, UK: Routledge.

Karl, M. (1990). Capital: A Critique of Political Economy. Vol. 1. New York, USA: Penguin.

Kastanakis, M. N., Balabanis, G. (2012). Between the mass and the class: Antecedents of the “bandwagon” luxury consumption behavior. Journal of Business Research, 65/10, pp. 1399-1407.

Kenzo (2014). KENZO X NEW ERA - RESORT 2014 EDITION. [ONLINE] Available at: https://www.kenzo.com/en/blog/kenzo-x-new-era-resort-2014-edition_10597/. [Accessed 11 June 2014].

Kenzo (2013). KENZO X VANS FALL/WINTER 2013 COLLABORATION. [ONLINE] Available at: https://www.kenzo.com/en/blog/kenzo-x-vans-fallwinter-2013-collaboration_9332/. [Accessed 11 June 2014].

Kenzo (2014). BOOK CORNER #13: KENZINE ISSUE 2. [ONLINE] Available at: https://www. kenzo.com/en/blog/book-corner-13-kenzine-issue-2_11434/. [Accessed 11 June 2014].

Kering (2014). Kering 2013 Full-Year Results. [ONLINE] Available at: http://www.kering.com/ sites/default/files/document/kering_ddr_va_2013.pdf. [Accessed 30 May 2014].

L

Leibenstein, H. (1950). Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand. The Quarterly Journal of Economics, 64/2, pp. 183-207.

Lent, R., Tour, G. (2009). Selling Luxury: Connect with Affluent Customers, Create Unique Experiences Through Impeccable Service, and Close the Sale. New York, USA: John Wiley & Sons.

M

Mandybur, J. (2014). Tom Ford: Rihanna's Instagram Is More Influential Than Fashion Reviews.

[ONLINE] Available at: http://www.oystermag.com/tom-ford-rihannas-instagram-is-more-influential-than-fashion-reviews. [Accessed 28 May 2014].

McCracken, G.D. (1988). Culture and Consumption. Bloomington, USA: Indiana University Press.

Midler, P. (2009). Poorly made in China: an insider’s account of the tactics behind China’s production game. Hoboken, USA: Wiley.

-71-

Miller, J. (2012). The Right Brain vs. Left Brain of Marketers [Infographic]. [ONLINE] Available at: http://blog.marketo.com/2012/01/the-right-brain-vs-left-brain-of-marketers.html. [Accessed 09 June 2014].

N

Naìm, M. (2005). Illicit: how smugglers, traffickers and copycats are hijacking the global economy.

New York, USA: Doubleday.

Neumeier, M. (2005). The Brand Gap: How to Bridge the Distance Between Business Strategy and Design. 2nd ed. UK: New Riders.

Nunes, P. F., Johnson, B. A. (2004). Selling to the moneyed masses. Harvard Business Review, 82/(7-8), pp. 94-104.

O P

Pambianco News (2013). Biggest Spenders at Harrods From Thailand, Singapore and Nigeria.

[ONLINE] Available at: http://en.pambianconews.com/biggest-spenders-at-harrods-from-thailand-singapore-and-nigeria/. [Accessed 09 May 2014].

Pinson, L. (2012). Anatomy of a Fad: How Kenzo’s Tiger Sweater Sold Out in Two Days. [ONLINE] Available at: http://www.stylecaster.com/anatomy-fad-kenzos-tiger-sweater-sold-days/. [Accessed 01 May 2014].

Podoshen, J. S., Li, L., Zhang, J. (2011). Materialism and conspicuous consumption in China: a cross-cultural examination. International Journal of Consumer Studies, 35/1, 17-25.

Polhemus, T. (2010). Streetstyle. [ONLINE] Available at: http://www.tedpolhemus.com/main_concept6%20467.html. [Accessed 02 June 2014].

Poyatos, F. (2002). Nonverbal Communication Across Disciplines: Paralanguage, kinesics, silence, personal and environmental interaction. Vol. 2. Amsterdam, Netherlands: John Benjamins Publishing.

Purdue University: College of Liberal Arts (2014). Marxism Terms. [ONLINE] Available at: http:// www.cla.purdue.edu/english/theory/marxism/terms/termsmainframe.html[Accessed 19 May 2014].

Q R

Raustiala, K., Sprigman, C. (2006). The piracy paradox: innovation and intellectual property in fashion design. Virginia Law Review, 92/8, pp. 1687–1777.

Rémaury, B. (2002). Luxe et identité culturelle Américaine. Revue Française du Marketing, 187, pp. 49–60.

Richins, M.L., Dawson, S. (1992). A consumer values orientation for materialism and its measurement: scale development and validation. Journal of Consumer Research, 19/3, pp. 303-316.

Ritson, M. (2007). Fakes can genuinely aid luxury brands. Marketing, 25/15, pp. 21-21.

Robin, M. (2012). How Zara is still producing record profits despite the retail gloom. [ONLINE] Available at: http://www.smartcompany.com.au/leadership/26377-how-zara-is-still-producing-recordprofits-despite-the-retail-gloom.html#. [Accessed 28 May 14].

-72-

Romani, S., Gistri, G., Pace, S. (2012). When counterfeits raise the appeal of luxury brands.

Springer Science and Business Media, 23/3, pp. 807-824.

S

Sapir, E. (1931). “Fashion”, pp. 139-144 in Encyclopedia of the Social Classes. USA, New York: Macmillan.

Silverstein, M. J., Fiske, N. (2008). Trading Up: Why Consumers Want New Luxury Goods And How Companies Create Them. USA: Penguin Group, Portfolio.

Simmel, G. (1957). Fashion. American Journal of Sociology, 62/ 6 pp. 541-558.

Smith, K. (2013). Art & Fashion: When does commercial kick in? [ONLINE] Available at: http:// editd.com/blog/2013/03/art-fashion-when-does-commercial-kick-in. [Accessed 06 May 2014].

Solomon, M. R. (2003). Conquering the Consumer space: Marketing Strategies for a branded world. New York, USA: AMACOM. Solomon, M., Bamossy, G., Askegaard, S., Hogg, M. K. (2010). Consumer Behaviour: A European Perspective . 4th ed. New Jersey, USA: Prentice Hall.

Souiden, N., M’Saad, B., Pons , F. (2011). A Cross-Cultural Analysis of Consumers’Conspicuous Consumption of Branded Fashion Accessories. Journal of International Consumer Marketing, 23/5, pp. 329-343.

Spring Reference (2014). Luxury Definition. [ONLINE] Available at: http://business.globalblue.com/ news-archive/hong-kong-and-taiwan-show-strong-growth/. [Accessed 14 May 2014].

Stevenson, A. (2010). Oxford Dictionary of English. 3rd ed. Oxford, UK: Oxford University Press.

T

Taobao.com (2014). Moschino iPhone 4/4s Phone Case. [ONLINE] Available at: http://item. taobao.com/item.htm?spm=a230r.1.14.40.plpWeE&id=20067093134. [Accessed 13 May 2014]).

Taobao.com (2014). Moschino iPhone 4/4s, 5/5s Phone Case.[ONLINE] Available at: http:// item.taobao.com/item.htm?spm=a230r.1.14.344.Te2fjG&id=38122235975. [Accessed 13 May 2014].

Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4/3, pp. 199– 214.

Thomas, D. (2007). Deluxe: How Luxury Lost Its Luster. USA: Penguin Press.

Tversky, A., Kahneman, D. (1986). Rational choice and the framing of decisions. Journal of Business, 59/4, pp. 251–S278.

Twitter.com (2014). Kenzo Twitter. [ONLINE] Available at: https://twitter.com/kenzo. [Accessed 04 June 2014].

Twitter.com (2014). McQ Twitter. [ONLINE] Available at: https://twitter.com/mcq. [Accessed 04 June 2014].

U V -73-

Veblen, T. (1899). The theory of leisure class. New York, USA: Macmillan.

Venkatraman, M. P. (1989). Opinion Leaders, adopters, and communicative adopters: A role analysis. Psychology and Marketing 6/1, pp. 51-68.

W

Wieczner, J. (2013). 10 things Generation Y won’t tell you. [ONLINE] Available at: http:// www.marketwatch.com/story/10-things-millennials-wont-tell-you-2013-06-21. [Accessed 14 May 2014].

Windsor, D. (2014). i-D magazine, 329, p. 68.

Wong, N.Y., Ahuvia, A.C. (1998). Personal taste and family face: luxury consumption in Confucian and western societies. Psychology and Marketing, 15/5, pp. 423–441.

X Y

Yu, J. (2011). A Case Study on Fashion Online Shopping. In Typology and Influence Analysis of Opinion Leader. Glorious Sun School of Management & business, Donghua University, Shanghai, China. IEEE Digital Library: E -Business and E -Government (ICEE). 2011 International Conference, pp. 6-8.

Z

-74-

IMAGES A B

Brandnamecollection.info (2014). Louis Vuitton Handbags. http://www.brandnamecollection.info/ handbags-louis-vuitton-c-314_315.html. [Accessed 03 June 2014].

C

Cuttintrend.com(2014). BEEN TRILL HBA TEE [2 COLOURS]. [ONLINE] Available at: http:// www.cuttintrend.com/store/p63/BEEN_TRILL_HBA_TEE_%5B2_COLOURS%5D.html. [Accessed 01 June 2014].

D E

Elle.ru (2010). В ОСОБЫХ ОТНОШЕНИЯХ С МОСКВОЙ. [ONLINE] Available at: http://www.elle. ru/moda/fashion-blog/v-osobykh-otnosheniyakh-s-moskvoy/. [Accessed 16 May 2014].

F

Farfetch.com (2014). MCQ ALEXANDER MCQUEEN. [ONLINE] Available at: http://www.farfetch. com/br/shopping/women/mcq-by-alexander-mcqueen/items.aspx#ps=1&pv=60&oby=5. [Accessed 01 June 2014].

Fashionmagazine.com (2014). Street Style, Paris: Chanel, Chanel and more Chanel outside Couture Fashion Week. [ONLINE] Available at: http://www.fashionmagazine.com/fashion/at-theshows/2014/01/22/street-style-paris-couture-fashion-week-spring-2014-2/. [Accessed 05 June 2014].

Front Row (2013). Trendy bags. [ONLINE] Available at: http://www.desdeelfrontrow. com/2013/10/trendy-bags.html. [Accessed 02 June 2014].

Fusionswag.com (2014). Pyrex “Champions 23 Text Print” T-Shirt Collection (Black). http://fusionswag.com/pyrex-champions-23-text-print-tshirt-black. [Accessed 01 June 2014].

G

Galleryhip.com (2013). Celebrity Fall Outfits 2013. [ONLINE] Available at: http://galleryhip.com/ celebrity-fall-outfits-2013.html. [Accessed 04 June 2014].

H I J K L M

M.thestar.com.my (2014). Chinese craze for My Love From The Star. [ONLINE] Available at: http://m.thestar.com.my/story.aspx?hl=Chinese+craze+for+My+Love+From+The+Star&sec=lifestyle&id=% 7BE0A52847-A95B-4D40-96E1-806D3364E337%7D. [Accessed 04 June 2014].

-75-

Macaroonsinparis.wordpress.com (2014). From Paris, Well, And Louis Vuitton [ONLINE] Available at: https://macaroonsinparis.wordpress.com/page/10/. [Accessed 04 June 2014].

N O

Olivecocomag.com (2014). Behind The Scenes of Rihanna’s Diamonds World Tour Rehearsal.

[ONLINE] Available at: http://www.olivecocomag.com/oc-video-behind-the-scenes-of-rihannas-diamonds-world-tour-rehearsal/. [Accessed 02 June 2014].

P

Paperwhales.blog.it (2011). Fabulous Foods by Linus Morales. [ONLINE] Available at: http://paperwhales.blogspot.it/2011/06/fabulous-foods-by-linus-morales.html. [Accessed 29 May 2014].

Pinterest.com (2014). SS 2014 pop art / Logomania fashion trend. [ONLINE] Available at: http://www.pinterest.com/pin/231091024602121239/. [Accessed 02 June 2014].

R S

Shopstyle.com (2014). Handbags. [ONLINE] Available at: http://www.shopstyle.com/browse/handbags. [Accessed 04 June 2014].

Ssense.com (2014). McQ Alexander Mcqueen Indigo Kaleidoscope Crocodile Print Sheath Dress.

[ONLINE] Available at: https://www.ssense.com/women/product/mcq_alexander_mcqueen/indigo-kaleidoscope-crocodile-print-sheath-dress/97965. [Accessed 01 June 2014].

Streetwearmuse.com (2014). Boy London Eagle Logo T-Shirt. [ONLINE] Available at: http:// streetwearmuse.com/boy-london-eagle-logo-t-shirt-black. [Accessed 01 June 2014].

T

Tastethestyle.com (2014). Food in Fashion Month. [ONLINE] Available at: http://tastethestyle. com/2014/03/food-in-fashion-month-2014/. [Accessed 04 June 2014].

Q R S T U V W X Y

Yucksauce.com (2014). Nicki Minaj Goes Gangster in ‘Senile’ Video. [ONLINE] Available at: http://yucksauce.com/nicki-minaj-goes-gangster-in-senile-video/. [Accessed 02 June 2014].

Z

-76-

-77-

APPENDIX I: SURVEY

-78-

-79-

APPENDIX II: INTERVIEWS Interview with Laura Minuti, product manager at McQ, the second line of Alexander McQueen I am writing my fashion marketing thesis about short-life trends, fads in luxury (I have not analyzed precisely the McQueen case, but I've worked in Alexander McQueen corner in TSUM Moscow and I know from my personal experience that McQueen has experienced such fads as the skull scarfs and T-shirts, clutches and boots). Briefly, the point of my work is finding out the patterns of fads in luxury, their target and markets, profitability and purpose, connections to fast fashion and counterfeit. I have drawn interesting relations of fads, new luxury and conspicuous consumption by now.

So, Laura, Alexander McQueen is an interesting case study of my work. What exactly are your duties as a product manager?

OLGA:

I work in McQ, but it is more or less the same thing, just more commercialised. I follow all the production steps and, when we deliver the collection, I also have all the feedbacks and requests from wholesalers and vendours. We produce in-house all the most sophisticated pieces of the main line, Alexander McQueen, but the cheaper products and the second line are outsourced.

LAURA:

OLGA:

It might be very interesting, I imagine! How has this big skull phenomenon started?

All these creepy prints and skulls were the outcomes of Alexander's own passions.

Everything was born from his crazy imagination. What I see in the archives in London is really sick, believe me! The phenomenon of all these skull T-shirts and scarves took place mainly because of the accessibility of these products. Neither I, personally, cannot buy his dresses even with discounts! Yes, when the company discovers that these products are more sellable, they start producing them in larger quantities.

LAURA:

OLGA:I

see! Would you say that certain products are supposed to become fads from the begin-

ning?

Sure! Starting from the moment of the collection creation we already think of dividing the collection this way. Well, let’s say that it is mainly the merchandiser who decides the general percentages of different product groups composing a collection. Then, we decide what and how many should be in that way, with logo, recognisable and so on. In the case of McQ this percentage is pretty high always. Usually it is mainly jersey that has the lowest production costs, 35-40% of the total collection, which is pretty high. In menswear it is even higher. The main line has more woven garments, but I assure you that, what is jersey is all to be sold in big quantities.

Then we have all the “upper” line products like formal and evening dresses, coats and jackets, the

LAURA:

-80-

ones that are more exclusive, and the top of the brand offer is the VIP and advertising part. For example, the next season you will see all these thermo aluminum textiles in the campaigns, the ones ambulances use. But it is not what we really sell, because: a) it is extremely expensive; b) it is quite impossible to wear this in the real life. Also fashion show garments are made mainly just for the sake of the show.

But! It does not mean that it all remains there, in the crystal palace. For example, do you remember that Pippa dress? When Kate Middleton got married her sister was wearing that elegant white dress, which made a huge buzz on press.

Yes, yes, I do remember! I worked at McQueen right at that period, and they introduced a similar evening dress in the next collection.

OLGA:

Exactly! Once they have noticed that there was this interest, from VIP they put this dress inside the collection. That famous Pippa dress was modified in all the possible ways: silk, wool, long and short, formal and cocktail, white and red and blue and so on. So as you see they managed to boost the sales of a product that was popular at that particular moment.

LAURA:

Interesting! I also explain in my work that new luxury and accessible luxury becomes important for the brands that want to be on the frontline of fashion. Many brands have even eliminated their second lines and now distribute everything under one name. Do you think McQueen could adopt a similar strategy, unite the two lines in order to offer accessible products as Alexander McQueen?

OLGA:

No, no, I do not think so! From the very beginning Alexander started from ultimate luxury. The fashion shows are rather artistic than fashionable. Whereas McQ was introduced exactly to support the first line financially. But I am sure they will never unite, the first line is too handmade, it is not sellable at all. We have one dress with feathers, Swarovski, embroideries in the office that costs, I mean the production cost, 100000 euro! We did not even think of putting it on sale!

What price would we offer?! There was also a dress entirely made of hummingbird feathers, which I, personally, as an animal activist, did not understand. They should have killed thousands of these poor birds! I am just saying that you cannot associate such a couture thing with accessibility.

LAURA:

Yes, I totally agree with you! But what is about the accessible products, like T-shirts, scarves, jeans that are included in the main line?

OLGA:

Well, I would say that the main line has extended a bit its offer. But they have never sold so many basics... Apart from the skull scarves maybe... I mean globally, of course in emerging markets accessible status items are popular. But concerning basics, for example jeans, they offer just 3-4 types each season, very simple, without any specific washing requirements. The main line sells just around 3000 pieces each season in total. Globally! Its main problem is that Alexander McQueen main line team always wants ultimate luxury, even in jeans. But I think that with such low value products luxury approach is completely wrong. The problem starts from the production: you cannot buy super fine fabrics for such a product, because then jeans will be simply overpriced.

Maybe denim-specialized brands can afford having these refined pieces, but nobody goes to McQueen (main line) to buy jeans. So if you offer them just to complete the look, the prices should

LAURA:

-81-

be reasonable. But they are not even interested in selling jeans, for them it is enough to sell a thousand dresses for 20000 Euros and the plan is achieved! It is McQ that makes money to support the development of the main line.

OLGA:

Did not know this! Next, what do you think of the influence of social media on luxury?

This is an interesting topic! I think it is very useful for the brand, because many people comment on stuff and express their opinions.

LAURA:

OLGA:

Do you read them?

I do, always, yes. Sometimes I see astonishing comments by the ones who go crazy for the brand. Others, on the other hand “no, it is horrible, disgusting”, which is very disappointing, of course! But with McQueen people are never neutral and objective. Because it has always been a very controversial brand: either you adore it at 100% or you abhor it! But anyway social media has very interesting effects on the brands today. Our brand though does not focus so much on it...

But a “younger”, fresher Stella McCartney, which offices are also in our building, makes a big use of it! But I think that if they could implement social media in a nice way it would be a very positive thing. Of course for McQ, because the main line is too niche and I do not think they really need it: the individuals buying Alexander McQueen do not search for it online. Our website is not very entertaining, it is very basic. But we have a blog for the internal use, which is a very helpful thing to keep the team updated and integrated!

LAURA:

OLGA:

Nice! Okay, I have only one question left. What do you think will be the next move in

luxury?

It is hard to say... In reality, McQueen is not so innovative and creative as most people outside the brand think. When I say it the reaction is usually “are you crazy?!”. But it is true; the whole brand was about the personality of Alexander. He had so many genius ideas, like, you remember, that fashion show when models had plain white dresses and robots sprayed color on them. Amazing! Now... Sara Barton, she does not have even a bit of the creative thinking that he had. Of course she was the one who knew him best, but I do not think there are innovations to expect from the brand. At this moment everybody is looking at these fresh brands, like Stella McCartney, Kenzo. In my opinion, unfortunately, this extreme luxury is declining very rapidly right now.

LAURA:

It is surprising to hear it from the person working inside the brand! Though I agree, this is a very objective point of view. Thank you very much, Laura! You were very helpful for my work, really!

OLGA:

LAURA:

I am very glad! It was very nice to meet you! Let me know if you need anything else.

-82-

Interview with Giacomo Piazza, co-founder of Volta footwear and 247 showroom

I am writing my fashion marketing thesis about short-life trends, fads in luxury. Briefly, the point of my work is finding out the patterns of fads in luxury, their target and markets, profitability and purpose, connections to fast fashion and counterfeit. I have drawn interesting relations of fads, new luxury and conspicuous consumption by now. Kenzo is a big case study of my project, they brought the brand forward with the help of fashion fads. Here, on my iPad I have a few examples of fads, including Kenzo sweatshirt, Isabel Marant sneakers and so on.

And Giacomo started the interview straight to the point.

Do you think they are fads? It is true for Isabel Marant wedge sneakers. They just could not manage them; it is not such a big conglomerate as LVMH. Because they are too small, they are not capable of managing such products. The Kenzo sweatshirts will last for at least 5 years!

GIACOMO:

OLGA:

But you did not see them after a few months…

You still can see them, but just a few. Because you cannot buy them! If you go to the store they are all sold out. LVMH, that are very skilled in different marketing moves, create this hype and interest but do not give the product to the market. This way the hype remains for a longer time. Particularly it works with jersey: T-shirts and sweatshirts. There is always a lack of jersey in stores. If you notice, especially online, on net-a-porter, these garments are sold out in a week. Moreover, now if you want such a sweatshirt, you have only Kenzo. It has become iconic.

If it is copied, it is fake. It is not like Isabel Marant and their wedge sneakers. They do them, but everybody else can copy them: Zara, Nike, counterfeit companies and it does not look bad. Kenzo team introduces new variations, transforms the product: this winter they did the eye prints, next season - fish print. Tiger sweats go to the followers, while innovators and early adopters already buy the new season ones. This year Kenzo sells the new "fish print" as the high fashion content division and tigers and eyes as the jersey division.

Then there is Pyrex. They have this logo street style look that all the hipsters wear now. There is a huge demand for this brand. But they state that they want anyway a hundred clients and sell at ridiculous prices. In wholesale they also oblige to buy in big quantities, so in the end you get only three points of sale in the world. Well, this is their strategy; it is easier to manage this way. And the most surprising thing is that there is a queue on the day the collection arrives to the store and the merchandise is sold out in 24 hours at their shop-in-shops.

Now it works basically this way: all these big fashion houses try to launch their own icons, generate the hype and create accessories and jerseys around it.

GIACOMO:

And how many of the trials achieve the “hype”? Has the one of Kenzo happened to the brand spontaneously?

OLGA:

It depends! Their latest Kalifornia bag was pushed though a list of opinion leaders.

Though it still hasn’t achieved such a big success as sweatshirts that were the right thing at the GIACOMO:

-83-

right time. There was a lack of jersey at that time. Only Givenchy started working on jersey, but they have launched sweats at 600 euros! The client of Givenchy is a bit different, so they strategically stated such prices. Whereas the tiger one of Kenzo was not expected to have this diffusion.

Then, it was obviously noticed and carried out in the following collections.

Do you think that this is the right strategical move now for the luxury brands: introducing these affordable luxury products?

OLGA:

I would say that all the most forward brands right now are the ones so called "high contemporary" that are the mixes of the luxury main lines and street style brands, like Stella McCartney and Dries van Noten. Moschino is doing the same thing right now: by closing Cheap and Chic and differentiating the main line they achieve a mix of contemporary and affordable luxury. It simplifies also the distribution and retail, instead of multiple lines you just sell one. Even in retail strategies there is a mix of different prices and positionings.

GIACOMO:

OLGA:

Could you please comment on what has happened to Moschino?

That was absolutely the copy of Kenzo operation. But for us it is a positive thing.

Kenzo, MSGM, now also Moschino, - all together create this block of “hip” brands. It is always better to have competitors. It means you are doing the right thing and it signs also that it will last longer. But again, back to Moschino, that was definitely a fad! It was such a boom on Facebook and social media. Everybody was talking only about them that day! Press loves Jeremy Scott. And they put it directly into the stores. How could they maintain this large-scale buzz until the advertising in June? And they did huge profits out of the gadgets accessories. It was very smart. The question is: what are they going to do next season?

GIACOMO:

I agree with you about Moschino, it was a very remarkable event. And it is also true that their future is very uncertain! In your opinion, do the Kenzo sweatshirts have any future?

OLGA:

Yes, such things do not have future when they are not managed, like it is happening to Isabel Marant sneakers, it’s already so annoying. Even the fake ones are already annoying.

Whereas all the success of Kenzo sweatshirts is managed by the whole merchandise team, limited, and is afterwards put to the new season. And it is much easier with jersey. Either you are cool or stiff. At the moment when you are cool you have to create all your world aro und this thing. Now the perfect mix is the luxury, the “fake” luxury (accessible) and the hype. For example, Lanvin had to make something with their collection, you remember the one with this dancing models in the ad campaign (Fall/Winter 2011-2012). They had to work on that exact concept further, add basics and accessories on top of it. And what did they do the next season? Just another “Okay” collection. The right moment has already passed.

GIACOMO:

OLGA:

True! Now, do you think that below the line is more important than above the line?

Of course. Now it is only Instagram. Only Instagram. It is so fast! There are four persons in Kenzo who work specifically on Instagram. And I am sure that it is much more popular and productive than the website. Humberto Leon and Carol Lim are exactly the 2.0 types of

GIACOMO:

-84-

cretive directors. Like Hedi Slimane at Saint Laurent. They are not designers. They do not even know how to draw. Humberto is very sensitive to what is happening at the moment in music, art and so on. He sees all the codes and knows how to connect and transform them in order to manage the brand.

Interesting. Thank you very much, Giacomo! It was an interesting insight on the contemporary luxury situation!

OLGA:

GIACOMO:

Thank you, Olga! Let me know if you need anything else for your work!

-85-

Interview with Liubov Popova, manager of the Womenswear department in TSUM department store (Moscow, Russia) I am writing my thesis and your opinion on the related topics would be of great help to me. My work is about the luxury fads, the short-life trendy products, like Alexander McQueen skull clutches and scarves, Louis Vuitton cherry monograms brags, Kenzo tiger sweatshirts. So I examine the target of these products, their behaviour on the market, their profitability and benefits for the brands. Emerging economies are biggest markets for fads nowadays. So your opinion as an expert in Russian luxury retail is very important for my research.

So, how Russian consumers perceive fads and other recognisable, distinctive garments? Do they sometimes become status symbols?

OLGA:

Well, it is quite impossible to draw a one picture of consumer habits in Russia. It is very very different and depends on many factors. In Moscow people who work in fashion or other creative industries for a long time, travel a lot and are updated do not show off their possessions that much. But the majority, especially consumers coming from other towns are very found of these kitchy seasonal things. And we have lots of super rich customers travelling to Moscow just for shopping, from Ekaterinburg especially, which is a very rich town.

And yes, for sure the IT recognisable goods become status symbols right away.

LIUBOV:

OLGA:

Do you think that the European fads match the ones that appear in Russia?

It is very specific for each case. Though many times yes. But you know, the Russian women always want to feel feminine and sexy, so I cannot agree for all the Western crazes. Like now I’ve seen those ugly sport sandals are in trend in Europe. I have something similar for gardening! Those ones will never boom on the Russian market! Not in the nearest future at least, I assure you!

LIUBOV:

OLGA:

How do products become popular and widespread in Russia?

It’s a complex of things, everything can actually work here: above the line advertising, social media, celebrities endorsement, even in-store installations.

LIUBOV:

And what about fads? Do local opinion leaders and celebrities matter?

LIUBOV: Oh yes, I think for fads they are most important ones. And they are really effective in promoting fads through all the digital channels. I’ve seen many women coming with Instagram screenshots of a friend of her friend and whatever. Now social media has grown enormously in Russia, people are all the time on phones, so I think it matters a lot.

OLGA:

OLGA:

What is about the Western opinion leaders?

No, I don’t think people actually follow them. Maybe a few celebrities they really like. But other opinion leaders like bloggers and stuff-no.

LIUBOV:

OLGA:

Do the distributors influence this somehow? Do you get any recommendations from the -86-

brand?

Yes, as I said even in-store promotion tricks work very well. But we do not always follow exactly what the brand suggests. We sometimes know better. I mean if Celine has an oversized robe as one of the key items, we would not put this on mannequins. It would not work. But if we are talking about fads that are attractive and eye-catching we always follow the recommendations.

LIUBOV:

OLGA:

Are fads profitable, even if their success does not last long?

Yes, they are very profitable. Sometimes if there is a super popular item a brand just received in the store, it looks like a Sunday market there.

LIUBOV:

OLGA:

Really? I am done with questions! Good, thank you very much, Liubov!

LIUBOV:

You are welcome! Take care, Olga, and good luck!

-87-

Interview with Wei Yang, owner of “New York fashion studio” multibrand store (Shanghai, China)

I study Fashion Marketing at IED Moda in Milan and I am writing my thesis about the short-life trends, fads in luxury (like Kenzo tiger sweatshirts, Isabel Marant wedge sneakers). Briefly, the point of my work is finding out the patterns of fads in luxury, their profitability, what are their purpose and connections to fast fashion and counterfeit. Obviously, all these theories and patterns work differently in different markets. For instance, BRIC countries are usually perceived as the main marketplaces of conspicuous consumption, that is an important topic of my work (the spending of money on and the acquiring of luxury goods and services to publicly display economic power). I attach a very brief presentation of my work, so you can understand better and see a few examples of fads in luxury.

So I guess you know very well Chinese customers and my first question is about your personal perception. Do you think conspicuous consumption is the main consumer behaviour pattern among them? Are such distinctive and representative items the best-sellers in the Chinese market?

OLGA:

As we all know, China is very big; in different regions in China markets can appear completely different. Between the north and the south there are significant differences in culture and ideas. In the north of China the factors accounting for the proportion of the conspicuous consumption behaviour compared to the south are much higher. I think what causes these factors may be long-term social, cultural and environmental trends, level of education, and the gap between rich and poor. The most developed area in the south is Shanghai and in the north – Beijing. Shanghai consumers are citizens who value luxury as a quality of life, whereas people living in Beijing see it as a way to express their personal identities and show off the labels.

WEI:

Who is the main target of fads in China? New rich people, aspirational consumers and young people or traditional wealthy people?

OLGA:

I think the answer to this question is similar to the first question. The target is divided into north and south. In the north there are many new rich consumers who definitely buy fads in big amounts. The south is younger; there are many aspirational consumers and young wealthy people. I’d also like to point out that the percentage of aspirational consumers is very very high in the south. Shanghai is also notable for its huge counterfeit market.

WEI:

What are the main drivers of consumers' purchases? Are they influenced by word of mouth and opinion leaders or classical above the line advertising? If it is the first one, are consumers influenced by the Western, European mass media or by local Chinese opinion leaders and celebrities?

OLGA:

In China, a leader and a celebrity influence is enormous! People literally rush to buy the latest things the celebrities are wearing. The buzz works best, the local buz. In decision making very few focus on fashion week or what is happening on the European fashion scene.

WEI:

Now, let's speak about counterfeit products. In my work I state that since these goods are so distinctive and desirable, they are the first ones to be copied by counterfeit companies.

OLGA:

-88-

Lower classes start wearing them and in the end luxury consumers are not interested in wearing these garments or bags anymore. Therefore, I can say that counterfeit products accelerate the cycles even more. Does the same thing happen in China? Tell me more about it, please.

China’s legal supervision system is not perfect, in order to survive, a lot of clothing manufacturing plant selection making fake products to reduce costs, improve the company’s profit margins.

And they are afterwards exported and sold locally in enormous volumes. Young and aspiration buyers are the main consumers in the Chinese counterfeit market. And, you are absolutely right, the upper classes do not want these garments after the streets are full with the counterfeited copies.

WEI:

And the last question. In your opinion, are these products, even though they are so fast, profitable for the companies anyway? Do you yourself purchase such products for your store because people will rush to buy them?

OLGA:

Due to customs problem in China, China’s luxury business profits are very difficult to obtain, because the market investment, personnel, retail costs and so on are considerable. The real profits come when big luxury names are involved, such as Louis Vuitton, Gucci, Prada, Givenchy. So due to the big difficulties I have to be very careful in purchasing things, and yes I buy mostly fad and iconic pieces, that are trendy, recognisable and, therefore, not risky.

WEI:

OLGA: WEI:

Thank you very much for your help, Mr. Yang!

You are welcome, Olga! If you have any questions, you can contact me any time.

-89-