The Luxury Industry Enterprise Business Model And Competitive Advantage

In view of global economic recession and highly changeable competition, almost all industries showed the lagged performance. However, luxury industry reversely maintains its growth. Despite that the highly-valued luxury product owns its loyal sales from high-level customer; luxury industry's innovative business model based on the market sensibility establishes its competitive advantages. Moreover, due to the change of life style, the trading up of consumption from mid-class consumers is inspired and the needs for new luxury brand (affordable luxury) rise rapidly. It hence imposes strong impacts on the competitive advantages of traditional (classic) luxury brand. To retain the customer base, classic luxury brands develop adapted strategies and business model in addition to emphasizing their classically brand values. Hence, these raise the research question that how luxury industry construct its innovative business model. In addition, comparatively investigating the strategy formulation and business model of classic luxury brand and affordable luxury brand has the theoretical and practical implication.This study based on the theoretical background of Hamel (2000) on innovative business model integrating other business models to propose a comprehensive framework of business model. In the part of empirical study, three luxury industries of handbag, high-quality apparel and luxury car amounting to six case companies were analyzed (including LV, Chanel and Ferrari on classical luxury; Coach, ZARA and Lexus on affordable luxury) to extract their successful business model linked to strategy innovation and competitive advantages. Through analysis of enormous texts, the research findings are summarized as follows:(1) What the luxury endeavors is to satisfy the high-end consumers' purchase needs to pursue the special emotional value and it gives rise to the starting point of this study.(2) This study proposes a comprehensive framework of the business model for luxury industry covering the entire corporate operation and adopts the multi-case study method to validate the framework's practical usability.(3) Successful business models for both classic luxury and affordable luxury were extracted via summarizing three luxury industries' successful corporations' practices.(4) The synthetic comparison of successful business models for luxury industry was summarized as:Classic luxury brand: strengthen brand value, stand on the ultimate quality, and present the hand-made rarity value.Affordable luxury brand: holds the spirit of customer orientation, create fast fashion and rarity value of small-volume, large-variety production.(5) As the business environment changes, both the classic luxury and the affordable luxury's business model have the tendency to draw close to each other.(6) Successfully validate the luxury business model's linkage to strategy innovation and competitive advantages.Considering the practical implication, the successful business model of luxury industry proposed and validated in this study provides some guidelines for non-luxury industry's innovative corporate operation. They include:(1) Business model needs dynamic adaptation to meet environment changes.(2) The strategy that companies seek to enter the luxury industry can focus on efficient production and customer management, and choose to enter the affordable luxury industry.(3) Suggestions for traditional or ordinary industries are: make use of brand value, adapted fine strategy adjustment on the basis of consistent core strategy, delicate customer management as the optimal strategy for retaining customer loyalty.Finally, considering the above research findings, the successful luxury business model potentially contributes to establishing the new management paradigm and offering the research suggestions in the future as the follows:trade-off between efficiency and effectivenessrarity value of limited productionthe benefits other than blocks resulted from economies of scale on innovation thrustdeviation of the product-life-cycle rule, resulting from long-sale classic luxury product...