Role of Brand Management of the Luxury Fashion Brand in the Global Economic Crisis: A Case Study of Aeffe Group

Abstract

In the last two decades, the luxury fashion industry has generatedmuch interest and discussions among academicians andmanagers since it has became a consolidated economic sectorin the late 1990s (Truong, McColl & Kitchen, 2009). Despite the significance of luxury fashion sector both interms of market value and rate of growth, there are few empiricalstudies concerning luxury brand management (Kapferer,2008; Okonkwo, 2007) mainly focused on specific topics suchas: brand protection (Clarke & Owens, 2000; Elsemore, 2000),brand extension (Dias & Ryab, 2002; Sjodin, 2008;Stankeviciute & Hoffmann, 2010), counterfeiting (Gistri,Romani, Pace, Gabrielli & Grappi, 2009; Nia & Zaichkowsky,2000) or luxury brand personality (Fionda & Moore, 2009;Phau & Prendergast, 2000). The same definition of luxury brand is still open for debatein the literature (Atwal & Williams, 2009). From a productperspective, luxury brands can be distinguished from non-luxurybrands by product-related associations. Therefore, the essentialcharacteristics of luxury products correspond largely tothose of luxury brands. These attributes can be identified inhigh price, distinctiveness, exclusivity, rarity, craftsmanship andexcellent quality (Kapferer, 2008; Nueno & Quelch, 1998;Phau & Prendergast, 2000). All these symbolic characteristicsare covered by the emotional brand identity component whichcorresponds largely to the luxury brand personality (Aaker,1997; Phau & Prendergast, 2000; Sweeney & Brandon, 2006). In any case, the strategic importance of brand as an intangibleasset on which strategic development and competitivenessof luxury fashion firms is based is widely recognized(Okonkwo, 2007; Vickers & Renand, 2003). Firstly, becauseluxury fashion goods differs from necessary or ordinary goodsby some essential attributes (price, quality, rarity, etc.) that canbe well expressed by the brand identity and its symbolic personality(Aaker, 1997; Kapferer, 2008; Kemp, 1998; Mason,1992; Sweeney & Brandon, 2006). Secondly, the functionalbenefits of many luxury fashion goods are becoming increasinglyequivalent, exchangeable and simply to imitate. Thisstrengthens the brand’s power of identification and highlightsthe importance to invest substantially in brand building in or-der to maintain a stronger competitive position (Okonkwo,2009). Today the luxury fashion sector has been hit seriously bythe global economic crisis (Kapferer & Bastien, 2009; Yeoman,2011). This last one, together with other structural changes involvingthe sector in the last years (both in the supply anddemand side), leads to a very uncertain environment that improvesthe importance of some competitive factors such as innovation,time to market and customer service. With reference to luxury-brand management, despite the lackof studies and empirical researches, we observe two parallel(and partially opposite) trends. In the demand side, changes in consumer behavior togetherwith the new austerity attitude spreading over the last threeyears tend to decrease the brands customers’ attention andinterest. Consumers are rethinking their spending priorities puttingless attention to the aspirational values of luxury brandsand more attention to the exclusive features of the luxuryproducts (Kapferer & Bastien, 2009; Yeoman, 2011). In the supply side, there is a growing competitiveness and adecreasing availability of financial resources that limits theR&D investments so strengthening the strategic relevance ofbrand that becomes one of the main intangible assets on whichthe competitive advantage and the value creation of a luxuryfashion firm can be based (Degen, 2009; Kapferer & Bastien,2009; Yeoman, 2011). Starting from these assertions, the aim of the paper is thatto analyze what luxury fashion firms can do in order to increasethe effectiveness of the brand investment (as it is fundamentalfor their economic survival and long term competitiveadvantage) and regain the customers’ brand attention. The study firstly proposes a literature background which discussesthe potential effects of world economic crisis on luxurybrand management assuming a wide perspective of analysisthat considers the crisis-phenomenon among the main changesinteresting the luxury sector both in the demand side and thesupply side during the last years. Secondly, the case of a famous Italian luxury fashion firmis analyzed in-depth: Aeffe Group. The empirical study is based on the qualitative case-studyapproach. It has been carried out by face-to-face interviews tothe Aeffe Marketing Managers and a review of the Group’sarchival documentations and publications. It highlights somemanagerial implication that could interest other firms operatingin similar contexts. In particular, we put attention on three interrelatedbrand management’s critical dimensions that couldassist luxury fashion firms in order to increase the effectiveattention. - Focusing on core brands, putting more attention to productsand processes’ quality in order to strenghten themain values of the brand identity. - Managing the composition of brand-portfolio in order toface the emerging customers needs and values. This requirescontinuous innovation and new productdevelopment. - Developing a more managerial approach in brand management,less influenced by the mere creativity of thestylists. This involves the implementation of an organizingmodel based on commitment and wide sharing of firms’values strategies and objectives aimed at supporting thecreative process; a more careful management of the communicationactivity and of the retail (because of its strategicrole in brand identity’s communication) and a verycareful management of the license agreements, largelywidespread in the luxury fashion market