۱- Introduction

۲- Literature review

۳- Study 1: Qualitative

۴- Study 2: Empirical validation of the framework

۵- Potential explanation of the realized results

۶- Contributions

۷- Limitations and future research

References

Abstract

Luxury brands across the globe have made inroads into emerging markets (EM). While some brands have succeeded in one EM, they have failed to replicate their success in others. We investigate the drivers of luxury brand sales in EM using a multi-method approach. First, through a qualitative study, we identify which market characteristics of EM (market heterogeneity, competition from unbranded products, socio-political governance, and resources and infrastructure) affect luxury brand sales, with a firm’s marketing effort and a market’s financial freedom being important contingencies. Second, we empirically test the insights using data from 88 luxury brands and robust econometric analyses. Our results show that market characteristics influence luxury sales and that the effects of such market characteristics on luxury brand sales are heterogeneous. We also find significant moderating effects of marketing efforts and financial freedom. Our study thus extends the literature on the marketing of luxury brands and EM.

Introduction

Multiple luxury brands have experienced stagnation in their sales in developed markets.1 Consumption figures (see WA2 -Exhibit 1 & 2) indicate that during the last decade, such brands have either witnessed no growth or have shown negative growth. Hence, realizing the challenges to sustainability in this situation, many luxury brands have started to explore new markets. Expansion in emerging markets (EM) led the industry to reach €۱ trillion by the end of 20173 . Brands such as Hermes and Ralph Lauren attained tremendous success in the Chinese and Mexican markets, respectively. However, many luxury brands that are successful in one EM have failed to replicate their success in others. For example, Hermes, a brand known for leather and lifestyle accessories, has made inroads into several Chinese cities by correctly identifying and targeting its consumers but failed to move beyond a couple of cities in India.4 Possible reasons for this range from product assortment to distribution to partner selection, which are closely related to the nature of the markets (e.g., resources and infrastructure (RI) as well as the prevailing socio-political environment in the host country). Such nonuniformity in luxury brand sales raises two fundamental questions: firstly, what drives the success of a luxury brand5 across EM; and secondly, whether the effects of country characteristics on luxury brand sales are heterogeneous.