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Luxury Consumption in Asia _amp; Europe and the Role of Digital Media

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					  Lovers of
  Luxury II
    Luxury Consumption in Asia & Europe
    and the Role of Digital Media




MSC901_Research Paper_F.indd 3            4/22/09 4:46:29 PM
    THE
    NUMBERS
                                 60%
                                 use the internet each month to find
                                 information about luxury goods

    ARE
    GROWING
    FOR LUXURY
                                 54%
                                 would like to see more advertising
                                 for luxury goods online


    BRANDS IN
    ASIA AND
    EUROPE
                                 51%
                                 use the internet each month to communicate
                                 with friends and family about luxury brands
    advertising.microsoft.com



MSC901_Research Paper_F.indd 4                                                 4/22/09 4:46:31 PM
       Digital Media & Luxury Brands
       Objectives of Study                                          Digital advertising has a role to play
       Is it appropriate for luxury brands to use digital           at every stage of engagement.
       channels in marketing communications?
                                                                   Microsoft has developed a luxury brand            • Consideration: The act of researching,
       • What are the motivations for purchasing
                                                                   engagement model which identifies 6                 choosing and ‘trying on’ a specific
         luxury goods?
                                                                   distinct engagement points consumers                product.
       • How do Luxury Lovers engage with                          have with a luxury brand, how they interact
                                                                                                                     • Purchase: Offline or online purchasing
         luxury brands?                                            with these points and what drives these
                                                                   consumers to the point of purchase. It is the     • Ownership: Membership of the brand
       • How open are they to digital advertising?                 convergence of these engagements through            club — purchase represents a higher level
       • How should digital marketing be used in                   multiple channels that build stronger brands        of relationship with the brand.
         luxury marketing?                                         and drives consumer brand advocacy.

                                                                   The model describes the six fundamental
                                                                   ways in which consumers engage with
                                                                   luxury brands:
                                                                                                                                                   Awareness
                                                                       • Awareness: Consumers actively seek out
                                                                         information about luxury brands.                            p
                                                                                                                                              nce             Exc




                                                                                                                                  hi
                                                                                                                                           lge




                                                                                                                                                                           Ad
                                                                                                                               ers
                                                                   • Admiration: Luxury goods represent an
                                                                                                                                                                 l




                                                                                                                                                                             mir
                                                                                                                          Own




                                                                                                                                                                 us
                                                                                                                             u
                                                                                                                          Ind




                                                                                                                                                                   ivit
                                                                     idealistic set of aesthetic and qualitative




                                                                                                                                                                                ation
                                                                                                                                                                       y
                                                                     standards, and luxury brand advertising
                                                                     represents a glimpse into a more                                              A luxury
                                                                     seductive, exciting world.                                                     brand




                                                                                                                                                                                  n
                                                                                                                          Purc
                                                                   • Exploration: After the initial allure,




                                                                                                                                                                              atio
                                                                                                                                         Sta
                                                                     consumers seek to explore, understand                                tu                       ali




                                                                                                                                                                 ty
                                                                                                                                               s


                                                                                                                              ha
                                                                                                                                                              Qu




                                                                                                                                                                           lor
                                                                     and authenticate the brand.



                                                                                                                                se




                                                                                                                                                                         xp
                                                                                                                                                                           E
                                                                                                                                           Con
                                                                                                                                              sideration
       We can mapping digital advertising channels to the engagement model allows us
       to understand the different roles that each can play in a campaign


                                 Display Ads         Search                Email                Instant             Social                Custom              Desktop
                                                                                                Messaging           Networks              Solutions

        Awareness                Targeting first;    Sponsored links:      B2C: Newsletters     C2C: Sharing,       C2C: Sharing,         Microsite(s)        Gadgets Productivity
                                 then environment    text + video          C2C: Sharing,        WOM BOTs            WOM                                       Software*
                                                                           WOM                                                                                RSS feeds: news,
                                                                                                                                                              events, launches,
                                                                                                                                                              sales, etc.

        Admiration               Video               Sponsored links:      C2C: Sharing         C2C:                sponsored             Microsite(s)        Screensavers/
                                                     video                                      Sharing Ads         destinations                              Wallpaper

        Exploration              Link to content,    Sponsored links:      B2C: Newsletters     C2C: Sharing,       sponsored             Microsite(s)        Gadgets
                                 e.g. Fashion Week   text + video          C2C: Sharing,        WOM BOTs            destinations
                                                                           WOM


        Consideration                                Sponsored links       B2C: Newsletters     BOTs C2C:           C2C: Sharing,         Microsite(s)
                                                                           C2C: Sharing, WOM    Sharing, WOM        WOM My
                                                                           My Gift Wish List    My Gift Wish List   Gift Wish List


                                                     Sponsored links
        Purchase

                                 Downloadable/                             B2C: Exclusive       UGC                 UGC                   Personalized        Gadgets
        Ownership                Shareable                                 newsletters UGC                                                Content             Screensavers/
                                                                                                                                                              Wallpaper




MSC901_Research Paper_F.indd 5                                                                                                                                           4/22/09 4:46:32 PM
       A Passion for Luxury
       Our research confirms
       a phenomenal
       global appetite for
                                                             ASIA                                                      EUROPE
       luxury goods.                                         Total spend last year on luxury goods                     Total spend last year on luxury goods

       We estimate around US$148 billion was                 US$134 Billion                                            US$14 Billion
       spent by online Luxury Lovers last year
                                                             Total luxury goods purchased last year                    Total luxury goods purchased last year
       across our Asian and European countries,
       of which around a quarter was spent online.           1.9 Billion                                               820 Million



       It’s important to note
       that Luxury Lovers also                                   % of goods bought
       like to share the love.                                   for self as opposed
                                                                 to gifting
       Around one third of purchases across
       categories are bought as gifts.
                                                                                                   Designer clothing       Designer fragrances   Fine jewellery
                                                                                                    and accesories           and cosmetics       and watches


                                                                 ASIA                                   72%                    66%                65%
                                                                 EUROPE                                 67%                    58%                57%



       Understanding the differences between regions and across countries is key to targeting and planning for luxury consumers.
       The European market is comprised of more mature consumers, whereas the Asian market is characterized by younger shoppers. In
       particular, India, China and Russia are much younger—a facet that defines their attitudes towards luxury and use of digital media.
       While luxury lovers in Europe are evenly split in gender, Asians are skewed more male.



                        26%                                                                             Europe
                                         23%                                                                                  Female              Male
                                                                                                        Asia
         18%

                                                     16%         16%
                                         18%                                                                                                             56%
                        16%                                                                                                 50%     50%
         14%                                                                                                                                     44%
                                                     13%                        8%
                                                                                                 6%            6%
                                                                  7%            6%
                                                                                                 4%            3%

        18-25          26-30         31-35        36-40         41-45         46-50             51-55          55+             Europe                Asia




        advertising.microsoft.com



MSC901_Research Paper_F.indd 6                                                                                                                              4/22/09 4:46:33 PM
       The Message of Luxury
        Across all regions, we uncovered a common
        set of core purchase motivations.




        INDULGENCE
        o    Treating oneself to something ‘special’

        o    A sensory experience

        o    Promotes sense of wellbeing

        o    Premium price intrinsic to the guilty pleasure of ‘spoiling’ oneself




        EXCLUSIVITY
        o    Being part of an exclusive club

        o    Members define themselves through understatement

        o    Members take pride in being ‘in the know’

        o    Members signal to and identify each other through
             the brands they display




        STATUS
        o    Communicating status to those around us

        o    A personal affirmation of one’s own progress through life




        QUALITY
        o    Perceived excellence of design, materials, manufacturing
             and craftsmanship.




MSC901_Research Paper_F.indd 7                                                      4/22/09 4:46:41 PM
       The Motivations of Luxury
       Indulgence, Exclusivity, Status and Quality
       These four motivations map to either rational or emotional perceived luxury product benefits


                                 RATIONAL                                                                     EMOTIONAL
                  o    Heritage, expertise,       o    Quality of                                             o   Success               o   Desirability
                       reputation                      manufacturing                                          o   Confidence            o   Indulgence
                  o    Quality of design          o    Quality of                                             o   Wealth                o   Pleasure
                  o    Quality of materials            experience/
                                                                                                              o   Elitism               o   Reward
                                                       service


       Luxury goods purchase in Asia is motivated by the desire to own high-end quality products while exclusivity and indulgence drive luxury
       purchases in Europe.While each motivation plays a role in the decision to purchase luxury goods, our analysis suggests that Status is the
       most variable motivator when comparing individuals

       In Europe, the drivers of luxury consumption are exclusivity and indulgence, whereas in Asia, the primary driver is status



       Index scores on each factor (arrows show
       direction of mean relative to average)



                                                          Indulgence                     Exclusivity                        Status                         Quality




              ASIA
                                                             (-0.1)

                                                                                            (0)                              (0.6)                          (0.2)




                                                                                                                            (-0.3)
              EUROPE                                         (0.1)                          (0.2)                                                            (0)



       And differences even appear between
       age groups within regions.




              ASIA                                    0.02   -0.29 -0.74
                                                                                     -0.04 -0.02       0.06        0.67     0.48     0.55         0.19      0.20     0.18




                                                      0.06    0.08    -0.13                                                                       -0.05 -0.02        0.03
              EUROPE
                                                                                                                  -0.09 -0.50 -0.80
                                                                                     0.17    0.19      0.05




                                                        18-35          36-54          55+


        advertising.microsoft.com



MSC901_Research Paper_F.indd 8                                                                                                                                        4/22/09 4:46:47 PM
       Mapping countries according to their affinity with different purchase motivations provides
       insights for campaign planning. We found that markets can differ by key motivators which
       is important information for advertising strategists.

       Germany, Denmark, Italy Spain are markets which are exclusivity-driven whereas Japan,
       China are status-driven.

       The size of the bubbles indicates the relative proportion of a market’s online population.
       Axes show the extent to which each country over/under indexes on each motivator.
       Over-index = right and top, under-index = left and down.



         Exclusivity                                       Exclusivity                                    Exclusivity
         Driven                                               +1.0                                          + Status
                             Germany
                                                                   Singapore
                        Denmark
                                              Spain                       Russia
                                                                                         Taiwan
                                                                                 India            China

                                    Sweden Italy       Finland


          -1.5                                                                                                Status
         Status                                                          South Korea                           +1.5




                   Switzerland                                   Hong Kong
                                      Netherlands
                                                      Belgium                             Japan

                                                                                                             Status
                                                          Exclusivity                                        Driven
                            Norway                           -1.0




       Belgium, Netherlands and Sweden emerge as markets most driven by Indulgence as a motivator.


         Indulgence                                       Indulgence                                      Indulgence
         Driven                                              +1.0                                           + Status



                                  Sweden                 Belgium                            China
                                           Netherlands
                                                                                Taiwan
                                 Germany
                                         Spain
                              Norway
                        Switzerland                              Singapore
          -1.5                                                                                                Status
         Status                                                                                                +1.5
                                  Denmark       Italy Finland                   India
                                                              South
                                                              Korea         Russia

                                                                     Hong
                                                                     Kong

                                                                                    Japan
                                                                                                             Status
                                                             -1.0
                                                                                                             Driven
                                                          Indulgence




MSC901_Research Paper_F.indd 9                                                                                          4/22/09 4:46:50 PM
                                  Luxury and Technology
                                  Luxury consumers in Asia and Europe are already using the
                                  Internet to both engage with and talk about luxury brands.
                                  Our survey data confirm that Luxury Lovers are heavy users of online services and applications.


                                  Used in past six months



                                        Online Activity                             ASIA                   EUROPE
                                        Using Email                                   80%                          84%

                                        Online Banking                                73%                          70%

                                        Online Shopping                               70%                          66%

                                        Business Purposes                             59%                          63%

                                        Downloading Music                             56%                          44%

                                        Instant Messaging                             55%                          46%
                                        Watching user generated
                                        video clips                                   54%                          45%
                                        Going on social
                                        networking sites                              48%                          36%
                                        Watching TV                                   42%                          29%




                                  advertising.microsoft.com



MSC901_Research Paper_F.indd 10                                                                                                     4/22/09 4:46:52 PM
         Luxury Consumers and the Internet
         Luxury consumers in both Asia and Europe rate the Internet
         highly as a source of inspiration and ideas for luxury brands.

         60% Researching or                                   30% Receiving                                             51% Communicating
         sourcing products                                    communications from                                       with others about
         or brands                                            brands or retailers                                       brands or products
        • Finding out where to buy                            • Receiving email newsletters from                        • Forwarding emails or links to friends – to share
          a desired product                                     prestige retailers                                        or recommend products

        • Establishing a brand’s heritage and                 • Receiving email newsletters or event                    • Sending IM to friends about luxury products
          ‘authenticity’ via its website                        invitations from luxury brands
                                                                                                                        • Sending SMS or MMS messages from stores to
        • Browsing luxury goods online                                                                                    include friends in purchasing process




        There is high acceptance of luxury                                               In Europe, the Internet has an important
        display advertising across many                                                  role to play in luxury brand inspiration.
        online environments (even more so                                                In Asia, the Internet rates highly as a key
        for Asian Luxury Lovers)                                                         source of inspiration for luxury brands.


              % of those who would be happy to see online ads                               Thinking about luxury items such as fashion, fine jewellery,
              on each of the following                                                      watches, cosmetics and designer fragrances, which of the
                                                                                            following give you inspiration and ideas on what to buy?

                                                                                73%                      Visiting the                                       63%
                  Fashion Websites
                                                                         67%                            actual stores                                              79%

                 Lifestyle, Culture &                                   67%                                                                                  65%
             Entertainment Websites                                                                       Magazines
                                                                     60%                                                                                   60%

                    Travel Websites                          42%                                        The Internet                                        63%
                                                       33%                                                                                          50%

               Upscale Community                                   53%                             Catalog/brochure                                  50%
                         Websites                     31%                                              through mail                                45%

            Major web portals, e.g:                            48%                                       Advertising                                        63%
                        msn.com                  24%                                                         on TV                              43%

                   Personal Finance                   30%                                                 Advice from                            46%
                          Websites              21%                                                  friends & family                          41%

                     News websites                    30%                                          Billboards/posters                          41%
                                                20%                                                                                         34%
                                                                         Asia                                                                                  Asia
                   Anywhere online                     35%                                     Seeing what people                            35%
                                                19%                      Europe              wearing on the street.                         34%                Europe

                                                                                                           TV Shows                                  51%
                                                                                                                                         29%




MSC901_Research Paper_F.indd 11
       Luxury Online Advertising
       Over half of Luxury Lovers would like to see more luxury advertising online

       I would like to see more advertising of luxury goods on the Internet

                            Agree   30%                              Among the ”Agree” and “Completely Agree” Groups:
                                                  24%
                25%                       Completely Agree
                                                                    Region:
                                                                              ASIA               EUROPE               Age:
                                                                                                                             16-34           34-54             55+
                             13%           8%                                 64%                       31%                    59%              47%                34%

                                                    Completely Disagree




       Internet is a great way to stay up to date with luxury brands

                   Agree    34%                 34%                  Among the ”Agree” and “Completely Agree” Groups:
                                         Completely Agree           Region:
                                                                              ASIA               EUROPE               Age:
                                                                                                                             16-34           34-54             55+
                      25%
                                     13%     4%                               72%                       57%                    72%              62%                52%

                                                     Completely Disagree




       Perhaps unsurprisingly, Luxury Lovers want their favourite
       luxury brands to adorn their PC desktop
       Mean appeal scores of ad formats (1-5, where 5=very appealing)

                   Desktop Wallpapers                                                                        4               The overall order of preferred
                                                                                                   3.6                       formats was the same when
                     Desktop Gadgets*                                                                  3.7                   comparing key demographics.
                                                                                            3.2
         On Cellphones / Blackberries                                                              3.6                       Note the higher preference
                                                                                     2.9                                     for ads on cell phones and
               Banner ads on websites                                                                  3.6                   blackberries in Asia.
                                                                                            3.2

                 Desktop Screensavers                                                                  3.6                   Base:
                                                                                           3.1                               Total quantitative sample (n=3,603)
                     Email Newsletters                                                           3.4                         *Full text is “Desktop gadgets that
                                                                                     2.9                                     keep you up to date with the latest
                                                                                                                             luxury information”
                         IM Ad banner                                                       3.2
                                                                              2.5

               In Game Advertisement                                                       3.2
                                                                                    2.8                      Asia
            Search Engine (Ad Words)                                                  3                      Europe
                                                                                2.7


        advertising.microsoft.com



MSC901_Research Paper_F.indd 12                                                                                                                                     4/22/09 4:46:53 PM
     Microsoft Advertising
     channels reach Luxury
     Lovers of all demographics


             % who use at least
             once per month                           REGION                AGE            GENDER
                                                    Asia   Europe   16-34   34-54   55+   Male      Female



                      Windows Live Hotmail          74%    44%      72%     55%     43%   65%       64%

                      Windows Live Messenger        72%    47%      72%     52%     43%   64%       63%

                      Windows Live Search           67%    29%      61%     47%     30%   57%       53%

                      Facebook                      58%    31%      60%     36%     15%   51%       48%

                      Windows Live Spaces           58%    N/A**    61%     43%     29%   56%       52%

                      Windows Live Search
                      Maps
                                                    60%    22%      54%     32%     17%   48%       41%

                      XBOX Live                     1%     17%      6%      6%      3%    5%         6%

                      MSN Portal                    72%    38%      67%     53%     48%   63%       59%
         * Base Total Sample (n=3,603)
         ** This question was not asked in Europe




MSC901_Research Paper_F.indd 13                                                                  4/22/09 4:46:55 PM
       Appendix | Methodology


       All research was conducted by London-based Essential Research on Microsoft’s behalf.



       Phase 1: Qualitative Research
       A multi-stage approach across the US, UK, France and Japan
       STEP 1 Media and technology diary

       STEP 2 Individual depth interviews

       STEP 3 Friendship pair interviews




       Phase 2: Quantitative Research
       A 15-minute online survey amongst 3,603 “Luxury Lovers” followed by a
       wave of follow-up web chats conducted via Windows Live Messenger

       ASIAN SAMPLES
       South Korea                China              Japan                  India                  Hong Kong         Singapore   Taiwan

       n:253                      n:250              n:252                  n:250                  n:253             n:253       n:251


       EUROPEAN SAMPLES
       Italy                         Germany                  Spain                       Sweden                Switzerland      Belgium

       n:255                         n:254                    n:255                       n:58*                 n:255            n:153

       Netherlands                   Denmark                  Norway                      Russia                Finland

       n:256                         n:47*                    n:88*                       n:251                 n:57*
       *Note that Denmark, Norway, Finland, and Sweden were combined (weighted by population) and presented as Scandinavia




        advertising.microsoft.com



MSC901_Research Paper_F.indd 14                                                                                                        4/22/09 4:46:55 PM
       Appendix | Internet is a critical source of information amongst luxury goods consumers




       You mentioned that you use the internet to find out
       about luxury items. Approximately how often do you
       use the internet to find out about luxury goods?

       Proportion of our sample who use the internet at least
       monthly to find out about luxury products
       Asia       69%                                                  Europe      52%



        Proportion of Asian countries who use the internet at least
        monthly to find out about luxury products online

        Asia                               South Korea                 China               Japan

        69%                                65%                         78%                 53%

        India                              Hong Kong                   Singapore           Taiwan

        38%                                63%                         45%                 37%




        Proportion of European countries who use the internet at
        least monthly to find out about luxury products online


        Europe                    Italy                  Germany               Spain     Sweden        Denmark

        52%                       49%                    50%                   49%       53%           61%

        Norway                    Russia                 Switzerland           Belgium   Netherlands   Finland

        38%                       63%                    45%                   37%       44%           66%




MSC901_Research Paper_F.indd 15                                                                                  4/22/09 4:46:55 PM
                                  For more information contact:

                                  Beth Uyenco, bethu@microsoft.com
                                  Global Research Director

                                  Nancy Ko, nancyko@microsoft.com
                                  Research Manager for Greater Asia/Pacific

                                  Simon Falconer, sifalcon@microsoft.com
                                  Consumer & Emerging Media Insight
                                  Manager for EMEA

                                  advertising.microsoft.com




MSC901_Research Paper_F.indd 16                                         4/22/09 4:47:03 PM
      Call on Microsoft Advertising
      for a customized advertising strategy
      that targets your audience through a range
      of digital experiences. We deliver the
      innovation and expertise to help you reach
      millions of people with just one platform.




MSC901_Research Paper_F.indd 17
MSC901_Research Paper_F.indd 2   4/22/09 4:46:27 PM

				
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