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Development of Luxury Products: Montblanc

Info: 5419 words (22 pages) Dissertation
Published: 12th Dec 2019

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Dissertation subject:

a. 'Montblanc. Its development in the luxury industry' OK

b. 'The Montblanc's brand extension in the luxury industry' OK

c. 'Montblanc brand: from a specialised luxury brand to a global luxury brand'

2.              Dissertation issue / key question:

a. 'Did Montblanc, a specialised luxury brand in the writing instrument segment, extend its perception of 'luxury brand' to its other product categories?' OK

b. Has Montblanc, a specialised luxury brand in the writing instrument segment, been successful in extending this perception to its other product categories?

3.              Literature review:

a. Definition of luxury:

* Different points of view

* Key words/concepts (to be tested in the survey)

b. Definition of luxury brand

c. Concept of diversification strategy:

* Objectives

* Types

* Drivers to be successful (consumer perception / reaction)

* Performance (to which extent)

* Montblanc:   strategic diagnosis (SBU)

d. Brand extension   Luxury brand perception:

* (How to measure it? Consumer's reaction)

4.              The research:

a. Key question: can a specialised luxury brand extend its perception of 'luxury brand' to other product categories? The case of the Montblanc brand.
Today, is Montblanc a global luxury brand (not anymore a specialised luxury brand)? Therefore how was it possible? Well know reputation in its core business (for quality, design, social status) and the choice of neighbouring segments.

b. Hypothesis: Montblanc is today an established global luxury brand. Montblanc is a clear example of a successful brand extension. How was it possible? (Reputation, tradition, quality, Montblanc extended its way of doing business based on quality and style next to its outstanding reputation in its historical core business)

5.              The research:

a. Objective: To prove that Montblanc has been able, in a relatively short time, to become a global luxury brand.

6.              The research method:

a. Which is the information to be collected in order to answer the issue discussed within our work and to verify the hypothesis?   the consumer's perception of the Montblanc brand (the only boss) and the point of view of the Montblanc's managers (figures on diversification mix, and resources allocated)

b. How to collect the data (survey, interviews)?

c. Which is the pitch of the research? Luxury sector, Montblanc and its major competitors in jewellery / watches / leather categories, luxury brand current and potential consumers.

Becker, Howard S. (1998), Tricks of the trade, How to think about your research while you're doing it, The University of Chicago Press.

7.              Analysis of the research findings:

a. Analyse and understand the collected data   as usually it helps identify some factors that may answer our issue, although often these elements are not complete

b. Criticise the research method and its limits (limited sample)

8.              Conclusion:

a. Buyers of Montblanc products (not only writing instruments): confirm the hypothesis

b. Buyers of only Montblanc writing instruments   to gain tradition in watch and jewellery segments requires times although a good quality but not impossible

c. Montblanc's managers: good results so far.

Recommendations:

a. Montblanc has to go on investing in its diversification strategy because failing in doing so would be highly risky for its brand perception among the final consumers. Could Montblanc extend its perception to other product categories? Not right now: low resources and need to be definitively established as a luxury brand in key categories such as watches and jewellery.

Write:

* 'la probl©matique' involves the key question, the hypothesis of the research and the elements / factors which will help to develop the chosen subject.
This first part includes the definition of the subject, the review of the literature (plus bibliography), the question, the hypothesis and the method of the research other than the action plan.

* Final dissertation: develop the different topics without any linking parts, add these linking parts, further develop underestimated parts and cut what is useless. Add the table of contents, bibliography, appendix, etc.


Executive Summary

* The research and its Interest

* The key question and the hypothesis

* Research method

* Major findings

* Conclusion

* Recommendations

The purpose of this research paper is to investigate if and how a specialised luxury brand can extend its perception of 'luxury brand' to other products categories. Being the luxury industry so wide of dimensions, the researcher decided to focus on one specific brand: Montblanc.

This choice permitted to closer define the pitch of the analysis in order to carry out a reliable and feasible research that might prove the success of the diversification strategy pursued by the Montblanc brand. Montblanc represents, indeed, an interesting case study to show how the diversification strategy can be an effective tool to increase the luxury brand perception among the final customers.

Montblanc, market leader for what concerns the writing instruments, has been striving during the last few years to definitively become a global luxury brand. To do so, Montblanc entered many different segments of the luxury world, such as leather, watches, fragrance and eyewear in the last €˜90s and the silver jewellery at the beginning of the 21st century. Moreover, a couple of years ago, Montblanc stepped forward into the fine jewellery business which is seen as 'the critical step' in its strategic development to attain the full status of global luxury brand.

In order to verify how the Montblanc brand is viewed and perceived in its competitive environment, the researcher adopted both a quantitative and a qualitative research method.

On one hand, a customer survey consisted of XXX questions was developed. This survey submitted to actual and potential customers had the objective to impartially investigate the customer perception of the Montblanc brand.

On the other hand, in-depth interviews with some Montblanc's managers were carried out. The interviewed, who represented different levels of the Montblanc's management, allowed the researcher to gain a full picture of the Montblanc brand and its strategic movements. Moreover the direct comparison with the Montblanc's management was important to identify on which resources and competences the final recommendations could be based.

For practical purposes, this study can be divided in five major parts:

1. the first part outlines the theme and the key question of the research paper;

2. the second part concerns the review of the literature as regards the following points: the definition of luxury and of luxury brands, some approaches to measure the brand perception / the reasons why people buy luxury goods (status-laden or conspicuousness-laden), and the diversification strategy. This part will be concluded with an in-depth analysis of the Montblanc brand;

3. the third part gives a fulfilling view of the undertaken research with particular attention to the objective, the hypothesis and the research method;

4. the fourth part covers the relevant findings coming from the analysis of the research results;

5. the last part presents the conclusions of the study and the researcher's final recommendations to the brand.

The theme of the research paper 'Luxury and the Montblanc brand' gives an important insight of the key constructs at the core of the work.

In first position one finds the term 'luxury' whose meaning and definition are almost fuzzy. It is the reason why, this work will examine some important findings coming up from the literature so wide in this respect, at the end of which some major traits of the definition of luxury will be underlined. Especially, the literature review will cover the evolution of the definition of luxury all along the 'recent' history. To be noticed that, the construct of luxury will be also investigated in the survey submitted to the final customers and also in the interviews to the Montblanc's management and other practitioners of the luxury industry. This research, carried out by exploring both the customers' and the professionals' point of view, enriches the research itself and helps to get a good understanding of the major characteristics emerging nowadays about this fascinating concept. To be clarified that this study, focusing on the Montblanc brand, is related to a part of the luxury market such as the accessories, jewellery and watches segments.

The second part of the theme of this study is represented by three words: 'the Montblanc brand'. This recalls two topics. The first one refers to the term 'brand'. By revising the literature, a definition of brand will be proposed. In this respect, there are not important doubts and we will briefly comment the definition of brand recently provided by Jevons (2007). Nevertheless, some issues may arise for the definition of 'luxury brand' which is obviously related to the construct of luxury. The expression 'the Montblanc brand' as a whole, moreover, puts the attention on the leader German brand whose unmistakable star logo is worldwide the icon of quality and excellence. As previously said, the researcher chose a specific brand to be able to concretely study the fundamental question of his research paper that will be clarified in the next lines.

To be noticed that the two parts of the theme title 'luxury' and 'the Montblanc brand' are tied up by the conjunction 'and' that underlines the strict link between luxury and the Montblanc brand. Nevertheless, this link requires a further consideration because it can be misleading if not misunderstood.

Which is the real mean of this linkage? There are no doubts that Montblanc is a luxury brand; but is it a specialised luxury brand or a global luxury brand?

This question is strictly connected to the core issue of this master thesis. More precisely, the driver question is if a specialised luxury brand can extend its perception of 'luxury brand' to other product categories.

In order to answer this key issue, the researcher chose to study a well-known brand which has been pursuing a diversification strategy to become a global luxury brand. The construct of diversification strategy will be explained from a literature point of view. Moreover, an in-depth analysis of the Montblanc brand and its strategic business areas will be undertaken by applying some tools learned during the studies at the ESCP Europe especially during the modules of strategy and of strategic diagnostic. This becomes fundamental to better understand in which kind of diversification strategy Montblanc is engaged and to give a wide knowledge to the reader about the brand itself.

To conclude, herein the reasons why the student chose this theme for his master thesis. There are three major reasons bringing to this choice.

The first one refers to the luxury world. The construct of luxury, albeit widely analysed in the literature, remains somehow mysterious. Today, the definition of luxury is strongly evolving mainly due to the economic uncertainty mostly caused by the financial crisis of 2008. Therefore, although the probability to uniquely define luxury is very low if not nil, the challenge to better understand what luxury is/means/represents/is perceived nowadays represents to the researcher a great topic of interest. His interest in luxury is also nourished by the will to work in this sector in the upcoming future. This surely stems from the professional experiences made by the student as part of his studies within companies (Montblanc and Concord) operating in the jewellery, watches and accessories segments. Indeed, during these experiences, the student was impressed by this world rather mysterious where the care of the smallest detail makes a huge difference.

The second reason concerns the Montblanc brand. The researcher had the chance to work for five months at Montblanc International, at the Headquarter in Hamburg within the Jewellery Category Department, and for three months at Montblanc UK, in London within the Retail Department. During this extremely positive experience, the student discovered in-depth this fascinating brand, from its tradition to its vision, from a strategic and more operational point of view. Surely the experience personally gained at Montblanc became highly useful in the development of the research and mainly in the analysis of the brand and of its strategy. Moreover the ongoing meetings/interviews with the Montblanc's management had a double advantage. On one hand, it enriched the content of the study and on the other hand helped the student maintain the contacts with a firm that is at the top of his personal ranking of his employment research.

The third reason concerns the strategic aspect behind this theme. Indeed, the diversification strategy pursued by Montblanc offered to the student the possibility to develop this construct often used/abused by luxury brands to extend their perception of luxury and, as a consequence, to finally increase their revenues. The diversification strategy has often been the object of strong discussions, mainly for what regards the results of pursuing this strategy and the ways of implementing it. This work has got the objective to rationalise the different types of diversification strategy and to investigate this theoretical concept on a concrete case study, thanks to the study of the Montblanc brand. This research will focus on the key factors of success or failure standing from the analysis of the diversification strategy pursued by Montblanc.

'Did Montblanc, a specialised luxury brand in the writing instrument segment, extend its perception of 'luxury brand' to its other product categories?'

This key question gives a stricter view on the content of this research paper. This study will focus on the strategic development of a specialised luxury brand as Montblanc was/is in the writing instrument segment since its origin. In detail, the research has got the purpose to investigate how the Montblanc brand is nowadays perceived from the final customers. The findings coming up from the customer survey will help the researcher evaluate if the Montblanc brand is still perceived as a specialised luxury brand or if its image has developed to the status of a global luxury brand. The customers' responses represent indeed the most reliable feedback to assess the degree of success of the diversification strategy pursed by Montblanc in the last years which has brought the brand to operate in relevant luxury segments such as leather, watches, fragrance, eyewear and jewellery next to the historical business area of writing instruments.

At a second stage, the customers' responses will be compared with the Montblanc management's point of view in order to verify if some discrepancies exist. This step is important to get a full picture of the Montblanc brand's standing.

Then, after an accurate presentation of the research, the student will point out the major findings in order to draw his conclusions about his study. The conclusions will include the major factors of the diversification strategy pursed by Montblanc to extend its perception of 'luxury brand' to other segments in the luxury industry, in addition to the fields of improvement coming out of the research.

Finally this research paper will present the student's recommendations which will take into account the strategic objectives standing out from the interviews with the Montblanc's management and also the Montblanc brand perception outlined by the customer survey.

In the next pages, the student will study, by starting from the literature review, some key concepts at the core of this research paper which include:

* the definition of luxury and its evolution;

* the definition of luxury goods;

* the definition of brand and of luxury brands;

* briefly the different approaches to measure the brand perception among the final customers.--> the reasons why people buy luxury goods (status or conspicuousness);

* and the presentation of the diversification strategy: the objectives, the different types, the advantages and the drawbacks, the risks, and the key success factors.

The literature review, as said, will be completed by the contextualisation of these constructs to the Montblanc brand. At this stage the Montblanc brand will be studied in order to give all the required basics to launch the following research.

In order to better define the constructs at the core of this research paper that will give the background of the following research, an in-depth literature review will be made. Four major concepts will be discussed thanks to the support of different literature material which includes insights from books, articles, management and fashion websites and personal references in terms of power point presentations, excel documents and excel files.

The activity of research consisted mainly in going through the databases accessible from the Intranet at ESCP Europe in order to directly access to a wide range of reference material.

The definition of luxury

The first part of the literature review regards the construct of 'luxury'. Luxury has always been a central field of research. Indeed its specific characteristics have attracted the interest of the researchers all along the history. However, albeit the meaning of luxury is widely discussed in the literature, researchers did not come up with a commonly accepted definition of this construct. For sure, it is not possible to uniquely define luxury. Simply, the words do not seem to be able to describe what luxury means. In this respect, the literature leaves this concept shrouded in mystery.

This research paper will face the definition of luxury by going through different steps. At the beginning some different definitions of luxury will be put forward by touching its literal and economic meaning, and also by exploring some philosophical and social interpretations. Then, an interesting brief explanation of the etymology of the term 'luxury' will be presented. Afterwards, the 'history' of luxury will be outlined before entering in more detailed considerations regarding the notions of old and new luxury. At the end of this first part, the student will show the latest development of the 'luxury' construct by getting important insights from the practitioners' point of view founded in articles related to the luxury world.

Literal definition of luxury

Webster's Revised Unabridged Dictionary (1913): 'Anything which pleases the senses, and is also costly, or difficult to obtain; an expensive rarity.'[1]

[2]

Economic definition of luxury

Mason (81): 'Un produit est consid©r© comme luxueux si l'©lasticit© de la demande par rapport au revenu est sup©rieure   1.'

Philosophers' definition of luxury

Paul Iribe (1932): 'Luxe: besoin qui commence o¹ finit la n©cessit©.'[3]

Voltaire (1694-1778): 'Superflu chose tr¨s n©cessaire. J'aime le luxe et mªme la mollesse.'

Rousseau: 'Le luxe doit ªtre rejet© car il est contraire aux exigences de la nature.'

Sociology researchers' definition of luxury

Bourdieu (79,84): 'Comme tout acte de consommation, l'achat d'une marque de luxe est un moyen d'affirmer sa position sociale, de faire croire   un changement de position ou prouver un changement de position sociale. Tout d©pend du r´le que l'individu joue ou pense jouer au sein de son groupe de r©f©rence.'

Baudrillard (68): 'L'acc¨s au luxe est d©termin© par une volont© sociale de se distinguer, de se d©marquer ou bien encore de s'affilier   un groupe. Suivant le groupe social auquel la personne se r©f¨re, le luxe aura une signification diff©rente.'

Maffesoli (96): 'L'analyse du luxe par le prisme des classes ne prend pas en compte le resserrement des individus autour de groupes restreints, de tribus. La consommation devient alors un plaisir personnel et intime, sans volont© ostentatoire.'

Management researchers' definition of luxury

Gutsatz M. (96): 'Le luxe comprend deux niveaux de repr©sentation. Le premier niveau est mat©riel, il comprend le produit et la marque (son histoire, son identit©, son savoir faire unique, le talent). Le second niveau est psychologique. Il s'agit de repr©sentations qui nous sont propres, influenc©s par notre milieu social et les valeurs de la marque.'

Roux E. (91): 'La marque de luxe se caract©rise par une valeur ajout©e symbolique, imaginaire ou sociale qui la diff©rencie des autres. La marque de luxe correspond ainsi aux besoins symboliques que le consommateur peut ressentir (par opposition aux besoins fonctionnels ou de vari©t©).'

Laurent G., Dubois B. (95): 'Le luxe est subjectif, personnel et perceptuel. Si l'on cherche   d©terminer les attributs caract©risant un produit de luxe, 6 dimensions apparaissent : Une qualit© sup©rieure et per§ue, un prix ©lev©, une s©lectivit© et une raret© des produits et de la distribution, un pouvoir attractif important un savoir faire certain et la non n©cessit©.'

Practitioners' definition of luxury

Coco Chanel: 'Le luxe est le contraire de la vulgarit©.'

Boucheron A.: 'Le luxe est une « mayonnaise » constitu©e de diff©rents ingr©dients. Si l'un d'entre-eux manque ou est mal dos©, la mayonnaise tourne. Le luxe est un concept et non un produit'.[4]

Jean-Louis Dumas-Herm¨s, historic Chairman and CEO of Herm¨s: '[5]

Just by analysing these few definitions of luxury, one can notice the absolute subjectivity of this concept. It stands out that luxury has got a close linkage with pleasure, rarity, exclusivity, quality, high price tag. Economists define luxury as something which is unnecessary, statement which would be probably argued by some studies on the consumers' reasons to buy luxury. For someone (Rousseau) luxury should even be avoided because it is not a primary need of the human being.

Luxury is something that belongs to the inner part of each individual but it can be also highly other-oriented. By wearing or experiencing luxury items, an individual expresses his own personality and can show his social status and position in the community.

The fact is that luxury is probably a bit of everything, a perfect trade off of opposite concepts. This makes luxury a kind of mystery.

After this round-up, the study will briefly present the etymology of the term 'luxury' before briefing touching the historical evolution of luxury.

Etymology of word luxury

According to Dubois, Czellar and Laurent (2005) the English term[6] 'luxury' is derived from the Latin 'luxus', which, according to the Oxford Latin Dictionary, it signifies 'soft or extravagant living, (over-)indulgence' and 'sumptuousness, luxuriousness, opulence'; 'luxus' also means sensuality, splendour - and its derivative 'luxuria' is extravagance, riot etc. Merriam-Webster's Dictionary defines 'luxuriance' as something characterized by richness and extravagance, often tending to excess.

The word 'luxury' is also often semantically associated with 'lux' the Latin word for light; therefore, luxury carries connotations of brightness. It is glittering and, in addition, it is something visible.

The evolution of luxury

Until the Middle Ages the writings point out that luxury was the reflection of the religious mystery that drives the human being to go beyond himself driven by an offer or a sign.

But the heyday of luxury is without any doubt the Renaissance (15th and 16th century), flourishing period for literature, art and science. This period reflects the explosion of luxury, vogue of the ostentatious architecture coming from Italy. At that time, luxuries are exclusive items belonging to the aristocracy and the court. During the Renaissance luxury becomes the prerogative of the bourgeoisie.

During the 18th and 19th century luxury remains exclusive of the '©lite'. The 20th century signs an important step in the evolution of luxury. Mainly after the Second World War luxury becomes almost conformist, not extravagant or eccentric. In the €˜80s, the focus is on the luxury consumer; in this time, younger period discover luxury thanks to the accessories. At the end of this decade, there is the boom of luxury for what concerns the distribution channel development. The major players widen their reach by exploiting the markets where they are present and even by entering new markets. At the beginning of the €˜90s, the crisis that hit also the luxury industry, pushed to rethink the concept of luxury that gained a higher spiritual/moral meaning in addition to the impeccable quality.[7]

Old-luxury vs New-luxury

With the 21st century, new terms about luxury are emerging in the practitioners' literature. For the purpose of this research paper, in the next few lines some considerations will be made on the expression of 'old luxury' in opposition to 'new luxury' in order to clarify their meaning.

Some practitioners argue that 'old luxury' is about the good itself and is defined by the company, in opposition to This seems to trace a clear line between the two concepts: 'old luxury' is about the material thing, it is about stuff. Instead, 'new luxury' is about experiencing.

Nowadays, it seems evident that 'old luxury' cannot anymore survive. The high quality of luxury products is assumed by consumers who are looking forward for something more. In our time, luxury is increasingly defined as those special qualities, features and attributes intrinsic to a product and that go beyond the item itself. According to Ms. Danziger (2008)[9], the product itself does not anymore create personal fulfilment.

Today, luxury is in the eye of the beholder and the consumers' perceptions are not anymore, exclusively depending on the exceptional quality of luxury products and on the high price tag. This does not mean that the materialism is not important but only that consumers are eager of experiences. Therefore, as a consequence, a shift from "product-centric" to "consumer-centric" point of view becomes inevitable to attract luxury consumers.

The needed clarification of 'old luxury' and 'new luxury' concepts will become also useful when the study will discuss the definition of luxury brands and in the research of the consumers' perception of the Montblanc brand which will lead to the student's recommendations at the end of this research paper.

At this point, it becomes interesting to see how the today's definition of luxury has evolved in the light of the recent events occurred in autumn 2008 which had an important impact on the entire economy and, therefore, also on the luxury industry.

Today's definition of luxury ppt vale, crisis, bling bling, tradition,

According to Yeoman and McMahon (2005), luxury is 'incredibly fluid, and changes dramatically across time and culture'[10]. This opinion becomes very much clear by thinking if the meaning of today's definition of luxury is the same definition of luxury of just eighteen months ago.

Today it is even harder to give an accurate definition of luxury. After the financial crisis, culminated with the bankruptcy of some key players in the real estate and banking industry which caused a chain reaction hitting all the other sectors, the perception of luxury has surely changed, at least to a certain extent. This critical point merits further considerations and, therefore, it will be investigated in the following research at the core of this study.

In the next lines some leaders' opinions in luxury will be presented. Some of these thoughts were collected in a confidential in-depth research carried out at the beginning of 2009, supplied by Montblanc's management. They will introduce the student's point of view about the 'sharp' evolution of luxury meaning in the last months.

Herein, some comments about the change of luxury construct in the last year.

S. Toledano, Dior: 'Compulsive shopping, it's over.'

M. Nieto, Baume & Mercier: 'Price sensitivity is coming back fiercely.'

C. Binkley, The Wall Street Journal: 'It's bling over'

J. Rupert, Richemont: 'During a recession, I'm sure consumers will choose solid values.'

B. Pavlowski, Chanel: 'Don't neglect any aspect of the product quality.'

R. Palti, Le Nouvel Economiste: 'Many markets are saturated and there is an increasing number of offers proposing the same service. Finding what will best meet the clients' expectations is no easy task. And yet, in these days of economic, financial (& lack of confidence) crisis, there is not a single company that can afford not to satisfy its clients, even just to sell.'

B. Arnault, LVMH[11]: 'post-recovery customers will not only place a particular emphasis on values like quality and craftsmanship, but also on exclusivity and commitment to social and environmental responsibility.

D. Dion, Sorbonne University: 'Luxury has to return to its exclusive and extraordinary roots.'

B. Fornas, Cartier: 'We are witnessing a return to true luxury and high end luxury products, which Cartier symbolises.'

JC Biver, Hublot: 'When there is a crisis, it is necessary to get as close as possible to one's clients to better understand them, to reassure them and to make in due time the right decisions.'

S. Toledano, Dior: 'There should be both empathy and connivance between the brand and the client.'

A. Ahrendts, Burberry: 'Even though the overall market may become difficult, I think that retailers and customers are always open to a new innovative idea or a new exciting concept.'

Jeffry M. Aronsson, Donna Karan: 'luxury is attention to detail and quality backed by superior service.'[12]

B. Pavlowski, Chanel: 'One should keep investing in creation.'

D. Peters, Jewelers of America: 'Selling in challenging times is not about product and it's not about price. Rather, it's about people and relationships, and the quality of the customer experience.'

J. Taylor, Harrison: 'The definition of living well is changing. There is a desire to not stand out. If you're laying people off, you don't want to buy a Ferrari.'

S. Geary, Mulberry: 'In the coming months, the mood will be against that €˜blind consumption.''

A. Arnault, LVMH: 'The collection focused on elegance and discretion and used materials that were noble but not too visibly noble.'

Giorgio Armani: 'Those who deliver what they promise to their customers, and bear their customers in mind, will survive the current economic climate.'

After this round-up, some further considerations have to be made. At our time, some relevant trends can be observed in luxury. These trends have an important impact on today's interpretation/ perception of luxury.

Increasing of price sensitivity is one of them. In time of crisis, luxury sector is one of the most negatively affected due to the nature itself of luxury products. According to Maslow's pyramid, luxury products do not belong to the first steps of the human beings' needs (phy

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