From Louis Vuitton to Gucci and Chanel to Krug, when it comes to luxury goods just two countries spring to mind – France and Italy. Not surprisingly, schools that have specialised in teaching on the subject are in just two cities, Paris and Milan.
The school best-known for its teaching on luxury goods is Essec Business School in Paris, which offers an MBA in Luxury Brand Management as well as short courses on the subject. Simon Nyeck, academic director of the MBA, says luxury goods are by definition aspirational. “They should make people dream.” He says this distinguishes between two great brands such as Louis Vuitton and Wal-Mart.
Essec teaches how to manage the brand, says Prof Nyeck, and this involves a deep understanding about the various luxury industries – wine, perfume, fashion and jewellery. “For me, everything is anthropology,” he says. Understanding semiotics, the study of signs, is critical to understanding luxury goods, and the message their producers are trying to sell. Maintaining the heritage of the product, as well as its modernity, are also important, he says.
While the brands are of different types, managing them poses similar problems. One of the biggest challenges is brand extension – moving into other areas such as watches or spectacles. A second is dealing with increasing competition from new entrants – the Chinese company Shanghai Tang into the fashion industry, for example. A third is the cost of manufacturing, and whether luxury goods makers can manufacture outside their traditional European homes.
Prof Nyeck believes if handled correctly overseas manufacture can be acceptable to customers as well as shareholders – manufacturing silk goods in China, for example, is permissible because China is strongly associated with the silk market.
Luxury goods makers also have the perennial problem of recruiting and training staff, particularly as the salaries they pay are below that of other sectors.
Unlike other sectors, though, one of the biggest issues for luxury goods companies is counterfeiting. Whether it is a help or a hindrance is debateable. Although the general perception is that counterfeiting detracts from the brand, Prof Nyeck is not so sure. “They [the counterfeiters] are building brand awareness. When the consumers become educated they will buy the real thing.”
Across Paris, HEC has lately entered the market for luxury goods programmes. Unlike Essec, HEC is teaching its programmes in China to Chinese executives.
HEC is already offering an Advanced Management Programme in Fashion and Luxury with Tsinghua University in Beijing and will offer a specialised masters programme with the Chinese school from September. “It is clear that in this sector there is a huge demand in the Chinese environment,” says Bernard Ramanantsoa, dean of the school.
The programmes will teach the technology and marketing dimensions of the luxury industries as well as issues of quality and culture. Prof Ramanantsoa brushes aside concerns that the programmes are educating potential rivals for French luxury companies. “My personal position is that we push the western companies to invest more in innovation.”
HEC is not the only business school to be educating the Chinese. SDA Bocconi, in Milan, has developed a programme with Fudan in Shanghai to teach luxury and fashion management to Fudan’s MBA students. Executive education programmes with Fudan are also on the cards.
The next phase will be for Bocconi to develop similar programmes in India, says Stefania Saviolo, director of the Master in Fashion, Experience and Design Management, which is run with Altagamma, the Italian association of high end producers, which includes companies such as Bulgari, Fendi, Gucci, Missoni, Ferragamo and Versace.
“In India there is no awareness of brands – Indians shop abroad in London or Dubai [for luxury goods],” says Prof Saviolo. The challenge in India, therefore, will be to change the aspiration from non-branded goods to branded and how to manage retail outlets.
Prof Saviolo defines her area of expertise as broader than that defined by the French schools, including fashion as well as heritage items in her remit. She also points out that an increasing number of sectors are included under the umbrella term of luxury goods – cosmetics, hotels and even interior design.
Boris Porkovich, associate dean for graduate programmes at the International University of Monaco is in agreement. “As luxury becomes more accessible, it’s being redefined,” he says. Sandwiched between France and Italy, the university is the latest to enter the luxury goods market and has launched an MSc degree in luxury goods and services.
Unlike France and Italy, which are the big producers of luxury goods items, Monaco is a consumer market, says Prof Porkovich. Indeed he describes Monaco as having an air of “controlled opulence”. The focus of the Monaco programme, therefore, is the behaviour patterns associated with luxury goods and “how the purchasing decision is affected by emotion.” The art, says Prof Porkovitch, is to “emphasise the magic in the retail experience”.