Green Luxury Prof: Jean-Claude ROUSTANT

Ranjan Kumar 7th November, 2014 Marketing of Luxury Products

Letter of Transmittal A Report on Green Luxury

Prof. Jean-Claude ROUSTANT Faculty, Marketing of Luxury Products Course Groupe ESC Troyes

Dear Sir,

As per your instructions, I have prepared a report on Green Luxury as part of the Marketing of

Luxury Products course requirement. The report that contains a brief introduction of the topic

and consumer behavior associated with it.

Yours sincerely, Ranjan Kumar

Executive Summary Green Luxury is an emerging trend in the luxury industry. Depletion of resources and increasing awareness

for social and environmental issues have been the driver for emergence of this field.

The way the brand calls it green vary from each other. It can be on the basis of operational process or

product. Based on the study, it has been found that there exists submarkets in green consumers and

association with green marketing increases the brand image. But this does not necessarily guarantee the

purchase intention.

Green luxury is more effective for the new comers than the regular luxury consumers. Example of brands

like Edun, Honest By, etc have been explained at the end.

Contents Introduction............................................................................................................. 4

Green Luxury - a synonym of Sustainability ................................................................. 4

A New way of De-maturation or a Trend ..................................................................... 5

Changing Trends ....................................................................................................... 6

Consumer Behavior for Green Luxury ......................................................................... 7

Sustainability- as per Brands ...................................................................................... 7

Examples ................................................................................................................. 8

Conclusion ............................................................................................................. 13

References ............................................................................................................. 14

Introduction

The word ‘Luxury’ is derived from Latin word “Luxus” that means ‘excess’. The Oxford defines

Luxury as an inessential, desirable item which is expensive or difficult to obtain.

Luxury is defined as a specific kind of sign value (MORTELMANS), produced in specific narratives

and used in processes of stratification. As a sign, it becomes apparent that luxury is a relative

concept. Every social group can be said to have its own luxury.

“Some people think luxury is the opposite of poverty. It is not. It is the opposite of vulgarity.” –

Coco Chanel.

Similarly, to the above statement luxury is sold as an association to social status and are attached

to the persona. Brands speak the characteristics of the consumers.

With the trending behavior of consumers towards more concerns for environment and its

sustainability, has marked a few changes in the luxury industries. The global recession, economic

down-turn, increasing expectation of consumers and increasing awareness of real environmental

and social challenges have affected the way of thinking of consumers.

“Luxury world cannot live in a bubble. We are not isolated.”- says

The affluent green-conscious customers are ready to pay high for eco-friendly offerings in luxury

industries. If we have go-green consumers, then their priorities and needs require attention.

This marks the start of a niche field in Luxury Products Marketing “Green Luxury”. It can be seen

as a combination of Green Marketing and Luxury Products Marketing.

Green Luxury - a synonym of Sustainability

“Luxury should be synonymous with sustainability”- James Lawson (Simpson, 2012), Ledbury

International market research firm.

But Luxury is associated with terms like indulgence, extravagance, sheer look-at-me bling,

unnecessary, show-off – is the antithesis of responsibility - which actually means luxury is having

guilty pleasure.

But green luxury marketers have totally different viewpoint to it.

It is the story behind the brand is what makes people to buy at high cost. It is increasingly driven

by trust and legitimacy. The exclusivity and rarity of the products are what get sold.

With rising consciousness for environment, going green is the new story that can be sold.

A New way of De-maturation or a Trend

When an industry reaches to a matured stage, i.e., marked by saturation in growth curve, then

new addition to the existing product/services can bring back to the growth stage. This is called

de-maturation. On the other hand, trend is known for temporary changes in the behavior of

consumer.

As luxury industry is associated with a strong foundation of story, the story that should stay

eternal in nature. So, it should never be a temporary. But it is sometime influenced by trends.

The way consumer chooses the product is very much depended on the sentiments about the

brand. And the trends are the result of sentiments.

Moreover, a report (D’Arpizio, 2013) from the Altagamma Foundation and consultancy firm Bain

& Company confirmed the world luxury market has reached a maturity and stabilization phase.

So, green luxury can be a way for de-maturation.

“We are entering a new phase in the evolution of the luxury market,” said D’Arpizio. “More markets, more segments, and more diversity of tastes all combine to create more variables to solve for when pursuing the right strategy for growth.”

Changing Trends

Luxury market earlier splurges on quality, time, rarity and experience. Now, sustainable

consumption has become a trait of the industry. The typical ‘green’ consumer is no longer limited

to premium or mass segment. Today, green luxury consumers check for social responsibility too,

before making a purchase.

Luxury consumers have shown their concern for environment damage, global warming, and

protection of wildlife.

The affluent consumers are taking the lead as early adopters of green living. This trend has call

for luxury brands to connect with their customers who are increasingly green aware and eco-

conscious. Green marketing has become a part of their strategy.

There are a lot of trend setters – dedicated to create offering among green-living luxury

consumers.

For example – designer Stella McCartney who is famous for no-animal policy and known for

fashion forward and environmentally sound style. Donna Karan with her Urban Zen initiative –

combines a philanthropic foundation along with a retail arm that distributes a line of natural and

organic fashions – is in forefront of green movement.

Green House – Home of Eco Smart Style – online initiative by Saks Fifth Avenue to sell eco-friendly

designer fashion, home furnishing and jewelry made from recycled metals. Also, Saks has also

brought ‘natraceutical’ skin care products.

With so many changes happening, luxury brands cannot afford to ignore it. They have started

learning from these trend-setters.

Consumer Behavior for Green Luxury

Based on a survey of 524 consumers from US, Japan and Korea, (Mardhia, 2010) Izza Mardhia

tested consumer behavior in green marketing for Luxury Brand. The test result showed that

luxury brand image had positive effect on satisfaction with green marketing activities of luxury

brand. Also, preference for the brand depended on honesty, professionalism for luxury, social

contribution and high-quality and had direct and positive effect on satisfaction with green

marketing activity.

On the other hand, the SEM analysis also showed that green marketing satisfaction did not have

direct effect in the increase of purchase intention. But it had indirect effect through improvement

of brand attitude. The consumers have high interests in and positive attitudes toward

environmentally concerned products, yet such interests and positive attitudes do not lead to

purchase.

The study also showed the existence of sub-markets in green-consumers (Coddington, 1993) and

it was necessary to segment consumers who had environmentally concerned propensity, to make

categorized targets of them, in order to maximize the effect of green marketing in luxury brand.

Moreover, it was seen that green marketing would be more effective for entry customers than

for regular customers of luxury brand.

Sustainability- as per Brands

Green Luxury can be associated with Sustainability. But the problem is what defines

sustainability. We do not have a concrete definition. We do not know how to measure it.

It can be seen as something that is purely extracted from the nature – no usage of chemicals. Or

it can be connected to the reduced carbon rating. Or it can be associated with usage of renewable

energy. It can be associated with ethics or having eco-practices in some or whole process of

delivering product/services.

UNO defined sustainability as usage of present resources keeping in mind that it will be available

for the future generation. But, we are not sure if using in the way, that we think is the most

sustainable way, will actually maintain the sustainability. Different brands have different way of

calling their offering supporting the sustainability of the environment.

Different brands, thus, see it in different way.

Stella McCartney, states that “the way to create sustainable fashion is to keep asking questions

[about origin and materials] while making sure to make desirable, luxurious, beautiful clothing

and accessories that women want to buy.”

François-Henri Pinault of Kering states that sustainability “gives us an opportunity to create value

while helping to make a better world.” Included among Kering’s brands are Gucci, Saint Laurent

and Balenciaga all of which conjure up images of decadent luxury.

Some brands have started working outside their core to contribute to environment and gain

green marketing credits.

Examples EDUN

It is now owned by LVHM. It was founded by Ali Hewson and U2 frontman, Bono in 2005.

It promotes long-term, sustainable growth opportunities in Africa by supporting

manufacturers, infrastructure and community building initiatives. The aim of the

company is to increase trade throughout the continent of Africa. Their ethical framework

is highlighted by the fact that “85% of the EDUN collection will be produced in sub Saharan

Africa” for their ethically sourced ready-to-wear spring 2014 collection. The merging of

fashion and sustainability is emphasized by the brand’s latest designer, Danielle Sherman

who gets much of her inspiration from Africa. Sherman pays particular attention to

“flattening” the female silhouette through collarless shirts, blazers and coats, giving the

collection a minimalist vibe.

Prices vary within the collection and starting at about $400, you can be guaranteed to find

something to suit most budgets.

Stella McCartney

The sustainable fashion designer is renowned for role in decreasing the carbon footprint in the world of fashion. Amazingly, her company’s UK based studios and offices are all powered by wind energy. McCartney believes that companies are responsible for the resources they use, something that is clearly reflected in her respective collections. As much organic cotton as possible is used when designing new collections and the company continues to source new, recyclable materials.

McCartney’s sustainable collection includes eco-friendly eyewear made from over 50% natural and renewable resources. They are comprised of raw materials from natural origins such as castor-oil seeds and citric acid. Eyewear prices range from $350 to $230. Also in her collection are biodegradable soles that are made from a bioplastic called APINAT. She has launched a leather that has a coating created with over 50% vegetable oil, enabling the company to use less petroleum in their products.

Bodkin

The goal of Bodkin is the merging of a particular aesthetic with an emphasis on

sustainability. The company uses recycled and organic fabrics as well as non-harmful dye

in the production process. Bodkin “actively seeks out and promotes materials that use

vegetable-based or zero-effluent dye processes.” Hartman has spoken out on the

controversy surrounding the expense of eco-fashion, stating that demand for organic

cotton outstrips supply, making it more expensive.

Additionally, “beautiful things made with care and detail by skilled people” as opposed to

mass manufactured clothing will always cost more. Vivienne Westwood echoes this

sentiment encouraging shoppers to choose quality over quantity when making purchases.

VogueVert

Every purchase from VogueVert guarantees $1 and 10% of the profits of a donation to the

VogueVert Charitable Foundation. Not only does the ‘Fashion for Development’

foundation fund scholarships for green design students, but it also supports causes that

advance the protection of the environment, animals, and women on a global scale.

The mission of VogueVert is to bring conscious luxury to the consumer, their tagline states

“Giving Back is the New Luxury.” Its guiding principles are the four Es: Education,

Empowerment, Enhancement and Enrichment. Their products are made from

sustainable, recycled and vegan materials and range in price from $99 to $500 and above.

Honest By

Belgian fashion designer, Bruno Pieters founded Honest By in 2012 following a trip around

the developing world. Pieters spent time observing the ways in which natives wore

clothes as well as the materials they were made up of. He found that clothes were grown,

woven and sewn from local, organic sources. The name of the company reflects the 100%

transparency under which Honest By operates. Materials used by the company and those

they choose to collaborate with “share their personal production information from yarn

and button origin to fabric and manufacturing details; information which honest by then

communicates to the client.”

Even the store markup calculations are transparent, which sets Honest By apart from the

vast majority of fashion design companies. Honest By lives by the philosophy that fashion

is about beauty and that the story behind fashion can be equally beautiful. The company

wants to provide a unique shopping experience whereby the customer can purchase

luxury items with complete awareness of the origin and artisanship of what they are

buying. Catering for both women and men, prices vary across the board.

Conclusion

Green Luxury is not trending in the industry and is getting a very positive response from the

consumers. As the brands reflects the care for the environment and sense of responsibility

fulfillment towards the community, more people want to associate with it.

The study show that the attitude towards the brand increase if it has elements of green

marketing. The question, that is still to ask, is green luxury can help to actually sustain the

environment or it will be just a way to make money on the name of conversation.

References D’Arpizio, C. (2013). Luxury Goods Worldwide Market Study. Bain & Company.

Mardhia, I. (2010). Consumer Behavior in Green Marketing for Luxury Brand: A Cross-Cultural Study of

US, Japan and Korea.

MORTELMANS, D. (n.d.). Sign values in processes of distinction.

Simpson, A. (2012). Luxury: the new epitome of green values?, Green Future Magazine.

http://www.therichest.com

http://www. theluxurychannel.com