Role of Brand Management of the Luxury Fashion Brand in the Global Economic Crisis: A Case Study of Aeffe Group

In the last two decades, the luxury fashion industry has generated much interest and discussions among academicians and managers since it has became a consolidated economic sector in the late 1990s (Truong, McColl & Kitchen, 2009). Despite the significance of luxury fashion sector both in terms of market value and rate of growth, there are few empirical studies concerning luxury brand management (Kapferer, 2008; Okonkwo, 2007) mainly focused on specific topics such as: brand protection (Clarke & Owens, 2000; Elsemore, 2000), brand extension (Dias & Ryab, 2002; Sjodin, 2008; Stankeviciute & Hoffmann, 2010), counterfeiting (Gistri, Romani, Pace, Gabrielli & Grappi, 2009; Nia & Zaichkowsky, 2000) or luxury brand personality (Fionda & Moore, 2009; Phau & Prendergast, 2000). The same definition of luxury brand is still open for debate in the literature (Atwal & Williams, 2009). From a product perspective, luxury brands can be distinguished from non-luxury brands by product-related associations. Therefore, the essential characteristics of luxury products correspond largely to those of luxury brands. These attributes can be identified in high price, distinctiveness, exclusivity, rarity, craftsmanship and excellent quality (Kapferer, 2008; Nueno & Quelch, 1998; Phau & Prendergast, 2000). All these symbolic characteristics are covered by the emotional brand identity component which corresponds largely to the luxury brand personality (Aaker, 1997; Phau & Prendergast, 2000; Sweeney & Brandon, 2006). In any case, the strategic importance of brand as an intangible asset on which strategic development and competitiveness of luxury fashion firms is based is widely recognized (Okonkwo, 2007; Vickers & Renand, 2003). Firstly, because luxury fashion goods differs from necessary or ordinary goods by some essential attributes (price, quality, rarity, etc.) that can be well expressed by the brand identity and its symbolic personality (Aaker, 1997; Kapferer, 2008; Kemp, 1998; Mason, 1992; Sweeney & Brandon, 2006). Secondly, the functional benefits of many luxury fashion goods are becoming increasingly equivalent, exchangeable and simply to imitate. This strengthens the brand’s power of identification and highlights the importance to invest substantially in brand building in order to maintain a stronger competitive position (Okonkwo, 2009). Today the luxury fashion sector has been hit seriously by the global economic crisis (Kapferer & Bastien, 2009; Yeoman, 2011). This last one, together with other structural changes involving the sector in the last years (both in the supply and demand side), leads to a very uncertain environment that improves the importance of some competitive factors such as innovation, time to market and customer service. With reference to luxury-brand management, despite the lack of studies and empirical researches, we observe two parallel (and partially opposite) trends. In the demand side, changes in consumer behavior together with the new austerity attitude spreading over the last three years tend to decrease the brands customers’ attention and interest. Consumers are rethinking their spending priorities putting less attention to the aspirational values of luxury brands and more attention to the exclusive features of the luxury products (Kapferer & Bastien, 2009; Yeoman, 2011). In the supply side, there is a growing competitiveness and a decreasing availability of financial resources that limits the R&D investments so strengthening the strategic relevance of brand that becomes one of the main intangible assets on which the competitive advantage and the value creation of a luxury fashion firm can be based (Degen, 2009; Kapferer & Bastien, 2009; Yeoman, 2011). Starting from these assertions, the aim of the paper is that to analyze what luxury fashion firms can do in order to increase the effectiveness of the brand investment (as it is fundamental for their economic survival and long term competitive advantage) and regain the customers’ brand attention. The study firstly proposes a literature background which discusses the potential effects of world economic crisis on luxury brand management assuming a wide perspective of analysis that considers the crisis-phenomenon among the main changes interesting the luxury sector both in the demand side and the supply side during the last years. Secondly, the case of a famous Italian luxury fashion firm is analyzed in-depth: Aeffe Group. The empirical study is based on the qualitative case-study approach. It has been carried out by face-to-face interviews to the Aeffe Marketing Managers and a review of the Group’s archival documentations and publications. It highlights some managerial implication that could interest other firms operating in similar contexts. In particular, we put attention on three interrelated brand management’s critical dimensions that could assist luxury fashion firms in order to increase the effectiveness of brand investment and regain the customers’ brand attention. –Focusing on core brands, putting more attention to products and processes’ quality in order to strenghten the main values of the brand identity. – Managing the composition of brand-portfolio in order to face the emerging customers needs and values. This requires continuous innovation and new product development. – Developing a more managerial approach in brand management, less influenced by the mere creativity of the stylists. This involves the implementation of an organizing model based on commitment and wide sharing of firms’ values strategies and objectives aimed at supporting the creative process; a more careful management of the communication activity and of the retail (because of its strategic role in brand identity’s communication) and a very careful management of the license agreements, largely widespread in the luxury fashion market.