Recent reports of surging growth among luxury goods makers such as LVMH and Burberry underline the insatiable appetite of consumers in emerging markets such as China for products with prestigious brand names. What’s more, data from Roper Reports Worldwide show that this desire for status brands is shared even by those consumers in emerging markets with relatively low incomes. This highlights the differences around the world in what consumers think is worth paying for – in other words, what constitutes ‘value’.
The phenomenal growth in demand for branded luxury goods in emerging markets is well documented. The driver of this growth is not just increased affluence in these markets, but also the prevailing Personal Values orientation, the Achiever mindset, which is characterized by a focus on making a good impression upon others.
While the difference between developed and emerging markets in the proportion of those agreeing they like to buy products with prestigious brand names was as small as 3 percentage points in 2008, by 2011 it stood at 12 % pts. The recession of 2008-09 led many consumers in Developed markets to reject outward displays of wealth and consumption, either through necessity or because it sat ill-at-ease with the mood of the time. In the past year, desire for luxury goods has rebounded somewhat in the Developed world, but has not yet attained pre-recession levels.
While at a headline level, demand for prestigious brand names is lower in developed markets, more detailed analysis shows that this view is confined largely to lower-income consumers in these markets. High-income consumers here are almost as likely as their emerging world counterparts to express enthusiasm. More striking yet, however, is how universal the enthusiasm for premium brands is in developing markets, even among those with lower incomes, highlighting the fact that the Achiever mindset is aspirational for many.
What these findings show, above all, is that a prestigious brand that acts as a display of status and success to others is in many cases a fundamental requirement for consumers in emerging markets, with even those who can ill-afford such brands expressing enthusiasm. In other words, a prestigious brand is worth paying for. By contrast, since the economic downturn in 2009, many consumers in developed markets have become less likely to see the value of such brand, and instead many admit switching from name brands to less expensive alternatives, as our Mood of the World report attests.
This is just one of the elements covered by our Redefining Value trend, one of the twelve that make up our global TrendKey framework of consumer attitudinal trends. The Mood of the World Report 2012 is set for release at the end of May.