Ch. 4 - The Marketing Environment

Luxottica's target market is simply anyone who is in need or in want of eyewear or eye care services. In todays world selling glasses isn't as hard as it used to be. You see, many years back, glasses were the symbolic reference to your classic nerd or geek. People could have been legally blind and still refused the fact that they needed to wear those 'geeky glasses'. In todays world, that isn't so, in fact, it may be the total opposite. People love brands and the style and exclusivity that comes along with it. Many people who don't even need glasses or contacts still use them because its now considered cool.

 The eyewear business is in expansion and Luxottica is capitalizing on that. They spend hundreds of millions in advertisement across the globe. Towards the end of 2011, CEO Andrea Guerra, said “In the next few years, the target markets for our products could increase by more than 2 billion new customers.” He gives insight into plans for further expansion in different markets such as Indonesia. In early 2013 Guerra gave note to expansion plans and an update to the business saying “The start of 2013 has been particularly positive”, “Vietnam is a new option on our table”. Analysts are predicting that the company can gain double-digit growth this year. Luxottica's market share increased 26% in 2012 and the company has said it has “witnessed a shift in demand for premium and luxury brands, especially in so-called 'gateway and mega cities' and high potential channels such as travel, retail, and department stores.” Guerra said Luxottica expects to open between 60 to 70 new stores in China next year after 60 new openings this year. Expansion in different markets and locations globally calls for new strategy and even though the target market is mainly the same minor adjustments must be made specific to each region. 

Below, is Andrea Guerra in an interview hosted by the Wall Street Journal:

WSJ: How do European, Asian and U.S. customers differ?

Mr. Guerra: This is a million-dollar question. There are a lot of similarities between Mediterranean and Asian consumers: They both want a certain lifestyle, and they're in search of an emotional relationship with the objects they buy.

U.S. consumers are more pragmatic. America, compared with Europe, is always a step more conservative and traditional. Think of the most legendary sunglasses: They were all born in the U.S.—Ray-Ban and Oakley for example—but only because of their functional value. Oakley was perfect for sports, thanks to its technological value, while Ray-Bans were the pilots' sunglasses that made it easier to see in whatever climatic condition. It's all about practical features rather than a real connection with the brand. But this is changing. 

WSJ: What about Asia?

Mr. Guerra: Asia is a new discovery every day. It's like a candy store, a new world, new business models, consumers that discover a new trend every day. In China, up until five years ago, sunglasses didn't even exist. Now they're gaining ground.

Our most important markets are Brazil, Turkey, India and China. And I mentioned them in this order for a reason. Brazil is definitely our first priority. China is surely growing but is still small for us.

WSJ: How do you respond to critics who say Luxottica has used its position to keep eyewear prices artificially high?

Mr. Guerra: There are really no entry barriers in this sector. Anyone can come in and sell at competitive prices. The beautiful thing about eyewear is that you can really find them at any price—from $1 to $1,000.