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1 INDEX Preface…………………………………………………………………………………………………….4 CHAPTER 1: THE LUXURY CONCEPTS 5 1.1 The four drives of change in luxury …………………………………………………….....5 1.2 The definition of luxury……………………………………………………………………6 1.3 The relativity of luxury…..………………………………………………………………...7 1.4 The luxury products…..……………………………………………………………………9 1.5 The luxury brands………………………………………………………………………...13 1.6 The relationships between luxury products and brands…………………………………..14 1.7 Types of luxury brands. ………………………………………………………………….15 CHAPTER 2: THE LUXURY CLIENTELE 17 2.1 The HNWIs………….…………….……………………………………………………...17 2.2 The four types of luxury clientele………………………………………………………...22 CHAPTER 3: THE LUXURY YACHT MARKET 25 3.1 A snapshot of the luxury market………………………………………………………….25 3.2 Characteristic of the global yacht’s market………………………………………………27 3.3 The super yachts market …………………………………………………………………30 3.4 The EU yacht industry……………………………………………………………………34 3.5 The Italian boat market…………………………………………………………………...36 3.6 The yacht industry trends…………………………………………………………………40 CHAPTER 4: RIVA IN THE WORLD 41 4.1 Riva in CHINA…………………………………………..……………………………….42 4.2 Riva in MENA (Middle East-North Africa)…………...…………………………………47 4.3 Riva in US……………………………………………………………………………….. 49 CHAPTER 5: THE RIVA LUXURY YACHT BRAND 51 5.1Riva brand awareness……………………………………………………………………..56 5.1.1 Riva history element……………………………………………………………………57 5.1.2 Riva time element………………………………………………………………………60 5.1.3 Riva complexity and work element…………………………………………………….61 CHAPTER 6: THE RIVA BRAND EQUITY 63 6.1 The two modes of luxury brand building..………..……………………………………...65 6.2 The Riva brand’s dream component……………………………………………………..66 6.3 The Riva brand architecture……………………………………………………………...68 2 6.4 The Riva brand identity and image……………………………………………………….69 6.5 The Riva brand name and logo…………………………………………………………...73 6.6 The Riva brand essence…………………………………………………………………..73 6.7 The Riva brand positioning………………………………………………………………74 CHAPTER 7: THE RIVA MARKETING STRATEGY 75 7.1 The 6’Ps of luxury………………………………………………………………………..75 7.2 The 18 anti-laws of luxury marketing……………………………………………………76 7.3 The Riva Brand Communication…...…………………………………………………….82 7.4 The exclusivity element….……………………………………………………………….85 7.5 The Riva’s communication types………………………………………………………...87 7.6 Riva sponsorship and cobranding………………………………………………………...95 CHAPTER 8: THE RIVA BRAND MANAGEMENT AND BRAND EXPANSION 106 8.1 The Riva distribution and HR management.……………………………………………106 8.2 The Riva salespeople……………………………………………………………………112 8.3 The Riva customer equity……………………………………………………………….117 8.4 The Riva brand model………………………………………..........................................122 8.5 The Riva brand cross-selling and brand expansion……………………………………..127 CONCLUSIONS 136 BIBLIOGRAPHY 143 SITOGRAPHY 145 3 Preface I chose to write a thesis on Riva brand because, since I was young, I have always been strongly connected to this brand and to the boat industry. Riva has a special meaning in my life, because it has many aspects in common with me. I was born in the same Riva’s region: Lombardia (more precisely 40 km divide Brescia, my native city, from Sarinco, the older Riva’s boatyard). After the Riva’s acquisition from the Ferretti group, the well-known Italian super yachts manufacturer, and from the Chinese public company, Shig-Weichai, Riva headquarters was moved to Forlì (40 km far from Rimini). This is another similarity aspect, because, since my mum is from Rimini, I have always shared a lot of life-time in that region. Moreover, I have always been a sea and nautical lover. Firstly, because my great-grandfather was a fleet admiral in ‘Marina Militare Italiana’, so, since childhood, I have stayed in close contact with that world. Second, my father owns a Riva and, even though I still never had the opportunity to get on board, I always stared at it hours and hours, attracted by its charm. This strange coincidence gave me the opportunity to always feel Riva brand awareness in a particular and narrow way. Lastly, during my university studies, I never lost the passion for this brand; I have always tried to take advantage of it for my future career. Luckily, this year I took the master course of ‘Brand Management and Licensing’ and I immediately loved it. I instantly asked prof. Dal Santo to give me the chance to make a thesis on the Riva brand. He accepted, hence, for me, was the chance to finally reduce the 40 km’s gap that always separated Riva from me. Thanks also to Mr. Giordano Pellacani (Riva Sales&Marketing manager) I was invited to Cannes Yacht Festival last September and I went also to visit the Sarnico’s boatyard in order to analyse the brand more deeply and closely. During that visit, I truly perceived the intensity of Riva’s culture and heritage and above all the passion that resides behind that brand. Eventually, I also realised, in first person, the origin of the power of Riva’s competitive advantage, that allowed this incredible Italian brand to survive over more than 170 years. 4 CHAPTER 1: THE LUXURY CONCEPTS 1.1 THE FOUR DRIVES OF CHANGE IN LUXURY Luxury world is changing. It is fundamental to analyse the four drivers of change to understand how it is evolving. The first driver is the ‘democratization’ that implies two things: First, the democratization concept permitted everyone to have access to the luxury world. That process has exponentially increased the number of luxury consumers, hence giving to the entire luxury world a great chance to grow. The other side of the coin is the risk of the vulgarization of luxury that reached a high level. Second thing is the historical social stratification that is gradually disappearing. The democratization process, that favours transparency and both cultural and economic levelling out, would have led to the death of luxury by bringing about the disappearance of ‘transcendent’ leading classes. However, paradoxically, the very opposite has happened: the luxury, that is the offspring of the ‘transcendent’ stratification of society, does not die just because this stratification has disappeared; instead, it has become its creator and driver. The second important driver is the increase in purchasing power, that permitted a growth in luxury goods in the recent years. This phenomenon increased the availability of money and time, bringing a both qualitative and quantitative linear growth in the consumption of most common products. Moreover, this process has changed also the current marketing activities, that, now, see a shift in strategy from normal products to ‘top-of- the-range’ or ‘premium’ products, thanks to the higher wealth level reached by both companies and people. Furthermore, most of the times, luxury companies has noticed that the surplus accumulated from people, that got rich, is spent only on some specific activities. This behaviour led to a phenomenon called bingeing, that is an extravagant consumption, typical of luxury world. The third driver is the globalization, that speeded up the increasing purchasing power process of people, through wage increases and falling prices of most manufactured products. The globalization favoured the exchange of products all over the world, hence creating new luxury products, concepts, desires and emotions, that can be considered as sources of luxury in some Countries that instead for other are not. This process has led to the demise of social stratification, bringing to a levelling out of all cultures and a relativism in all religions. 5 Because of this change, a luxury product is becoming more and more rooted in a specific culture; its uniqueness comes along with the place in which was produced. It must remain faithful to its origins and anchored to it, to not being labelled as non-luxury product. This is the consequence of the vulgarization process, caused by the democratization of luxury. The last driver, that changed the concept of luxury, is the communication. A change in the communication is caused by the development of the global mass media, television in particular, and the growth in international travels that made everyone aware of the cultural richness and diversity of our planet. Therefore, every one of us might choose among a vast field of possibilities, which culture best fit his/her personality and then come up with his/her very own social stratification. In luxury, the last important aspect, that is a result of previous drivers, is the non-return effect. or ‘ratchet effect’. This is an outcome that occurs when people have tasted luxury in whatever area, then, it is very difficult for them to turn away from it. In fact, a strange and symmetrical phenomenon is showed when there is a fall in population’s spending power: people start cutting their expenditures of conventional products, to not sell their luxury ones. Most of the times, they invent excuses or find interesting stories to not sell, nor use them. Lastly, the ‘ratchet effect’ of luxury affects both the personal and the social aspect of people’s relationship with luxury, causing huge distortions in people’s social lives. 1.2 THE DEFINITION OF LUXURY Luxury is defined as something that is more than necessary and ordinary (Reith & Meyer 2003, p. 10). The distinction between necessity and luxury is based on the availability or exclusivity of resources. While necessities are possessed by virtually everyone, luxuries are available exclusively to only a few people or at least only on rare occasions (Bearden & Etzel 1982, p.184). However, not everything that is neither necessary nor ordinary

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