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Luxury Brands Buy Supply Chains to Ensure Meeting Demand

11/18/2018

Summary

Many luxury brand markets, for example the wine-making industry, are facing an enviable problem: a surfeit of demand for its limited supply. Wineries aren't facing problems like marketing or finding customers, but instead are facing problems like finding enough high-quality raw materials for production. Companies in luxury brand markets are working to secure the sources of their competitive advantage and buy supply chains using vertical integration as a strategy to ensure that they can meet the surging demand of their consumers.

Key Points

  • Luxury brands markets are facing a surplus in demand for the limited-supply of resources that they need for production
  • Wealthier consumers are feeling confident and richer because of changes like looser business regulations and lower taxes
  • Vertical Integration is a long-term strategy

Discussion Questions

  1. In today's economy, what do you consider to be a more challenging problem for companies, a lack of supply or a lack of demand?
  2. What do you consider to be the most effective strategy to meet demand for luxury companies?
  3. What additional problems would a company who doesn't target the wealthy population the way luxury brands do, have facing similar problems of surplus of demand and shortage of supply?

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