Analysis of business opportunities for luxury brands in second tier cities in China

China now has become the second biggest luxury consumption market and will soon become the number one market in the world. It is not surprising that most lucrative sector of China’s luxury market is the 2nd-tier cities, as the purchasing power rising in this area and the market in 1st-tier are reaching a peak. The Chinese 2nd-tier cities have become the main battle field for the expansion of the biggest luxury brands. However, choosing a right place to extend can be difficult for luxury brands. Moreover, applying the same marketing techniques to each area can be a mistake. This project applies PEST analysis to show how the external environment works for luxury industry, as well as exploring the patterns of luxury consumption in Chinese 2nd-tier cities. The theme of the project is to find out how different luxury brands expand its operation in the chosen 2nd-tier cities, and how do they work out the positioning of products and segmentation of customers. Moreover different communication and distribution channels, and through which how luxury brands manage their customer relationship will be discussed. Finally this project tries to figure out the opportunities and risk of the expansion.