Vertu: Last Call for British Luxury Mobile Phone Maker?
(7 pages of text)
Case (Pub Mat)
Vertu Corporation Limited (Vertu), a manufacturer and retailer of luxury mobile phones, was founded as a subsidiary of Nokia in 2000. It was later acquired by a Swedish private equity firm in 2012, and then sold to Godin Holdings in 2015. Despite these multiple corporate ownership transitions, Vertu had remained uniquely positioned, differentiated by its phones’ bejewelled embellishments and a worldwide concierge service available at the touch of a button. The luxury phones were sought after by ultra-high net worth individuals as instantly recognizable status symbols akin to luxury watches. However, in the early 2000s, the introduction of luxury-priced, full-featured iPhones; the decline of conspicuous consumption among ultra-high net worth individuals after the financial crisis; and the anticorruption movement in Asia rendered Vertu’s business model unsustainable. Or was it? In July 2017, Vertu’s new owner faced a critical decision upon the liquidation of Vertu. Should he sell or license the remaining brand assets to a luxury brand owner or retrench in China to focus on existing customers without taking into consideration the ethical and reputational implications to the brand in the rest of the world?
This case can be used in an undergraduate- or graduate-level course on introductory marketing, brand management, or strategic marketing management. In introductory marketing courses, the case can be used to introduce the luxury product category and focus on identifying, assessing, and addressing the impact of external environment threats on brand positioning. The case can also be used to strengthen students' understanding of luxury brand strategies, including brand resilience, country-of-origin branding considerations, and the new paradigm of subtle Veblen goods and the sub-segments that have shifted toward them. In strategic marketing management courses, the case can be used to teach investigating brand valuation and corporate brand acquisition strategies. After working through the case and assignment questions, students in an introductory marketing course will be able to
- define luxury products and describe their typical behaviour with respect to the demand curve;
- describe the target market and the 4Ps (product, price, promotion, and place) of Vertu’s marketing strategy; and
- conduct a PEST analysis on the luxury mobile phone external environment.
Brand management students will be able to
- describe the characteristics of Veblen goods, identify the drivers of demand for subtle Veblen goods, and evaluate the implications for Vertu’s brand element design;
- describe the difference between a griffe, a luxury product, a premium product, and a mass-market product and define a “masstige” product (using the Kapferer luxury brand pyramid);
- apply the theories of country-of-origin brand image to propose marketing mix adjustments for Vertu, given its new manufacturing location; and
- evaluate the factors that lead to brand resilience and assess the viability of the Vertu brand, given recent micro and macro events.
Strategic marketing management students will be able to
- conduct a qualitative evaluation of the valuation of the Vertu brand before and after its recent acquisition; and
- compare brand acquisition strategies and evaluate the success potential of Uzan’s acquisition strategy.
Finland, Large, 2017
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