Luxury Marketing Project: LoroPiana - Essay Example

?Luxury Marketing Project: LoroPiana Marketing of Luxury Karim Aouad 22.10 Introduction Per capita income thresholds are increasing for most of the individuals with development of global economy. The growing income levels of all the consumers in the world have augmented the turnover of global luxury market. Luxury consumption is a status symbolon grounds of spending pattern,exhibiting the tradition of conspicuous consumption. A conspicuous buying decision of a consumer does not abide by the traditional norms of consumer behaviour analysis. This essay aims to set an effective luxury marketing plan for the famous luxury brand LoroPiana. The context of this essay will not only facilitate to understand the current status of the brand in the market but will also provide further ways by virtue of which the firm would be able to augment its sales in future(Rogers, 2001). LoroPiana LoroPianais a luxury clothes-producing company that is based in Italy. The company produces high-end woollen garments and cashmeres. The LoroPiana merchant family founded the organization in the early nineteenth century. The family did business of woollen garments initially from Trivero, located in Northern Italy, and over time in the twentieth century; the family shifted their business to Valsesia. Moet HennessyLouis Vuitton (LVMH) is another luxury goods company; it has purchased almost 80% of LoroPiana’s shareholding on the 8th of July 2013, which is worth almost 2 billion Euros. LoroPianais a famous luxury brand company with almost 132 stores across the world (Roberts, 2013). Brand Identity Prism Jean-Noel Kapferer had introduced prism analysis for a brand. This included six aspects that help to identify a brand. These aspectsare culture, personality, physique, self-image, relationship and reflection. These six aspects were classified further in two dimensions. Figure 1: Brand Identity Prism (Source: EURIB, 2009) Constructed Receiver vs Constructed Source: this dimension explains that a brand that has gained enough popularity in the market virtually acts as a person and can also be analyzed as a stereotypical user. Internalismvs Externalism: this element explains that its social aspects create a brand’s external expression. These social aspects of a brand also influence the different aspects incorporated by the brand itself. This essay will consider the prism analysis of LoroPianabrand. Physique: it was believed by Kapferer that a company could never win the loyalty of consumers if they did not work over the material benefit of its products. The quality of a product largely helps to attract potential buyers. LoroPiana’sfine woollen and cashmere garments are famous around the world. The company is the largest buyer and weaver of wool and cashmere. Itsproducts are excellent sportswear and accessories. The garments manufactured by the company are marks of unique tailoring. Not only design, the LoroPianaproducts have their own establishment in the market subject to their distinctiveness in quality. The trousers made by the company are not only stylish, but are symbols of status and class. Personality: an iconic star can often correctly give the idea about the nature and quality of a product. The personality dimension explains that in certain situations the practice of endorsement gives meat and flesh to a brand. LoroPianahas endorsed its products by many iconic models. These advertisements have added feather to the cap of LoroPiana’s brands personality and image (Shaughnessy, 2013). Culture: culture closely attaches a brand to its organization. The appeal for the products produced by a company significantly depends on the culture that the consumers possess. LoroPianagarments and accessories are western informal dressing attires. The people wearing traditionally western dresses hence favour the brand. Since the products manufactured by the company are expensive, it can be analyzed that the potential customers of the products are the rich buyers living in the developed economies. A company must possessbrand culture resonates,which would help the organization in generating more customer contacts. Relationship: the worth of brand relationship is more intense for service brands than product brands. However,LoroPianamaintains excellent after sale customer relationships. The brand managers of the company also make the customers believe that using such branded products would help them enjoy the austerity of superior status. Reflection: Kapferer believed that the brand manager of a company should never impose a realistic image about the target group of buyers for its manufactured products. The brand manager of an organization should only appoint a group of people, who would try to win over the loyalty of the targetedclienteles. Consumers of all age groups use LoroPiana garments. So the brand reflects a consistent relationship with customers of variable ages. Self Image: brand managers should look into the insight of consumer’s perceptions about the brand concerned. LoroPianais a luxury brand and its consumption depicts the characteristics of conspicuous spending. It is never possible for a luxury brand to succeed in the market, if it does not play on the identity of the brand. LoroPianapricy garments and accessories helpconsumers to convey their class to the rest of the society. Thus, even if the products are expensive, the potential customers find their utility way above the cost incurred from purchase of such products (Johnson, n.d.). Current Portfolio LoroPianawas an Italian company owned by the LoroPianaMerchant family. PietroLoroPianafounded the company long back in 1920. In the recent past almost 80% shareholdings of the company is purchased by the LVMH on the 8thof July 2013. LVMH has decided to pay a sum of 2 billion Euros to LoroPianain return of its 80% stake holdings (Roberts, 2013). LVHM has undertaken this decision because the company desired to include a high quality luxury brand in its portfolio. It is believed by the officials of the LVHM brand that the classy woollen and cashmere garments of LoroPianacombined with the fashionable leather goods of LVHM would capture the majority of the booming market demand of luxury products. LoroPianais LVHM’s biggest acquisition till date. It is believed by LVHM that the aggregate sales of LoroPianawould significantly increase after these deals by 2014 (Auerbach and Reishus, 1987). Almost two third of the total revenue generated by LoroPianacomes from sales of men and women garments. The company has 130 stores across different nations in the globe. The firm also sells a rare woollen product named Ricuna, which is extracted from a South African mammal. However, put and call options has been implemented for the remaining 20% shares of LoroPianafor the coming three years. The price would be based on multiple trailing before amortization, interest, taxes and depreciation is calculated. It is estimated that the annual sales of Loro Piano will augment from 631 million Euros in 2012 to 700 million Euros in 2013. The transaction of acquisition is forecasted to help LoroPianamultiply its annual turnovers(Roberts, 2013). Brand Stretching In the modern world, business enterprises experience high competition among themselves. In order to maintain brand value and lead in the industry, companies must continuously try to incorporate new forms of products. Brand stretching is a procedure under which a company introduces new varieties of commodities and sells them under the same existing brand name. Innovate The new product introduced by a company is often termed as a spin off. One of the primary activities for all manufacturing firms is to introduce new strategies, with the help of which they may conceive new range of products and maintain brand equity. LoroPiana is a well-known luxury brand in the market for manufacturing high quality woollen and cashmere garments. The company should try to make more variations in its product lines. Luxury product consumption is increasing all over the world with the rise in the per capita income thresholds. However, it should be considered that the growing middle class consumers in the emerging economies are turning out to be the most consistent buyers of status symbol products. Nations like India, Brazil and South Africa depict the booming economies in the world. It has been found empirically that demand for cosmetics both by men and women in all the economies in the world have increased with time. Thus as a part of the brand stretching program, the company can start up a new business segment engaging in the production of cosmetics. Such new varieties would surely help the company park more potential customers for its cosmetics. Moreover, considering the present recessionary traces of the market, the company should introduce low priced products. It is empirically found that many luxury brand producers are introducing low priced products to augment their sales in such crisis situations. Like, Mercedes have introduced its A Class cars in the market for tapping the middle-incomeconsumers, whose numbersare growing at present (SIRIUS, 2011). Quality of LoroPiana Products The woollen and cashmere dresses of LoroPianaare are symbols of class, status and quality. Rich people buy products of LoroPianabecause it adds a feather to their cap of glory and status. The company should manufacture a wide range of cosmetics that are good in terms of quality. The cosmetics produced by the company should not be tested on animals at first. In a brief sense the company must not entertain any kind of cannibalism in the process of manufacturing of its new cosmetics product lines. Cannibalism; it is the practice of using animal skin or fur in the manufacturing process. The company has received several awards for its product quality and class despite of the fact that it uses animal fur to produce some of its rare woollen garments. Human beings are superior animals; they should not harm but only protect all forms of life in the environment (Vezzoli and Manzini, 2008). The organization should realize that in the contemporary world, consumers are becoming more aware about sustainable consumption. LoroPianamay soon lose its brand popularity, if it does not stop the practice of cannibalism (Wind and Douglas, 1972). Thus in its brand stretching program, the company must introduce a new cosmetics section. However it should be considered that its cosmetics manufacturing process should not include harm the animals or practice any type of cannibalism. Enriching Substance LoroPianashould realize that the industry for luxury market is highly competitive and its inherent complexities are increasing with time. The brand managers of the company should continuously try to invent new approaches abiding which LoroPianamay enrich its cosmetics quality and substance. The company may incorporate new catchphrases for advertising its new range of cosmetics. If the company uses such catchy idioms beneath its advertisements it would surely attract a big tarn of prosperous buyers. The advertisements of the brand should be expensive and should convey the underlying value of status symbolization to the noticeable buyers (Raaij and Verhallen, 1994). Targeting New Clienteles The current economic system in most of the nations is known to have less liquid fund and high demands from the growing population. Though the per capita income levels of most of the individuals in the developed and developing economies are increasing, the real income level is decrementing with the soaring price echelons. The might lose large number of customers in this crisis, who would be unable to buy its cosmetics due to lack of purchasing power. Thus the cosmetics produced by the company should be of various price ranges. By doing so the company would surely be able to tap more middle and low-income consumers if it lowers the prices of its products. The company must aim to target new clienteles but should suffice the demand of the existing customers.The corporation may endeavour to park more potential buyers without losing the existing consumers loyalty (Dibb and Simkin, 2013). Thus as a part of its brand stretching program, the company can introduce the new range of cosmetics products in the market. However it should considered that the raw materials included in these cosmetics or its manufacturing process must not harm animals. The cosmetics should be good in quality. Considering the recessionary trails in the market the cosmetics launched by the company should be of various price ranges so that it becomes affordable for consumers of all income groups. Marketing Plan A company can never succeed in business without the help of an effective and efficient marketing plan. A good marketing plan would help LoroPianawin high brand value and prestige in the market. Marketing on the Basis of Anti-Laws Anti law marketing methodology followed by LoroPianawould help it reduce the excessive competition in the luxury market. The company may use the policy of penetrating pricing to tap new customers for its products. By applying Blue Ocean Strategies, the company may enter in new emerging markets and initially start to launch its products at lower prices (Henry, 2008). Once it taps some impending buyers, the firm may increase the price level of these products. Such method of incurring loss at the initial stages for capturing new buyers is also known as dumping. LoroPianamay also introduce the policy of Limit Pricing to threat the new entrants in the industry. If the firm is able to win a broad customer base then it would surely enjoy the benefits of economies of scale in production process. LoroPianacan reduce the average cost of its products by experiencing economies of scale in production andset stumpy prices for its fabrics. It would be impossible for new entrants to sell their product at such low prices. The corporation must also protect its merchandise with patents and licenses. Piracy of luxury products is common in the market; this would adversely affect the popularity and value of the brand in the industry. After enjoying higher finances,LoroPianamay takeover other luxury brands and sell them over time, this would help the company to reduceexcessive market competition (Slack and Nigel, 2005). 4P’s LoroPianamay use the 4P’s marketing strategy to increase its sales in the luxury industry. These 4 P’s are product, price, place and promotion. Product The company should ignore the practice of cannibalism (Smith, 2010). It should never compromise with the quality of its product just to augment the revenue or to lower its product price. More varieties should always be introduced to offer prospective buyers with a great variability of choices. Not only in wool and cashmere, the company should also introduce new ranges of silk and cotton fabrics. Apart from making sports and informal dresses, LoroPianashould also introduce new range of formal outfits. Price Considering recession in the cotemporary world, LoroPiana should try to incorporate new range of products at lower prices, so that more individuals can experience the quality products of the company (Atikian, 2013). Place The company should try to market its products in all the emerging economies. It is empirically found that countries like Hong Kong and Thailand have large number of brand aware consumers, who would surely love to purchase the LoroPianaproducts. Promotion Apart from introducing new catchphrases,LoroPianamay introduce celebrity endorsements for its apparels. Famous sports stars are the ones who are religiously copied by many fans and followers. Advertisements of LoroPianadone by such famous personalities would surely help the company park more loyal customers. Conclusion In the face of this new financial era in which we are entering, it is important to adapt marketing strategies to the economical environment we are in. Thus, it is logical that luxury brands begin looking for new buying patterns, considering emerging countries, and the purchasing power they can bring to the market. We have seen that it is important to look for innovative ways to provide luxury products in order to sustain through these difficult times, and brand stretching has been proven to be a rewarding strategy for luxury brands that have adopted it. In the near future, we surely might witness a rise in the luxury brand stretching world, with the ever growing middle-class from the BRICS countries, on which they will have to rely to increase their market shares and profit turnover. Reference List Atikian, J., 2013. Industrial shift: The structure of the new world economy. Basingstoke: Palgrave Macmillan. Auerbach, A. J. and Reishus, D., 1987. Mergers and Acquisitions. [pdf] Available at [Accessed 12 September 2013]. Dibb, S. and Simkin, L., 2013. Market segmentation success: Making it happen! London: Routledge. 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Smith, F., 2010.Environmental Sustainability: Practical Global Applications. Massachusetts: CRC Press. Vezzoli, C. and Manzini, E., 2008. Design for Environmental Sustainability. New York: Springer. Wind, Y. and Douglas, S. P., 1972. International market segmentation.European Journal of Marketing.6(1), pp 17-25. Read More