Luxury Goods Industry: Designer Handbags - Research Paper Example

Designer Handbags Introduction It is said that one can know about a woman by looking into her purse. Usually, women's handbags are very intimate and what they carry inside them are things that they need or things that they cherish. The kind of things a woman puts in her bag and even the way in which they are arranged shows a lot of her character. Fashion is not at all just about wearing, but attitude and expression too. Up until about 1967, fashion had imitate a phase of discovery for youth; fun-loving, extreme and colourful. Now fashion started to reflect the rift in society between young and old, first rejecting society's ideas of acceptable wear and then rejecting the idea of fashion itself. The designers who create accessories and wearing and the people who use them, are the first and last words in the language that is fashion (Weston, 2004). Customer service is a very important factor in the fashion industry, therefore the designers’ offers customers with the kind of service that concentrates on the customers wants and needs. The company's goal is to make consumers believe in our product regardless of fashion trends. With the increase of demand for products such as handbags, the market for this particular product is steadily increasing, also the increase in tourism and customers help to increase the market. The market for our product is constantly changing and the speed of change depends on innovation and how the market perceives the industry. Demand on fashion is highly based on economic stability. When the economy is prosperous consumers are willing to spend money. When the economy slows down and is in the process of going into recession retail businesses slow down because consumers are not willing to spend extra cash on certain items such as clothing and accessories. The product design is the most obvious competitive advantage. Our designers are the most creative and innovative in the business. Our designs are one of a kind and unique, we also custom design bags for clients who want their own design. Handbags and Fashion A Fashionable woman who realizes that she needs a new handbag when she realizes that her old handbag is no longer in fashion. The fashionable woman decides to purchase a designer’s bag. Her decision based on the design of the product, the numerous styles, sizes, and colours the product came in. it has been noticed that price is not a factor during customers purchase. It has been observed that the fashionable woman becomes pleased with her purchase due to the exceptional quality and artistic craftsmanship of designer’s bags. There are designers who have a very high potential to expand due to the uniqueness of their products. Designers products are unique because they incorporate fashion, quality, and function in their designs. Different designers provides ready made bags in different shapes and sizes, as well as custom made bags, made to order for their customers. Reputable designers provide exceptional customer service, because they believe in reaching out to their customers’ wants and needs. Designers specializing in high quality, high function, and high fashion handbags. Their initial focus is to provide fashionable women with ready made or custom design bags in different shapes, sizes, colours, and function. Designers’ product offerings will be differentiated by their innovation, style, craftsmanship and design. Designers offer fashionable women fashionable and quality handbags. As a consumer oriented person designers’ first priority is in satisfying our customers’ need and wants. Designers’ market segment concentrated on targeting women who have high fashion expectations. The potential for this segment to respond well to designers’ products and service is expected to increase. Their target markets buying behaviour is based on what the trends of the season are. Designers’ goal is to make sure that they make products that are accommodating to change in fashion trends. They want their consumers to believe in their product regardless of fashion trends. Famous designers’ competitive advantage is that they offer customers a choice between ready made and custom made bags. With the change in fashion trends customers can customize their handbags according to the trends in fashion. There are world famous designers who pride themselves on having the most innovative and unique designers in the handbag industry. There are ready made bags have a set price while custom-made bags vary in price depending on size and design. During the maturity stage of any designers’ bags the creative designers continue to design bags to be introduced in the coming season. These seasons will be divided into Winter, Spring, Summer, and fall collections. Each season will serve as an inspiration to each collection. The designers believe in non price competition because they believe that there focus should not be on the price of the product but should be based on quality of the product. In this field there is as such no competition in product prices with the competitors, pricing is based on cost of raw materials, labour, and customer response. Designers’ target market is not driven by price. They are driven to purchase products by their want of the product based on the style and quality. The marketing plan has to change and adapt depending on current market situations. This consists of re-inventing the product and changing the structure of business. Economic conditions such as a recession will change the marketing objectives in that promotion of the bags will emphasize on product quality and lifetime guarantee features (Ruth Ruka, 2003). A sagging economy means an even greater emphasis on accessories. Consumers who may ignore the cost and guilt of buying a new seasonal wardrobe will indulge in a bag to update their look. This involves constant marketing of its products and image, which keeps the designers constantly discernible to customers and the fashion world. To achieve this, different designers have started increasing communications expenditure in the last few years, and are planning on continuing the increase of their marketing budget (The 6P’s of Luxury Marketing). Designers’ handbags, accessories and marketing methods are not tailored according to national needs or customs. Their aims at reaching the growing global market segment of the rich and "newly rich", among which groups a homogenization of taste for luxury products has been detected. This group is a true example of the emergent phenomena of the global marketplace, where needs and perceived benefits are common from the USA to Europe to Japan. This global market segment's price elasticity is low, meaning that they are not affected by changes in prices. They see price as an irrelevant factor, and shop for luxurious, high quality brand names. Since designers have several rival firms on a global scale, so they coordinate with their marketing activities with careful timing and placement to achieve maximal penetration of their core message: the luxurious and fashionable image of all types of handbags. Most of the designers advertises in national and international fashion, lifestyle and business magazines. Advertisements are timed to appear at the start of buying seasons, where customers will be looking for fashion items to purchase for the coming season. This is effective use of advertising, since the ads appear at times of the year when customers are open to receive such messages. Marketing There are designers who publish product catalogues and make them available to existing and potential customers. These catalogues should be sent out via mail to the companies customers, and be reachable by potential customers at e.g. prestigious hair saloons, etc. Direct mail should also be sent to the wealthier people in each of the countries where these designers’ pursues business activities, thereby making it convenient for the potential customers to familiarize themselves with designers’ handbags and even order through the order sheets provided in the catalogues. Usually designers set up their personal relationship offices in the fashion capitals of the world. Their job it to make local and international fashion press deal with designers as much as possible. Entering a market through placing designers’ handbags in super stores would be inadvisable, since this method would not truly communicate the luxurious, unique image of any designer. Studies have been conducted on the purchasing habits of wealthy people. These studies showed that truly upper class individuals do prefer high quality, luxurious wearing, handbags and fashion apparels, but they prefer not to have brand names or logos visible on what they purchase. However, the lower classes of society are exactly the opposite. They want to be thought of as possible more than what they are, and prefer clothing with the brand names visible to other people. Counterfeits make use of exactly this, by making low quality look-alikes of the originals, with the difference of having the counterfeited brand name very visible on the handbags. These low quality copies hurt the designers’ image, and should be dealt with aggressively. This is especially true for the Far East, where the population is very large, but only a small percentage can afford real designers handbags. People who cannot pay for real designers handbags chose to purchase imitation. Central and Eastern European countries may show potential as well, since they are rapidly developing countries, with the newer generations having been strongly influenced by the 'modern', capitalist Western culture. The government has lessening influence in most of these countries, and the new wave of wealthy population will be open to the image conveyed by different designers. Strong luxury brands send a clear message, are consistent in delivering and often lead consumer trends. That is why brands represent the most valuable asset of luxury goods companies. However, the means of communicating the brand image may differ from country to country. It is required that designers set up regional marketing centres, which should provide marketing services to retail outlets, be it a directly operated store or a franchisee store (Rix, 2001). This regional marketing centre should be accountable for developing the equipment, which the local envoy is free, or in several instances, obliged, to use. They must develop a complete, global marketing strategy with visibly defined above-the-line, below-the-line and in-store performance (Marketing Intelligence). These are critical elements that should be provided to retail outlets, being especially important in department stores. It should be the right of the local franchise holder to adapt those materials to suit the prevailing environment, taking into account culture, traditions, language, etc. The local retailer should make definite that the note they are transfer is reliable with designers’ universal communications strategies and it is also the franchisee's liability to select the most appropriate means of delivering the brand message, since the bottom line is that they are the ones that will be the most familiar with the culture of the specific market. If the designer is in the luxury section, the overall surroundings of the store is especially imperative, the position of the shop, place of the display and who their neighbours are is also important. Luxury has to remain luxurious. This is a fact and does not differ by country or religion. The regional marketing centre must have thorough knowledge of the customs of the given country, and adapt the product line and marketing methods accordingly. All the variables must be kept in mind when designing the product line to be sold in a market. It will also be the job of the regional marketing centre to be aware of the legislative issues/restrictions regarding marketing communications in any given market that belongs to the specific centre. The designer images of luxury, quality, uniqueness, beauty and desire should be consistently communicated where legislation/culture allows. Global Luxury Goods Industry The first generalization we can draw is on the market segment of consumers of luxury goods. They are the well-off individuals, with high disposable income who purchase luxury goods not only because of their quality, but also to uphold their personal image. Therefore we can say that this segment has homogeneous needs across the globe and is one of the very few truly global market segments (Bernand Catry, 2003). However, producers of luxury goods must be careful. The more successful they become in terms of increased visibility, sales volume and profits, the more the power of their brand equity diminishes. Mass availability has diminishing effects on desirability. Luxury goods producers have this difficult task of balancing the growth expectations of shareholders with a weakened image (Stephen Dabkowski, 2003). Counterfeiting is also a key issue. Put a luxury name on items that do not support expected levels of craftsmanship, design, quality and style, and the atmosphere around a luxury brand immediately fades. Most designers producing luxury handbags offer similar standards of quality. What differentiates them from one-another is their brand image, product design and assortment. This is where the market share of any given luxury goods provider can be increased. The designers and marketers must identify the needs of the upper class, and sell products offering benefits that attend to those needs. For a fashion apparel provider like Gucci, trend setting lineups should be designed. Of course, volume must be balanced with brand equity. A luxury goods provider cannot sell too many products, since its luxurious essence will diminish. If demand is high, the prices of designers’ accessories like handbags should be raised. This increases profitability, and does not weaken the image of and designer. The luxury goods industry is unique among all others industries. Luxury products of designers are known in all the countries because of their quality and tradition. Luxury products are globally accepted for the quality they provide (and thereby the upper-class image). Another generalization we can draw is that the luxury goods industry is in general less cyclical than are comparable products in the mass market. This is mainly due to the fact that, the buying power of luxury goods consumers is good even in difficult economic times. In times of recession, the middle class will accumulate savings, while the upper class individuals still have their image to uphold, therefore keep on spending. References Bernand Catry,(2003). The great pretenders: the magic of luxury goods, Business Strategy Review, Fall 2003, Vol. 14. Global Sources: http://www.fashion.globalsources.com Marketing Intelligence, http://www.alwen.com/scripts/gen/4_contexte/b_veille/4b_veille1.asp?L=uk&LG=uk Rix, P. (2001). Marketing: A practical approach. (4th Ed.). The McGraw-Hill Companies, Inc; Sydney. Ruth Ruka (2003). The Economic Environment, Printed by TRUMPS Copy Centre, Auckland, New Zealand Stephen Dabkowski, (2003). Elite brands fight a battle for the upmarket buck http://www.theage.com.au/articles/2003/02/16/1045330468567.html The 6P’s of Luxury Marketing: http://www.winsper.com/6Ps/Win_whitepaper4.18.pdf Retrieved on April10-2010 Weston, P. (2004) Fashion Trends 2003/2004.Retrieved on April 30 from the World Wide Web: http://www.fashion- era.com/fashion_trends_2003_4_.htm#Fashion%20Trends%202003/2004 Read More