Prada Marketing Strategy - Coursework Example

Introduction Luxury goods or services are not necessarily the stuff for the affluent though the market for luxury goods and services evolved through a rather non-conventional manner. The concepts of luxury, affluence and use of expensive products and stuff has been around since the dawn of civilization as man always wanted more in order to gain prestige and respect. One of the key psychological comforts provided by luxury products is the recognition of superiority, high self esteem and prestige associated with the use of such goods. It is because of this reason that the firms have been able to roll out products and services which specifically catered to this aspect of consumer behavior. Prada, an Italian luxury fashion label aimed at offering luxury products to men and women is one such organization catering to a different niche of the market. Selling ready to wear, handbags, shoes and luggage etc, Prada aims to provide its customers a unique shopping experience and charge premium prices for offering such opportunity. Over the period of time, due to its innovative marketing initiatives, its originality as well as constant focus on improving quality has offered Prada an opportunity to continue to dominate the high end luxury market. Backed by aesthetically designed flagship stores, Prada has been successful in ensuring that it remains the priority brand in luxury goods market. In this article, author will aim to discuss Prada as a luxury good, what marketing strategies it has adapted, its pricing strategies, potential opportunities and threats it may face while launching itself in emerging markets. Luxury Goods Though luxury goods may remind us of being associated with the affluent and rich however, the definition for luxury goods has evolved over the period of time. Though there is still a lack of a solid definition for what luxury goods are, it is generally believed that luxury goods can fall into any category. One of the basic criteria applied to define what luxury goods are is based upon the dimension of pricing and quality. Any product which is high priced and is of higher quality is considered as luxury good and as such the overall ranking of luxury goods can keep on changing considering the price and quality of each individual item. Luxury goods however are mostly connected with the creativity, innovation, precision, craftsmanship, highest quality as well as the premium prices. Such combination of factors therefore make luxury goods an entirely a different ball game for not only the marketers but for the consumers only. (Chadha & Husband, 2006)  Market for luxury goods however, is considered as an entirely new dimension from the perspective of the marketer as well as the consumer. These characteristics of luxury goods therefore require them to be studied and explored along with ordinary goods and also separately from them. Marketers of luxury goods mostly target the customers who fall in the high end income and wealth category therefore the overall market offering as a package are relatively different than what is offered to the public in general. What is also important to understand that within luxury goods, there are brands which are further classified according to their quality and prices? Such fragmentation of the market therefore outline that the competition for finding slots to fit into the various luxury needs of the customers may be high. In order to cater to the different and unique needs of the customers, marketers and firms therefore focus upon different combinations of marketing elements to provide a unique and different experience to their customers. (Wong, & Ahuvia, 1998). Prada- a unique brand Prada is a global brand based in Italy which is also catering to the needs of its high end customers. Through a combination of different marketing elements, Prada has proved to be one of the sought after luxury brands in world. Prada has evolved to the top position in the luxury goods market by making strategic acquisitions across Europe thus making itself one of the highly sought brands in the region. Prada is an Italian brand dealing mostly with the luxury goods comprising of shoes, handbags, luggage items, leather goods and other ready to wear products. Prada reaches its market through different channels however, most importantly, it extensively use its runaway shoes, through its flagship boutiques. Over the period of time, it has also extended itself in markets like perfumes and mobile phones. In collaboration with LG, Prada started to produce its mobile phones also and two models were rolled out. The overall focus was still on producing luxury mobile phones which can cater to the unique and different needs of the customers of Prada. (Moore,& Doyle, 2010) Marketing Strategies One of the main themes in the overall business and marketing strategies of Prada has been focused on acquisition. Over the period of time, Prada has entered into new markets through acquisition of local brands and thus establishing itself into the markets where it was not traditionally operating. The surge in the luxury goods market has also been mostly associated with cultural convergence, improvements in digital communication as well as international travel due to increase in wealth. Such external factors therefore have increased the overall visibility of the brands at the global level and more agile firms have been able to capitalize on such social and economic changes. Prada has also been one of the top firms which have been able to map such social and economic changes and resultantly adapted marketing strategies which were targeted at divergent international market niche. (Tungate, 2008)  Since its inception, Prada has not only focused on producing brands but pieces of arts too thus clarifying its intent on capturing market in relatively different manner. Corroborated through excellent customer services and technology, Prada has been able to develop its brands in a manner which can appeal to the artistic sentiments of the individuals buying its products. Based on basic elements of elegance, prestige, social status and high self esteem, Prada has focused on marketing its products to high end customers. It cleverly combined all the above elements and created a unique shopping experience for its customers. This approach has allowed Prada to actually continue to innovate and develop products which can cater to the higher demands of its customers. Customers therefore mostly buy Prada products when either there is a change in the season or the change in the fashion trends. Such aspects of buying habits of Prada consumers suggest that Prada is being considered as a leader in fashion change. Constant innovation and change therefore has successfully allowed Prada to develop and execute a marketing strategy which allowed it to remain as a top brand in fashion world. (Tungate, 2009)  There are three basic elements or expectations of the Prada consumers which comprise of high quality, luxury, high social status and wealth. Prada has been able to maintain all three in order to continue to execute its marketing strategy successfully. Further, Prada has been able to maintain its presence in all big and demanding markets. It has more than 260 stores located in areas such as New York, Tokyo and Beverly Hills. Presence in such affluent areas therefore automatically allows Prada to maintain its presence and continue to evolve and execute its marketing strategy. Apart from this, Prada has also been able to maintain an on-line presence thus taking benefits from alternative marketing and distribution channels. Further, it has also partnered with other firms which are directly offering its products to end-users. Such diverse distribution network therefore allows Prada to continue to maintain its status as a luxury brand. (Okonkwo, 2007)  As discussed above that it has evolved due to making acquisitions at relatively higher pace. Such approach therefore has allowed Prada to continue to beat the competition while at the same time increasing its reach in its traditional as well as non traditional markets. Its presence in markets like China and Hong Kong clearly outline that Prada has been focused on extending its reach to maintain its status. By branching out in countries like China, Prada has taken a step ahead towards mass marketing of its luxury goods. It’s recent IPO on Hong Kong Stock exchange is a very vivid proof of Prada’s overall brand image and strength. Pricing Strategy Prada offers different products and their price tag differs according to the quality and associated prestige. Like all luxury goods, Prada offers premium prices luxury goods and as such charges prices as high as $3000 per handbag. The overall pricing strategy of Prada therefore is based upon skimming the market and charge prices which are relatively higher than what are charged for similar products by other luxury goods companies. What is also important to note that Prada has remained a privately owned company for long and such small nature of the overall organization has allowed continuing to charge premium pricing? This is based upon the notion of continuing to build the consumer awareness as well as expectations in order to charge higher prices to the consumers. Prada, over the period of time, has been able to continue to maintain its brand image just to ensure that it can charge premium pricing on all its brands. (Swani & Yoo, 2010) Prada is present in emerging markets like China also and its pricing strategy in emerging markets is also relatively same. Since Prada has remained a brand which is associated with luxury and prestige, shoppers even in countries like Japan and China may be willing to pay premium prices. Opportunities and Threats in Emerging Markets Prada recently entered into Chinese market with a bang and success of its IPO on Hong Kong Stock exchange is considered as one of the signs of brand’s overall image in the international market. Prada believe to be forecasting to generate most of its sales from Chinese market in near future. (Carreon, 2011)  Such shift in the revenue generating sources therefore suggests that emerging markets can provide great opportunities to Prada. Economic downturn and greater transfer of wealth towards countries like China, Brazil and India make emerging markets a very lucrative market. These markets are heavily populated with increasing middle class income levels. Prada therefore can take advantage of such huge market and may start to cater to the relatively low end of the market. Since most of the population in emerging markets is still in middle class or in relative poverty, therefore Prada can have an enormous opportunity to tap into that segment of the market too. (Craig, & Douglas,2011) What is however, important to understand that emerging markets are reliant on developed countries and as such economic downturn in developed world may have a spillover impact on emerging economies too? Such situation therefore may not allow Prada to continue to skim the market by charging premium prices. In order to successfully operate in emerging markets, Prada will have to make changes in its overall marketing strategy to cater to the needs of masses also and offer them low end products while still maintaining its hold over the luxury segment. Prada therefore, in order to better cash in the opportunities in emerging markets may follow Apple which plans to roll out a low priced edition of its premium brand iPhone. Conclusion Prada is one of the top luxury brands in the world offering shoes, handbags, luggage items and other read to wear goods. Founded in Italy, it has become a global brand due to its originality as well as quality. Prada’s marketing strategy has remained focused upon targeting the consumers belonging to high net worth category. Its products are easily priced to the extent of $3000 per handbag and are sold in markets across the globe. The overall focus of marketing strategy has been on to provide luxury goods at premium prices. Prada has been able to maintain its high prices owing to the fact that it has been able to maintain consumer awareness and interest in its products. Prada’s presence in countries like China and other emerging economies has been received with positive attitude. It may be possible that Prada may generate as high as 50% of its sales from markets like China. However, emerging markets are still not affluent societies and as such Prada may have to change its strategy and offer its products to low end customers also. References Craig, S & Douglas, S (2011) Empowering rural consumers in emerging markets, International Journal of Emerging Markets, 6(4), p.382 – 393 Carreon, B (2011) Chinas Super Rich Go Gaga Over Prada, [online] Available at: http://www.forbes.com/sites/bluecarreon/2011/05/27/chinas-super-rich-go-gaga-over-prada/ [Accessed: 20th Dec 2011]. Chadha, R. and Husband, P. (2006) The cult of the luxury brand: inside Asias love affair with luxury, New York: Nicholas Brealey Publishing, Moore, C & Doyle, S (2010) The evolution of a luxury brand: the case of Prada International Journal of Retail & Distribution Management, 38 (11/12), p.915 – 927 Swani, K, Yoo, B (2010) Interactions between price and price deal, Journal of Product & Brand Management, 19(2), p.143 - 152 Okonkwo, U. (2007) Luxury fashion branding: trends, tactics, techniques, New York: Palgrave Macmillan. Tungate, M. (2008) Fashion brands: branding style from Armani to Zara, New York: Kogan Page Publishers Tungate, M. (2009) Luxury World: The Past, Present and Future of Luxury Brands , New York: Kogan Page Publishers,. Wong, N. Y., & Ahuvia, A. C. (1998). Personal taste and family face: Luxury consumption in Confucian and Western societies. Psychology & Marketing, 15(5), 423-441. Read More