Diesel S-p-A Marketing - Business Plan Example

Marketing Plan: Diesel 0 Introduction Diesel S.p.A. (hereafter referred to as Diesel) was founded by Renzo Rosso in 1978. The Italian company markets a host of products ranging from apparel and accessories to motorcycles and helmets. Diesel has grown by leaps and bounds since inception and has established itself as a major brand in the global fashion market. It woos young adults with merchandise that has a distinct style. Diesel creates and delivers product offerings that have functional, emotional and prestige value for its customers. It communicates with its target market through various advertising media. 2.0 PEST Analysis The following section discusses the political, economic, social and technological forces that impact Diesel. 2.1 Political Factors Diesel has forayed into numerous international markets and is therefore impacted by the political forces operating in different countries. The company has to adhere to the law of the land which may be different in various geographical regions of the world. Any kind of diplomatic tension between countries or conditions of war may adversely impact the functioning of Diesel. Many apparel companies including Diesel have enhanced procurement from countries like China and India under the liberalization regimen enforced by the WTO. Such a trend has the potency to wipe out small suppliers in other parts of the world. Every now and then stories surface that workers are compelled to work overtime and are measly paid in China. Diesel will have to ensure that its supply chain is ethical so that its reputation is not affected. 2.2 Economic Factors Given the fact that Diesel’s product portfolio is essentially fashion and lifestyle oriented, economic factors can have a significant impact on the company. Consumers tend to scale down their discretionary expenditure in recessionary economic conditions. A high rate of inflation or high unemployment will also have an adverse impact on the revenues of Diesel. In times of boom, the consumer sentiment will be good and the sales of Diesel will witness an increase. 2.3 Social Factors Diesel is a lifestyle brand and therefore social cultural factors have a significant bearing on the company. The developed world is more open to new and innovative designs and styles. In fact Diesel’s hometown Italy is the hub of fashion industry in the world. Some of the countries in the Middle-East are however extremely conservative. Expanding business in these countries may prove to be a challenge for Diesel. 2.4 Technological Factors The technological factors play a role not only in the procurement and production of fashion goods but also in the distribution of finished products. The Internet has become an extremely powerful distribution channel (Carlos and Miguel, 2005). Online purchases have tremendously enhanced the convenience quotient for the consumers. An added advantage of online purchases is that it tends to reduce the cost of products as the margin paid to the middlemen is nearly eliminated. 3.0 SMART Objectives The two SMART (specific, measurable, attainable, relevant and time-bound) objectives for Diesel lifestyle brand are discussed below. 3.1 Growth in BRICS Nations It is recommended that Diesel should expand its footprint in some of the BRICS nations like India and China. These developing countries have witnessed above average growth rates in recent times and boast of a booming middle class. The consumer base in these countries has the ability as well as the inclination to buy lifestyle products. These countries have become the preferred destinations of all marketers across the globe. India has adopted the policy of liberalization and globalisation and is inviting foreign companies to set up shop in the country. Diesel already operates a few stores in the Indian market. It has stores in Chennai, Pune, Gurgaon, Mumbai, Ludhiana and national capital New Delhi. However, given the enormous geographic size of the country, the scope of expansion is huge. It is recommended that Diesel doubles its presence in India by opening up 11 more stores in the country in 2014. The company can adopt the franchising route for such expansion. This will ensure that Diesel does not have to incur huge capital investment upfront. The new stores should ideally be located in upscale malls which have come up across the country. This will help Diesel in reaching its target market instantaneously (Zargani, 2007). Furthermore, Diesel can look for franchisees in Tier A and Tier B towns since the upper sections of the society visit malls that cater to high end fashion. The company can resort to national advertising to create a brand preference for its products. This will enable Diesel attract a larger number of franchisees. Diesel had set foot on Chinese soil with much fanfare more than seven years ago. It is time that the company increases its foothold in that country as well. 3.2 Sourcing From India Diesel should increase its sourcing from the Indian sub-continent by 10 percent in the coming year. Diesel had set up a wholly-owned subsidiary in India to increase the quantum of imports from that country. The cost of labor in India is pretty low and therefore the raw material and other products can be procured at a reasonable price (Bansal, 2012). Diesel need not pass on this cost benefit to the customers. In fact, this low cost of raw material will enable Diesel to increase its profitability. 4.0 Strategies The concept of product life cycle with respect to the Diesel brand has been discussed in this section. 4.1 Product Life Cycle The concept of product life cycle suggests that product categories/products/brands pass through the following four distinct stages; introduction, growth, maturity and decline (Gherasim, 2011). Diesel has a vast product suite. Majority of the products and services of the company are designed to woo the fashion conscious people. Consumers with a penchant for distinct lifestyle also get attracted to the brand. Since inception, Diesel has grown rapidly to become a well recognized brand in many countries of the world. The brand has crossed the introduction and growth stage of the product life cycle. At present, it is in the maturity stage of the product life cycle and operates in an industry which is fiercely competitive. The brand, as also many of its competitors, adopts the price skimming strategy. However, given the nature of business, it is recommended that Diesel competes on the plank of differentiation. It must create a distinct position in the minds of the customers. By doing so, it will have a distinct, loyal set of customers who would opt for the Diesel brand irrespective of the price they have to pay (Chung and Hu, 2013). For the customer, Diesel brand is not just about wearing clothes. The brand creates value, not in what the customers wear, but in how the customers feel when they wear the brand. The brand thus has an emotional connect with its customers, over and above the functional benefits that it accords to them. The brand must continue to reinforce its image of passion, energy, uniqueness and customer delight. Adopting the strategy of differentiation will enable the company to avoid price wars and thwart any stress on its revenue and profitability. It is important to remember that products of fashion tend to have shorter life cycles. So while some of the products in Diesel’s product suite like denims may enjoy a long maturity phase, other products may quickly pass through the stages of the PLC and eventually decline. Diesel should therefore continually unveil new designs so that the latest designs chip in and fill the void created by the designs that no longer find favor with the customers. 4.2 Promotion Strategy (Maturity Stage of PLC) Diesel should use promotional strategies to engage the customers. The company should go in for preference building advertising since there is a clutter of brands in the fashion and lifestyle industry. It is recommended that Diesel uses some more unconventional promotional campaigns as it has done in the past. The Diesel: U: Music, a forum wherein the not-so-well-known artists perform is an example of the unorthodox route that Diesel has adopted in the past. Taking such an unusual route to promotional campaigns may prove to be a differentiation in itself. 5.0 Segmentation Marketing experts suggest that a single company cannot cater to the needs of all the consumers in the marketplace. A company should therefore divide the market into different segments and strive to satisfy the needs of a particular segment (referred to as target market) in a superior manner. Diesel can segment the market on demographic (age and gender) and economic parameters. Diesel has products that cater to both genders. The lifestyle products of the company would be best suited for young adult aged between 20 and 35 years of age. Diesel products would be bought by people with higher incomes (Michaels, 2007) In addition to this, it is recommended that the company uses a physiographic approach to segmentation. It is quite possible that people in the same demographic profile exhibit different attitudes. Thus the VALS framework of market segmentation which segments the markets into eight categories on the basis of resources and primary motivations of the customer should be used by the company (Dunne, 2006). 6.0 Marketing Mix The four elements of marketing mix; product, place, price and promotion with respect to Diesel are described below. 6.1 Product Diesel has a vast product repertoire which can broadly be categorized into Diesel Female, Diesel Male, Diesel Black Gold, Diesel Kid, 55 DSL and Lifestyle. The company offers different styles of apparel, denims, accessories, innerwear, eyewear, jewels and fragrances for both genders. The company’s Diesel Black Gold category includes Womenswear SS14 and Menswear SS14 labels. The kid’s collection includes products like jacket jiner-fur, pant pizzlo, cap finily, t-shirt tecny slim, 5 pocket krooley and lots more. The #Dieseltribute and #Dieselreboot are the latest offerings from the Italian company. The company’s lifestyle product range includes helmets, bikes, and headphones. The company markets drawers, larders, rock chairs, rock lamps, fork lamps, chubbies, sound systems and drumboxes under its home range collection. Diesel has also forayed into the hospitality industry. It operates the Pelican hotel located at 826, Ocean Drive, Miami Beach, FL. Diesel has also collaborated with a like minded Italian behemoth Ducati. The alliance markets motorbikes and other collection that appeals to the aficionados of motorcycling. 6.2 Place The Italian behemoth sells its products in brick-and-mortar stores as well as its online portal. The company has strong physical presence in United States, United Kingdom, France and Spain. Diesel has ventured into some of the BRIC nations like India and China to cash in on the growing consumerism and changing lifestyles of people in these countries. Diesels products are available in more than 5,000 outlets worldwide. The Diesel online store is available in numerous countries including Austria, Belgium, Finland, France, Greece, Italy, Japan, Norway, Spain, United States, and United Kingdom. Diesel has a strong physical presence in its domestic market Italy. In addition to Diesel’s own online portal, the company’s products are also available at other leading online retailers including Ebay.com, Bluefly.com and Revolveclothing.com. 6.3 Promotion Diesel uses the print media as well as the electronic media for advertising. The company has fully capitalized on the advent and rise of digital media. The company has a Facebook page with a huge following. Diesel, the pioneer in denim and casual fashion has churned out immensely popular advertising campaigns from time to time including ‘The Black and White Campaign’ and the ‘Global Warming Ready’ campaign. The ‘Be Stupid’ campaign has also proved to be a roaring success for Diesel. 6.4 Price Diesel has become synonymous with fashion and lifestyle. The company competes with the likes of Giorgio Armani, Burberry, LVMH and Ralph Lauren Corporation in the apparel and accessories market. In line with its upscale products, Diesel adopts a premium pricing strategy for such products. In the jeans and denim segment Diesel competes with Levi’s, GAP and Old Navy follows a competitive pricing strategy. References Bansal, S. 2012, Sourcing norms force brands to evaluate entry, Washington. Carlos Flavián & Miguel Guinalíu. 2005, "The influence of virtual communities on distribution strategies in the internet", International Journal of Retail & Distribution Management, vol. 33, no. 6, pp. 405-425. Diesel. 2013. [Online]. Available from: http://www.diesel.com/ [Accessed: 02 December 2013] Dunne, D. 2006, "Thats segmentation, not sales", Marketing, vol. 111, no. 34, pp. 16. Chung, H., Lin, Y. & Hu, J. 2013, "Bundling strategy and product differentiation", Journal of Economics, vol. 108, no. 3, pp. 207-229. Gherasim, A. 2011, "Product Life Cycle Approach", Economy Transdisciplinarity Cognition, vol. 15, no. 2, pp. 158-167. Michaels, A. 2007, Fortune favours the brave Entrepreneurship: Diesel chief Renzo Rosso has built up a profitable fashion empire with a maverick streak, says Adrian Michaels, London (UK). Zargani, L. 2007, Diesel plans megastores, increasing brand exposure, WWD, vol. 194, no. 18, pp. 10. Read More