The High Brand Reputation and the Customer Preference - Essay Example

Individual Fashion Marketing Plan Brand ‘Valentino For All’ Brief Since its establishment in the year 1960, Valentino S.P.A has been one of the pioneers in the luxury fashion segment. Haute couture created by the famous Italian designer Valentino Garavani has been the base strength of the brand that has rendered it a unique sustainable position in the global marketplace. Correspondingly, the marketing plan is based on brand extension of this famous brand which is to be named as ‘Valentino For All’ and which would act as a diffusion brand of Valentino S.P.A targeting to offer a more affordable product range to especially the young teenage girls. Executive Summary ‘Valentino For All’, the planned brand extension based on diffusion strategy will endeavour to sell luxury products especially female related garments to young consumer segment i.e. teenage girls. The brand extension strategy would make use of social app to communicate with the target consumers and to create greater awareness. The target retail outlets featuring greater share of Valentino brand will enable the company to make its presence within the target masses. Besides, the brand extension will enable Valentino to make its presence more prominent in the competitive market. Table of Contents Executive Summary 2 Brand Overview and Strategy 4 The Consumer 6 The External Environment 14 The Competitors 17 Product Type 24 Promotion 27 31 Pricing 32 Place 33 Conclusion 34 34 References 35 Bibliography 37 Brand Overview and Strategy The prime intention of this report will be towards performing the deep evaluation of a luxury fashionable brand named as ‘Valentino SpA’. This brand has been into fashion business since long and is basically of Italian origin. Since being an Italian fashion brand, all its apparel and fashion products reflect the styling trend and the traditional craftsmanship of Italy. A majority of the products manufactured by this brand belongs to a niche section and are high priced as well (Valentino SpA, 2014). The brand was established by Valentino Garavani in 1960 in Rome, Italy. Since then, the brand has been considerably successful in gaining significant amount of preferences from both male and female customers who like the precision and the styling factor associated with assorted offerings such as clothing, footwear, perfumes, glasses, accessories along with watches. The brand adds a combination of certain important factors which contribute to its success factor. It is a popular brand due to ensuring the offering of a diversified portfolio of products for men and women encompassing clothing, footwear as well as accessories (Valentino SpA, 2014).In the current scenario, the brand has attained significant amount of development under the effective supervision of their Creative Directors Maria Grazia Chiuri and Pierpaolo Piccioli. These creative directors have successfully helped the brand in terms of launching a rejuvenated collection of the brand based on its legacy prevailing for a period of half a century. The aesthetic value of brand is kept into consideration wherein contemporary as well as feminine aspects of the design are provided greater priority (Valentino SpA, 2014). With due consideration to the prevailing brand related factors, it has been determined to make a brand extension of the unique luxurious offerings so that a greater share of the market is captured. Subsequently, with the brand extension name of ‘Valentino for All’ a shift in focus is rendered towards young teenage girls, fashion enthusiasts and graduates. The brand in the current marketing scenario can aim towards manufacturing women’s garments and lifestyle products specifically for events such as prom celebrations and final year college parties. Although it is apparent that a number of high street stores possess an assortment of apparels but due to inherent desire amid women to wear luxury products at affordable cost they are at times denied of using the kinds of offerings provided by fashion brands such as Valentino. Thus, this endeavoured brand extension which would act as a diffusion brand would render high standard quality, latest fashion, desirable luxury along with the option of having certain luxury items for rent and sharing of certain purchase items amid friends to ensure a cap in the cost associated with the offerings. Subsequently, based on the age factor of these young customers, it has been planned to come up with stylish and quality garments at affordable rates. All these efforts made as part of brand extension points out towards certain specific intentions of the brand. One of such intentions is that the brand wants to attain new and young age female customers and the other intention is that it wants to make these young customers feel the taste of luxurious quality and fashionable products. With regard to strategic positioning, the brand must position its new products based on the factor of quality and luxury at affordable rates as well as an offerer of facilities such as sharing of products amid friends and renting certain high end items. Through his strategic positioning, the brand will be successful attain the attention of multiple new customers who might not have been able to afford the high priced products of this brand. Regarding the short-term goal, the brand should undertake aggressive advertisement strategies for getting its products within the attention of its targeted customers. Whereas for the long-term goals, the brand should make efforts towards bringing about diversification within its product line, renting and sharing facility as well as pricing strategies so that it can manage its customer segments in an effective manner through greater customer engagement (Valentino SpA, 2014). The Consumer Market Sector Size Valentino SpA operates in the competitive fashion garments and accessories industry where there are a number of leading players that have grabbed a considerable extent of market size. According to PM Digital (2013), it is affirmed that Valentino SpA holds around 5.4% of the online market share coming under the other luxury brands category (See Appendix 1). Subsequently, the leaders in this section are Ralph Lauren with around 25.1% and Coach with nearly 19.1% of online market share (PM Digital, 2013). Moreover, with the current initiative of this brand which is highlighted i.e. ‘Valentino for All’ in terms of coming up with a new line of quality and price centric products, the brand might expect a rise within its current market share by 2 to 3 percentage depending on the customer populate type they are currently focussing upon. Concerning Facebook page like counts, a year-in-year (YOY) growth has been observed in the market segment for Valentino’s in between 2012-2013 of around 236%. Besides, Valentino has fast rising followership in Twitter with 849% growth on YoY (PM Digital, 2013). Segmentation of Products Based on Customers types with Demographic Factors The segmentation part for Valentino has been presented as under in an orderly fashion [refer to figure 2 in appendix 1]. The below listed chart of (Segmentation of Products Based on Customers types with Demographic Factors) provides a clear category of the different product line and product mix possessed by the brand. It also projects how the brand differentiates its product types based on the demographic and the gender factors. Moreover, apart from this existing above stated segmentation pattern, this brand will be adding a new segmentation pattern where focus will be provided on the teenage demographic factor. The low price category, quality and luxury factors will also be considered in the new segmentation pattern which is yet to be seen. In relation to the value provision, previously the brand was mostly providing high luxurious apparel products with the prime intention of providing its customers with higher level of tangible and intangible values. The luxurious products provided the attainments of a niche feeling within the customers which further helped them higher levels of societal status (Valentino SpA, 2014).However with the recent initiative taken by the brand in terms of launching of its luxurious price centric products, the value provision to the customers generally included the feeling of product nicheness and quality at an affordable rate. Driving Factors Adding to all these, the brand has got its stores in multiple nations which include North America region, European nations such as Ukraine, Netherlands, Hungary, France, Italy, United Kingdom, Spain and Germany, Middle East nations including Kuwait and Bahrain, Asian nations such as Thailand, Taiwan, China, Japan, Hong Kong, Indonesia and in South America Brazil as well as Panama (Valentino, n.d.). Moreover, for the driving factors that the location factor does play a significant role for this brand for bringing about diversification within its garment product type. Adding to the location factor, the cultural factor also acts as a major driving force since the garment design, type and the raw material quality factor may also vary from a cultural context (Wu, 2012). Relevant Statistics With regard to the relevant statistics, it can be stated that over a period of time, this brand has maintained its stranglehold over a certain section of the market. The reflection of this aspect can be found within the price sensitivity of the United States (US) customers towards luxury life care and apparel products. Despite the recent economic recession hits, still the luxury brands seemed to have maintained a constant rate of growth within the markets of US. This also projects a great opportunity for this luxury garment brand to launch its new cost effective project. Correspondingly, the customers of UK appeared to prefer the quality and the luxury factor more over the price aspect. Thus, it would be convenient for Valentino to target the teenage customers and provide them with the feeling of luxury and quality since the price aspect has already been kept low by the brand itself (Cable News Network, 2014). Appendix 1 Fig 1. Market Sector Size Source: (PM Digital. 2013) Apparel Clothing Garments and Accessories Belts Foulards Bracelets Make-Up Bags Scarves, Ties and Wallets Other Garment Accessories Garments For Both Men & Women Men’s Garments Mens Ready-to-Wear Mens Jeans Premium Category Super Premium Category Mens Outerwear (Other than Jeans) Mens Jackets and Coats Mens Shirts Mens Sweatshirts Men’s Shoes Mens Beachwear Other Mens Outerwear Womens Clothing Womens Outerwear Womens Skirts and Pants Premium Womens Skirts Super Premium Womens Pants Womens Outerwear (Except Skirts and Pants) Womens Dresses Womens Jackets and Coats Womens Tops Womens Shirts Women’s Bags and Shoes Other Womens Outerwear Footwear Womens Footwear Mens Footwear Eyewear Designer eyewear Fig 2. Segmentation of Products Based on Customers Types with Demographic Factors Source: (Valentino SpA, 2014) Appendix 2: Customer Profile Board Age- (15- 60) Occupation- Teenagers, Working Professionals (Male & Female) Preference- Luxury, Quality, Price, Social Status Value Return- Mostly intangible ( young, powerful, free, different, exclusive, approachable, popular) Shop Locations- Mostly in Italy Source: (Valentino SpA, 2014) The External Environment In relation to the external environmental factor, multiple factors must be taken into consideration before determining the odds and evens of carrying out a business process over a specific area. For this part of the discussion, analysis will be carried out on the US market wherein the maximum number of stores of Valentino is present. These considerable factors are based on: Geographic and demographic aspects Socio-Cultural aspects Political scenario Competitive business practises and Economic scenario Technological advancement The detailed explanation of these aspects have been mentioned as under Geographic, Demographic and Political Aspects With regard to the geographic aspects, it can be stated that the US is a well-established nation and does possess an appreciable population level. Moreover, the US ranks amid the leading nations in terms of population just after China and India and is also the third biggest nation on the globe after Russia and Canada (nationsonline.org, n.d.). Since being a large sized nation, so the probability of getting a target customer population of varied demography is high over there (U.S. Census Bureau, 2013). This might appear as an opportunity for ‘Valentino for All’ i.e. proposed brand extension with regard to making its new product mix launch. Besides, the count of population between the ages of 13 to 74 years is also appreciable within this nation. This further increases the scope for Valentino for All to attain a better market stance within US and target the teenage population for the launch if its new cost effective product segment (U.S. Census Bureau, 2013). Socio-Cultural Aspects The concept of individualism is highly preferred within the US’s culture. Individuals are known by their achievement levels rather than their age or sex. These trends can be commonly seen in the work setups within US industries. The American population does not remain much tended towards being culturally oriented. Most of them prefer straight forward communication style and project quick responses based on their needs. This might appear beneficial for proposed Valentino for All brand extension since they will not have to put in considerable efforts over being culturally sensible. Despite being favoured towards supporting individualism, still the concept of equality can be found within the American society which might somehow act like an advantage for Valentino for All (Sherry, 1990). Competitive Business Practises and Consumer Trends As pet the latest forecast made by Google, there exist top 10 fashion brands housed within the US market. This might appear as a challenge for threat for proposed Valentino For All since the level of competitiveness will gradually go up. As a counterpart, other brands may also adapt the strategic technique which Valentino for All wants to implement and worsen the situation to a major extent for this brand. The entire advantage concept mostly depends on the levels of market hold attained al the small or large operational fashion brands within the markets of US. The consumer trend related to preferring luxury offerings is at a rise after the recovery from recession in the past few years. Thus, the new opportunity that would be obtained by consumers in nations such as the US i.e. having luxury products of a globally leading brand like Valentino at reasonable cost along with gaining the option of product sharing and renting would be a major drawing factor (Mau, 2013). Economic Scenario The economic scenario of US appears to be quite impressive. The nation follows a mixed type of economy and also holds the world’s largest economic stance. The nation accepts global currency and has just emerged from a financial crisis. Moreover, the nation also projects high levels of interest towards foreign investors. This might appear as a huge opportunity for ‘Valentino for All’ since it will get high level of support from the governmental side if it plans of doing some major investment within the US market (U.S. Department of Commerce, 2014). Technological Advancement With regard to technological advancement, it can be stated that the United States seems to be highly advanced in terms of technological aspects. The nation appears to have accepted the methodology of automation in majority of its industries specifically in the garment manufacturing sector. This is mainly due to the reason that the demand for designer garments has subsequently increased with time and thus the need of new garment manufacturing machinery are felt. This factor might also be like an advantage for the ‘Valentino for All’ diffusion brand since it can easily launch its new collection and meet the rate of demand as well (University of Central Florida Libraries, 2008). The Competitors The competition factor plays a significant role in terms of improvising the business or sometimes in terms of deteriorating it as well. As a common understanding, it can be stated that since the market of the United States can be termed as developed, so the risk of facing competitive barrier will be much higher over that area. Moreover, since being a global brand, the level of competition faced by Valentino is quite high both in the domestic as well as in the international markets. For instance, in the domestic market, this brand faced competition against brands such as Armani, Dolce & Gabbana, Prada, Versace and Moschino. However, in relation to international levels, the competitors are mostly like Chanel, Burberry, Ralph Lauren and Dior along with diffusion brands such as Burberry London, Mui Mui, Marc by Marc Jacobs (Slideshare Inc., 2014). SWOT Analysis (Valentino For All (Proposal), Armani, Prada) BRAND 1. Valentino For All (Proposal) Strengths High level of brand reputation and brand equity in both domestic as well as international market The high raised name of Valentino Garavani himself would enable to attain greater attraction as well as recognition High standard, quality, desirable luxury and affordable cost Efficient and effective regulation of the distribution channel with the facility of renting and sharing products amid friends Maintains a varied product portfolio such as garments for both men and women, fragrances, watches, jeans, bags and eyewear Weaknesses The brand extension has to continue investing huge amounts for maintaining its brand image as well as market contacts Bringing about huge diversification within the brand products might increase the risk of brand dilution Opportunities The growing trend of luxury markets and the increasing demand of luxury products amid especially the teenagers in multiple foreign nations such as India and China Increasing level of competition which is indirectly forcing product development More chances of targeting the youth segment with the new product line in the brand extension approach Threats High level of competitive segment might jeopardise the brand’s market hold Easily available substitutable products from the domestic as well as other lower reputed brands BRAND 2. Armani (Emporio Armani Diffusion Line) Strengths Follows uniqueness and personality within their product design. Products provide the owners the feel of uniqueness within the crowd The garment products are majorly hand stitched rather than machine stitched Expatriation in designing of sportswear Weakness Emporio Armani diffusion line has at times been criticised for being unexciting in terms of designs, deficient in quality along with being overpriced in comparison with to other diffusion lines Opportunities Majority of the workers of this brand are young aged and are skilful which provides this brand with an opportunity of improvising their efficiency levels Taking into consideration the current demand for luxurious garments, this brand has the opportunity of setting up new individual outlets in the global market especially in the Middle East region through the establishment of international tie-ups Threats The brand serves a very small portion of the target population demanding for premium segment goods The market capture rate of this brand is quite slow and needs much of an effort to come upwards Duplicate products of this brand are easily available in the market at very cheap rates BRAND 3. Prada (Miu Miu Diffusion Line) Strengths The brand already possesses an established global positioning and fashion house It is known worldwide for being fashion forward, feminine, urbane along with having a sought after edge Launching a new collection of products in each season invariably The brand also has high expertise in the areas of product promotion and effective market communication techniques Weaknesses Due to the stiff level of competition witnessed by this brand, it faces heavy resistance in terms of capturing larger market share The level of awareness about this brand is significantly low in the international perspective Opportunities Since the brand has attained a high market reputation along with it also possesses a diverse product portfolio so the chances of its penetration within the international markets rise significantly Utilisation of the digital media marketing for spreading high level awareness within its customers The brand takes the opportunity of establishing tie-ups with other multinational fashion brands for grabbing better market share Threats Intense competition levels in the international markets Availability of easy substitute garment products at cheaper price Source: (Prada, 2014; Giorgio Armani S.p.A, 2014; Valentino SpA, 2014) The above projected facets describe the various strengths and weaknesses possessed by the proposed brand extension and two of its leading competitors. Apart from the strengths and the weaknesses, the threat factor also poses major challenges for this brand and should be effectively dealt with. One of such threat is from the substitutable products, which provide similarly styled offerings at almost identical cheaper price. The other important weakness which the brand should keep in mind is regarding its product diversification as high diversification often leads to brand dilution. Apart from the strengths and weaknesses of the other two competitors, ‘Valentino for All’ has got a key strength factor that it has got a huge chain of garment outlets in multiple nations and this will gradually help the brand in terms of getting along with the store advertisement of its new cost effective products (Prada, 2014; Giorgio Armani S.p.A, 2014; Valentino SpA, 2014). Appendix Logos of Competitors Porters Five Force Analysis for ’Valentino For All’ Product Type Currently, the brand has established a highly diversified product mix. The details of the product types have been mentioned above in the segmentation part of the discussion. In a generalised manner, the product mix for this brand includes garments, lifestyle accessories, bags, eyewear and shoes. However, the lifestyle accessories, shoes and garments sections can be further subcategorised into women’s wear and men’s wear. Besides, due to the technological advancement factor within the US market, a majority of the brand’s production units are automated and thus the consumption value will the brand will be providing to its customers includes availability, product quality, niche feeling specifically for the teenage female sections and high flexibility towards price effectiveness. With regard to consumer engagement, the brand will be focussing towards the use of mass media communications such as social media app (key strategy), magazine postings, TV advertisements, billboards promotion, newspaper promotions among others. Moreover, facilities of renting certain popularly demanded products and facility of sharing amid friends regarding key products would enable to aid customer engagement. Above all, the concept of product mix followed by this brand finds similarity with the theory of ‘theory of constraints’ which can be used for effectively reframing the product mix procedure (Davies & Mabin, 1990). USP: Assurance of product quality, style, design and provision of the niche feeling within an affordable rate. Expected Net Profit (ENP): Total Revenue £ 500,000 Cost of Goods Sold £ 150,000 Gross Profit £ 350,000 Operating Expenses Salaries for employees £50,000 Store establishment cost £100,000 Utilities and fixed cost £ 20,000 Miscellaneous expenses £5,000 ------------------------------------------------- Total £175,000 Tax to be Paid £ 25,000 Net Profit (ENP) £ 150,000 Appendix Product Mix Images by ’Valentino for All’ Source: (Valentino SpA, 2014) Promotion Branding The branding of this new brand extension will be done based on a specific sentence of ‘Quality and Luxury for Special Women’. Since this brand extension describes itself to be of standard quality and luxurious and above all it mostly targets teenage girls i.e. women section of the demography, thus this branding statement will be appropriate enough for convening the brand message to the customers. Packaging With regard to packaging of Valentino for All products, the brand will be following the trend of sustainability and environment friendly. Specifically for the new garment product line, the brand will be using decomposable and environment friendly materials for manufacturing the packages. Point of Sale Type In terms of carrying out the sale process for this new product mix, the brand will be focussing towards the implementation of two types of sales processes. The first will be the sales technique through its retail outlet chain and the second one will be through the brand’s online shopping portal which will be giving the customers the freedom of going through the new line of product category along with wisely selecting it. Market Communication Mix Choice of Element Description Effectiveness Rating Cost (Estimated) Single or hybrid element Advertising: Magazine Television Guerrilla Enable to create awareness amid readers Enable to create awareness amid viewers Enable to create awareness amid target consumers i.e. teenagers with unconventional as well as low cost approach Ability to deliver a personal message Medium £5,000 In relation to the hybrid element concept, public relation (P.R) might act as a hybrid element with guerrilla advertisement technique. Ability to reach a large audience High £25,000 Level of interaction Moderate £15,000 P.R: Events Celebrity sponsorship Celebrity gifting Product placement Create mass awareness Create mass awareness Create mass awareness Create prominence amid target audience Ability to deliver a personal message High £20,000 £27,000 £10, 000 £10, 000 The context of public relation can be considered to be as single entity since, it will sufficient enough for drawing people’s attention. Ability to reach a large audience High Level of interaction High Credibility given by target audience Moderate Sales Promotion: Packaging Website Loyalty cards Environmental friendly products Create online presence Create loyal customer base Ability to deliver a personal message Moderate £23,000 £5,000 £3, 000 The in the case of sales promotion, the simultaneous advertisement using mass media communication can act as a hybrid element. Ability to reach a large audience High Level of interaction Credibility given by target audience Moderate Social Media Social App Tweets and Page on social media Check the products, make communication with other purchasers and price comparison Ability to deliver a personal message and obtain feedback High £3,000 This can be used as a single entity only Total Marketing Communications budget £ 1,46,000 Pricing Style: Cost Price: Mark up: RRP: Gross Profit: Valentino Contrast-Back-Pleat Wool-Silk Drill Coat £ 2,500 £ 3,200 £ 3,150 £ 650 Valentino Patent Pencil Skirt £ 1500 £ 1750 £ 1850 £ 150 Embroidered Lace Dolman Tunic and Cuffed Shorts £ 2500 £ 2800 £ 2750 £ 250 Place Retailer Description Location Existing Brands Sold NorthPark Center Retail output for Valentino garments and life style products 8687 N Central Expy, Dallas, TX 75225, United States Valentino Valentino Retail Store Retail output for Valentino life style products 105 Grant Avenue, San Francisco Valentino Conclusion From the entire above discussion and review of the provided facts, it can be stated that through this brand extension, ‘Valentino for All’ can subsequently attain a greater market share within its operational markets such as US. Moreover, the high brand reputation and the customer preference regarding the product types might act as a significant level of advantage for launching this brand extension. The prevailing demand amid the young teenager girls to obtain luxury products at affordable prices has been the key factor related to the brand extension plan. It is determined that the use of social app and other marketing communication modes can facilitate Valentino to garner greater prominence. References Cable News Network, 2014. Consumers: We want Gucci or Target. Forget the Gap. New York (CNN Money). [Online] Available at: http://money.cnn.com/2011/03/09/pf/consumers_prefer_luxury/ [Accessed May 17, 2014]. Davies, J. & Mabin, V., 1990. Reframing the Product Mix Problem Using the Theory of Constraints. Victoria University of Wellington, pp. 1-10. Giorgio Armani S.p.A., 2014. World of Armani. Shop Online. [Online] Available at: http://www.armani.com/in [Accessed May 17, 2014]. Mau, D., 2013. The 10 Most Popular Fashion Brands Of 2013, According To Google. Fashionista. [Online] Available at: http://fashionista.com/2013/12/google-top-fashion-brands-2013#awesm=~oEwwnh73gSdMar [Accessed May 17, 2014]. nationsonline.org, No Date. Countries of the World by Area. Home. [Online] Available at: http://www.nationsonline.org/oneworld/countries_by_area.htm [Accessed May 17, 2014]. Prada, 2014. Pradasphere. Exhibition Explore. [Online] Available at: http://www.prada.com/pradasphere [Accessed May 17, 2014]. PM Digital. 2013. Trend Report: Luxury Brands Online. The Study. [Online] Available at: http://www.pmdigital.com/wp-content/uploads/2013/09/PMDigital-Luxury-Study-2013.pdf [Accessed May 17, 2014]. Sherry, H. F., 2001. A Sociocultural Analysis of a Midwestern American Flea Market. Journal of Consumer Research, pp. 13-30. Slideshare Inc., 2014. GUCCI Brand Analysis. Presentation Transcript. [Online] Available at: http://www.slideshare.net/082011341/gucci-brand-analysis [Accessed May 17, 2014]. U.S. Census Bureau, 2013. Demographic Analysis. Population Estimates. [Online] Available at: http://www.census.gov/popest/research/demo-analysis.html [Accessed May 17, 2014]. Valentino SpA, 2014. Maison. Collections. [Online] Available at: http://www.valentino.com/en/home/maison/10000-maison [Accessed May 17, 2014]. Valentino, No Date. Store Locator. Collections. [Online] Available at: http://www.valentino.com/en/home/store_locator/ [Accessed May 17, 2014]. Bibliography U.S. Department of Commerce, 2014. U.S. Economic Accounts. Bureau of Economic Analysis. [Online] Available at: http://www.bea.gov/ [Accessed May 17, 2014]. University of Central Florida Libraries, 2008. PESTLE Analysis. Business Research -- Industry Analysis. [Online] Available at: http://guides.ucf.edu/PESTLE [Accessed May 17, 2014]. Wu, Y. & Wang, N., 2012. Market Feasibility of Burberry and Gucci in Zhang Jiagang City, P.R China. Arcada, pp. 1-77. Read More