Valentino: The Indian expansion Strategic Fashion Marketing Plan Craig Ramsay Student ID: 2476554
Contents: Why India? - 1 Marketing Objectives - 2 Market Segmentation - 3 Target Consumer - 4 Positioning & Competition - 5 Place & Location -6 Promotion - 7 Brand Identity - 8 Price & Costings - 9 Timeline - 10 Appendix - 11 Bibliography - 17
Why India? As established in the audit, greater expansion in Valentino is needed and India is a prime target for this. India is currently becoming a global superpower,, economically and political, and the worlds spotlight is slowly turning on this area of the world. As the graphics state, the wealth of India is constantly growing, perfect for the luxury retail market as it means the consumer has a greater disposable income. The retail industry of India is also constantly growing (a yearly rate of 25%) , and accounts for 10% of the GDP and 8% of employment and is a massive industry with sales of $450 billion a year (businesstoday.intoday.in, 2012). Valentino as always has an affiliation with this region of the world, with Valentino himself being personal friends with the Queen of Iran, and as seen the most recent collection, SS14, Valentino is beginning to develop a more middle eastern and Asian lo ok due to the recent take over by Mayho ola investments, thus an Indian expansion is seen as a more naturally stepping stone in Valentinos development and prime time to commit to this strategy because of the most recent expansion and the success level of these.
Marketing Objectives For Valentino to expand in the Indian market, several objectives must be set to ensure the process goes as smo othly as possible and to avoid any mistake that may occur which could jepordise the project. Firstly, this is only an initial two year strategy. This is because, as Valentino has not really been prominent in this market thus far,Valentino will use the launch of this new store to see how the Indian consumer reacts to the product and how popular the brand is in this region. If this proves successful, Valentino will then lo ok at expanding further into India, dependent on the sales figures and feedback Valentino receives over this two year period. In addition to this, In order not to take a vast financial risk, Valentino must find the cheapest way to infiltrate this market, and still appeals to the Indian consumer,as so if the project does not go as successfully as hoped, there will be no overriding negative effects on Valentino in the long term. In order to maintain success with this project, Valentino will replicate previous ideas taken in the recent expansion project, altering to some degrees due to the new target consumer,such as the promotion strategy taken in Shanghai (Valentino.com, 2013). Social media, particularly blogging by the public, must also be considering within this strategy, in most the promotion section of the strategy, due to rise in levels of this activity in this region (Loewenstein, 2012)
Market Segmentation Due to the varying amount of wealth ($3.5 Trillion(Chakravarty, 2010)), and how it distributed within India (Appendix 5), the market can be segmented into several different catagories. Catagory 1 would be be classed the elite and superwealthly. This is the top 1% of the countries population, who own 15.9% of the countries overall wealth (Chakravarty, 2010). This is the primary target consumer for Valentino in the India due to the amount of disposible income this sector has, and with a minor income tax of 30% on those earning over â‚Ź118,300 (financeminister.in, 2013) has little worry with governmental issues that may affect there income. Catagory 2 is the second wealthist sector in india, the top 9% of the population who retain 37% of the countries wealth (Chakravarty, 2010). Even though is is still a significant portion of the nations wealth, it is divided amoungst a wider amount of people. Thus making them signficantly less wealth than Catagory A, but pocess more consumer,and thus also need to be targeted. Catagory C is the remainder of the population who are extremely po or,bottom 20% sharing 1% of the countrys wealth (Chakravarty, 2010) and can thus be exlcuded from any form of taregting the strategy
Category A
Category B
Category D Key Facts Category A & B to be targeted Minmum income tax compared to EU Top 10% of population holds majority of wealth Highest populated country by 2030
Category C
Target Consumer As established in the market segmentation, the two main groups, category A and B, are the required target market for Valentino, with category D being a secondary target market. Referring to consumer section of the previous audit (See Appendix 2), Valentino shall aim at consumer one, the older consumer into the more classical form of Valentino design. For this reason, for this initial launch Valentino will not bring the Valentino Red range to India. The primary reason that these consumer can classed as consumer 1 is due to how the wealthy in India tend be older due to the reason that the money has been built up in business ventures and hasn’t had the time to develop into younger markets via aspects such as inheritance. Luxury products are also popular with this consumer,with luxury retail in India having grown by 15% in the last three years (hindustantimes.com, 2013) To relate this to category D, people who have the funds to travel in India are more often the people who have built up wealth over time, due to the expense to travel to this region from Europe or the US. To target this market, Valentino will rely on the solid aspect of the classical elegant lo ok that Valentino is famed for,due to how this lo ok appeals much more to the 40+ market, than the younger,edgy lo ok Valentine Red offers and the strong brand image that comes hand in hand with the name Valentino. In addition to this, Valentino will also release an exclusive Indian line (see promotion) altering aspects of the design to suit the taste of the category A & B consumer and lauching new lines, such as Sari’s, in order for the consumer to be able to see the how Valentino is allowing them to keep the traditional clothing of India, with a western twist. Standard lines of the Valentino collection will also be available for category D, due to the high amount of western tourism, and for A and B who are interested in western design.
Key Facts New range to target Indian consumer Luxury retail grown by 15% Classic Design Older consumer 40+
Positioning & Competition Key Facts Similar climate to euro market Louis Vuitton main competitor
In in the Indian market, Valentino will be easily able to position the brand as a prominent luxury brand. This is mainly due to the fact that the ten biggest luxury retail brands are all European luxury brands. Because of this Valentino will be able to replicate the position that it currently holds in the Europe in India. This may not seem to be changing an adequate amount to adapt to the Indian market, however,it can be easily assumed that because these are European companies, therefore it establishes current climate of the market in India is very similar to Europe, as can be compared to the analysis of positioning seen in the previous audit (See Appendix 3). In terms of competition, Valentino’s main competitor in the Indian market is Louis Vuitton, primarily due to the popularity of the brand in India. Louis Vuitton has a current brand value in India of $22.7 million (indiatvnews.com, 2013), making it the largest and most popular brand in India, and thus are currently dominating this market. However,Louis Vuitton is currently struggling to expand the brand out of Indian malls and further into the Indian highstreet as the brand is finding it difficult to acquire a decent premises (wgsn.com. 2013). This therefore gives Valentino the opportunity to infiltrate on Louis Vuittons current share of the Indian market while the brand is preoccupied with expanding the brand in this market, rather than creating improvments on the fo othold it already possesses. Traditional competitors, Prada and Chanel, hold a smaller share in the market which gives Valentino another chance in the long term to dominate these brands in the Indian market where the popularity seems less than so than the European Market.
Place & Location For this expansion to be a success, Valentino must launch in a location where the wealthiest live and where the sales of luxury go ods is the highest. This is the National Capital Region, which, as seen in the diagram, has the highest sales of luxury go ods in India, and also encompasses the richest cities, such as Jaipur and Delhi (rediff.com, 2013). In addition to this, this launch will also differ from the other new stores that have opened in that this will not be a street store, but will be a mall store. Once again referring to the statistics shown in the diagram, this is where luxury go ods are sold in the highest volume, and therefore must be the preferred method of shopping to the Indian consumer. As well as this, the National Capital Region also experiences the highest amount of tourism within India, therefore making it a prime location to target the category D consumer. The design of the store will follow that of the concept store in Milan, as this store really does express ideas of the classic flavor of the design of Valentino, helping the brand to still maintain it’s identity as a western brand in this market, something that does appeal to the Indian consumer and helps consumer in category D to recognise and relate the brand to there tastes and functions.
Key Facts Mall Store NCR area for expansion VM will be model on Milain store
Promotion After the success of collection Shanghai, Valentino will replicate this idea in in India with collection India. This is because it reduces the risk of something going wrong and putting the promotion section of this strategy in jeopardy, and with this already being a strategy with an element risk as India is an untested market, no unnecessary risks will be taken. The first part of this promotion will include Valentino designing an exclusive range of garments specifically designed for the Indian market, such as Sari’s. Even though it has been proved that the consumers in category A and B have an interest and want in western design, this collection once again reduces the risk of the strategy aiming in the wrong direction and also gives Valentino a chance to establish itself and position itself in other elements of the Indian apparel industry. The standard Valentino line which is sold in Europe will of course also be said, thus is can be said that this exclusive line is covering Valentino from both lines of fire. Furthermore, the Indian consumer finds the indeed of exclusivity appealing as it enforces the ideas of luxury and elitism (Jian, 2012). The event itself shall be smaller than the launch of Shanghai in order to illustrate the idea that this event is elitist and exclusive, thus creating a tactic of having people vying for invitations for this event, where the finest of Indian wealth and well known figures will be attending. Indian bollywo od stars will also be used to model the clothes of the new range, giving the consumer something to relate to, as the use of celebrity conveys wealth and luxury within the brand, and using models with an Indian skin tone allows the consumer a better deduction of how the garments will lo ok on them, rather than a white model. Furthermore, due the rise of blogging and social media in this region (Lowenstein, 2012), a series of select Indian fashion bloggers, the INFB for example, will be invited to the catwalk to write reviews and give opinions on the collection, thereby utilising digital outlets, something in the audit that was found to be lacking, and also using the bloggers as a way of free promotion in this market. To finalise this event, a champagne reception will be held instore in order to allow the future consumer to become familiar with the store itself and the other products that Valentino sell to draw interest, and hopefully in the long term, sales.
Key Facts Collection India Celebrity Models Utlise Indian bloggers
Brand Identity It is important for Valentino to retain the identity of the brand due to the appeal of western fashion houses in the Indian market and to make sure the brand stays relevant as it has with the previous recent expansions. Consumers will also, more often than not, feel more comfortable shopping with an already established brand with a strong reputation behind them as they know the product will be of a high quality and beautiful level of design (Mink Rath, 2010). e classic signature of designed that have ensured Valentino the reputation that it has today. It is therefore most important, in relation to DNA pyramid (See Appendix 4) that Valentino really stick to the heritage of the brand in this expansion. Using things such as the same packaging of the purchased garments will help reinforce this statementBecause of this, the garments in collection India, must always have something that shows the image of Valentino as a brand, the use of famous Valentino red is a key idea to ensure these products still retain this.
Price & Costings
Key Facts Store costing less than $1 Million Promotion - $3 Million Staff Trainging $35,000
The initial development costs of this strategy are generally very cheap. The cost of developing and creating the store will be $300,000 because, as Valentino is initial expanding into the Indian retail malls, no building needs to be bought or built, therefore this cost is purely on making the store visually appealing to the standards of Valentino. The cost of renting a 5000 sq fo ot space in a prime mall in Delhi for 2 years is estimate to cost $444,700 (Hans, 2012). With the estimate cost of store overall coming to less and $1 million illustrates how inexpensive this venture is. Training the staff is estimated to be $35,000 as this needs to occur at the Valentino retail academy to ensure the high standards of the brand our met, this estimate includes travel, fo od and lodgings for each of the employees. The most expensive part of the expansion will the promotional ventures of collection India. This cost is estimated to be $3 million in order to maintain that the fashion show and launch are as glamorous and lavish as possible to reinforce the identity of Valentino being a brand of luxury and exquisite design. When pricing product, Valentino can will maintain the prices sold in the European market, with the subtraction of the sales tax on clothing as this is not needed in India. The primary reason for not upper the price to create a higher profit margin is maintain a competitive price with the competition and to also attract the category D consumer as they will buy in a higher bulk if the prices in India are cheaper than those of the European markets. After anaylsing the growth of the 10 main competitors in the Indian market, it is almost certain that in this first year Valentino will turnover a minor profit, when the brand with the smallest growth, Coach with $1.3 million, is a brand that is a lot less established than Valentino in terms of name and reputation, thus the identity of the brand should sell itself.
Timeline
Store Development - 1 month Collection India Half yearly figure review Half yearly figure review Half yearly figure review Half yearly figure review If a sucess, developing strategies for further expansion
Appendix Appendix 1 - population graph
Appendix 2 - Consumer Table
Appendix 3 - Positioning map
Appendix 4 - DNA Pyramid
Appendix 5 - Wealth Graph
Appendix 6 - Competitors earnings 10. Coach Brand Value: $3,276 mn 9. Fendi Brand Value: $3,636 mn 8. Burberry Brand Value: $4,194 mn 7. Cartier Brand Value: $6,377 mn 6. Chanel Brand Value: $7,075 mn 5. Rolex Brand Value: $7,941mn 4. Prada Brand Value: $9,454 mn 3. Gucci Brand Value: $12,735 mn 2. Hermès Brand Value: $19,129 mn 1. Louis Vuitton Brand Value: $22,719 mn
Appendix 7 - Mall rental table
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