BRAND BUILDING
MARKET STRATEGIES FOR LUXURY PROFESSOR ALESSANDRO CANNATA
Bhavyaa |Chelsea | I’Mari | Shaniya
Céline BRAND BUILDING
lxfm-730 MARKET STRATEGIES FOR LUXURY PROFESSOR ALESSANDRO CANNATA
Bhavyaa |Chelsea | I’Mari | Shaniya
TABLE OF c o nt e nt Execu�ve Summary Company Summary Socio-cultural Analysis SWOT Analysis Understanding Brand Brand Strategy Market Analysis Primary and Secondary Customer Products and Value Proposi�on Conclusion References
executive summary
Célineis a French ready-to-wear and leather luxury goods brand that has been owned by LVMH since 1996. They are known for their iconic handbags and small leather goods. Part of Céline’s success comes from their business model of remaining a private and exclusive brand. Extensive research was done on the market, brand, target consumer, products, and value proposi�on. All of this was taken into considera�on when crea�ng a plan on how to build brand equity. When it came down to inves�ga�ng the future of brand building in Céline, we determined in Spring / Summer 2048 it will con�nue to stay a niche brand. This is what has made them so strong and successful. However, with the rise of wealthy middle class consumers, the demand to purchase luxury goods will increase. Céline will to con�nue to stay exclusive through a mul�tude of ini�a�ves. They will maintain their low promo�on strategy by solely focusing on the pla�orms Instagram and WeChat. As a way to maintain their exclusivity, Céline will be offering a premium service where our loyal customers get early access to certain products before they officially launch on the market. As well as, developing a pricing strategy. In 2048, Céline will con�nue to reinforce their brand associa�ons in order to keep building their brand equity.
c o m p a ny s u m m a ry
ABOUT Céline Céline is a French ready-to-wear and leather luxury goods brand that has been owned by LVMH group since 1996. It was founded in 1945 by Céline Vipiana. At Céline the products are central to everything and speak for themselves. Ready to wear, leather goods, accessories and shoes: each item is cra�ed to be beau�ful and prac�cal, without ar�fice, in tune with the everyday lives of the women for whom it is designed. Céline’s focus is on “less but excellent”. Rooted in the present, Céline writes its history day a�er day: explora�on, crea�ve energy and commi�ed choices lie at the heart of its culture. This explains the brand’s ability to be full of surprises. Its major characteris�cs are sophis�cated materials, a passion for detail and �meless modernity. The House’s aesthe�c is clean, elegant and comfortable with a point of view that’s disciplined but always eased. The "Crombie coat", collarless masculine shirt, perfectly cut pair of trousers and smokings are essen�al to the House’s permanent collec�on as well as the "classic", "luggage", "cabas" and "trapeze" iconic bags.
MISSION STATEMENT
CÉLINE: “House aesthe�c is clean, elegant and comfortable with a point of view that’s disciplined but always eased.” LVMH mission: Is to represent the most refined quali�es of Western "Art de Vivre" (the art of living) around the world. In view of this mission, five priori�es reflect the fundamental values shared by all Group stakeholders: Be crea�ve and innovate, Aim for product excellence, Bolster the image of our brands with passionate determina�on, Act as entrepreneurs, and Strive to be the best in all we do.
KEY
COMPANY FACTS
CEO: Séverine Merle
140 Stores Worldwide
HEAD OFFICE: Paris - France
1800 Employees
www
WEBSITE: www.celine.com
4 Collec�ons a Year
COMPANY'S HISTORICAL REVIEW
1945
LAUNCHED WOMEN’S WEAR READY-TO-WEAR LINE
1964
CÉLINE’S FIRST SIGNATURE CANVAS WAS INTRODUCED; EXPANSION IN MONTE CARLO, GENEVA, HONG KONG, LAUSANNE, TORONTO AND BEVERLY HILLS.
CÉLINE VIPIANA FOUNDED CÉLINE IN PARIS; INITIALLY SOLD CHILDREN’S FOOTWEAR
1950S
LAUNCHED FRAGRANCE; CÉLINE OPENED A LEATHER GOODS FACTORY IN FLORENCE; THE TRENCH BECAME THE ICONIC PRODUCT
1971
1973
BERNARD ARNAULT DECIDED TO BUY INTO CÉLINE’S CAPITAL
1996
MICHAEL KORS WAS NAMED THE FIRST EVER WOMEN'S READY�TO�WEAR DESIGNER AND CREATIVE DIRECTOR FOR CÉLINE
2005
CROATIAN DESIGNER IVANA OMAZIC DIRECTED THE DESIGN STUDIO
CÉLINE REDESIGNED ITS LOGO WITH THE INTERTWINED "C" SULKY CANVAS LINKED TO THE ARC�DE�TRIOMPHE, WHICH APPEARED AS A SYMBOL FOR PARISIANS
1987
THE BRAND WAS INTEGRATED INTO THE LVMH GROUP FOR $540 MILLION
1997
ITALIAN DESIGNER ROBERTO MENICHETTI WAS NAMED CREATIVE DIRECTOR
2006
LVMH HAD TO MAKE DRASTIC DECI� SION AND DESTROYED ALL THE REMAINING INVENTORY IN CÉLINE STORES, CLOSED 20 OUT OF 100 STORES WORLDWIDE
2008
FIRST READY�TO�WEAR COLLECTION FOR SPRING/SUMMER 2010 AT PARIS FASHION WEEK
2017
HEDI SLIMANE APPOINTED AS ARTISTIC, CREATIVE AND IMAGE DIRECTOR
2018
TRANSITION OF DESIGNERS 2006�2008
PHOEBE PHILO APPOINTED AS THE NEW CREATIVE DIRECTOR OF CÉLINE
2010
PHOEBE PHILO EXISTS CÉLINE
FEB’ 2018
PLANS TO LAUNCH MENSWEAR AND FRAGRANCE COLLECTION
S O C I O - C U LT U R A L A N A LY S I S
political In 1945, Germany's surrender and the signature of the Armis�ce in Reims that meant the end of the Second World War in Europe. Poli�cally, France had been destroyed due to the German occupa�on. How to rebuild France, from its homes to its en�re government, was the most significant problem facing France in 1945. In response, the United States rushed to French aid. France became one of the largest recipients of U.S. Marshall Plan aid, a program which donated huge amounts of cash to help Western European countries to rebuild European infrastructure. Although the money was used to rebuild Europe, it was also intended to start capitalist economies and markets in Europe, hoping it can give the United States trading partners on the con�nent and defend the expansion of communism from Eastern Europe. A�er the Second World War, many of the French government's leaders that had collaborated with the Nazis, nicknamed Vichy France, were imprisoned for treason. The provisional government first established by French statesman and commander Charles de Gaulle in North Africa took control of French affairs. The provisional government made prepara�ons for a Cons�tuent Assembly, which formulated a new French Cons�tu�on. De Gaulle's government implemented a massive na�onaliza�on program, pu�ng investment on heavy industry, finance, energy and transport sectors. France na�onalized its industry and regulated the entrance of foreign-owned transna�onal corpora�ons (TNCs) in an effort to achieve industrial autonomy a�er World War II. Advantages of na�onaliza�on included: enhanced interna�onal compe��veness and protected na�onal industrial development, saved those private corpora�ons which faced the situa�on of bankruptcy in economic crisis, helped country recover from war's damages through rebuilding basic industrial construc�ons. In 1944, women were granted the right to vote, and social security followed a�er one year. The post-war years provided a blueprint for the modern French state.
economic France was under the control by a totalitarian government in Vichy. The French economy was opera�ng under a state capitalist system during the war. World War II ended in 1945. As a result, France’s infrastructure was destroyed and their economy was in a weakened state. The produc�on of their industrial and agriculture state was lowered by 40%. Due to the poor condi�on of their roads, bridges, tracks, and ports, supplies could not be distributed promptly or efficiently. In the French poli�cal spectrum, there was a resistance movement that united the conserva�ve, socialist, and communist elements. This united front con�nued a�er the end of the war, which lead to an agreement to promote a rebirth of France and evade the economic stagna�on that happened before/during the war. In order to reach this goal, everyone agreed that economic planning was key in moving forward, and thus the Ministry of Na�onal Economy was created. France then na�onalized the gas, electricity, banking, and coal sectors, along with companies that worked with Vichy. Banker Jean Monnet stated that the French government didn’t have the resources itself to fix the economy. He proposed a reconstruc�on plan that would give France control over Germany's steel/coal sectors and bring the resources to France. Also, he called for the state to take control of key economic sectors: agriculture, transporta�on, communica�ons, mechaniza�on, electricity, fuel, and fer�lizers. In the Monnet plan, each sector was le� to commi�ees represented by the Planning Commission, major firms, public enterprises, unions, and technical experts.
SOCIAL A strong and effec�ve women’s movement appeared in the late 1970’s and 1980’s. Long term changes in the pa�ern of motherhood and work outside the home had a major impact on women’s lives, as did the ideas of feminist thinkers who demanded gender equality. Contracep�on within marriage became common in the late nineteenth century. Pregnancy and childbirth thereby occupied much less of a woman’s life than earlier. Now, without the demands of motherhood, more and more women became full �me or part �me wage earners outside the home.
Europeans, like Americans, also became fascinated with "gadgets" such as televisions, washing machines, vacuum cleaners, dishwashers, and stereos, all of which was augmented by installment purchasing, which allowed people to buy expensive items on credit. Leisure �me also flourished, many European countries mandated that employees receive month long paid vaca�ons each year as a result of which Europeans flocked to beaches and ski resorts. Mass communica�on and travel, which linked the U.S. and European youth together more easily. The postwar baby boom resulted in more young people who exercised more influence on society as a whole. Post war prosperity and greater equality gave young people more purchasing power than they had held before. By the late 1960’s youth in Europe, as in America, embraced roman�cism and revolu�onary idealism as part of the "counterculture." They o�en cherished dreams of complete freedom and simpler, purer socie�es.
TECHNOLOGICAL Synthe�c Rubber By 1942 Japan controlled much of Asia, where a majority of natural rubber came from. Rubber was essen�al to the war effort so, the United States created GRS (Government Rubber Styrene) or synthe�c rubber. Nylon Nylon, a synthe�c fiber was first developed in 1935, but wasn’t publicly released un�l 1940. The war needed synthe�c fibers, for uniforms, parachutes and the like, as natural ones were in short supply, so produc�on as a fashion item ceased. In 1945, there were “nylon riots” as women fought to get their hands on the fashion item again (Hill).
ART & LITERATURE The war transformed the literary and art scene in France. During the war, Paris lost its posi�on as the avant-garde art and cultural capital. Under German rule media was controlled and promoted an�-Semi�sm and an�-Bolshevism (Owen, Smethurst). Intellectuals could not remain poli�cally uncommi�ed,crea�ng a divide of those who promoted resistance of German rule, those who collaborated with German rule, and those who tried to remain neutral. A�er the war, Utopian ideologies were no longer viable, people weren’t looking for the perfect Utopian world, feeling that it didn’t exist. Existen�alism rose to take its place, led in part by French philosopher, novelist and playwright, Jean-Paul Sartre. Existen�alism was a rejec�on of past philosophies and touted the belief that humanity was alone in a godless universe; the individual was responsible for their free will and development (Owen, Smethurst). As the full horrors of the war were unveiled in 1945 and beyond, backlash and persecu�on of the complacent and collabora�ve took place including in ar�st communi�es. In January 1945 French journalist and poet Robert Brasillach was tried and found guilty of "intelligence with the German enemy" during World War II, which started a debate in French society over collabora�on and forgiveness (Judt). French theater also had a revival as “clash of poli�cs, ethics, and philosophies, public and personal, that were the substance of everyday life” took center stage.
S WOT
A N A LY S I S
- Strong brand personality
- Consumers relate Celine as leather goods brand and not as a ready-to-wear brand
- Has created niche consumers - Celine is owned by LVMHwhich reduces financial risks
- Celine is not a complete lifestyle brand
- High quality raw materials are sourced from Italy
- Slow to join social media compared to compe�tors
- Contemporary exclusive brand
- The new crea�ve director could help grow menswear collec�on - Increasing the social media presence in response to frequent usage by consumers - Athleisure wear is growing by 5-6% in the fashion industry - Increasing the middle-class luxury consump�on in Developing countries
- Transi�on in crea�ve directors could impact the brand personality
S
W
0
t - Wide use of social media may threaten exclusivity - Compe��on within LVMH brands - Brand extensions through menswear and fragrance could weaken exis�ng brand associa�ons
BRAND
IDENTITY
Aker matrix BRAND AS PRODUCT Leather Goods and Modern Clothing
BRAND AS PERSON
Mysterious, Covetable, Fresh, Creative, Minimal, Charismatic
BRAND AS ORGANIZATION Parisian, Private, Ready to Wear, Sophisticated Ease, Modern, Sincere, Iconic
BRAND AS SYMBOL
Céline Logo, Trapeze Bag, Clean
KApferer PRISM PHYSICAL
Constructed Source
Chic, Less is more, Dynamic, Monochrome, Sophisticated E x t e r n a l i s a t i o n
PERSONALITY
Straightforward, Confident, Relaxed
RELATIONSHIP
CULTURE
Parisian Luxury Fashion, Individualism
High Quality, Trustworthy, Loyal, Exclusiveness
REFLECTION
SELF-PROJECTION
Timeless, Clean, Simplistic, Individualism Constructed Receiver
Confident with a high end quality look and feel, Unique
I n t e r n a l i s a t i o n
KELLER'S PYramid High Loyalty Trustworthy Positive perception Satisfaction
High quality Innovative fabrics Iconic creative director (Phoebe Philo) Recognizable (Sophisticated & clear)
RELATIONSHIPS Resonance RESPONSE
Judgements
Feelings
Utilitarian Modern Design for active women ConďŹ dent (emotional connection)
MEANING
Performance
Imagery
IDENTITY Salience
Luxury French fashion brands including ready-to-wear, handbags, footwear, jewelry Minimalist style and innovative garments
Exclusive (high-end) Timeless & Innovative Feminine Modern/Minimalism Neutral color
BRAND
ST R AT E G Y
unique revelation Céline style has strong in balance of femininity and modern design, which looks simple but it is innova�ve and �meless in the strong structure. Compare to the general fashion brands, Phoebe Philo describes that the concept of Céline is a kind of contemporary minimalism because she wants to clean it up and make it strong and powerful.
Belief System Céline’s belief system was originally subtle luxury with sophis�cated high quality materials. It started off as a children’s shoe company where that was the main focus. Once a womens-wear line was added it shi�ed to ins�lling confidence in women. “Céline is a company which creates affini�es, built on a clear value system: sincerity, agility, focus. Internally, everyone is a stakeholder and ambassador for a single, coherent project: to make beau�ful, sincere and genuine products which empower women and give them joy in dressing and living for themselves.”
brand ritual Céline’s brand rituals include private appointments for shopping and showing off new collec�ons. Céline has occasional private events including invite only events for the launch of new season. Stores are designed to create private shopping experience. Céline also does in store repairs for damaged clothing.
distinctive Lexicon Brand Logo
Less is More
Brand Logo on Products
CĂŠl in e Pa r i s
“Made in Paris” embossed in the interior of Bags
MADE IN PARIS
Garment Labels
market a n a ly s i s
market overview Personal Luxury Goods The market for personal luxury goods presented growth in the worldwide, which is driven both by more local consump�on (up 4%) and by strong tourist purchases (up 6%), according to the Bain & Company.
Fig.1. Global Luxury goods market, 1996 2017 (â‚Ź billion) Source: Bain & Company
China was the top performer. Chinese consump�on bounced back in 2017 because local buying boosted the sales in China by a remarkable 15% at current exchange rates, to a total market size of €20 billion. Lower price differen�als with the other countries around the world also pushed the local market. Buying abroad increased was another factor. Globally, the share of personal luxury goods purchased by Chinese na�onals reached 32% in 2017. In Japan, the personal luxury goods market grew by 4% at current exchange rates to reach €22 billion, boosted by a currency-driven in the second half of the year and increased spending by Chinese travelers. Europe also bounced back, growing by 6% at current exchange rates to reach €87 billion in sales and regain as the top region for luxury sales by value. The American market (including both North and South America) con�nued struggling in 2017, growing by 2% at current exchange rates to reach €84 billion. It maintains a crucial market for luxury brands.
Fig.2. Share of global personal luxury goods market,by region 2016-17 Source: Bain & Company
Apparel, Footwear and Leather Goods Apparel and Footwear industry, Bags and Accessories both con�nued a growth. According to the report "Global Powers of Luxury Goods 2017," this analysis is based on the companies in its "Top 100 luxury goods companies by sales" analysis. Bags and Accessories presented the highest growth rate among all the luxury goods products sectors, with 13.4% of sales growth. It is s�ll the fastest growth sector and had the highest CAGR (11.3%). Mul�ple Luxury Goods are those companies' substan�al sales in more than one product sector such as LVMH, Richemont and Kering. This sector had the largest average size among the Top 100, accounted for 32.5% of total sales. It also achieved the highest net profit margin (12.5%), and the second-highest sales growth (10.8%) and CAGR (8.0%). Apparel and Footwear had the largest number of companies in the Top 100, with 41 companies. However, this sector presented only 4.4% of luxury goods sales growth.
Fig.3. Product Sector Profiles, Source: Deloi�e
Fig.4. Performance by product sector, Source: Deloi�e According to another report "The State of Fashion 2018," Sportswear presents a strong growth in the fashion industry sales growth, accounted for 6-7% sales growth in 2018. The second largest growth is Handbags and Luggage, accounted for 4.5-5.5% in 2018. Apparel and Footwear are both 3-4% of sales growth in 2018.
Fig.5. Share of categories of Fashion Industry, Source: McKinsey Global Fashion Index (2017)
The Size of the Market The global luxury goods industry remains essen�ally modest, presen�ng just over 3% value growth in 2016. Sales of luxury goods managed to exceed USD388 billion worldwide in 2016.
Fig.6. Luxury goods market size, Source: Euromonitor Interna�onal China, Japan and the U.S. accounted for almost half of value sales, contribu�ng to over 50% of absolute annual value gained.
Fig.7. Luxury goods top 10 absolute growth markets 2011-2016 Source: Euromonitor Interna�onal
According to the report "Global Powers of Luxury Goods 2017," LVMH ranked #1 in the Top 10 luxury goods companies by sales. According to another ar�cle “Chart of the Week LVMH Cash Cow Nears $12 Billion in Sales,” LVMH posted another fiscal year of record revenues and opera�ng income on January, 2018. The group’s revenue rose to €42.5 billion, a 13% increase year-on-year, while group opera�ng income was €8.3 billion, up 18% (Business of Fashion).
Fig.8. Top 10 luxury goods company by sales, Source: Deloi�e The group's fashion and leather goods division posted revenues of €15.5 billion ($19 billion), up 13% year-on-year, making up about 36.3% of the overall LVMH business. The selec�ve retailing business includes mul�-brand beauty giant Sephora, accounts for another third of the business, 31.2% of revenues. Watches and jewelry, perfumes and cosme�cs, and wines and spirits account for approximately 10% each.
Fig.9. Fashion & leather goods drive 36.3% of total sales at LVMH Source: Bernstein
However, Louis Vui�on s�ll remains the largest and most profitable luxury brand at the LVMH. According to es�mates by Sanford C. Bernstein, it earned €9.6 billion in revenue (almost $12 billion), with earnings before interest and tax (EBIT) of more than €4 billion in 2017. Céline accounted for only €950 million in sales, 2.2% of the group's total revenues in 2017.
key success factors Key success factors of the apparel and accessories goods industry include exclusivity, authen�city, coveted products, cra�smanship and brand associa�ons.
Competitive landscapes When looking at the compe��ve landscape for Céline, it is important to differen�ate between in house (LVMH) compe��on and outside compe��on. We will briefly cover the LVMH brands of Dior, Fendi, and Louis Vui�on and the outside compe�tors of Hermes, Bo�ega Veneta and Yves Saint Laurent. As men�oned previously, LVMH ranked #1 in the Top 10 luxury goods companies by sales, according to the report “Global Powers of Luxury Goods 2017.” For Céline, the 5th most profitable brand under LVMH, there is no steeper compe��on than Louis Vui�on, Dior, and Fendi, also under the LVMH umbrella (Berezhna, 2018).
IN-HOUSE COMPETITION DIOR FENDI LOUIS VUITTON
EXTERNAL COMPETITION HERMÈS BOTTEGA VENETA YVES SAINT LAURENT
Fig.10. Brand by brand es�mates for LVMH 2017 (millions €) Business of Fashion
Core
competencies Céline Céline was one of the first ready to wear lines in the 1960’s, and is thusly characterized as having �meless modernity and contemporary, for the everyday woman. Yet, despite being for the everyday woman, there is privacy and exclusivity. Dior Dior has been around since the 1940’s and has a long history of reinven�ng the wheel including Dior’s 1947 “new look”. These styles have become classic staples in women’s wardrobes. Introduce new innova�ons each season. Fendi Dedicated fur workshop where it can take up to 200 hours to create a fur piece and iconic leather bags like peekaboo and bague�e which also have made to order personaliza�on that allow for up to 1,000 choices. Contemporary fashion and approach to brand. Louis Vui�on LV has long history and plays on their heritage of the travel bag. In addi�on to this, they also use the history of their innova�on with the stackable trunks and con�nue to be exploratory and crea�ve. They excel at lifestyle including the fact that LV is the name of the parent company of many brands. Bo�ega Veneta Leather goods drive 88% of sales at BV, the bags and fashion aren’t ostenta�ous and o�en don’t have logos. The leather weave bag which they tried to get a patent on and a�er many appeals were able to patent the technique (The Fashion Law). Yves Saint Laurent YSL has a strong brand image that projects boldness, freedom, and modernity, demonstrated by some of the female stars who wore YSL, including Liza Minnelli and Lauren Bacall. YSL is known for many iconic fashion items such as the “le smoking” tuxedo suit for women which debuted in 1966 and con�nues to be featured in ready to wear collec�ons (Shardlow, 2011). Other cult classics include Paris and Janis style shoes and Jodhpur boots for men (Mellery-Pra�, 2015). YSLwas the first couture house to introduce, in 1966, the concept of luxury prêt-à-porter with a collec�on called “Saint Laurent Rive Gauche”, synonymous with youth and freedom, se�ng a first cri�cal step in the moderniza�on of fashion and revolu�onizing the socio-cultural landscape (YSL, Kering).
Hermès Hermès is a family owned fashion manufacture, that has been around since 1837. The level of knowledge they have in leather goods as well as the level of exper�se are driving factors in their ability to remain exclusive. Alex Dumas says, of Hermès, "The main strength of Hermès is the love of cra�smanship. We see ourselves as crea�ve cra�smen." (Adams, 2014). At Hermès any las�ng premium derives from mys�que, its new division, Pe�t featuring one of a kind objects made from reject bags.
Contemporary brand Timeless Exclusive
Heritage Timeless Innova�on
Subtle luxury Leather goods cra�smanship Innova�ve design
Fur and leather goods Cra�smanship
Heritage Innova�on
Contemporary
Strong brand image Iconic silhoue�es Prêt-à-porter
Lifestyle
Long heritage Cra�smanship Exclusive
Competitive advantage
Céline Iconic bags, and modern flair paired with the focus of everyday func�onality make Céline �meless and desirable. The private nature of the brand keeps it exclusive and hidden. Dior Dior’s lifestyle hits all components of fashion beauty, etc, and lets them meet their customers’ needs for most things. The heritage and �melessness of the brand give it credibility and make it well known. Fendi Only brand in LVMH to have an in-house fur atelier. Savoir-faire Launched in 2003 as a premium service for the Selleria collec�on, a line made en�rely by hand, the Fendi made-to-order service is now available for a selec�on of leather goods such as the iconic Bague�e and Peekaboo bags. Allows for up to 1,000 customiza�ons. Fendi’s playful nature is also seen through various ini�a�ves such as being having the first fashion show recorded by drones, or a fashion show in 2007 on the Great Wall of china, which could be seen from the moon. This creates buzz and excitement around the brand as they are bold and crea�ve. Louis Vui�on Iconic logos paired with mee�ng the lifestyle needs of their customers keeps this brand in the minds of the consumer. While exposure could be seen as a weakness for a luxury brand, LV is the most profitable brand in LVMH and even the top of luxury brands for most valuable brand (Forbes). Bo�ega Veneta BV appeals to a wide age group, something that has even been demonstrated on the runway when Gigi Hadid and Lauren Hu�on walked the runway in 2016. However, slow growth has caused them to reconsider their marke�ng strategy to hit digital pla�orms harder to further appeal to younger genera�ons. “Jean-François Palus, group managing director at Kering said the brand would soon undergo a “radical reset” of its communica�ons strategy with a heavy digital component.”(WWD).
Former CEO Carlo Bere�a has said despite how many products are made, the atelier approach has maintained a level of cra�smanship, “At the beginning, Bo�ega Veneta was a sort of atelier and the key success story has been to maintain, even in this fast-growing story, the atelier approach. The approach we have with our produc�on today is similar to the original atelier. This has been one of the key success stories: to maintain the original cra�smanship.” (Amed, 2016). BV maintains the atelier in�mate approach “We don’t have cathedrals. Tomas has always wanted to enforce the in�macy of the Bo�ega Veneta brand versus the gigan�c version of spaces that we see in the luxury market. Bo�ega Veneta was a small ar�san atelier based on leather goods. When Bo�ega Veneta started to open stores all over the world, mainly focused on accessories, big spaces were not needed. We have quite a large number of stores around the world, but with dimensions that, on average, are quite small because most of the stores are selling just leather goods.” (Amed, 2016) Yves Saint Laurent YSL’s ready to wear is just as desirable as shoes and bags, which is rare for luxury brands. According to Kering group’s 2014 financial results for Saint Laurent, leather goods and shoes represent 66% of the business, but that ready-to-wear was the fastest growing of any category, growing by 23% (Mellery-Pra�, 2015). Luxury as a basic is one differen�ator from other brands which focus on luxury as a luxury. In this way, casual-wear has become popular with denim, tees, leather, and knitwear accoun�ng for almost 1/3 of the brands business (Mellery-Pra�, 2015). According to Ortelli, a European luxury goods analyst at Bernstein “the price points are more affordable than comparable brands like Balmain, Givenchy, The Row and Louis Vui�on in ready-to-wear and more affordable in leather goods than the new range of leather bags from Louis Vui�on, Valen�no and Bo�ega Veneta.” Hermès Hermès does not work with a-list celebri�es and this paired with limited distribu�on create mys�que. “Hermès has a limited online presence as distribu�on mostly happens through directly operated stores, where the company can control the level of care a client receives. Over the years, Hermès has grown its network of DOS and franchise stores while reducing distribu�on through third-party retailer as a way to preserve its brand integrity and cra�smanship.” (HBS).
Exclusivity
Lifestyle
Fur atelier
Timelessness
Heritage
Made to order
Iconic
Timelessness
Playful nature
Wide age appeal Atelier approach In�mate se�ngs
Ready to wear is as desirable as bags and accessories Luxury basics More affordable
Lifestyle Exposure Iconic
Mys�que Cra�smanship Limited distribu�on
future trends
Future Outlook Although Western markets are s�ll the global economic stronghold, there is a shi� of economic growth from mature regions in the West to emerging markets in the South and East. In 2018, half of apparel and footwear sales will originate outside of Europe and North America, according to McKinsey FashionScope.
Fig.11. Global apparel and footwear sales forecast 2011-2025 Source: McKinsey Fashion Scope Also, mainstream fashion customers are adop�ng digital channels. The global fashion industry is moving to digital side, and online sales of apparel and footwear is growing rapidly. Many consumers today expect perfect func�onality and immediate support at all �mes. For distribu�on channels, although wholesale remains the largest channel for personal luxury goods, the retail channel such as specialty stores and online sales con�nue to rise.
Fig.12. Growth in online sales of apparel and footwear globally 2017-2020 Source: Euromonitor Interna�onal Addi�onally, customer a�en�on is also shi�ed to new communica�ons channels. Social media users spend long �me per day on those pla�orms. This has a deep impact on fashion, as purchase decisions are influenced by social media, peer reviews and influencer marke�ng.
Fig.13. Customer shopping habits, Source: Kissmetrics
growth
potential & opportunities
Fashion market growth poten�al and opportuni�es With younger genera�ons coming into their own buying power, and the shi� in the luxury consumer to Asia, there are many poten�al growth opportuni�es in the personal luxury market. Globaliza�on/ Asian Market Globaliza�on will con�nue to grow in terms of connec�vity, and shared data across borders, helping fashion brands to enter new markets as access to global customers grows. This can create a what is called “micro-mul�na�onals” where small companies grow from being local to interna�onal though an online presence, such as Matchesfashion.com, which started as a small chain of local neighborhood bou�ques in London and has expanded to 190 countries using online resources (BoF-McKinsey). Besides globaliza�on, the luxury consumer has also moved from the west to the east as the Asia-Pacific region leads the world for both for the number of rich people and the wealth held by them (Kollewe), 32% of all luxury good buyers are now Chinese (Paton, 2017) and product categories like apparel and footwear will grow over the coming years in not only Asia, but La�n America, Africa, and the middle east (BoF-McKinsey). New genera�ons Y and Z drive luxury There has been a shi� from older consumers driving luxury spending to younger genera�ons. Gen Y and Z have pushed 85% of luxury growth in 2017 (Paton, 2017), due to digital marke�ng strategies. Personaliza�on Personaliza�on and cura�on are growing in importance to consumers due to younger genera�ons valuing authen�city and individuality. Brands can use data to tailor experiences, create recommenda�ons, and engage with consumers. Brands who are successful in this will have a powerful tool for differen�a�on within the fashion marketplace (BoF-McKinsey).
Pla�orms Consumers will con�nue to move to online pla�orms as a first place to search for goods because of their convenience, relevance, and product diversity. Amazon is expected to surpass Macy’s this year to become the largest apparel retailer in the US, Tmall and JD.com control more than 80 percent of the Chinese online apparel market, and Alibaba's Singles Day is the largest online shopping day globally. Luxury brands are now looking for how to collaborate on major pla�orms to engage with their customers be�er. Casualwear Luxury casualwear is on the rise, boos�ng global sales of luxury personal goods by 5 percent in 2017 to an es�mated $309 billion. Brands like Chanel, Dior and Louis Vui�on are offering couture sneakers while Fendi, Chloé and Hermès are launching capsule collec�ons specially designed for skiing and cross-fi�ng (Associated Press). Bags and accessories As men�oned previously, according to “Top 100 luxury goods companies by sales”, bags and accessories presented the highest growth rate among all the luxury goods products sectors, with 13.4% of sales growth. It is s�ll the fastest growth sector.
technological trends
A-COMMERCE
INNOVATION
GREEN LUXURY
VIRTUAL COMPANIONS
BLOCKCHAIN
WEARABLE TECHNOLOGY
MIGRATION TO MOBILE
ARTIFICIAL INTELLIGENCE
The future of luxury industry will see the narra�ves of the consumer “experience” and “transforma�on” economies. A-commerce Automated Commerce will be the new trend defining the luxury market. With more advanced algorithms in retail business and smarter devices will mean outsourcing some of the fashion experience for the affluent consumer for whom �me is the ul�mate luxury, or the forward-thinking shopper who wants to be the trendse�er. A-commerce is set to take care of the ni�y-gri�y of the fashion experience like searching, purchasing, organizing, and styling. Green luxury Rising concerns about climate change and environmental sustainability will impact affluent consumers, par�cularly millennials. Consumers are embracing the benefits of living green, not simply for egalitarian purposes, but for their own happiness. According to market research firm Mintel, Chinese consumers are more likely to purchase ethical brands at a premium price. 58% of surveyed consumers indicated that they are willing to pay more for ethical brands. Interna�onal luxury group Kering, which owns brand such as Gucci and Yves Saint Laurent, is leading the green movement in China. It recently launched a WeChat mini-program named "My EP&L" (Environmental Profit & Loss), an environmental impact measurement tool that informs consumers of the environmental cost of their purchases, and allows them to make ethical choices based on the calculated cost. Virtual companions A virtual companion is capable of internalizing a user’s values and aspira�ons holds great poten�al in being able to deeply connect with an individual. AI, machine learning and emo�on analy�cs make it possible to realis�cally model human conversa�on, rela�onships with virtual companions are set to extend beyond the merely func�onal. Gartner predicts that by 2020, the average person will have more conversa�ons with bots than with their spouse. AI chatbots is programmed to become a digital version of a user by picking up a user’s moods, mannerisms, preferences and speech pa�erns such that it can even mirror an individual’s idiosyncrasies.
Blockchain Blockchain offers game-changing possibili�es to the luxury business. Blockchain, the underlying digital ledger technology of cryptocurrencies has entered the mainstream market and looks poised to grow in 2018. Blockchain is essen�ally a shared database of transac�ons that are con�nuously updated. It will give owners of luxury items everything they need to know about the provenance of an item; the story of its crea�on and ownership. The age of the holis�c luxury experience has already hit the industry where luxury is not just trading products anymore, but the trading of en�re product life cycles. Innova�on is shaping the future of luxury Technology is going to radically change how the consumer wants to interact with brands and with marke�ng. Luxury luggage with built-in technology is also set to become increasingly visible. Suitcases and carry-on luggage with func�onality, such as fingerprint locking, handbags with built in ba�ery chargers, built-in global-tracking, Bluetooth speakers, self-weighing scales, SIM cards and Wi-Fi hotspots will be an important growth area within personal accessories as luxury travel goods manufacturers look to cash in on global growth in smartphone and app usage. Wearable Technology There is indeed a wearable future ahead, one that can drama�cally alter the landscape of luxury and business but the growth is slow. Though the wearable market is set to double by 2021(report by IDC), luxury brands have been gradually adap�ng the trend. The future of wearable tech and fashion goods is more about smart tex�les than gadgets. Making technology truly wearable is not just a ma�er of dressing up a device. It will require vigorous innova�on that wholly integrates form with func�on.
Fig.14. Wearable technology category usage data
Fig.15. Global volume sales of electronics by type: 2013-2018 Migra�ng to Mobile A significant por�on of the luxury market is now engaging informa�on through their mobile devices and in many cases this is a brands first point of contact to a poten�al consumer. They are frequent travelers and enjoy the use of user-friendly, personally-tailored shopping and content such as digital fashion magazines or self-curated content via the likes of Instagram or Snapchat. According to Bain & Company, approximately 7% of personal luxury goods purchases are currently made online, with the number projected to grow to 20% by 2025.M-commerce(Mobile-Commerce) is set to be the fastest growing segment of luxury internet retailing. Ar�ficial Intelligence As more data is collected and technology advances, ar�ficial intelligence will add value to all facets of the supply chain as well as end user experience. For the end user, be�er recommenda�ons, and tailored product selec�ons, AI can help brands achieve a touch of personaliza�on for e-commerce consumers.
Fig.16. US Retail Revenues and Growth Rate, 2012 to 2016 Ar�ficial Intelligence As more data is collected and technology advances, ar�ficial intelligence will add value to all facets of the supply chain as well as end user experience.-For the end user, be�er recommenda�ons, and tailored product selec�ons, AI can help brands achieve a touch of personaliza�on for e-commerce consumers.
Céline
growth opportunities With the recent hire of crea�ve director Hedi Slimane, Céline has many opportuni�es for growth in the market, in fact, BoF postulates that the hiring of Slimane signals LVMH’s plan to make Céline more commercial including increasing revenue from 2-3 billion euros over the next 5 years (Brehezna, 2018). Bags and Accessories As the bags and accessories market con�nues to grow, Céline has an opportunity to grown even within LVMH and become the top of the leather division as LVMH aims to increase Céline’s revenue over the coming years. (Brehezna, 2018). Menswear With the recent hire of Hedi Slimane, Céline is set to venture into menswear. Menswear is forecasted to grow at a faster rate than womenswear over the next three years, with net gains of 2.3% for men’s and percent and 2.2% for women. And by 2020, the menswear market is es�mated to be valued at $33 billion an increase of 14 percent from 2015 (Biron, 2017). Fragrance Slimane is also expected to launch a fragrance. Currently the global fragrance market was valued at $48 billion in 2016 and certain categories, such as pres�ge and niche fragrances, have been performing be�er. Online presence/pla�orm Céline has a major opportunity to grown in their online presence or even collaborate with a pla�orm. Mostly digitally agnos�c, last year Céline launched e-commerce for their French website and plan to launch e-commerce for the rest of Europe and the U.S. later this year and Japan in 2019. But with e-commerce con�nuing to grow Céline has the poten�al to expand further their Instagram and we-chat accounts and become more digitally connected.
Market Size Focus on China Social media and word-of-mouth are the first and second sources of informa�on for Chinese consumers, with 49% and 30% respec�ve shares. Considering the advanced online ecosystem in China, the e-commerce ac�vity of Chinese in other industries, and the average amount of �me the Chinese spend on social media, luxury brands have the poten�al to increase their share of consumers’ a�en�on in the digital ecosystem. The relevance of social media and influencer's is an a�tude of Chinese consumers. Considering the advanced online ecosystem in China, the e-commerce ac�vity of Chinese in other industries, and the average amount of �me the Chinese spend on social media, luxury market has immense poten�al growth.
Fig.17. Social Media Ac�vi�es: US. vs. China
Fig.18. China internet Users & Penetra�on Rate Millennials By 2025, Bain projects that Millennials and Genera�on Z will account for 45% of the global personal luxury goods market. While that presents great opportuni�es for many brands, the challenges are also considerable because Millennials think and shop differently from previous genera�ons. By 2035, Millennials will have the poten�al to become the largest spending genera�on in history. Consuming products and brands is not just a way to say who you are but a way to define who you are for millenials. This segment is also part of the digital revolu�on, which leads to a different percep�on of '�me,' 'space' and 'possibili�es.'
Fig.19. Genera�on X growing in spending and genera�on Y growing in numbers
PRIMARY and s e c o n d a ry TA R G E T C O N S U M E R
demographic Celine’s primary target customer is females in their late twen�es to late fi�ies. Celine recently got a new crea�ve director, Hedi Slimane. Slimane has said that he wants to start a menswear collec�on, fragrance line, as well as launching an ecommerce website. We are keeping that in mind when it comes to our target customer. Our secondary customer is male and will be in their late twen�es to early for�es. Both genders will have their degree with some pursuing a masters and doctorate. They will be working men and women with an income of above $70,000, and live in big metropolitan ci�es. They view image as an expression of character and appreciate the high quality and cra�smanship that Celine brings to the table. Overall they are going to be confident, sophis�cated, successful, and driven. They are frequent shoppers at the Celine store, but also shop online when they are too busy to travel into the store. They are into technology and social media.
behavioral Frequent usage of technology Customers today prefer technical devices such as smartphone or tablet and luxury fitness wearables such as smartwatches because customers spending more on luxury experiences than luxury goods. Wearable tech is becoming popular due to the change of lifestyle. Customers pursue smaller, smarter, and integrated into everything. Celine's customers will also be the frequent technical users. Frequent usage of social media Celine doesn't operate many social media pla�orms except for Instagram and WeChat, its current customers are more limited social media users because they don't view too much informa�on from Celine's social media pla�orms. However, social media is influen�al to the fashion industry in today's society. Current genera�on is spending a lot of �me on various pla�orms such as Facebook, Twi�er, YouTube…etc. The brand's future customers will become more frequent social media users such as Millennials. Frequent retail and Online shoppers Celine's customers are usually frequent retail shoppers because the brand doesn't focus on online sales and more sell directly through its own operated bou�ques. Customers know where can find the Celine stores and enjoy the exclusive shopping experience and a�rac�ve environment of the specialty retail stores. However, online sales are also becoming a future trend for luxury goods sales. Digital channels are more and more important due to the shi� of customers consump�on behavior. Therefore, online shoppers will also increase.
psychographic PRIMARY CONSUMER Pe rso n a 1 NANCY CALLAHAN Resources: Income Money Machine - 94 Resources: Wealth Financially free - 90 Resources: Time Leisure class - 96
Level of knowledge Luxury na�ve - 92 Personal Preferences Super star - 91
Our first persona will be Nancy Callahan. She is 47 years old, married, and got her doctorate degree in business administra�on. Her husband is a plas�c surgeon and she is VP of a marke�ng firm. There she is able to pick her hours and create her own schedule. They both are making 7 figure incomes. They live in a penthouse in the outskirts of New York and they enjoy going out to exclusive dinners and traveling in their free �me. Paris is their favorite spot. She drives a Mercedes Benz Cabriolet and loves having a glass of Domaine Leflaive Montrachet Grand Cru. She goes shopping on a weekly basis. Nancy appreciates Celine’s minimalist style because she can wear it everywhere and dress it up or down while s�ll being comfy for wherever she's headed. The medium clasp bag in crocodile is her favorite Celine product. When it comes to social media she s�cks with Facebook and Twi�er, along with a subscrip�on to BOF and Vogue. Nancy is part of the upper elite class and would be at the top of income for Celine’s target demographic. She is very informed about brands and knows exactly what she likes.
P e rso n a 2 ALEXA CHAMBERS Resources: Income High Flyer - 80
Level of knowledge Luxury explorer - 85
Resources: Wealth Financially Independent - 80 Resources: Time Balanced - 70
Personal Preferences Super star - 90
Our second persona is Alexa Chambers. She is 29 years old, single, and lives in Chicago. She got her degree in journalism and is now a journalist for the Chicago Reporter. Her income is $75,000 and she lives in a one bedroom apartment. Her friends and her enjoy trying new places for cappuccinos and brunch. Alexa drives a BMW 340i sedan and loves taking relaxing bubble baths a�er a long week of work. Her favorite Celine product is the Micro Luggage Handbag and she visits the store frequently for simple staple pieces in muted colors. When it comes to social media, she is on many different pla�orms: Instagram, Snapchat, Twi�er, Facebook, Holonis, and Pinterest. Alexa is at the lower end of our target income, but s�ll is very knowledgeable when it comes to brands and her personal preferences.
SECONDARY CONSUMER P e rso n a 3
JONATHAN GOLDMAN Resources: Income High Flyer - 85
Level of knowledge Luxury explorer - 80
Resources: Wealth Financially independent - 85 Resources: Time Busy bee - 55
Personal Preferences Understated - 70
The last persona is Jonathan Goldman. He is 35 years old, single, and a college graduate from MIT. Now he is a tech CEO and travels a lot for work. His income is $35,000 and he lives in a condo in the suburbs of Atlanta. In his free �me, he enjoys grabbing a few beers with buddies and going to the gym. Overall, he tries to maintain a healthy lifestyle. He will cook all his meals and go shopping at Whole Foods. He drives a Lexus Coupe RC F. He goes to Celine for all of his work a�re. He wants to make sure he always looks very clean and professional. He likes to see what his friends are up to so he has a snapchat, twi�er, and instagram. Jonathan is s�ll financially independent, but would be considered in the middle of their target demographic with his income of $350,000. He has understated personal preferences and works a majority of the �me.
P R O D U CTS AND VA L U E PROPOSI TION
Goals & o b j e ct i v e s In 2018, consumer wealth is moving to Asia. Buying power is shi�ing from Baby Boomers and Gen X’s to Gen Y and Gen Z, drama�cally changing the dynamics of retail. Increasingly, brands are embracing social media, moving to digital pla�orms and e-commerce in order to capture the growing market share. The trends that we covered previously are rapidly becoming the new normal of modern business. Céline, known for its contemporary take on sophis�ca�on and �melessness, requires a long-term strategy -- ours covers a thirty-year period -- to maintain their market posi�on and brand exclusivity amidst a rapidly shi�ing luxury marketplace. For the Céline of 2048, the most important goal will be to maintain exclusivity amongst the pull to join digital pla�orms and social media, meet the demand of growing middle-class wealth, increase revenues through brand extensions carried out by current crea�ve director Hedi Slimane. This report will cover how Céline will maintain their exclusivity in an increasingly diversified luxury marketplace through the u�liza�on of the 6 P’s.
Strategy ov e rv ie w Through the u�liza�on of the 6 marke�ng P’s, Purpose, Product, Placement, Promo�on, Price, and People, we will cover Céline’s brand building strategy over the next thirty years. These strategies are employed to con�nue growing Céline’s posi�on in the market as an exclusive connoisseur brand. We will first explore Céline’s unique selling proposi�on, before examining the marke�ng P’s further. As a connoisseur brand, Céline will not seek to grow at the expense of their brand equity. For this reason, many of the P’s will remain consistent to the strategies already employed by Céline. These strategies include, Céline’s brand purpose, product, promo�ons, and people. However, price and placement offer opportunity for Céline to maintain and enhance posi�on in the marketplace to combat inherit market threats. We will more deeply discuss how both increasing price and a selec�ve placement strategy can benefit Céline’s brand building process in the coming thirty years.
Unique SELLING P R O P O SI T IO N A unique selling proposi�on (USP) refers to the unique benefit exhibited by a company, service, product or brand that enables it to stand out from compe�tors. The unique selling proposi�on must be a feature that highlights product benefits that are meaningful to consumers. For Céline, exclusivity, quality, specialty and its privacy are USP. Céline is exclusive with the product offering with simple, minimalis�c designs gelling well together with its brand image. The quality of cra�smanship and use of raw materials from Italy has an unmatched degree of excellence. Céline ready-to-wear, leather goods, accessories, jewelry and shoes are specialty of the brand. Preserving an iden�ty and roots, while at the same �me constantly reinven�ng themselves to appeal to their contemporaries is a purpose for Céline’s existence. The House of Céline has introduced a highly specific retail concept that is adapted to accommodate different sites and loca�ons interna�onally. Céline’s a�empt to not disclose much informa�on in public has lead to its brand strength and this is iden�fied as one of the best characteris�cs of the brand.
Luxury INGR EDIEN TS D E V E LO P M E N T I. Purpose Celine’s purpose is uniqueness. They are all about constant innova�on and will never stop changing what they do. Compared to other brands, they truly stand out. A customer would have the mentality of either loving them or ha�ng them. They are one of the only brands who doesn’t have mul�ple forms of social media and doesn’t follow what other companies are doing. Celine has their own voice and perspec�ve, which is what makes them so successful as a brand.
II. Product Celine is most known for their handbags and leather goods. We will be reinforcing their products by keeping their classic and iconic styles like the trapeze and micro luggage handbag. We want to stay true to the core of Celine. This will help Celine to con�nue to build brand equity in the future.
III. Pr icing The middle class market – defined as households with a daily expenditure of $10-100 per person at purchasing power parity (PPP) – is projected to double its share of global consump�on from one-third to two-thirds by 2050. This increased consump�on is due to increasing wealth of the middle class which has therefore increased the size of the upper middle class. This is par�cularly true in emerging markets, as we discussed previously, like China, India, Malaysia, Brazil, Mexico, and South Africa. The size of the “global middle class” is expected to “increase from 1.8 billion in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030” (Pezzini). Par�cularly in China, “76 percent of China's urban popula�on will be considered middle class by 2022...54 percent will be classified as "upper middle" class - meaning they earn between US$16,000 and US$34,000 a year.” (Iskyan). In Africa as well, while the growth of the middle class has been slower compara�vely, it has led to an increase in domes�c consump�on of “refrigerators, television sets, mobile phones, motors and automobiles” (Pezzini). The growing middle class in the emerging world implies the rise of the ‘global ci�zen’ which will likely increase the expenditure and splurging in luxury products. As Pezzini states, “The developing world’s “emerging middle class” is a cri�cal economic and social actor because of its poten�al as an engine of growth... Consolida�ng this incipient middle income group into a stable middle class could provide a solid founda�on for economic progress by driving consump�on and domes�c demand.”
Céline, being a connoisseur Luxury brand needs to protect itself from becoming too easily accessible. With the threat of growing middle class wealth, Céline needs to focus on remaining exclusive to mass consump�on. One way to tackle the rise of the middle class income and keep Céline pres�gious is to increase the price of products.The increase in price of product could be validated by Veblen effect. The Veblen effect, describes abnormal market behavior where consumers purchase the higher-priced goods even though similar low-priced (but not iden�cal) subs�tutes are available. It is caused either by the belief that higher prices means higher quality, or by the desire for conspicuous consump�on. In other words the Veblen effect, in which the higher the price the higher the demand, would keep Céline exclusive to those who can buy it, yet, also keep Céline desirable to the masses.
Veblen (Luxury) Good P2
Preffered Price
P1
Normal Good D1
Demand
D2
Fig.20. Graph describing Veblen Effect against demand and price
This strategy would also jus�fy Kapferer’s An� Law “the presumed price should always seem higher than the actual price.” In the case of Céline when an imagined price is higher than the actual price, that creates value, and this results in increased demand, making it difficult for clients to buy by applying the luxury strategy of raising the average price of the brand works here the best. Luxury sets the price; price does not set luxury. The more the price the more it is perceived by the client to be a luxury.Money does not do a worthy job of categorizing objects or stra�fying them unless they have been culturally coded. This ‘an�-law’ means that luxury is what could be called ‘supply-based marke�ng’ (Kapferer,70). The more the price the more it is perceived by the client to be a luxury. Raise your prices as �me goes on, in order to increase demand (Kapferer,71). Céline needs to have a systema�c raise in prices that it gives the whole company a sense of responsibility. Price is a decisive factor in bringing about a change in mentality. Here mentality refers to live in luxury you have to be above others, not be ‘reasonable’. A reasonable price is a price that appeals to reason, and therefore to comparison. Keep raising the average price of the product range. In luxury marke�ng, the launch of a product is at a higher price, so that when compe��on comes onto the scene, the price is raised even further. Céline should not enter into any entry level product to wash out its image from being luxury. A brand that cannot grow in volume and profitability other than by launching accessible products shows that it is no longer part of the luxury market. Instead, Céline must always be seen to be restoring the gap, restra�fying, and it should act as a visible agent of meritocracy. This way Céline would also be taking advantage of the global economic growth that is crea�ng thousands of new rich and very rich people throughout the world. As stock markets are rising, luxury brands have been marking up prices.According to research by the Boston Consul�ng Group, between 2002 and 2012, median luxury handbag prices for seven brands increased at an annual rate of 14 percent, significantly outpacing the overall infla�on growth rate of 2.5 percent (Bain and Company). Raw materials are more expensive and more scarce than ever before. Louis Vui�on have recently invested in Australian crocodile farms to ensure their supply of the expensive skin.This would increase the hand bag prices dras�cally.
IV. Placement D i str ib ut io n Céline will con�nue to concentrate on crea�ng unique and private shopping experiences for their customers. Flagship stores and specialty retailers will remain the most important distribu�on channel for Céline. Brick and mortar stores are essen�al for Céline to maintain their exclusive shopping environment as well as to provide the best shopping assistance through quality sales personnel. Addi�onally, digital channels are an influen�al development in the fashion industry. In 2048, Céline will have adopted digital sales channels, and the brand will provide online service in a way to maintain uniqueness. Céline will enter the digital world in a way that will balance its exclusivity, and engage with its customers efficiently through an e-commerce strategy.
Fig.21. Céline luxurious new flagship store in Sydney’s Wes�ield shopping center
R eta il C h a n n e ls
DOS (Directly Operated Stores) Céline will remain focused on its directly operated stores. For Céline, contemporary style, simple and clean interior design, as well as a sense of privacy will s�ll be an important facet of store design. Previous collabora�on with Danish ar�st FOS created custom furnishings including cast-iron door handles, floor lamps, a chandelier, ovoid and a "cabas" stand at the entrance (Retail Insider). While new crea�ve director Hedi Slimane may change some of these aspects of store layout, these custom created design elements are essen�al for making the store feel like a museum of fashion, and eleva�ng the products. Custom furnishings also signal that the products are also exclusive to Céline. Any changes made to store visuals will remain consistent across all stores globally. Over the coming years, Céline will also expand their stores, opening in developing loca�ons, such as Malaysia, Brazil, Mexico, and South Africa. These are developing countries with growing affluent consumers who are interested in luxury consump�on. Picking these loca�ons carefully will help Céline remain exclusive, while also capitalizing on a growing luxury consumer. Shop-in-shop Stores Céline currently operates a limited amount of shop-in-shop stores with specialty retailers such as Holt Renfrew in Vancouver and Le Bon Marché in Paris to emphasize different product categories. Over the next thirty years, Céline will con�nue to source poten�al specialty retailers around the world to display specialty categories such as women's ready-to-wear bou�ques or leather goods. For example, Céline’s products are present in four areas at Le Bon Marché including fashion accessories, bou�que, women department and footwear department.
On l i n e pl atf o r m 24 Sèvres The 24 Sèvres is a digital pla�orm launched by French department store Le Bon Marché, which is owned by LVMH. It provides over 150 luxury brands including Louis Vui�on, Chris�an Dior, Gucci and Fendi and offers a new shopping experience for luxury products. Céline has already begun it’s digital sales channel journey by providing e-commerce on the Céline website in France since 2017, Europe and the United States in 2018, and Japan in 2019. Céline is currently only available in store at Le Bon Marché, but in order to be�er u�lize Céline’s placement strategy, over the next thirty years, Céline will collaborate with Le Bon Marché’s e-commerce pla�orm, 24 Sèvres to provide another digital channel for consumers to purchase from. 24 Sèvres has several unique features that differen�ate it in the crowded marketplace of mul� brand pla�orms. First of all, 24 Sèvres is the first and only French based pla�orm site. This has enormous appeal as it will pull customers looking for the unique French aesthe�c. 24 Sèvres also aims to make the online experience similar to shopping in a grand department store and works to create a window shopping experience, using the internet as a way to express visual art rather than simply a commercial point of sale. 24 Sèvres also tries to make the customer experience as if you were in store with click-and-collect in Paris, express delivery in over 75 countries, and Parisian fashion experts available via video chat in the iOS app. A final feature, and one that Céline will u�lize in it’s placement strategy is Le Bon Marché/24 Sèvres’s loyalty program, La Carte 24 Sèvres. This program works both in stores and online, but includes three levels of privilege including Status Invité, Status Ini�é, and Status Privilégié. Based on points earned through purchases, each level has a reward hierarchy able to be redeemed once per year.
Fig.22. 24 Sèvres home page
As part of Céline’s placement strategy, through collabora�on on 24 Sèvres, Céline will adopt the La Carte loyalty program to offer exclusive product content to top �er Céline customers. Using La Carte’s Status Privilégié level of loyalty, which starts at 4000 points and is equivalent to $4,000 Euros or Dollars spent, Céline will offer early access to runway pieces as well as exclusive, limited edi�on pieces that will be available to purchase online only for members at Status Privilégié level through 24 Sèvres. For Céline, this placement strategy works to keep Céline feeling pres�gious and exclusive for their customers, despite the pressure to expand on digital pla�orms, which may be viewed as a form of dilu�ng, especially for the digitally agnos�c Céline. This strategy not only makes it more difficult for customers to buy desirable items, as this feature isn’t available though Céline’s own e-commerce site, it also gamifies the experience because customers must reach a certain amount of points to earn the right to buy exclusive items. Customers who get their hands on these items will be viewed as top customers and those who aren’t part of the exclusive crowd will desire to earn entrance to the top �er.
Fig.23. 24 Sèvres loyalty program
V. Pro mot ion Céline is one of the most influen�al fashion brands on the market. Compared to other luxury brands, Céline is one of the few luxury brands lacking a social media opera�on and a website without e-commerce capabili�es except for France. Un�l February 2017, the brand launched an official Instagram account and opened a WeChat account on November, 2017. In other words, Céline is very beginning on the social media pla�orms, but it makes brand exclusive and mysterious for customers by no overexposure on the internet. The promo�on strategy of Céline is no fanfare, under the previous crea�ve director Phoebe Philo’s direc�on, Céline will maintain its low-key style and focus on current two social media pla�orms to connect with the customers and present this style to all Céline’s followers. The purpose of social media pla�orms for Céline is not to sell the products but to present the spirit of the brand. Céline will con�nue using Instagram to emphasize its products, materials and colors without too much descrip�on and keep focus on visual images. In the Asian market, Chinese customers will receive the latest news from Céline such as new products and collec�ons through following the official WeChat account. Although Céline won’t operate other social media pla�orms, the new online pla�orm 24 Sèvres operates several social media pla�orms such as Facebook, Twi�er and mobile app. It can allow 24 Sèvres to promote some Céline’s products when the brand is available on the website. Thus, 24 Sèvres may help Céline a�ract some other luxury brands’ customers. In addi�on, Céline holds two annual runway shows in Paris. The shows can invite some online influencers, and they will be another influen�al promo�on strategy for Céline because Céline doesn’t pay for bloggers to promote their products, but the brand a�racts those influencers to promote it. Céline should keep this advantages from them.
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Fig.24. Official Instagram Page & Spring Summer 2018 Ready to Wear collec�on
V I . Peo pl e The people element of the 6 P’s is one of Céline’s weaker points. Céline only gained a cult following a�er Phoebe Philo joined the brand in 2008. Her persona became closely associated with the brand, however, the new crea�ve director Hedi Slimane, hired in 2018, means that Céline can no longer bank on Philo’s persona as a selling point for customers. It is unclear how long Slimane will remain crea�ve director at Céline, and therefore, it is dangerous to build the brand around him. There is a major gap for Céline in terms of who they use to represent the brand internally. Because Céline emphasizes privacy, including private shopping appointments, their sales associates are an important part of the brand as they are the ones who create a majority of the shopping experience for the customers in store. Over the next thirty years, retail experiences are expected to change becoming more automated with AI and even going completely digital. As stated in Retail Reinven�on: Why Retail Doesn’t Need Salespeople, “Salespeople have been replaced by product reviews, recommenda�ons based on buying history and “editors” who curate items and selec�ons to guide browsers to buy based on trends and the things they’d like to sell — all before consumers set foot into a store to buy — if they even do.” For luxury brands, customer service is a major part of the brand building process. As Céline transfers to more digital spaces and also expands into more regions, pu�ng emphasis on their customer service both online and in store will be key for differen�a�ng them in the marketplace and to con�nue building a seamless customer experience. As for people outside the brand, as men�oned previously, Céline rarely uses outside associa�ons however, it would be remiss to not men�on the growing power of influencers in the luxury marketspace, especially since Céline is o�en featured by influencers. Two such influencers who o�en feature Céline are Song of Style who has 4.7 million Instagram followers and Sylvia Haghjoo who has 186k followers. With “92 percent of consumers trus�ng influencers over celebrity endorsements, according to research by MuseFind, influencer marke�ng is only going to con�nue to rise among brands” (Bobila). Addi�onally, “73 percent of respondents note content collabora�ons — solely produced by the influencer — are "highly effec�ve," especially surrounding product launches” (Bobila). Despite the numbers and buzz around influencer marke�ng, we aim to maintain Céline’s exclusivity over the next thirty years. Ac�vely pursuing influencers would make it difficult to balance this goal. As stated in Influencer Marke�ng is Here to Stay, “Of the 73 percent of high-end brands using influencer marke�ng, balancing exclusivity and aspira�on on social media — which, historically, is known to have democra�zed the fashion industry — is the biggest challenge.” Céline’s best bet is to let influencers come to Céline but s�ll encourage influencer engagement by invi�ng them to fashion shows or other events, as men�oned in the promo�on sec�on. This method will ensure that Céline remain exclusively in the �er of influencers who truly like and embody the brand.
conclus ion
At Céline the products are central to everything and speak for themselves. Their goal is to make beau�ful, sincere and genuine products which empower their customers to dress and live for themselves. Céline looks for individuality and talent in those who contribute to achieving this goal. In 2048, Céline will con�nue to put emphasis on their core fundamentals of and maintain their exclusivity as a brand. Through con�nued u�liza�on of the 6 marke�ng P’s Céline will further develop a pricing and placement strategy to alongside con�nued efforts to maintain the brand’s pres�ge through promo�on, purpose, people, and product in a changing luxury market.
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