Aleksandra Pavlova
IED Barcelona
INTRODUCTION WHY EXPAND THE BUSINESS? INTERNAL ANALYSIS ORGANISATION STRUCTURE U K P. E. S. T. A N A L Y S I S ETHICS & SUSTAINABILITY ANALYSIS IN THE COUNTRY OF ORIGIN R U S S I A P. E. S. T. A N A L Y S I S ETHICS & SUSTAINABILITY ANALYSIS IN RUSSIA RUSSIA MARKET EVALUATION RUSSIA COMPETITORS ANALYSIS THE PORTER‘S 5 FORCES ANALYSIS CONSUMER ANALYSIS - BUYIG BEHAVIOUR KEY SUCCESS FACTORS MARKET ENTRY STATEGY DISTRIBUTION MAP MARKETING STRATEGY & SALES OPERATION OVERVIEW & TIMETABLE C O N C L U S I O N & R E C O M M E ND A T I O N S ANNEX BIBLIOGRAPHY
2018-2019
Aleksandra Pavlova
IED Barcelona
P. 3 P. 5 P. 6 P. 8 P. 9 P. 11 P. 13 P. 15 P. 17 P. 21 P. 25 P. 27 P. 29 P. 31 P. 33 P. 35 P. 37 P. 39 P. 40 P. 41
2018-2019
Aleksandra Pavlova
IED Barcelona
INTRODUCTION The following paper proceeds to develop an international brand expansion strategy for a high segment brand Stella McCartney, based on constructing a strategy for the brand to enter Russia (a country from the BRIC group). The paper will consist of the analysis of the emerging markets and the opportunities for the given brand for entering the market, as well as the benefits and limitations that may arise from the process. A general global businesses overview will also help to construct an in-depth review of the fashion segment at the current time, thus gaining insight on the environmental and social impacts of the market, outcoming into an analysis of the ethical side of the operation from the industry’s perspective.
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2018-2019
Aleksandra Pavlova
IED Barcelona
2018-2019
Stella McCartney on the cover of the Fast Company magazine, October, 2017
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Aleksandra Pavlova
IED Barcelona
2018-2019
WHY EXPAND THE BUSINESS?
5
As discussed in the CWK1 portion of
As far as target expansion, the brand
the paper, Stella McCartney is under-
is choosing to bring a closer focus to
going a boost of global expansion at
it’s millennial audience and raising
the current time. Two months prior to
the brand awareness in that segment,
the recent split of the brand’s partner-
braking the idea that currently exists
ship with the Kering group (2017), the
of the brand is associating it with a
brand stated in their Annual Financial
more adult and mature target. The
Document of that year the their priori-
global expansion of the brand and
ty for the short term future is continu-
launching it in new locations is a tac-
ing to strengthening and advancing its
tic that will help Stella McCartney to
current retail operations and pursu-
place itself more easily into the new
ing further selective retail expansion
desired position in the market, due to
within Europe and further and more
reaching a new audience who have
intensively into Asia (focus on China)
a less stabilised perception on the
[Kering Group, 2016].
The expansion of
brand and it’s identity. Thus, the abil-
the business would help the brand to
ity of the brand to adapt to new envi-
reach a fresh audience and gain fur-
ronments will help it to position itself
ther awareness worldwide, as well as
closer to the desired target through
develop the brand further separately
updated marketing and communi-
from Kering, which was one of the
cation strategies and it’s all around
main limitations for Stella to pursue
omni-channel approach to further in-
her own vision and strategies for the
crease the proximity of the brand to
past years of the partnership.
its clientele.
Aleksandra Pavlova
IED Barcelona
INTERNAL
2018-2019
ANALYSIS
“My intention is to create real change in an industry that desperately needs it” - Stella
Stella McCartney as a brand that was
best decisions for both themselves in-
founded in 2001, and is still one of the
ternally but also in the global sense.
only brands in the industry that em-
A major part of the brand’s philosophy
braces the opportunity to adopt a more
is to provide people with an example
environmentally conscious approach
that a high fashion brand can also be
to every aspect of it’s operations. Stella
managed in a sustainable way at it’s
McCartney is an industry frontrunner
core, setting the bar high also for the
in portraying the modern feminist yet
future of the brands in the industry.
feminine sense, environmental respon-
The brand adopts an authentic and co-
sibility, and exquisite tailoring all in one
herent omni-channel business model,
brand. One of the brand’s main goals is
every stage of which is concerned with
to operate in symbiosis with the current
the values and motivations behind it
sociocultural and consumer demands,
and the ways it can change the current
yet keeping the goal of gradual expan-
state on the environment by adopting
sion and influencing both whole indus-
further social and environmentally
try’s and the consumer’s behaviour and
conscious actions in the fashion sector
motivating them towards making the
[Stella McCartney, n/d].
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Aleksandra Pavlova
IED Barcelona
2018-2019
“We are agents of change. We challenge and push boundaries to make luxurious products in a way that is fit for the world we live in to- day and the future: beautiful and sustainable. No compromises.� [Stella McCartney, n/d]
This the official statement of the brand, that shows committed willingness to change and learn, adapting to the current and forecoming social and environmental challenges of the consumer-centric culture of the current time. Stella advocates for making a positive change in the world by using the available resources sparingly and efficiently to support that change. * A more detailed internal analysis of the brand has been done in the CWK1 portion on the paper.
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Aleksandra Pavlova
IED Barcelona
ORGANISATION
2018-2019
STRUCTURE
CEO
Stella McCartney MARKETING DEPARTMENT
FINANCE HUMAN RESOURCES MANAGEMENT
COMMUNICATION PRODUCT DEPARTMENT MANAGEMENT
MARKETING MANAGER
ADVERTISING TEAM
PRODUCT DEVELOPMENT TEAM
ADMINISTATION
BRANCH MANAGER
MEDIA MANAGEMENT TEAM
DESIGN TEAM
EMPLOYEE HIRING & TRAINING TEAM
RETAIL STORES TEAM & STORE PLANNING
PR EXECUTIVE
BUYING & MERCHANDISING TEAM
TALENT AQUISITION
VISUAL MERCHANDISING TEAM
CUSTOMER RELATIONS MANAGEMENT
SENIOR EXECUTIVE
LOGISTICS TEAM
COUNTRYSPECIFIC MARKETING CCOORDINATION
DATA MANAGEMENT
SUSTAINABILITY TEAM
INTERNSHIPS
PRESS & FEEDBACK MANAGEMENT
INNOVATION & DEVELOPMENT TEAM
ACCOUNTING TEAM
RESOURCE MANAGEMENT
CORPORATE COUNCELING
EXECUTIVE SECRETARY SALES TEAM
LEGAL TEAM
RETAIL MANAGEMENT & OPERATIONS MANAEMENT
QUALITY CONTROLS
* Since the split of the brand from the Kering Group in 2016, a new version on the brand’s structural model has still not been published online. Thus, for the structure above, unofficial sources has been used to construct the positioning of various departments within the brand’s operations, as well as the jobs position offers listed on the official Stella McCartney human resources site, although this list is not complete [Stella McCartney, n/d].
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Aleksandra Pavlova
IED Barcelona
2018-2019
THE BRAND‘S LOCAL ENVIROMENT POLITICAL - The UK is a country with a relatively stable political environment. - Since the start of discussions regarding the Brexit, some uncertainties were created in the political field by the tensions between the two sides of politicians and the public voting “for” or “against” the agreement. - The UK has a strict law system, which mostly operates on the governmental rather than the private sector level.
THE UK
- The country has been a popular destination for FDI (Foreign Direct Investment) into sports, real estate, tech, and other fiends, allowing it to establish public relations with many countries overseas and gain relational “respect” from other political groups. The government strictly filters the foreign investors, however the boarders are open. - The country has proactive government, however it is split into national and local administrations. - Some corruption in the country is present, however it is limited and well-hidden, thus not affecting majorly neither the public or the private sectors, and is not a “threat” like in some other countries.
ECONOMICAL - The country’s economy is overall a strong one with current positive growth trends, currently being positioned at the 5th largest economy in the world by the nominal GDP value (The World Bank, 2017). - The inflation rate rose 3.1% in mid-2017, with the government setting only 2% as the regular inflation target , however the rate has been evened out after additional half a year.
- The economy in the country is very diversified, with large both public and private sectors, and private entrepreneurship being very encouraged and supported by the government. - The predictions for 2019 showcase that the UK economy is expected to grow slightly faster than the previous year, and slow down to the targeted rate by 2020. The prediction is based on the assumption that the exit form the European Union will go as planned and the trading agreements remain stable , disregarding the current uncertainties. - One of the economic problems in the country is that as it commonly seen in other countries the rate of inflations is higher that the rate of salary increases, meaning, the working segment of the population works the same positions continuously earn less in proportion.
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2018-2019
SOCIO-CULTURAL - The UK has a large consumer market due to the population of the country (over 65 million) and the constant stream of tourists. - Due to both the labour market and the healthcare market receiving a lot of support from the government, the ageing population of the country is large and still increasing. In 2016, 18% of people were aged 65 and over, while 2.4% were aged 85 and over. - Although the population of the country is very multi-cultural, the UK has historically had a very distinct concept of social class. Statistically, 1 out of 8 residents of the country has been born abroad, even considering the country’s strict controls for migration and the governmental policy for “managed migration”. On the other hand, it provides the country with cheap workforce. - The education levels are very high in the country in both the private and public sectors, and for decades it has been a destination for many students coming to study from abroad. The country is positioned to be in the top 10 most educated in the world. - One of the challenges the government has faced is in the field of public services, and maintaining expenditure levels on social welfare projects due to the budget deficit.
TECHNOLOGICAL - This sector is one of the biggest contributions of the UK economy. - The country is very infrastructurally developed, and a large portion of the governmental budget annually goes to maintaining this standard, as the infrastructure is what offers entrepreneurs many opportunities for business in the country, which the government supports. - Statistically, UK has attached £28bn in technology investment since 2011, compared to £11bn in France and £9.3bn in Germany (McGoogan, 2017). - One of the main strengths of the UK Technological sector is the highly effective intellectual property rights in the UK, compared to the majority of other countries, as well as the regulatory control over indigenous innovations.
PEST ANALYSIS
Aleksandra Pavlova
Sources used in this PEST analysis: [David, 2018], [Bush, 2016], Hussain, 2013]
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Aleksandra Pavlova
IED Barcelona
2018-2019
BRAND‘S ETHICS & SUSTAINABILITY ANALYSIS IN THE COUNTRY OF ORIGIN CURRENT POSITION
UK is one of the leading pioneers in
about the environmental impacts of
contributing to the bettering the sus-
production of different industries, with
tainability worldwide. The attempts
a focus on fashion in particular, and
are shown throughout both the con-
thus, from the years 2000 to 2017 the
sumers and producers minimising
increase in ethical spending has been
the impact of their purchasing. In
seen from £20 billion to over £80 bil-
many sectors the buyers are turning
lion, with the biggest statistical jump
towards the more sustainable op-
being in 2010 [Cooper, 2017].
tions, and overall growing their concerns for state of the environment.
On the other hand, many of the green energy practices have experienced a
Statistically
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speaking,
the
latest
recent struggle through the govern-
available data (2017) shows that
mental cuts regarding the support of
the green energy usage has grown
green spending. As a result, the sales
56,3%, investment ethical clothing /
on solar panels and energy saving
second-hand purchases increased
transportation has decreased dras-
19.9% and 22%, and ethical food and
tically, following the changes in gov-
drink has increased 16,2% (which is
ernmental changes in substation and
the largest increase of the last dec-
taxes is the sector. The impact of those
ade, mostly fulled by the raise of the
changes on the market as a whole is
awareness of the harm of the meat
negatively impactful (otherwise if the
and dairy industry) [Carlile, 2018]. Over-
decline in solar panel sales and ener-
all, the progress was enhances by
gy efficient cars is excluded, growth in
the facts that the year received a lot
the ethical spending looks stable at a
of publicity and media discussions
5.5% increase per year) [Carlile, 2018].
Aleksandra Pavlova
IED Barcelona
2018-2019
PROSPECTS
Despite the recent actions, the govern-
businesses, but forms part of a balanced
ment still shows a major involvement in
overall strategy to achieve Parliament’s
sustaining the environmental wellbeing
goals and objectives. The goals of the
in the country, shown through releasing
policies are stated to be the reduction
a policy statement outlining the Parlia-
of carbon emissions (by 34% by 2021),
ment’s priority in taking actions to de-
the reduction of water consumption (by
liver sustainability (statement released
50% by 2021), the reduction of generat-
in 2013). The statement can be summa-
ed waste weight (by 30% by 2021), and
rised in sustainability and environmen-
recycling more of the waste generated
tal improvements being integrated into
(75% of waste weight by 2021). In order
the economical cycle, striating in the
to remain in focus of those targets, an
stages of business planning and deci-
annual Environmental Improvement
sion making, and ensuring that sustain-
Plan (EIP) is released, stating the cur-
ability is not separate from core of the
rent state of progress [Carlile, 2018].
LAWS
.
Lastly, the UK was the initiator of the
by calculating the most cost-effective
Parliament’s Environmental Engage-
investments into energy efficiency in
ment Programme (2014), in support
various sectors. The research showed
of the Global Action Plan, the aim of
that using the Program, 22 power sta-
which was to improve the efficiency of
tions’ worth of electricity can be saved
the energy used by businesses aa well
by 2020. These targets are expected to
as households. The main goals of the
run to the financial year 2020/21, after
program were to save public money
which they will be reviewed and opti-
and cut the amount of generated waste,
mised [Parliament UK, n/d].
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Aleksandra Pavlova
IED Barcelona
2018-2019
THE NEW MARKET POLITICAL - The country has a Civil Law System and wide president’s power. - The main country’s law is a constitution, accepted in 1993. The Russian Federation consists of 85 equal federation subjects (Republics, Regions, Cities of Federal Importance, Autonomic regions). - The political environment in the country is “stable”, however not accepted by many.
RUSSIA
- The country has very high levels of corruption, due to which the political climate, infrastructure, and the private sector are the most affected. - According to Putin, he does not want Russia to have the copy of the US’s political system, to which the main reason is Russia still takes control over the majority of the USSR counties, to which there are both “positive” and negative consequences for the country overall. - Russia is considered to have an open relationship strategy. Since 2009, the country has official relationships with 191 countries and 144 embassies, which brings many opportunities for both political and economic trade. -This country has the biggest store of nuclear weapon in the world, with a military that includes both navy, ground and ground and air forces, and sell weapons to over 80 other countries.
ECONOMICAL - Currently, the Russian currency Ruble is not a strong one. Due top the economic crisis, the country is still recovering and the economical state is still affected. - Russia’s economy was most affected after the fall of the Soviet Union and the replanning of the economy from planned towards a market-based system. During the same time, many industries were privatised after the 1990 reforms. At the same time - transport, banking, social media, defence, and energy-related sectors still remain majorly under government control to this day. - The country’s GDP is considered to be within the top 10 biggest in the world, due to Russia’s main natural production of gas, oil, and metals. The main reason for Russia’s economic recession is the fact of the decreasing prices of raw materials of the country. - The predictions for the year 2020 showcase that the economic growth would stay within the 1.5% to 1.8% margin, and only higher-than-expected oil prices could favourably affect the growth forecast.
13
- Overall, a macroeconomy with high levels of international reserves ($461 billion) and low external debt levels (about 29% of GDP) positions Russia well to absorb external shocks.
IED Barcelona
2018-2019
SOCIO-CULTURAL - Russia’s population is currently 142,355,415, which can become both a struggle, and a benefit for many markets. - The population is highly concentrated in the western part of the country, whilst the urban population equals to 74%. A large part of the country is not inhabited on the south-east. - One of the main social problems in the country is unemployment, and Russia’s goal of halving poverty down to 6.6% by 2024 can be achieved only is the low annual growth scenario is managed. - Also due to the corruption levels in the country, the social class separation in the country is very apparent. The gap between the rich and the poor is continuously growing. This not only affects the economic sectors of the country, but also the change in mentality and mindsets of the country’s classes - as an example, the approach to family planning. - Another social issue is the standard of living for the majority of the population further away from the western side of the country, however the government are aiming to bring more cities in the country to the standard of Moscow and Saint Petersburg, where the society is very developed and “europenised”, with a developed MICE sector (Meetings, Incentives, Conferences and Exhibitions), with professional service and facilities, as well as developed social activities.
TECHNOLOGICAL - Russian internet users include 73.4% of the population according to 2015 data, which is a relatively high number, giving growing opportunities for the online reachable foreign businesses. - The country is very developed in terms of scientific, mathematical and technological knowledge, however doesn’t use the resources to produce many goods in that department. - Due to the strict controls of the social activities in the country and informational management, most of the national TV channels are owned by the government or people who have close relations with it. - At the current time, Russia is working on building a high-tech economy, but bureaucracy and corruption is slowing down these attempts. “The big problem for high technology in Russia is neither money nor ideas. It is the country’s all-pervasive bureaucracy, weak legal system and culture of corruption.” - quote by The Economist (International man of mystery: Flying anything to anybody, Dec 18th 2008). - A lot of the technology currently present in the country is the technology implemented at the military forces from the times of USSR.
PEST ANALYSIS
Aleksandra Pavlova
Sources used in this PEST analysis: [Guzanova, 2018], [UK Essays, 2013], [Kum, n/d], [World Bank Group, 2018], [Pain, 2012], [Aliev, 2013].
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Aleksandra Pavlova
IED Barcelona
2018-2019
BRAND‘S ETHICS & SUSTAINABILITY ANALYSIS IN RUSSIA CURRENT POSITION
Over the last few years the issue of
tives are at the current time only at the
sustainable development has been
starting stages of the process, many of
becoming increasingly important to
them do no receive governmental fund-
Russia. Some of the evidence comes
ing and support, and are suppressed
from the ongoing reforms regarding
under the majority of the infrastructure
environmental legalisations within
projects being proceeded without eco-
the country, updated “greener” strat-
logical aspects in mind. In the end, the
egies form business development
current aim for the country is stated to
and the social initiatives that go into
be the increase of energy efficiency by
it. However, since many of the initia-
40% by 2020 [Safonov, 2013].
PROSPECTS
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Since Russia is a stock of a large part
strength, since it could help the coun-
of the world’s raw materials, includ-
try to overcome the dependency on
ing oil, gas, and water, it plays an
fossil oil and gas to stay economically
important role in the global supply
valid. Additionally, the country takes
of resources, thus, giving the coun-
up above 1.1 billion hectares of forest-
try a large potential in “greening” it’s
ed land, meaning is plays one of the
economy. The ways the country can
leading roles in the world’s mainte-
proceed to take steps in this direc-
nance of the ecosystem and the coun-
tion - is by managing more efficient-
try’s local economic system ad a large
ly it’s natural resources, maintain-
part of it being the provision of em-
ing and protecting already existing
ployment, therefore the current view
ecosystems, and developing liability
on the forestry losses means large-
for the global commons. One of the
scale damage is nose sectors [Bobylev,
reasons this has to be done is also
2013].
for Russia to maintain it’s economic
country was introduced, aiming to
In 2006, the Forest Code of the
Aleksandra Pavlova
IED Barcelona
2018-2019
change the system of the forest man-
will last up to the year 2020
agement, offer better protection from
in, 2013].
fires, as a resulting aim to better the
the opportunity for the creation of
environmental functionality and re-
more state nature reserves, as well
generation. Resulting from this, one
as 6 new national parks and a fed-
of the latest actions taken by the gov-
eral sanctuary. In addition, many al-
ernment is the issue of a proposal for
ready existing reserves are aimed to
the developing of Specially Protected
be expanded and optimised to achive
Areas of Federal Significance, which
the new standards.
[Kiryush-
This Concept is investigating
LAWS
As far as legalisation is concerned, it
laws as still not seen any direct im-
shoes several principles of sustain-
pact of the organisation of the country
able development, that are reflected
and has not been actualised through-
through the Constitution of Russian
out [Damianova, 2013]. Additionally, there
Federation and it’s reference to the
is a current trend in transferring the
environmental laws, including the
environmental supervision and con-
“Environmental Protection” law and
trol powers from federal to regional
the “Forest and Water Code” . These
levels (government to private compa-
laws are stated to provide control
nies) in order to help the government
over the use of land are resources,
save money and time on funding
as well as the impact made on ecol-
those practices, however due to the
ogy by inhabitation of land and pro-
high levels of corruption in the coun-
duction, and are regulated in order
try the private sector is not manag-
to serve the wellbeing of people the
ing the responsibilities efficiently and
land. However, the proposal those
lack realisation funds.
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Aleksandra Pavlova
IED Barcelona
RUSSIA - MARKET
2018-2019
EVALUATION
The value of the Russian fashion
growth Russia stands in the top five
market is 22 billion euros (as for the
markets amongst Europe, Middle East,
latest data report of 2016), accounting
and Africa.
to about 8% of the total luxury segment in the country (the largest part
More specifically, during the last year
of the luxury segment is devoted to
alone (2017), many of the foreign
the cars market - over 40%) [Orlov,2017].
brands have opened their first loca-
The fashion segment is forecast-
tions in Russia (including Superdry,
ed to grow rapidly in the following
LK Bennett, Aquazzura), mostly in
years (about 9% per year as for 2017)
Moscow and Saint Petersburg, since
As far as the relationship
those two cities are considered to be
between Russia and the UK is con-
the “two capitals” of the country and
cerned, over 50 million euros worth
are the main fashion heatpoints in
of high fashion brands items are be-
Russia. Moscow is usually the first city
ing imported from the UK to Russia
where the new companies chose to
on the yearly basis. The market as
enter - it is an international metropol-
a whole has experienced struggles
itan with the biggest population in the
in the recent decade due to the eco-
country, as well as a place with high
nomic crisis and internal turbulence,
level of tourism all year round, and a
however the luxury market in Russia
large proportion of consumers in the
specifically is one of the most stable
upper classes being very trend-fo-
ones in the world, and has still been
cused [Brown, 2017]. Regarding the tour-
going through spikes of growth even
ism aspect, a large proportion of sales
during the harder times (with the
each year are enabled by the Chinese
greatest expansion being seen back
coming to shop in Russia (which has
in 2005, when the market has grown
increased 30% since 2014, due to the
from 4 billion to 37.4 billion euros in
currency exchange rates between
one year). Thus, in terms of business
yuan and ruble increasing it’s value)
[Doran, 2012].
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Aleksandra Pavlova
IED Barcelona
2018-2019
TSUM (the most well-
TSUM in 2007. As many other brands,
known high end department store in
the store was closed during the time
Moscow) has even introduced a mar-
of crisis, but now has been returned
keting strategy aimed at targeting the
back, along with 3 other new loca-
Chinese audience
[Fashion United, 2016].
tions. The head of Esper Group (a
As far as Stella McCartney, the first
Moscow based fashion consultancy),
ever store in Russia was opened in
Ekaterina Petukhova, has stated:
[Luxury Daily, 2018].
“The current global economic environment has made these companies thrifty. They are not willing to spend that much on a market that may prove risky and volatile for their brand. We speak of a quality revival of the market, i.e. customers shopping for luxury and frequenting stores but the foot traffic is still below the pre-crisis level as well as the average bill amount. The market is waiting for new participants and new openings after the crisis” The brands that have managed to stay
factors that are important for success
of top of the sales during the time of the
is the heritage and the brand image,
crisis are Prada and Dolce & Gabbana.
the service that goest into making the
Otherwise, the cautious approach to to
purchase. The pricing and accessibil-
the Russian market and consumers is
ity are not the top priority factors for
considered to be typical for the luxury
the type of Russian customer who is
brands who are not positioned in the
shopping for luxury goods. The famous
highest pricing segment [McKinsley, 2018].
aphorism “The rich get richer and the
Additionally, as far practise shows re-
poor get poorer” is a true statement
garding the Russian consumer, brands
for the country, which means the up-
that offer a combination of quality, sea-
per class buyers are getting increas-
sonality, and style do the best. Other
ingly less and less price-sensitive.
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Aleksandra Pavlova
IED Barcelona
2018-2019
At the same time, there are many dif-
ing lower and also many of the brands
ficulties that may arise when entering
and collections traditionally not being
a market like Russia. Firstly, due to
accessible inside Russia in the times
the large population and area of the
before. Another difficult in the market
country, creating brand awareness
may be attracting millennials, which is
may become a difficult task. Since
one of the main priorities for the luxury
many physical stores are only posi-
brands in Russia at the current time and
tioned in Moscow, it takes a lot to pro-
one of the main drivers of sale in many
vide exposure for the more provincial
other markets. Reaching this segment
citied away from the capital, by show-
is still a struggle in Russia, due to there
ing capabilities of online branding and
not being sufficient information of their
advertising in the Russian net. Ar-
buying behaviour and brands not being
noud Bakker (the owned of MEGA, a
able to construct a coherent customer
chain of the largest shopping malls in
profile [Fashion United, 2016].
Russia with over 265 million shoppers
19
annually) offers guidance and support
Derived form the research in the pre-
to the brands entering the market for
vious section of the paper on the Mar-
the first time (thus, brands like Su-
ket Evaluation, the most successful
perdry and Armani Exchange have
brands in the country are the ones that
now got stores in various of the malls)
manage to combine the high quality
[McKinsley, 2018].
Resulting from this is-
of the offered products, a fashion-for-
sue is also the essential step of brand
ward approach, together with the rich
development in a new market - being
heritage ands service level offered to
building brand loyalty and custom-
consumers. Such brands perform the
er comebacks. In Russia this plays a
best even during the times of econom-
specifically important role, as many
ic shortcomings, and gain customer
buyers are used to buying designer
loyalty and recognition for the long-
items abroad (predominantly in Italy,
run success. Many of the sources re-
UK, and France) due to the prices be-
searched discovered that the brands
Aleksandra Pavlova
that fit that category and labels such as: Burberry, Prada, Chanel, Hermes, Bulgari, Armani, Saint Laurent, and
IED Barcelona
2018-2019
MARKET EVALUATION SUMMARY:
Jimmy Choo. Out of these brands, some are considered to be competitors of Stella McCartney both in the Russian market as well as internationally. The difference is that on a global scale consumers from different countries may more sensitive to either the brand’s label and the “level of luxury�, and others are more sensitive to the style offered. In Russia, the style aspect is one of the most important, and is most commonly compared to typical Scandinavian and European, with more put together and classic styles, with minimum colour and the priority for quality. Thus, the brands that are the main competitors for Stella McCartney in Russia are Prada (5 stores in Moscow, 2 in
- The Russian fashion segment is returning back to stability after the prolonged economic cricis, and is predicted to grow as rapidly as 9% per year in the following years. - Moscow and saint-Petersbutg are unchangibly the main cities for fashion retail in Russia. - I large percentage of fashion retail sales in Russia are thanks to the Asian tourism sector. - Brands that offer a combination of quality, style, and service remain the most successfull in the russian market. - Russia is a very complex market due to the size and the consumer mentality and demands towards luxury.
Saint Petersburg), Hermes (2 stores in Moscow, 1 in Saint Petersburg), and Armani (16 stores in Moscow, 14 in Saint Petersburg). All brands of the
*The following pages contain S.W.O.T. analysis charts for the 3 brands chosen as main competitors for Stella McCartney in Russia, as well as the comparative charts of those brands
list have. Their own store locations as well are presented in multi-brand and resale stores.
20
Aleksandra Pavlova
PRADA SWOT ANALYSIS
RUSSIA
21
IED Barcelona
COMPETITORS
2018-2019
ANALYSIS
1. P R A D A
STRENGTHS
WEAKNESSES
- Overall positive cashflow and earnings - allows the brand resources to expand to new markets and new product categories
- Compared to many other brands in the niche, Prada has a higher attrition rate - the company has to spend more on employee training
- Loyal audience due to high levels of customer satisfaction due to a separate customer relationship management department working with both current and potential customers
- Problems have been seen in the sector of financial planning of the brand - the liquidity of the assets is high, and the efficiency of spending is not accurate
- Automisation of activities allowing the brand to adapt the scaling of the brand in different markets based in demand changes
- The brand usually keeps the inventory and product stocks high for every release due to not being know for accurate forecasting and calculating potential market demands
- A well built personalised supply chain due to the integration of technological firms into the streamline of the brand - allows Prada to have a reliable relationship with it’s suppliers - Highly skilled workers due to the training and learning programme provided by the company and investing annually into employee development Present in multi brand stores worldwide - Well known and recognisable advertising - Unique heritage under Muiccia Prada
- Due to Prada being predominantly private company, it sometimes may be difficult to acquire funding + corporate debts for the development of the brand - More that half of sales are from leather goods, therefore unfriendly to the environment, especially unbeneficial to attracting the environmentally conscious consumers - Weaker e-commerce conversion of sales compared to in-store purchases
- Successful track record of development of new products and existing category expansions
OPPORTUNITIES
THREATS
- Global market growth opportunities (focus on Asia) and product range extensions due to the stability of the cash flow
- Rising in pay levels in many countries relevant to the production of goods (eg 15$ per hour in China lay) may be a threat for the profitability of the brand
- The end of the economic recession is an opportunity for the brand to capture new customers and invest into increasing it’s market share and provide room for further product alliances and new partnerships - The adoption of new technologies may help the brand to gain new customers due to the value oriented propositions of the brand and help to enter new market segments - Outsourcing production can give Prada an opportunity to same money in the long-term and establish a positive relationship with it’s already existing suppliers, still maintaining the existing control over the production chain
- Copies from base level brands due to the mass market operating faster that couture can be an issue for many of the luxury brands including Prada - Economic crisis in the targeted markets, especially as Prada grows to operate in more markets where currency fluctuations are present - Attempting to switch the consumer behaviour from not shopping through the online channel may become a threat for the existing physical infrastructure of the brand and it’s brick-driven supply chain model
- Franchising opportunities can lead to investment free expansion of the brand, especially in the already existing markets where the brand image is stable - Branding towards the millennial audience can help the rabid to reach the younger audience in the markets like Russia, where the consumer is very profitable, yet theres not specific targeting present towards it Sources used in this SWOT analysis: [Dyachuk, 2012], [Ferm Fort University, n/d].
IED Barcelona
2018-2019
2. H E R M E S
STRENGTHS
- Strong brand name and global presence of the brand means it is easier for it to enter mew makers and increase brand awareness without high investments in promotion - A rich and consistent heritage (brand originated in 1837) attracts and gives the sense of reliability to a type of customer who are drawn to this quality - The larger half go the Hermes stores are operated directly by the brand (180 out of over 300 stores worldwide) - beneficial for maintaining the brand image - The brand operates their own production units (over 30 worldwide, including in France, Japan, the US, as well as many points in Asia) - can produce and deliver more efficiently and adapt to the changes in demand - The brand has a wide range of products, not only in the clothing department, but also within watches, jewellery, bags, shoes, perfumes) - The media presence of the brand is very strong, throughout social media, magazines, physical advertising, PR - Hermes has a very strict quality control policy, making them a reliable brand for the audience who are drawn to consistency in performance - A very recognisable and consistent packaging with the brand’s signature colour scheme (burnt orange patented colour)
OPPORTUNITIES - Further global expansion to reach new groups customers, especially with the global growing market for luxury in Asia - Using the current digital developments in order to concrete the presence of the brand online and provoke sales through e-commerce - reaching new customers who have limited access to physical stores - Invest into new ways of advertising in order to increase brand recall - Expansions to new markets and investment into R&D - The possibility of branching out into a new market - e.g. design, as some attempts have already been made
WEAKNESSES
- Increasing competition in the c current time means the brand needs to work even harder to maintain it’s market share - Imitations of the brand’s designers by lower class mass-market brands hurts the business and the brand value of the brand - The brand can bee seen as every focused on a specific customer target (e.g. not reaching millennials) - The brand still uses different types of leathers in the production of the goods, which puts it into an unbeneficial position in relation to alternative luxury brands (like Stella McCartney) who are making efforts to be sustainable - The majority of the collections are not seasonable which can come to be both a strengths and a weakness depending on the circumstances, however in comparison to brands entering the countries that are focused on seasonality, it can become a weakness
THREATS - Global economic instabilities affecting sales during the times of recession in different markets - The increasing cost of raw materials can affect incomes, since the brand is very quality oriented and would not settle for cheaper materials - Other luxury brands exposing their ranges and growing is awareness, that may replace Hermes in the mind of the customer due to a lesser price point for “the same” product offered - The new trends for the luxury market has been focusing on their online communication and strategic investment into their social media / online channels, and not keeping put with other brands in the field in that department may cause the brand to fall back and seem old-fashioned
Sources used in this SWOT analysis: [MBASkool, 2018], [Calingo, 2015]
HERMES SWOT ANALYSIS
Aleksandra Pavlova
22
ARMANI SWOT ANALYSIS
Aleksandra Pavlova
23
IED Barcelona
2018-2019
3. A R M A N I
STRENGTHS - Giorgio Armani has been in the list of the most powerful brands by Forbes for the last 5 years - The majority of the brand lines offer hand stitching as their chosen method of production, as well as personalised sized and fits of the items - A variety of designers work for Armani at end given time, all hand selected from the best fashion schools in the world - this gives the brand an original approach by each of the contributors - Giorgio Armani is well knows for the innovative marketing tactics (e.g. being the first brand to display a fashion show live on the internet to the worldwide audience) - The brand collaborates with many brands outside their own field (e.g. customising automobile interiors), as well as working long-term with celebrities (e.g. Lady Gaga) - Studies showed that the majority of customers rate the experience they receive while shopping in Armani’s physical stores is very positive, which is a valuable trait about a brand when it comes to gathering a loyal audience
OPPORTUNITIES - The major opportunity for the brand is to expand on its current customer base, specifically regarding the market segments and this working on enhancing the customer loyalty - Innovation can be applied to the brand by it’s younger contributors by involving the brand in more online based activities and promotion of the product using digital media - The brand can look forwards to extending more globally and catching up to it’s direct competitors, also benefiting on the increasing disposable incomes of some of the new markets
WEAKNESSES - The brand has been previously accused by PETA for using “unnecessary” animal furs in the majority of their clothing lines. After the debate continuing fo over 7 years, the brand promised to stop using animal furs in their clothing lines - Armani has a somewhat limited presence in the world (Giorgio Armani is only present in 36 countries), whilst some of the direct competitors (e.g. Dolce & Gabbana) are present in over than 50 - Armani can be seen as overpriced by some of the customers due to them referring to other lines of the brand e.g. Armani Jeans - thus, the brand may be losing out on some of the potential customers due to the high pricing strategy they adopt - There may be a lack of present scaling opportunities for the brand in it’s current position, due to the niche of the brand being relatively limited to a specific audience - this affects the growing patterns of the brand
THREATS
- The brand loyalty for Armani can be considered relatively low in comparison to some of the other brands in the segment, thus the customers Turing to the brand when they feel like they’re getting the best deal on the combination of price, quality, and style that they are looking for - this may become a threat for the brand wanting to expand on their already existing customer base - The brand value of the brand may be compromised by the lower level brands imitating the original styles of Armani - The current changes in exchange rates due to the economic instabilities in the world nowadays are one way or another going to influence the sales of the luxury segment - Armani is one of the brands that benefits the most of the sales of accessories rather than garments, which can be a threat to the other competitors finding innovative ways to sell apparel, by either following the current trends or rebranding the communication of the brands towards e.g. millennials
Sources used in this SWOT analysis: [Bhasin, 2017]
Aleksandra Pavlova
IED Barcelona
2018-2019
DIFFERENTIATION OF THE ESTABLISHED COMPETITORS
STELLA MCCARTNEY
PRADA
HERMES
ARMANI
Stella McCartneys differentiating point is the key element of the brand’s essence, being the fact of majorly basing the brand’s production and external operations into an environmentally sustainable model. The brand supports various charities, independent organisations, sources recycled materials, and pays of an annual sustainability charge (these are only get examples). This is a definite benefit to the brand, since not many alternatives are available in the luxury fashion sector, and even less are present in Russia. Prada’s main differentiation point is the brand image and style, since the Russian luxury consumers are found to aim for a more conservative, yet fashion-forward look. Prada does a good job of keeping the brand image present, yet incorporating trends and fashion innovation into their collections, which is what given consumer looks for. The main strength of Hermès over the competitors if the most luxury pricepoint, in combination with the rich brand heritage. Since the luxury buyers in Russia are only getting increasingly wealthy, due to both economic and political aspects (discussed in the PEST analysis), some thrive to but the “top of the top” of what is available. Additionally, the brand heritage aspect has also been found to be one of the determining factors for the Russian consumer overall. For Armani, the main benefit in the Russian market and what it has succeeded more over the other competitors is the brand presence. Due to the various segments of the Armani brand (Emporio Armani, Grigio Armani, Armani Jeans etc.), the prices also differ within those segments, meaning the consumer base increases, since more people can afford to purchase. Thus, the brand has become increasingly widespread in Russia, since the tendency for the middle-class customers is trying to “reach” for the lower level of luxury brands. Armani overall has the most stores in the country over any other of the chosen brands.
24
Aleksandra Pavlova
IED Barcelona
2018-2019
THE PORTER‘S The current fashion retail landscape
lated with brands and yer new brands
is growing to be more and more com-
are entering with new concepts. There
petitive, and whilst there are different
are several factors, including globali-
brands, many of them provide the
sation, the fluctuations of the global
same types of products. The fashion
economy, technological developments,
market ha too grown densely popu-
and demand for “cheap” and “fast” fash-
1
BUYER POWER
- The primary major force is the bargaining power of the buyers, that can influence the brands to push down prices, by not buying products, or switching to alternative retailers. In the case of the luxury fashion industry, buyer power is also a relatively large force. While clothes shoppers are typically individuals with little ( or none direct bargaining power, as compared to huge companies, buying in bulk, who might be the main clients in other industries), they have many alternative brands to invest into, with little incentive to stay with one particular company unless brand loyalty has already been developed, being the main way of indirect bargaining power.
2
SUPPLIER POWER
- In the fashion retail industry, supplier power is a comparably insignificant force, since most brands source their garments from “third world” manufacturers, that receive overall a very small fraction of the total profits made by brands. Thus, suppliers have very little control over the whole industry, as they can always be switched to other workers. As an outcome, the input prices for the industry are low and will stay there concrete until the world’s “development gap” decreases significantly.
25
Aleksandra Pavlova
IED Barcelona
2018-2019
5 FORCES ion that are affecting the fashion retail
several factors that affect the market
space. The power of change is most of
position of brands. These are sum-
the time in the hands of the customers,
marised in the 5 forces analysis of the
and therefore the focus of the brands
high fashion retail industry, in which
is also based on bettering the consum-
Stella McCartney is based in, through
er experience. In the end, there are
the illustration below:
COMPETITIVE RIVALRY
3
- The levels of competitive rivalry in the high fashion industry are very high, especially as more and more brands enter the market and the monopolic power of the larger houses decreases. At the same time, there are many retailers who provide similar products, especially with the raise of fast fashion and them implicating the luxury fashion market. In this sense, the luxury fashion industry is a very complex one to enter, specifically for the markets where the consumer is not familiar with the brand, and thus is likely to pick the “safe” of familiar option.
THREAT OF NEW ENTRIES
4
- As mentioned previously, there is many new brands entering the market every year, however not many of them are able to differentiate and therefore are not successful. Thus, many brands are attempting to find new differentiation strategies than product differentiation, e.g. a adopting a unique communication strategy, special use of social media, brand value proposition, etc. Overall, the fashion industry at the current time at a ‘high risk, high reward’ stage for new entrants, therefore, with a unique strategy the brand can succeed fast.
THREAT OF SUBSTITUTION
5
- Direct substitution is not a high risk for the fashion industry in general, since there are not many ways to substitute clothes, however luxury brands can easily be substituted by consumers for more affordable options. This issue is therefore also related to competitiveness of specific brands and their ability to provide unique selling propositions.
26
Aleksandra Pavlova
IED Barcelona
CONSUMER ANALYSIS BUYIG BEHAVIOUR
2018-2019
-
“Russian consumers are very fashion-oriented and style-sensitive, which in itself doesn’t differ all that much from any other European market� - a quote from Rino Castiglione, the owner of the US denim brand Wrangler, that recently opened a large flagship in the centre of Moscow.
The aspect of trends is very important
locations. For newly entering brands it
for Russians, and studies show that
is important to organise operational call
over than 10% over than the world-
centres, website chats, adapted in rus-
wide average of Russians notice when
sian language since the population of
new products appear in the markets
english speakers is only (12%). Overall,
across all industries. The typical Rus-
a personal approach regarding custom-
sian consumer is not known to make
er service is crucial [Gad, 2017].
purchases on impulse, and most of the time they already know what they
Another aspect that is more unique to
want to purchase when they are en-
the Russian market is the value of fam-
tering a store.
ily shopping the the influence of family on purchasing decisions. The consum-
Russians
27
also demonstrate strong
ers in the country generally tend to shop
brand loyalty across the board. The
with their whole family, buying more of-
high value on the quality of the prod-
ten for other members than for them-
ucts means once a product is pur-
selves. The task for the brands coming
chased one time, the consumer is
from abroad is to tap into this dynam-
likely to come back if satisfied and
ic by providing more broad marketing
the brand feels reliable. Also coming
tactics and campaign towards not only
from this, the Russian audience like
the consumer directly, but also to their
to receive personalise services while
close ones who can suggest them to
shopping, both online and in physical
make that purchase.
Aleksandra Pavlova
IED Barcelona
2018-2019
From a monetary perspective, the av-
international brands, it is a challenge
erage saving in the country is not high,
how to make a profit while not scar-
since there is a lack of reliance on the
ing the consumers away by the pric-
banking system in the country due to
ing. This is the main disadvantage of
the strong negative effects of the eco-
the foreign brands in comparison to
nomic crisis (the average consumer
the local brands - the fact that the lo-
spends over 80% of their earnings) [Ban-
cal companies are more flexible as
co Santander, 2019]. Another noticeable dif-
they can change the pricing strategy if
ference taking the Russians apart form
they observe a change in the market,
the global average is that they “enjoy”
thus not having to balance the Rus-
shopping less that the worldwide aver-
sian economic conditions along with
age consumer. Thus, especially for the
other external pressures [Bush, 2016].
CRITICAL BARGAIN-ORIENTED
STYLE-ORIENTED
PHYSICAL SHOPPER
FASHIONABLE PICKY
SERVICE-ORIENTED
RATIONAL BRAND-HUNTER
KNOWS WHAT THEY WANT
FAMILY-SHOPPER
LOYAL
PRICE-INSENCITIVE LOOKS FOR QUALITY
THE RUSSIAN LUXURY CONSUMER 28
Aleksandra Pavlova
IED Barcelona
KEY SUCCESS FACTORS
1.
Adopting a more flexible pricing strategy, adaptable to the market as being competitive towards other brands of the same field. Since Russian is currently only recovering from the economic crisis, the market may appear more price-sensitive than the usual.
2.
Do not rely heavily on impulse purchases and sales of raw lower segment of the brand (e.g. accessories). Focus on the quality of the clothing and establish strict quality controls in the not only in the country of production but also inside Russia. It is crucial to make a good “first impression� on the customer regarding firstly the quality, since the Russian consumers tend to be very loyal to the brands they trust. In order to gain that trust, the quality of the garments purchased have to meet the standards.
3.
Focus on spreading awareness about the opening of the store upon the initial stages of entering the market. Due to the large size and population of the country, the word of mouth is not the most effective way of finding customers, hence the chosen advertising channels and advertising intensity play a key role.
29
2018-2019
Aleksandra Pavlova
4.
IED Barcelona
2018-2019
Hire an agent / middleman who would have awareness about the construction of the Russian fashion market form the inside and has had experience with introducing high end brands into the market on a large scale. Initiate the introduction of other commercial relations to maximise sale in the long run.
5.
Focus on creating a top level shopping experience both online and in the physical stores, since the consumers are very impressionable regarding receiving the optimum service and the feeling of paying not only for the good but also for the premium experience. The online shopping and delivery services level is specifically important, as many customers will shop online due to likely not having access to a physical store in their region.
6.
Introducing a new communication strategy for the Russian market upon entering - developing a communication campaign, offering an online website as well as additional services in Russian language, introducing market-specific communication incentives (e.g. targeting whole families instead of individual people).
30
Aleksandra Pavlova
IED Barcelona
2018-2019
MARKET ENTRY STATEGY
31
The chose entry method to position
agent offers more transparent approach
Stella McCartney in Russia is a tactic of
to the business, since no external agen-
adopting a local agent in order to help
cies of parters are used, which is select-
the brand build it’s operational strategy,
ed incorrectly may lead to inconsistency
as well as adapt well to the unique cir-
and even partial transfer of ownership.
cumstances of the foreign market. Stel-
As well as that, other options like fran-
la McCartney currently operates 3 sell-
chising or co-branding require a more
points in Moscow, however all of those
long term and complex partnership
a corner stores and are ruled by larger
which hiring an agent does not. Like-
organisations. In order to successfully
wise, the expenditure on an agent is not
launch an independent location in Mos-
comparable to one of a co-producer on
cow, the brand will need to gain com-
a joint ventures agreement. Thus, the
mercial relations in order to develop a
brand overall stays in full control and
successful entry campaign, gain deeper
has options whether to prolong the part-
knowledge of the competitors present
nership with an agent after the initial
in the market, and maintain the known
entry or operate on it’s own. Lastly, hir-
standard of the brand independently in
ing an agent is also a beneficial strate-
terms of service and customer rela-
gy for Stella McCartney due to the fact
tions. One of the main challenges that
that agents usually operate through a
the agent can help the brand to solve
commission, rather than a direct salary
is the spread of awareness through
,meaning both parties would be directly
strategic advertising, which is one of
invested into the success of the cause
the key success factors of the chosen
and the maximisation of sales. The ex-
method. As discussed before, Russia
clusivity clause offered to the brand by
is a unique market not only in terms of
the agent will also ensure that the agent
the consumer’s mindset, but also due
knows the spicing strategy that shall be
to the physical size of the country, that
adopted by the brand, since as discussed
makes spread of information as well as
earlier, the current state of the Russian
distribution different from the brand’s
economy requires many brands to make
country of origin. Additionally, hiring an
price-related adjustments.
Aleksandra Pavlova
IED Barcelona
2018-2019
The chosen channel for distribution is the longitudinal (indirect-long) channel throught using an agent in the new country of entrance. This channels is chosen as the Russian market is relatively new for Stella McCartney and maximum possible support is needed from external forces to adapt to the unknown enviroment, simultaneously keeping the full control and ownership of the brand and the distribution chain.
PRODUCER
(MANUFACTURERS IN EUROPE AND ASIA)
AGENT
(THE HIRED MIDDLEMAN)
WHOLESAILER
(STELLA MCCARTEY UK)
RETAILER
(STELLA MCCARTEY RUSSIA)
CUSTOMER
(THE ONLINE/ PHYSICAL BUYER)
*The following pages display in more detail the distribution process of the brand and the basis of the production and distribution system outside of the country of origin:
32
Aleksandra Pavlova
IED Barcelona
2018-2019
DISTRIBUTION MAP
SWEDEN
UK
pulp mill
brand’s centre
GERMAY
SWITZERLAND
viscose factory
RUSSIA
proposed selling point
fabric mill
PORTIGAL
cotton jersey
ITALY
fabric and denim mills
TURKEY
fabric and denim mills
USA EGYPT forests
33
Aleksandra Pavlova
IED Barcelona
2018-2019
CHINA factory
INDIA factory
cotton ( + some other raw materials) trasports trasport of prepared fabrics to sewing facotries is Asia transport products ready for quality check from the factories to the UK transport of products ready for sale from the cental warehouse in UK to the warehouse in Russia online orders distribution from Moscow
[Stella McCartney, n/d]
34
Aleksandra Pavlova
IED Barcelona
2018-2019
MARKETING STRATEGY & SALES Stella McCartney is a brand that aport
of value pricing, since as mentioned
the differentiation strategy in their
prior, the value brought by the brand
marketing tactics. The basis of the
to some customers is what they are
strategy is based upon the sustain-
willing to pay for. The specification
ability-centred rooting of the brand,
that needs to be considered in re-
which attracts a large portion of it’s
lation to the Russian market espe-
customers being people who are
cially is that (as discussed in detail in
wanting to support the cause, since
the P.E.S.T. analysis and the market
the brand is the only one in the whole
analysis) that market is still remain-
luxury fashion segment that is posi-
ing very price-sensitive, although
tioned that concretely in the ethical
the economy is still recovering at the
sector. The second factor is based on
current time. What this means is that
the style of the offered products to-
for many luxury brands it is a vital
gether with the brand image, which
condition to consider setting a more
is a selling point for many customers
flexible pricing strategy in order to
looking for the simple Scandinavian
succeed, since it is still cheaper for
look, together with the high fashion
many to shop for luxury brands out-
touch. Lastly, and very importantly
side of the country due to the cur-
for the Russian market, the brand is
rent weak exchange rate related to
also positioned in the “high quality�
the fall of export prices of Russia.
market, due to which the differentiation facts it the price/quality ratio,
As a result, one of the main reasons
which is very competitive if com-
of the decision to hire a distribution
pared to some other brands int the
agent is the help Stella McCartney
same field (e.g. Hermes in Russia).
will receive to set the prices of the products correctly in the new mar-
35
The pricing strategy of the brand is
ket and remain competitive in rela-
luxury pricing with a combination
tion to the directly compared brands.
Aleksandra Pavlova
IED Barcelona
2018-2019
POSITIONING MAP The following positioning map illustrates the current position of Stella McCartney in the Russian market in relation to it’s established direct competitors, as well as the proposed position. The factors of comparison are chosen to be price and brand awareness, since those are the factors directly affecting the success of sales, considering that the quality of the products is known to be high in all of those competitors:
HIGH
PRICE
marketing goal
BRAND AWARENESS
LOW
HIGH
MASS MARKET STYLE REPLICATIONS
LOW
36
Aleksandra Pavlova
IED Barcelona
2018-2019
OPERATION OVERVIEW & STRATEGY IMPLEMENTATION TIMETABLE
37
In regards to the ethics and sustaina-
The quality stamp of the Control Un-
bility for both the country of the brand’s
ion will give the Russian consumers
origin as well as the new marketplace,
the reassurance they need regarding
the strategy that will be used in Rus-
the quality of the garments, as well as
sia is based upon the idea of equali-
reinforce the brand’s organic reach
ty control, since that was the main
towards the highest quality and eth-
found concern regarding the consum-
icality level of production of what is
er behaviour and what the brands are
possible to achieve. Based on previ-
judged on initially by the customers.
ous analysis, the Russian market is
Stella McCartney is going to partner
the not the most developed in terms
with the Control Union organisation,
of sustainable production and distri-
which is responsible for the certifica-
bution tactics that keep sustainability
tion of the quality of cotton imported
at their core, however the current is-
and exported to and out of countries
sues apparent in the country’s system
of production, and is present in many
show that changes are ready to be
of the locations where Stella McCart-
made. It is important to keep in mind
ney’s production and sales take place
that the market as a whole is relative-
[Peterson Control, 2018]. Since the stand-
ly developed, however the country’s
ard quality controls of the brand occur
internal systems do not operate as
in the UK where the brand is from (as
they should due to both political and
well as at the factory facilities in China
economic factors. Thus, it is a positive
and India), and all of the products that
incentive to implement an external
go through the warehouse are selec-
partnership on a non-local brand like
tively checked for imperfections, this
Stella McCartney to lead other com-
process will add an additional layer to
panies by example and set the plank
reinforcing quality controls in the new
high for other brands even within the
country of distribution as well.
same industry.
activity
time
IED Barcelona
MONTH 1
MARKET RESEARCH & SETTING OBJECTIVES
marketing department
STUDY THE CONSUMJER TARGET & CULTURAL DIFFERENCES
marketing department + communication department
MARKETING PROPOSAL & DEFINING THE STRATEGY
country-specific marketing coordinator
FINANCE MANAGEMENT PROPOSISION & BUDGET
finance team
MONTH 2
human resources + legal team
DEFINING THE STORE FORMAT AND LOCATION
branch manager + the retail stores team
buying & merchandising team
SETTING THE DISTRIBUTION ROOT AND METHODS
logistics team
DEVELOPING A COMMUNICATION CAMPAIGN
communcation communcation department department + advertising + advertising team team
ESTABLISHING PAYED MEDIA MARKETING PARTNERSHIPS DEVELOPING COHERENT COMMUNICATION CHANNELS AND CONSUMER & SALES RELATED PLAFTORMS
OPENING THE STORE IN THE SELECTED LOCATION & HIRING STAFF
MONTH 4
finance team
HIRING AN AGENT / MIDDLEMAN TO FURTHER ANALYSE THE ENROMENT
PRODUCT & PRICE SELECTION
MONTH 3
2018-2019
media manage- media managemeng team + meng team + PR executive PR executive communcation department + media managemeng team
CALENDAR
Aleksandra Pavlova
branch manbranch manager + human ager + human resources team resources team
KPIs & MONITORING THE TRAFFIC + REVENUES
data management + accounting team
FEEDBACK ANALYSIS & PROPOSE IMPROVEMENT STRATEGIES
data management + marketing department
ADJUST & FURTHER IMPROVE OPERATIONS IF NEEDED
executive shief + retail management team
* The calendar above showcases the main steps to be made in order to implement Stella McCartney into the Russian market over the period of 4 months, as well as shows which departments of the brand’s organisational structure are operationg within each of the steps of development.
38
Aleksandra Pavlova
IED Barcelona
CONCLUSION After undertaking an in-depth analysis of the given brand, as well as producing a marketing and distribution strategy for the brand’s implementation into the Russian market, it can be said that the implementation shall be a successfull practive in the case of all of the established success factors being followed by Stella McCartney. Distributing to Russia can be an initially challenging task due to the specifications of the market overall, as well as the consumer, however it can bring many benefits to the brand, including financial gains in the longrun is the market “accepts� and brand.
39
2018-2019
Aleksandra Pavlova
IED Barcelona
2018-2019
RECOMMENDATIONS As discussed throughtout the paper, there are various factors that would lead to the success of Stella McCartney in the researched market of Russia.
The main of those include :
Hiring an agent to assist the implementation of the brand into the market; Development of a market-specific communication campaign, focusing on the unique consumer touchpoints; Adopting a more flexible pricing strategy in order to remain competitive in the post-cricis market enviroment; Focus firstly on gaining the reputation of a top quality and service company in order to attract loyal customers.
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Aleksandra Pavlova
IED Barcelona
2018-2019
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Aleksandra Pavlova
IED Barcelona
2018-2019
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IED Barcelona
2018-2019
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Aleksandra Pavlova
IED Barcelona
2018-2019
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