FASM 410 - Prof, Alessandro Cannata Natalia Colichon, Maria Claudia Galli, Monica Martinez, Gavin Walters.
INDEX COMPANY HISTORY - OWNERSHIP STRUCTURE - MISSION STATEMENT -FINANCIAL PERFORMANCE - GROWTH STRATEGIES -SWOT BRAND IDENTITY CURRENT POSITIONING IN THE MARKET CURRENT DISTRIBUTION COMMUNICATION AND PROMOTIONAL ACTIVITIES MARKET ANALYSIS PESTEL ANALYSIS KEY PLAYERS INDIRECT COMPETITION TARGET CONSUMER DEMOGRAPHIC INFORMATION PSYCOGRAPHIC INFORMATION BEHAVIORAL INFORMATION STORE LOCATION, DESIGN AND PRODUCT LAYOUT PRODUCT PLAN COMMUNICATION AND PROMOTIONAL PLAN FINANCIAL PLAN CONCLUSION APPENDIX
EXECUTIVE SUMMARY
At Ralph Lauren, our goal is to reach and penetrate as many markets outside of our United States roots, and grow strong relations with markets abroad. A specific focus of the brand is penetrating the constantly growing and changing Asian market, specifically that of China. We hope to gain the high luxury market position we proudly hold in the U.S. Our position as one of the leading American luxury lifestyle brands is a strength we hope to educate and engage the consumers of the Asian market. We plan to integrate this implementation in the international business capital of Hong Kong, China with a pop-up shop in the Hong Kong Jockey Club. Hong Kong is a financial playground, home and workplace to many of the key figures among the business, art, fashion and financial industries. We have chosen the Hong Kong Jockey Club, for not only the central location the social environment, but also to help resonate the equine elegance and heritage of the brand. The popup shop will take place within the Club, equipped with a full bar, and traditional polo lounge to fully engage the consumer, enveloping them into not only the brand history, but also fully engaging them into the specific lifestyle the brand represents. In addition, we face high levels of competition from the surrounding 547 retail operations comprised of luxury international brands and 67 flagship stores.
At Ralph Lauren, we are proud of our extravagant and engaging store designs, creating an unforgettable customer experience, while further educating the consumer about the brand heritage. At this pop-up we have chosen to fully furnish the space with pieces from the brand’s very own Ralph Lauren home collection, wall coverings, and artistic photographs depicting crucial moments within the brand’s rich history, further informing this otherwise, unaware consumer. The limited inventory chosen for within the pop-up include pieces of the men’s Black Label pieces, specifically designed with traditional racing details and designs. We have also selected pieces that are integral staples in the business man’s wardrobe. As we are aware the Asian market is one of the largest purchasers of extreme luxury items, we plan to introduce these bespoke and rare items into this essential market. We will be featuring the brand’s exclusive Cooper collection of men’s bags, including the ultimate Cooper Alligator bag, ordinarily featured in only three flagships worldwide. We are aware and sensitive to the needs of the Asian market, which has become central in the luxury fashion industry. With this pop-up we at Ralph Lauren are excited to educated and engage with these consumers, inserting now only the brand, but the lifestyle experience we provide into this new and exciting market. We hope, with out rich brand representation, at an equine event space will blend perfectly with the upper crust, refined elegance of the equine derived designs. As we continue to secure our strong position in the luxury market at home, we seek to gain the same following and consumer loyalty, expanding with these new consumers as we grown our brand in the Asian market.
EXECUTIVE SUMMARY company history
Ralph Lauren Corporation was founded on March 20, 1997 and it has been a leader in the design, marketing and distribution of products. Ralph Lauren is a global brand controlled by American clothing designer Ralph Lauren. In 1970, Lauren released a line of women’s suits tailored in a classic men’s style and in 1971 a short sleeve cotton shirt was released in 24 different colors which consequently became the brands signature look. Polo expanded rapidly in the 1980’s and 1990’s, opening boutiques across the United States and abroad. In 1984, Lauren opened the flagship store in New York’s Rhinelander Mansion. The company went public on June 11, 1997, traded under the symbol of RL (Ralph Lauren). Ralph Lauren is one of the world’s highest and most luxurious corporations with golden brands such as: Polo by Ralph Lauren, Chaps, RRL, Club Monaco, and RLX Ralph Lauren. The company designs and markets apparel and accessories, home furnishings, and fragrances which are available at nearly 11,500 locations worldwide including upscale and mid- tier department stores. It’s apparel products include a range of men’s, women’s and children’s clothing. In total the company operates about 435 Ralph Lauren and Club Monaco retail stores worldwide as well as eight e-commerce sites.
OWNERSHIP STRUCTURE corporate officers
Ralph Lauren - Chairman and Chief Executive Officer Jackwyn L. Nemerov - President and Chief Officer Christopher H. Peterson- Executive Vice-President, Chief Administrative Officer and Chief Financial Officer. Valerie Hermann- President, Luxury Collections Mitchell A. Kosh- Executive Vice President, Human Resources.
MISSION STATEMENT
The mission of Ralph Lauren is to provide quality products, bringing different worlds together and inviting people into they’re dream and vision. They are the true innovators of lifestyle advertisements that tell a story and the first to create stores that encourage customer participation in that lifestyle.
FINANCIAL PERFORMANCE
Ralph Lauren Corporation, Reported revenue of $7.45 billion in fiscal 2014 (ended in March), A 7% increase versus their prior year revenue. Net Income rose 3% over the same period to $776 million. The company’s store count grew from 882 free- standing and concession shops in fiscal 2013 to 936 in 2014, and the number of e-commerce sites increased from seven to eight. Fiscal 2014 marked the fourth consecutive year of rising sales and profits for RLC. Despite a small decline in sales in fiscal 2010, Ralph Lauren has proved quite strong during a difficult period for many retailers. Profitability has risen due to higher net sales and increasing income from continuing operations.
GROWTH STRATEGIES
Ralph Lauren’s key strategic growth objectives are centered on allocating their strong cash flows to high ROI activities, including: Expanding their international presence, principally in Asia and Europe. Extending their direct-to-customer reach via Ralph Lauren stores and e-commerce. Innovating and expanding new and emerging merchandise categories, particularly accessories. Investing in infrastructure to support their growing global reach. Developing their global talent pool.
SWOT ANALYSIS
Strengths •Global brand awareness •Strong American Identity •Product diversification •Presence in many market segments •Large range of consumers
Weaknesses •Fake imitation and replicas •Distorted brand image from the brand identity •Currency fluctuations •No strong presence in Asia •Highly dependant on the Polo line Ralph Lauren depends on the financial viability and operational ability of licensees and wholesale
Opportunities Threats •Expand in foreign markets •Fluctuating exchange rates make •Broaden horseback trend inconsistent cost margins •Internet sales as prime source of •Competition is present in the Asian future growth Market. •Improve brand recognition • Competition already in the market among the Asian market are taking over customer base and retail space.
BRAND AS A PRODUCT
BRAND AS AN ORGANIZATION America, World of Ralph Lauren European Heritage
BRAND AS A PERSON Preppy Sporty Wealthy Traveled Modern Classic
BRAND AS A SYMBOL
CURRENT POSITIONING IN THE MARKET
All brands of Ralph Lauren are based from the company’s brand identity. American Aristocracy and its lifestyle with a European Heritage. All looks embrace a style that is sporty, preppy, wealthy, traveled, and timeless but modern. Each brand that falls into the company represents its own niche. Ralph Lauren has presented confusion from customer because they perceive a brand overlap, and do not recognize them one another. Current Menswear brands: Purple Label: Custom tailored and made to measure suits. Black Label: Sophisticated dressing for men. Polo Ralph Lauren: Symbol of the modern preppy lifestyle. Ralph Lauren Golf: Collection design for Golf players. RLX: High Performance outfitting. Double RL: Denim and vintage inspired. Denim & Supply: Effortlessly stylish, young spirit and all American Heritage.
CURRENT DISTRIBUTION
67%
12% 21%
Ralph Lauren is based in New York and it operates in the US, Canada, Europe, Japan, South Korea, China, Southeast Asia, and Latin America. America accounts for about two thirds of the sales, while Europe and Asia generate 21% and 12%.
OPERATIONS
Wholesale: The Company makes its wholesale sales from ma jor department stores and specialty shops through North America, Europe, Asia and Latin America. Retail: Ralph Lauren also sells directly to consumers through retail stores in North America, Europe, Asia, and Latin America. Their retail sales are mostly based through concession- based shop-within-shops located primarily in Asia and Europe. Ralph Lauren also sells via its retail e 窶田ommerce channel in North America and Asia. Licensing: Ralph Lauren also licenses to unrelated third parties the right to operate retail stores and use its trademarks in connection with making and selling designated products, such as apparel, eyewear, and fragrances in indicated geographical areas with specified time periods.
NUMBER OF DOORS
-Ralph Lauren Branded Products (Wholesale): approximately 11,000 doors worldwide. -Showrooms: New York City, Milan, Paris, London, Munich, Madrid, Stockholm and Panama. -Retail: 433 directly operated freestanding stores worldwide. -Concession based shop-within-shops: 503 at 243 retail locations in Asia, Australia, New Zealand, and Europe. RETAIL DOORS TO DATE United States and Canada: 238 Europe: 97 Asia: 110 Australia: 29
Shops within shops: 22,000
in its primary channels of distribution to its Ralph Lauren branded wholesale products worldwide.
Licensing:Thecompany’s
licensing partners include Luxottica Group, S.p.A.; L’Oreal S.A.; Peerless, Inc.; and Hanesbrands Inc.
E-Commerce:
Own site and and certain whosale customers’ site.
Factory Stores: 235 located in outlet centers.
COMMUNICATIONAL AND PROMOTIONAL ACTIVITIES
Over the years Ralph Lauren have released different brands targeting different age groups and customers with different spending powers. Advertisement has been adapted depending on the target consumer, but maintaining the American story from an elite perspective. In addition to traditional media advertisement, Ralph Lauren has focused on the physical environment of the stores and their visual communication. All stores are designed by the requirements of the specific environment with unique features embracing classic upper class of the American lifestyle image. Ralph Lauren has an extremely strong personality that has built to transmit the brands identity.This aspect is personally very important to Mr.Lauren, as he provides his personal account for every promotional event. Customers consistently feel the presence of Ralph Lauren himself because of his personality being present in media coverage
MEDIAS USED BY THE BRAND
Advertising and Sales Promotions (in media and online): gift certificates, gift cards, gifts packaGing, personal shopping, seasonal sales and out of season outlet stores. Public Relations • Sponsorship: USGA, U.S Open Polo Championship, American Cup, British Beach Polo, U.S Open tennis. • Celebrity endorsements: High-level models, Hollywood stars, top level sportsmen.
DIGITAL COMMUNICATION TOOL
Social Network The Ralph Lauren collection Smartphone application Interactive Windows and e-commerce sited for RalphLauren.com RL magazine 4-D show
MARKET ANALYSIS Name Hong Kong Special Administrative Region Government Type: Limited Democracy Head of State President of China Xi Jinping Head of Government Chief Executive Leung Chun-yinh Population 7.18 (2013) Currency Hong Kong dollar (HK$) GDP (purchasing power parity) 38,123.52 USD (2013)
Life expectancy 83.8 years (total population) 82 (male) Ethnic Composition Chinese (95%) Filipino (1.6%) Indonesian (1.3%)
PESTEL ANALYSIS
Political • Governed by a China approved constitution. • Effective governance framework due to British influence. • Rank within 15 countries with highest percentile rule of law. • Hong Kong has minimized corruption by enforcing effective regulations. • Hong Kong is far from obtaining an independent democratic system. • Protests are being held against the Chinese government,
Economic • One of the most important financial centers in the world. • Support to small and medium size enterprises by an increment of loan guarantee ratio. • Trade and tourist dependent economy. • The Hong Kong dollar is set by the US dollar. • The country has signed several agreements with different countries to set a free trading system. • High property prices. • Duty free port and low tax rate.
Social • One of the highest life expectancies in the world. • The culture in Hong Kong is a mixture of traditional Chinese with British influences. • Chinese and English are both official languages. • Their most important holidays are, the Chinese New Year, The Dragon Boat Festival and the MidAutumn Festival. • Gambling is popular among the Hong Kong culture. • Suffering from a decreasing birth rate, and income inequality.
Technology • The Innovation and Technology Commission (ITC) was established to support R&D. • The Incu-App Technology Business Incubation Programme, which aims to provide support to web/ mobile application technology start-ups. • The overall expenditure on Research and Development remains low as a percentage of GDP. • The government has implemented the R&D Centre Programme as an initiative for improvement to develop new technologies.
Environmental • Hong Kong follows seven regulations that cover environmental protection, public health and the country’s ecosystem. • Hong Kong has implemented a sustainable waste management program to reduce percentage of waste. • Hong Kong has an increasing problem of smog, and the air pollution exceeds the recommended levels. • Street level pollution caused by diesel vehicles and marine vessels. • Regional smog, which is mainly caused by industry and power plants, specifically from the border of China in the South.
Legal • Hong Kong has high levels of investment, financial, business and labor freedom; property rights and freedom from corruption. • There are almost no restrictions on foreign investment. • The legislative council of Hong Kong declared a competition bill that sets limits into the competitive sector in the country, encouraging fair business practices. • There is also a Competition Commission that investigates anticompetitive conduct.
COUNTRY ANALYSIS
According to Euromonitor, as the menswear market in Hong Kong reaches HK$ 24 billion in the 2013 (3M$), a higher volume growth reaches 13%. This growth represents a higher performance than womenswear. The increase in the percentage is highly influenced by the importance of grooming for men, because foreign brands are highly manipulated by the cultural differences and the society of the Asian market. The fact that men are less money conscious than woman brings in more shopping activities and motivation for the Asian consumers to spend on fashion. For the Asian men consumer, personal appearance is very important especially in Hong Kong, which always try to be presentable and part of the business ambiance. Hong Kong is considered a multi cultural society, so is under the influence of foreign fashion, such as the slim fit rising popularity brought from Europe. The native of Hong Kong is more likely to replace a jacket by a trench coat or a blazer, because companies nowadays seem to be making Fridays casual. Shorts and trousers are the fastest growing category with 16% and reaching 4 millionn HKD. Jackets and coats take the second highest value with a growth of nearly 16%. Including jacket, coats, and other varieties such as hoodies, sport jackets for street style, buying each category for different purposes. The third fastest growing area is men’s top increasing by 14%. The average size is Medium, due to the average Asian body. The plus size market is not developed yet, therefore when the consumer is in need of plus sizes merchandise they must order online.
CHINESE (89.2%) ENGLISH (3.2%) OTHER (7.6%)
CHINESE (95%) FILIPINO (1.6%) INDONESIAN (1.3%) OTHER (2.1%)
MARKET SIZE MENSWEAR HONG KONG (MILLION HKD)
PER CAPITA EXPENDITURE MENSWEAR HONG KONG (MILLION HKD)
DIRECT COMPETITION burberry
Luxury British fashion house established in 1856 by Thomas Burberry known for their signature trademark check pattern. The company manufactures clothing, accessories and fragrances for men and women. Burberry men’s clothing and accessories target to a male crowd that searches for luxury and extreme function. Burberry counts for 15 stand-alone stores in the Hong Kong area, including Hong Kong Island, Kowloon and the New Territories. Burberry image reflects an accessible luxury with a price point between $400-$2000 providing a wide range to reach their desired consumer.
ermenegildo zegna Italian luxury fashion house that specializes in men’s clothing. It was founded in 1910 and has been managed and owned ever since by the Zegna family. It is known for its high quality suits and as one of the biggest global producers of fine fabrics, especially on wool technology. The brand also manufactures suits for labels such as Gucci, Saint Laurent and Tom Ford. The company targets male between the ages of 35 and 50 with a strong education and working position. The brand counts with 8 retailers including stand-alone stores and department stores in the Hong Kong area. Prices range from $450-$3000.
hugo boss German luxury fashion house founded by Hugo Boss in 1924 in the city of Metzinge. It has a very good reputation in terms of the quality of products. They target mainly to the male consumer between the ages of 30 to 40 that is eager to live comfortably in a stylish manner. Prices range between $190$2000 and retails in 10 different locations in the Hong Kong area, from Kowloon to Hong Kong Island.
gucci
Italian fashion and leather goods brand, part of the Gucci Group, which is owned by the French company Kering. It was founded in Florence by Guccio Gucci in 1921. It is well known and respected for the high quality leather products and hand made shoes. The brand has an exquisite quality and craftsmanship in regards to the leather goods, which ranges from small goods to luggage. Gucci operates and sales in 12 retail locations from Kowloon to Hong Kong Island. The brand targets business men between the ages of 35 and 45 that can afford a price range from $400 to $3000.
hermes
French manufacturer established in 1837 by Thierry Hermes. The brand is respected for its leather goods, lifestyle accessories, perfumery, luxury goods and ready-to-wear. It is a detail and fine craftsmanship driven company with an equestrian origin. The consumer is a wealthy business male between 45 and 55 that wants to reflect their position and good taste through their appearance. Prince ranges between $300 for small leather goods up to $1500 and retails in 7 stand alone store in the Hong Kong area.
INDIRECT COMPETITORS
The pop up shop, due to its location inside the Happy Valley Jockey Club, will be surrounded by recreational spaces to enjoy the races. This account restaurants, bars and betting lounges. In our advantage, this has provided us with key elements to include in the pop-up shop to improve the betting experience. The most important trend is the use of electronics and digital technology for gaming. It is also important to note that even though these restaurants can take customers from the pop-up shop, they are considered traffic drivers for our benefit.
THE LEADING EDGE Offers racing watching and dinning, equipped with Plasma televisions and more than 200 tables. It also has self-ticketing machines offering betting assistance.
WINS CAFE Betting facility for a racing and dining experience. It is equipped with private televisions units at each table and Ipad rental service. It is reserved just for Priority Silver Customers and above.
THE GALLERY Venue choice for a happy Wednesday (racing nights) experience. It offers view to the racetrack, horse racing dĂŠcor and digital experiences. It serves bistro-style Mediterranean semi-buffet and a bar with cocktails.
STABLE BEND TERRACE Outdoor Barbeque overlooking the racetrack. It offers free flow of soft drinks and complimentary Ipad usage.
MOON KOON RESTAURANT Chinese a la carte and set menu restaurant.
THE RACING CLUB, HAPPY VALLEY The club boosts stylish and luxurious manners with several specialty gourmet diners and entertainment. It can be reserved for private events.
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ADRENALINE Stylish bar and lounge that combines innovative technology for interactive gaming, live band and buffet dinner.
BEER GARDEN Vivid green oasis with trackside view of races and fast food kiosks.
HAPPY VALLEY Provides private parties with advanced audio-visuals, betting facilities and delicate buffet.
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TARGET CONSUMER
The Pop-up shop will mainly target the customer sector for the Black Label Line and Accessories for Ralph Lauren. But still will carry basic elements from the Polo line that represent the brand identity, which helps solidify the image Ralph Lauren wants to transmit with the pop-up shop. The Black Label Line reflects sophisticated dressing for men with a mixture of sharp tailoring and a modern attitude. Classic lean silhouette suiting and sportswear that are iconic and timeless will also be showcased in the pop-up. The black label is available in Ralph Lauren Stores, limited selection in high-end department stores and online.
DEMOGRAPHIC hong kong customer
MEET KUY TAE: AGE: 43 INCOME: 1.3 Million EDUCATION: UPENN Business School HOMETOWN: Hong Kong CURRENT HOME: Hong Kong RELATIONSHIP STATUS: MARRIED CAREER: CEO of HSBC in Hong Kong FUN FACTS: - Frequent Business Travel - Plays Golf and Poker - Smokes Tabbaco - Attends Horse Racing Events
mainland china customer
MEET LIM SWEE SAY: AGE: 40 INCOME: 800,000 EDUCATION: UPENN Business School HOMETOWN: Shangai CURRENT HOME: Hong Kong RELATIONSHIP STATUS: Single CAREER: General Manager Bank of China FUN FACTS: - Enojys his newspaper in the morning Plays Polo - Social Wine Glasses - Bets in Horse Racing Events - Worksout Regularly
european customer
MEET GIANCARLO: AGE: 40 INCOME: 1+ Million EDUCATION: SDA Bocconi School of Management HOMETOWN: Italy CURRENT HOME: Paris RELATIONSHIP STATUS: Maried CAREER: Real Estate Development Investor FUN FACTS: - Travels for Business often - Enjoys spending family time - Sports fanatic - Whiskey and Wine drinker - Enjoys crafted cuisine
PSYCHOGRAPHICS
Ralph Lauren Black Label targets its brand to professionals and people of wealth. This consumer enjoys their leisure activities to be associated with sports such as rugby, polo and horseback riding, and is most likely to own multiple residences. Likes to spend time with the family but still enjoys a whiskey on the rocks after the office. They are on top of the social circle and use the brand as to go pieces for everyday casual and formal live. Quality, exclusivity, style and fine living are among the values of the customer and he aspires to be respected, admired and sophisticated.
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behavioral information
The Black Label consumer is considered an Innovator according to the VALS profile. They are successful, sophisticated and their purchases reflect cultivated tastes for upscale products and services. They are determined to make decisions based on the best materials and quality to go along with their busy and fast pace living. Still they also take into account the style, design and details such as leather piping and bespoke garments. He is conscious about his image so he likes investing in fashion as a treat or functionality.
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STORE LOCATION
• The Hong Kong Happy Valley Racecourse is located in the ma jor housing and business area of Happy Valley on the Hong Kong Island. • The happy Valley Racecourse offers flat races which are regularly packed, with and electrifying atmosphere that is rarely seen on other racecourses. • The Happy Valley racecourse location is one of the two most popular horse racing facilities in Hong Kong. • It is close to Hong Kong’s Central district which is famous for its international hob of businesses and culture. • As many as 40,000 people go on Wednesday nights during the racing season that extends from September to early July. • Horse Racing is the only legal form of gambling in Hong Kong. Which is famous among locals, international residents and tourists. • Happy Valley is an upmarket Hong Kong neighborhood that holds a big percentage of expats which favors the attendance of internationals to the racecourse. • Wednesday nights in the racecourse are particularly interesting, with bright lights, a frantic atmosphere and big winning payouts. • Billions are spent every year at the Happy Valley Racecourse, as large bettors are attracted to the high class racing. • The racecourse is centrally located in the middle of Hong Kong Island. So it can be reached by MTR (subway), TRAM, Bus and Taxi. • Horse Race in Hong Kong is a pivotal part to many people’s life and to the city’s economy, horse racing in Hong Kong is followed far more passionately than anywhere else in the world. • Ralph Lauren Black Label target customer is a keen on self-indulgent leisure and lifestyle spending. He has invests in expensive hobbies, clothing, personal computers, cars, and independent holidays. The target customer is most likely to spend a Happy Wednesday evening in a private box or in one of the most exclusive race viewing restaurants. • This customer is inside the most popular age segments in Hong Kong and will remain in the future in the short-term. Numbers in this group have been growing for a while as life expectancy continues to rise in the territory.
design and characteristics
Atmosphere: • Colors: neutral colors, such as brown, burgundy, red, black and gold. • Lights: Yellow, dim light and only strong lights showcasing the merchandise. • Darkness: No dark spot. The mood of the pop-up shop is comfort, relax and warm house. • Layout: The pop up shop is a mixture between of experiences, of the American lifestyle with and European heritage. It’s about making the customer to feel like home in a safe and cozy environment. • Music: lounge (customers are into the racing experience, and expect minimal distractions) • Volume: Low • Perfume: Soft candle smells to no smell what so ever. • Employees: Cantonese and English speakers. The staff plays a ma jor role, their task is to build a relationship with each customer. The shop assistants should be personal shoppers and experience builder for the customer to complete the luxury acquaintance. The pop-up shop main goal is to break into the Asian Market and an opportunity to reorient the brand perception from the customer. The staff represents the store image in a live and vivid way so its important that the understand and reflect the exact perception Ralph Lauren is trying to portray. • Employees Dress Code: Each employee will be provided with 2 complete outfits to wear every other Wednesday.
bar
before
after
PRODUCT PLAN
COMMUNICATIONAL AND PROMOTIONAL PLAN For the promotional aspects of our pop-up shop in the Hong Kong Jockey Club, we will be having pre-launch, launch and post-launch activities. Pre-launch we will have a mass mail send out, consisting of email blasts, specific event newsletters, Twitter and Instagram posts and ma jor press releases. Focusing on promotion and education of the pop-up shop/bar as well as coverage on top tier and targeted items in the pop-up shop. Highest press volume will appear in China based fashion magazines such as GQ China and Vogue China. We will hold exclusive tours, interviews and coverage by fashion correspondent Hung Huang, a crucial fixture in the Hong Kong news outlets releasing it as a video that will be posted on the Youtube Ralph Lauren account. On another note, Facebook will be consistent throughout the three stages, starting with the email releases and wrapping up as soon and the post launch activities are held.
The launch of the pop-up shop will be on the first Wednesday of April 2015 in the Hong Kong Jockey Club, on the Happy Valley racecourse. For the launching event we will invite both Chinese and international fashion pace setters, innovators, and celebrities. Elite event guests will include Miroslava Duma, Jay Chau, Feng Wang (Editor-in-Chief of GQ China), BryanBoy, Fan BingBing, Andrew Wu and Angelica Cheung, Editor -in-chief of VOGUE China. These style setters will create high press excitement, resulting in traffic increases drawing more potential consumers. Starting from the second Wednesday of May all the way to the last Wednesday of June, the pop-up shop/bar will be open to the public. The high social media activity will make the pop-up shop an integral location during the races. The heavy press and innovator presence surrounding the brand will represent the high brand quality and loyalty, submersing the brand power among this new audience. Other than promotion, the pop-up shop will be partnering and sponsored by Blue Girl beer; which is the premium leading beer in Hong Kong, raising cultural awareness by integrating the brand into their lifestyle. Post launch will consist on another press run through the social media channels, which have already been implemented. The press run will include highlights, sales figures, as well as special attention to the items sold in the pop-up shop. We will push to shed light and once again address brand power and heritage, working to secure not only brand loyalty, and a strong future growth in China, one of the most powerful markets within our economy.
TWELVE MONTH PLAN
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FINANCIAL PLAN
HK $994,047
CONCLUSION
Infiltrating and reaching out to markets outside the United States will remain Ralph Laurens main objective. The brand is hoping to take a larger share of the Asian market, particularly that of China by captivating and teaching the consumers about the brand’s identity. In order to achieve this, the brand will develop the implementation of a pop-up shop in the Hong Kong Jockey Club. Hong Kong was chosen due to being known as a global business capital. This city allows the brand to attract a diverse mix of consumers, who are found inside the fashion, business, art and financial industries. Ralph Lauren also plans to carry on with its reputation of high luxury style they proudly dominate in the U.S, and try to occupy the same position within Asia. The Hong Kong Jockey Club represents that luxurious lifestyle Ralph Lauren delivers to its consumers; through this the brand is able to represent itself in a unique manner. Not only does the club help Ralph Lauren communicate its high-end character, it directly captures the equestrian target market by its horse racetrack translating into the brands logo. With a deep analysis and understanding of the Asian market wants and needs, Ralph Lauren will offer an exceptional shopping experience. As mentioned before, Ralph Lauren will remain true to its brand heritage and will elaborate the design of its store through the Ralph Lauren Home collection. Moreover, the brand will take into full consideration the fact that the Asian market is one of the leading consumers of expensive and lavish products. With this in mind the pop-up shop will be made up from the Black Label line, in order for uninformed consumers to become clear of the brand’s richness. Ralph Lauren is excited to properly meet with the Asian market, and aspires to succeed in generating new and current consumer loyalty through the expanding of its brand.
APPENDIX
INCOME STATEMENT
As for the allocation of funds for the operation of the pop-up in Hong Kong, we have outlined a financial plan for all necessary costs. The total amount of funds to create and operate the pop-up will be HK $58,210,990 ($7.5 million USD). We will be renting a lounge and bar space in the elite Happy Valley Hong Kong Jockey Club, for a total cost of HK $22,100,382 ($2,850,155 USD), utilities included within the cost of rent. Being that the venue and space has already been built to completion, building costs will not be necessary. The space rented for the pop-up will be located interiorly within the jockey club, therefore exterior costs will not be needed. Design of the space will be done by the Ralph Lauren Hong Kong based visual merchandising team, at their hourly rate on the day of install at a total of HK $4,945 ($638 USD). The interior decor will be comprised of Ralph Lauren furniture pieces, sourced from Hong Kong feature stores, with a total value of HK $1,215,149 ($156,711 USD). There is a featured storage closet, with shelving within the rental space in the jockey club, which will serve as a stock storage area, complete with a safe for the exotic skins and luxury items.
Staff within the pop-up and bar will include a shop manager, with the hourly wage of HK $50, as well as three sales professionals each making an hourly wage of HK $40 ($5.16 USD). For the bar and lounge area, two bartenders, as well as a two butlers will be included, at the cost of HK $30 ($4.09 USD) an hour. Being the shop will open during very specific dates which coincide with races, these staff members will only be working a total of 12 days. Amounting to a total of 120 hours, total wages for all employees is HK $88,500 ($11,413 USD), tips, commissions, and taxes not included. The space will be cleaned by ISS maintenance, weekly, at a rate of HK $7,755 ($1,000 USD) per cleaning session, with a total of fifteen cleaning sessions post and pre-pop up events. Promotional activities include press releases and coverage, as well as event pricing, alcohol and entertainment. The total amount allocated to promotional activities is HK $28,691,724 ($3,700,201 USD). In the resolution of gaining legal licenses and grants to move forward and operate the pop-up and bar area, HK $3,102 ($400 USD) will be designated to gaining these terms. While profit, is not the ma jor initial objective of the pop-up, we realize that a loss will be potentially taken in order to pursue this effort to make a ma jor stance in this foreign market, and therefore consider this to be a worthy investment for the company.
PESTEL ANALYSIS political
Hong Kong was transferred to China from the British colonial rule in 1997, after 100 years. The country is now governed by a China-approved constitution, under the “one country, two systems� political settlement, with independence over political and legal systems. Little political change is expected since the democratic parties in Hong Kong have been supported by popular protest against the government. Due to the British legacy, Hong Kong has an effective governance framework with a successful economy under a free market regime with little government intervention. Hong Kong is ranked between the 15 countries with higher percentile in the rule of law, which measures the confidence on the implement of the rules of society, quality of contract enforcement, police, crime and violence. Hong Kong has been minimizing corruption by enforcing effective regulation, which has allowed the country to retain its individuality. On July 1, 2012, during the celebration of the 15th anniversary of the return of Hong Kong to the Chinese rule, mass protests were held against the government. Have been increasing up to the creation on September 2014 of the Umbrella Revolution by the Hong Kong Federation of Students. Complaining about the glaring income inequality and electoral reforms from Beijing. Since the foreign and defense policy of Hong Kong remains under China’s central government, unnecessary violence has been utilized during protest. This also affects Hong Kong in the matter of China involved into military attempts, such as the force to convince Taiwan to agree in unification. Even though Hong Kong has remained independent in some aspects, the city is far from obtaining a democratic system while the chief executive continues to depend on China. Pro government parties have presence in Hong Kong and the elections of the chief executive are not under universal suffrage. This has shown that true electoral representation are not reflected in policymaking.
ECONOMIC Hong Kong has the benefit of being a duty-free port; no dumping laws and it has a low tax rate providing ease of doing business. Hong Kong is ranked as one of the most important financial centers in the world. The economic system is based on macroeconomic fundamentals and prudent fiscal policies. The country recovered on 2010 after the recession in 2009 from a growth of 2.67% to 6.98%. Hong Kong is a preferred destination for FDI because of its predictable business environment, rule of law, stable tax system, free flow of information, and skilled workforce. FDI is important for the growth of the economic system, and the country ranked globally in the forth place in terms of FDI inflows. Hong Kong also provides support to small and medium size enterprises by an increment of loan guarantee ratio to 80% and reducing guarantee fees, this was done in 2013 by the financial secretary. The Hong Kong Export Credit Insurance has also included new policy terms of special concessions to the small and medium size enterprises, this benefits the companies and the overall economic development of the country. Hong Kong is now considered as a destination for marketing strategies due to its mix of nationalities, meaning that marketing services has grown significantly. These services include advertising, brand and image consulting, event organization, and market research. Advertising export has grown 3.3% since 2012 when Hong Kong made The Closer Economic Partnership Arrangement with China. Providing a bigger sector for Hong Kong to penetrate in the marketing business in the mainland market. Hong Kong is a trade and tourism dependent economy meaning that the city can be affected by the global demand, exports account 2.5% of total GDP. The Hong Kong dollar is set by the US dollar which determines the monetary policy for the country. Is it important to Hong Kong to increase economic co-operation with other countries to maintain its exports but also their imports. The country have signed several agreements such as The Free Trade Agreement (FTA) between New Zealand and Hong Kong in 2011. The agreement between Hong Kong, Iceland, Liechtenstein, and Switzerland in 2012 along with the FTA between Hong Kong and Norway. As well as an FTA with Chile. They cover protection of intellectual property and trade in services and goods. The country was strong enough to support uncertainties within financial markets in the US and Europe. Nevertheless, the Hong Kong Monetary Authority and other regulators are implementing measures to increase flexibility of the financial system. Aiming to strengthen credit and liquidity risk of banks and increase the regulatory reserve level. The Hong Kong dollar is set in a range of HK$7.75-7.85:$1 and has fallen alongside the US$. While the Chinese economy and its currency continues to grow, it has been speculated that the HK$ will be set to the Chinese renminbi instead. It is important for business in Hong Kong to have in account. The unstable property prices, high property prices could be a challenge for prospective enterprises.
SOCIAL
Hong Kong boasts one of the highest life expectancies in the world and a multicultural society. The culture in Hong Kong is a mixture of traditional Chinese with British influences in terms of law, education, politics, language, food and the way of thought. They consider themselves as “Hong Kongers” differentiating themselves from the Chinese in mainland china. Their traditional values are, “family solidarity”, “courtesy” and “saving face” being applied into assistance to family in need and foreign domestic helpers. Chinese and English are both official languages, but Mandarin is also well accepted, making Hong Kong a place for intercultural relationships. Their most important holidays are, the Chinese New Year, The Dragon Boat Festival and the Mid-Autumn Festival. Gambling is popular among the Hong Kong culture, it is only legal at three stablished and licensed institutions that are approved and supervised by the government. Horse Racing at Happy Valley and Sha tin, the Mark Six and soccer. The Hong Kong Jockey Club provides major revenue for horse racing and gambling and it was founded in 1884 by the British colony. It is a high society members only that was limited by “old money” families but changed within the years. The membership cannot be bought or sold in the secondary market so it is still a process that can take years. Hong Kong is currently suffering from an aging population along with a decreasing birth rate. According to International Monetary Fund projections, these demographic effects could start setting in 2015. Even though migration of a younger generation from the Chinese mainland, Hong Kong is still going to be treat by the increasing needs of the aging population that could affect the governments finances. Hong Kong is also being challenged by a rising income inequality with the household income of the poorest population on decline and rising income for the richest population. This gap is a result of the aging population as well as the demand on high skilled workers due to the restructured of the economy. The government has been declining in terms of percentage of GDP in what concerns education, and healthcare. From 2.1% to 1.8% and 3.2% to 2.3% correspondently from 2003 to 2011, this can compromise the social development if persisted in a long-term.
TECHNOLOGICAL
The government is committed to expend and increase Research and Development of innovate practices. The Innovation and Technology Commission (ITC) was established to drive Hong Kong into a world-class, knowledge-based economy. The commission objectives include, support applied to R&D, technology transfer, and application. Foster innovation and technology culture in the community. Promote technological entrepreneurship. Provide technological infrastructure. Facilitate the development of human capital to support innovation technology and promote internationally accepted standards and conformity assessment services. The Hong Kong Science and Technology Parks Corporation introduced the Incu-App Technology Business Incubation Programme, which aims to provide support to web/ mobile application technology start-ups. Mobile and web applications are experiencing a positive growth in the market, specifically with the support of the HKSTPC with entrepreneurs with financial aid for technological development. The overall expenditure on Research and Development remains low as a percentage of GDP, meaning that the country has little progress on the technological front and reduced innovation. Hong Kong is known for entrepreneurship and the use of available technologies but have not develop new ones. As a response the government has implemented the R&D Centre Programme as an initiative for improvement, under which six centers have been established. The centers have been working with industries to provide relevant industry oriented results and place Hong Kong as a more threatening competitor. Centers include automobile parts, ICT, logistics and supply chains, nanotechnology, textiles and clothing. Hong Kong is a leader in the international market for its low cost of production and exportation. Inadequate R&D efforts have driven emerging nations to identify areas of comparative solutions that can overtake Hong Kong and make it lose its competitive edge. Due to the threatening position that Hong Kong is facing overlapping authorities inside Hong Kong’s R&D space lack of coordination has increased. In this case many solutions are being researched but without an organization within that private sector and bodies of research, nothing will be solved.
ENVIRONMENTAL
Hong Kong follows seven regulations that cover environmental protection, public health and the country’s ecosystem. These are the Waste Disposal Ordinance, the Water Pollution Control Ordinance, the Air Pollution Control Ordinance, the Noise Control Ordinance, the Ozone Layer Protection Ordinance, the Dumping at Sea Ordinance and the Environmental Impact Assessment Ordinance. Hong Kong has implemented a sustainable waste management company that aims to reduce waste by 40% in a ten-year period, starting from 2013. The Environmental Protection department has partnered with government departments, district councils, property management and school to organize, educate and unite a recycling network throughout the country. Hong Kong’s location has brought a lot of damage to the environment. It has an increasing problem of smog, and the air pollution exceeds the recommended levels. The two main challenges are Street level pollution caused by diesel vehicles and marine vessels; and regional smog, which is mainly caused by industry and power plants, specifically from the border of China in the South. The government implemented corrections to the Air Pollution Ordinance in 2012-13 as an effort to reduce smog. Vessels are also being incentivized to used cleaner fuel to ensure clean air to future generations, this plans are accounted to be analyzed every 5 years. But still the industrial sector remains as the major source of pollution that is mainly located outside the borders of Hong Kong. In this case is important that Hong Kong reinforces a cross-border cooperation and integrated policies to obtain significant results.
LEGAL
According to the Heritage Foundation’s and the Wall Street Journal’s 2012 Index of Economic Freedom Hong Kong has high levels of investment, financial, business and labor freedom; property rights and freedom from corruption. Hong Kong depends on the law constituted by the Chinese government, but is independent in terms of the judicial power. The government provides favorable business policies, there are almost no restrictions on foreign investment and foreigners can invest and own up to 100% of equity (excluding for state-owned activities and cable). It takes only 3 days to start a business and is protected by Hong Kong’s regulatory environment. The legislative council of Hong Kong declared a competition bill that sets limits into the competitive sector in the country, encouraging fair business practices. The first rule includes prohibiting any sort of agreements, decisions, or practices that prevent or distort competition in Hong Kong. The second rule states that there should not be any form of concentration of market power in a single entity. There is also a Competition Commission that investigates anti-competitive conduct, and report them to the Competition Tribunal. Avoiding agreements could include penalties for up to 10% of annual turnover.
WORKS CITED
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