Case Study 3 Group 2 : Filipa ALVES - Camille BARBE - Margaux BOMBE - Pei Xin LIN
Content ☓ The problems ☓ Main facts & marketing theories ☓ Alternative ways ☓ Evaluation of each way ☓ Solution chosen
The Problems -
Personalization takes time and prevents the brand from increasing its production.
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The place where yachts are made can slow the production especially in winter.
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The brand has a huge range and want to develop their diversity, so they thought of creating a sister brand in order to lighten the “mother� one.
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How to be innovative without going to far from the core business and without losing the heritage of the brand?
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How to deal with the emerging markets like China and Russia? Should they chase this opportunity?
Background -
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Nautor Swan is a finish producer of luxury sailing yachts. Founded in 1966 by Pekka Koskenkylä. Their shipyard is based in Jakobstad. In 1998 Leonardo Ferragamo started to control the company, bringing an italian hint to it. Ferragamo was sensible to the brand right before own Nautor’s Swan. The brand used to sponsor some boats’ racing such as the Swan Caribbean Challenge. Current models: ClubSwan50, Swan 54, 60, 65, 78, 95, 115, ClubSwan 125 Main competitor: Baltic Yatchs There is a Club which is the ClubSwan. This club has some relationships with partners and suppliers such as : BMW or Rolex as partners and Champagne Perrier-Jouët as suppliers. The club also has its own website.
Background JAKOBSTAD - The town where Nautor Swans and Baltic Yatchs shipyards are located. - Strong traditional culture related to yatchs manufacturing. - “Spotless, typically scandinavian, modernist town”
- “Everyone here has a boat project in their backyard”
Main Facts -
Build the majority of the yacht's core platform within its own facilities in Finland.
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"No compromise" philosophy on quality: Use their infrastructure and expertise to produce their own moulds, laminate their own hulls and construct their own interiors, which means they don't do "outsourcing" thing.
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The brand wants to focus on the quality that’s why each step is controlled. And it represents one of their strengths that seduce customers.
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Ensure the good communication with the clients from the beginning to make the construction process go smoothly.
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Able to respond to client requests quickly since most of the designs and procedures already in place.
Main Facts -
Flexibility: In terms of producing different sizes and project type (racer, cruiser) since Nautor has their own mould tools in house.
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Tradition of interiors: All clients have access to the company's own inhouse interior design team.
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Maintenance of elegance: Having the production and design departments in the same building.
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Kronoby as home to "teak library": It holds samples of all the interior wood used in Swans built.
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Increasing pressures on the production line if Nautor wants to expand their product portfolio. (ex: building, marketing, selling)
Marketing Theories DEMOCRATIZATION OF LUXURY â—?
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Taking into account that middle class has been growing, luxury brands are more and more attracted to extending their brands in order to make it more affordable to these consumers. The democratization of luxury brings aspects of luxury to an increasing number of consumers at lower costs than usually connected with luxury.
Extended Luxury Brands - Traditional luxury brands that launch new sub-brands. Still producing exclusive luxury. Still focused on the core of the business, while taking advantage of the sub brand being more accessible.
Marketing Theories DEMOCRATIZATION OF LUXURY → The brand Nautor’s Swan is thinking about creating a sister brand, because they have a large products’ range. So we can relate it to the democratization theory with the idea of extended luxury brand. In fact, they are the only brand to have a such large range of products and they want to keep it and use this strength. That’s why they want to extend the brand with a new one to offer a larger range of products. The democratization allows the brand to target more customers. However, it may have some disadvantages (which we will explore later).
Marketing Theories The Core of the Luxury Brand
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The core recalls the founder of the brand. In the Nautor Swan case, it’s founder - Pekka Koskenkyla - had the vision of applying Finnish functionalist design to making the speedy yet comfortable boats. This vision still lingers today on the manufacturing of all yatchs.
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It traces its origins back to the start of the brand and the original location of the brand remains important. The fact that years have passed and Nautor Swan still manufactures its boats in Jakobstad is a very enlightening factor for consumers. Their yards’ facilities are “steeped in tradition”. Also, the fact that the brand traces its history back to 1529, “when local carpenters were selected to build boats for the Swedish Army”, is a captivating fact for who buys. Moreover, the “no outsourcing” policy is one of the company’s strengths.
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The craftsmanship is highly valued and rarely mechanised. Nautor Swan do everything in their facilities, which facilitates the control of quality and decreases the probability of errors. Everything is carefully thought and managed.
Marketing Theories HERITAGE
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Heritage - myths and traditions that distinguish a luxury offering from other offerings that can be also functional and prestigious.
→ The brand is really attached to the city Jakobstad, because it is the center of shipbuilding for over 500 years. So here, the heritage is really important and even if during winter they can’t produce anything. Indeed, Ferragamo, the actual owner of the brand, says ‘we want a stronger drive toward evolution - never a revolution’. It underlines the fact that the heritage remains in the essence of the brand. The quality and the craftsmanship are also important and define the brand. That’s why they are doing everything from the beginning of the production to the end.
Marketing Theories Luxury experience : In one of the article, Donald R. Macpherson used to go to the sea with his father on a Swan and he wanted to do it again with his family. It is a family luxury experience and the Swan allow them to spend time together and share moments in family.
Social Signifier : The social signifier is a way to distinguish oneself from others. When you consume a product it sends a message to the others. And in some cases, consumers consume to show that they have a status (parvenus).
Alternative Ways 1. Extension of the brand 2. Emerging markets 3. Changing the place where yachts are made
Alternative One : Extension of the brand The 48m hall at the Boat Technology Center has a big space around it and can be used to build these smaller yachts.
The sister brand will stay in the same city to keep the heritage and the craftsmanship of the brand. We think that the name of the sister brand is really important because it can give a bad feeling of that sister brand perceived as lower in quality or cheaper.
The name of the sister brand will be very important because the name can give a bad connotation. In this case, customers will use their purchases as a social signifier. So they will buy products from the “mother brand�.
Alternative One This brand will renew with the roots of the brand because the smaller boats were the first products of the brand. The name of the brand can be “Swan’s roots”. It has the same model as Nautor’s Swan. The idea is to have a brand which is totally focused on innovation and another one with the former boats which relate the new brand with the roots of the entire brand. Thanks to the name, the customers will not feel ashamed of buying ‘smaller’ boats or ‘with less quality’ because they cannot afford to buy the Swan 115S for example. So, we want to avoid a strong social signifier phenomenon by focusing the name of the brand only on the difference of size and not on the difference of quality or whatever (that definitely doesn’t exist).
Alternative One Advantages : - Create a brand for the smaller boats allows the customers to associate the innovation and the bigger boat to Nautor’s Swan. - The name of this brand will be related with the former brand Nautor’s Swan and the roots of the brand.
Alternative One Disadvantages : - The Swan 115S are the most privileged products of the brand because of their hulls cured in one single go. This reminds the uniqueness of the product and by the way, the exclusivity of that brand. So, extending the brand by building smaller Swan can make the brand lose its prestige. - Nowadays, the market of the smaller boats is not increasing. Some brands didn’t make it and Nautor’s Swan was one of the only brands to succeed and remain in the field because they adapt themselves with producing bigger boats like the Swan 115S. - As referred, the main competitor of Nautor Swan is Baltic Yachts, and they Nautor Swan is considered to practice cheaper prices than its competitors. Since that there is already this perception on the brand, to extend it may be really dangerous for the brand. It may cause the brand to be perceived as too accessible and it’s possible that it loses prestige.
Alternative One Evaluation : The idea of a new brand can make the range clearer for the customers and can allow the brand to innovate more and more. The point is that the brand has to take into account that this new brand doesn’t have to be seen as the ‘cheaper’ range of products. That’s why the name focus on the tradition and the heritage of the brand. The brand is aware about the size of the range. They want to keep this strength and the creation of a new brand will allow them to do this.
Alternative Two : Emerging markets Since Russia and China are considered as members of the so-called BRICs, their rapid development has been increasingly important roles in the global market. Especially for the luxury market, with a population of 1,3 billion population, though its economy has been slowing down for past few years, China remains a major growth driver in both luxury market and non-luxury market. With more and more immigrants coming to Europe, they also bring billions to the economy. Besides, according to Forbes, Russia had around 77 billionaires in 2016, even though they were going through a crisis. This means a lot about the type of consumers that Nautor Swans could attract here. One of the main spendings of ultra rich russians or chinese is, precisely, yachts. This is clearly an opportunity for Nautor to expand their market to these two emerging markets.
Alternative Two Advantages : - Chinese people don't have the same sea culture. So a yacht brand will have to personalize a lot its product to suit to chinese people and their way of living if it wants to tackle the chinese market. This seems to be perfect for Nautor that makes lot of personalization to attract the rich who love personalization. - The middle class is growing, they are just like parvenus, so they would like to buy something could show they are rich like the patricians.
Alternative Two Disadvantages : - If Nautor doesn't expand their production line and decide to work on the emerging market, they might lose the european market. Since their production could not afford such large demand. - It might encounter other competition from Asia or other countries, who knows more what chinese clients want. (ex: Taiwan),
Alternative Two Evaluation: - The approach of looking for another market is often used by luxury brands who encounter a decreasing sales. However, what we need to notice is that, there's no way to keep all. If we choose this one, we have to abandon the other. Same here for, if Nautor wants to expand the new business in emerging markets, they take risk to losing their identity just for trying to adapt to the new market. So here's the suggestion, if Nautor really wants to expand the market to these new market, the have to be careful don't lose their tradition and heritage.
Alternative Three : Change the way of production With the idea of changing the way of production, the brand can move the place where the boats are produced because during winter they can’t do anything because of the weather. Moreover, to allow customers to customize and personalize their boat are making the process of production much longer. These two facts are disadvantages to the production and make it longer and harder. That’s why, if we change the place where boats are made, the sells could increase. They could reach more consumers.
Alternative Three Advantages : They can increase their sales because the way of production will be changed.
Disadvantages : By producing much more yachts, the brand can lose the quality of its products. That’s quite boring because the quality and aesthetic make part of the efforts that the brand makes. That is also something important for the customer as the guy told in his story (a storm hit his Swan and he just went below and baked bread). That means that customer really trust the brand and the performance/resistance of its products. Fixed costs would increase.
Alternative Three Evaluation : The fact that the customers can customize their boat is important to the brand and to make the customer desire the product. That is what makes it desirable, unique and rare and that characteristic need to be kept.
Alternative Chosen ●
We think that it’s appropriated to mix alternative 1 (which refers to the creation of a sub-brand) and alternative 2 (which refers to the opportunity of chasing emerging markets).
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We consider that done carefully, the idea of creating a sub-brand and tracing back to the roots may result in strong benefits for the Nautor Swans. To produce again yachts below 50 ft may attract more customers. Of course that for this to happen, Nautor Swans needs to create a good communication and marketing strategy, so that the sub-brand won’t be perceived as “decrease on prestige” or “another vulgar extension”, hurting therefore the main brand.
Alternative Chosen ●
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Furthermore, we consider that chasing the emerging markets opportunity is also essential for the brand to keep growing. The yachts industry may be fuzzy in certain periods of time and they need to think on a long term sustainable strategy in order to keep attracting customers’. We think that both strategies gathered, may provide the diversity that the company is looking for, while at the same time providing a boost in the company’s customers’ base, thus their growth in the industry.
Alternative Chosen Recommendations -
In order to promote the new sub-brand “Swan’s Roots”, we thought about creating a new website, which will be related to the main website. This website would provide all the models proposed, should be dynamic. Like a virtual vitrin.
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Create a first launching event to promote this new sub-brand in Jakobstad, where most of the regular and loyal customers’ would be invited to. This would relate to the sub-brands name - Swan’s Roots -, providing the customer a close and intimate approach of the heritage.
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We can recommend the brand to try to reduce its ecological footprint by using renewable materials for example or to use the scrapes. So, we think that this is not the priority of the customer now but we want to propose a long term strategy hoping that customers will become more aware of the damage on the environment.
Example of website with models
Alternative Chosen Recommendations -
In order to appeal to Russian and Chinese customers’, for instance, marketing ads could be a good idea. They would have to promote the main features of the yachts in high highlight. Also, a sales team on the field would be useful for the customers to express their requirements and details.
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Also, we suggest that they promote events in China and Russia, in order to promote the yachts. Perhaps, they could make use of the high technology development in China and partner with high tech companies in China, providing sophisticated 3D demonstrations of new models, for instance.
Thanks for reading and listening