New Product Development and Business Plan Jakirrah Brown, Tanner Lunetta, and Nitaya Walker Savannah College of Art and Design LXFM- 501 Professor Alessandro Cannata
Table of Contents Table of Contents
2
Company Selection and Research
4
Vision and Mission Statement
4
Brand Description
5
Products and Brands
6
Product and Service Features
8
Production and Supply Chain
9
Environmental Factors
9
Financial and Strategic Direction
10
Target Market and Consumer Profile
10
Potential Product Lines
10
Market and Research Analysis
11
Market and Industry Analysis
11
Introduction of Market
11
PEST Analysis
11
Industry Trends
12
Growth Potential and Opportunities
13
Barriers and Threats
13
Key Success Factors
13
Potential Competitors
14
Marketing Strategy
21
SWOT Analysis
22
Core Competencies and Competitive Advantage
22
Product Development
24
Branding Material
24
Marketing Strategy Overview
25
Brand Positioning Target Market Segmentation: Primary and Secondary
26 26
Customer Lifestyle
27
Target Market Trends
28
Brand Positioning
29
Marketing Mix Strategy
30
Brand Merch. Concept Board
32
Production and Manufacturing Process
32
Price Strategy and Competitive Positioning
35
Place Strategy and Tactics
37
Budgeting Allocation and Expected ROI
38
Marketing Promotional Calendar
38
Advertising and Promotional Draft
40
Financial Planning
42
Measurements and Evaluation
43
Risk Analysis and Growth Plan
44
Long-term Strategy
45
References
46
Company Selection and Research Vision and Mission Statement
Prada Group’s manifesto is “Pioneer of a philosophy of action that transcends fashion, the Prada Group inquisitively observes the contemporary society and its interactions with the most diverse and apparently distant cultural spheres. A fluid perspective that becomes the manifesto of the Group suggesting a new approach to doing business by placing at the core of ethical and action principles essential values as freedom of creative expression, reinterpretation of the existent, preservation of know-how and valorisation of people’s work.” The creative vision of Prada Group is to function as a modern interpretation of changing scenarios. Observation and a curiosity for the world is at the core of their creative process, as they believe that change is constant in society and thus in fashion. While they cite previous success stemming from exposure to different cultures, they now feel that this will not be enough to maintain their modern cutting edge perspective. For this reason, the vision is to become the agents of change and be flexible enough to meet the demands of a rapidly evolving society and customer.
Brand Description
Founded: 1913 Founder: Martino Prada CEO: Miuccia Prada Country: Italy Prada is one of the most famous and largest fashion houses of the world. The name is synonymous with providing top class, luxurious fashion to its up-market customers. Prada has a grand history and an awesome prospect attach to its name. Starting in a humble corner of Italy, Prada had weaved its path to success with a lot of hard work. The swanky fashion label specializes in manufacturing best quality and always offers the latest in fashion in all ready to wear leather and various accessories such as luggage, shoes, bags, perfumes and watches. Mario Prada and Martino were once leather workers, but it was their indomitable attitude and irreparable quality of work that made them what they are today. Eventually, the two started importing trunks and handbags. This was the start of the spectacular brand we know today as Prada.
Products and Brands Brands MIU MIU
Miu Miu is the most unrestrained portrayal of Miuccia Prada’s creativity. Intentionally far from traditional aesthetic imagery, the brand conveys the essence of an emancipated and conscious woman. Miu Miu’s strength fluctuates between naïf spirit and iridescent subversion and it illustrates the most rebellious and seductive core of contemporary femininity. Miu Miu is the most unrestrained portrayal of Miuccia Prada’s creativity. Intentionally far from traditional aesthetic imagery, the brand conveys the essence of an emancipated and conscious woman. Miu Miu’s strength fluctuates between naïf spirit and iridescent subversion and it illustrates the most rebellious and seductive core of contemporary femininity.
CHURCH’S
Church’s challenges the most formal style rules throughout all chapters of its history. A contemporary luxury repository of a centuries-old tradition leads customers through a journey that dates back to 1873. The brand remains true to the spirit of craftsmanship and British attitude with its creations and by updating its style codes. With its creations, Church’s becomes synonymous with an impeccable style that remains faithful to the aesthetic codes of its British attitude, without sacrificing the exploration of new areas of expression, playing with the combination of three primary elements: finest leather, classic taste and excellent cultural craftsmanship An always-modern luxury that enshrines an impeccable tradition of a formal yet effortless style.
CAR SHOE
The small rubber studs set on a deconstructed sole identify the iconic Car Shoe loafer since 1963. Stemming from a passion for race cars and fine handmade shoes, this timeless accessory has become part of the common imagery of travel and motors. In 1963 Italian artisan Gianni Mostile translates his passion for race cars and handmade shoes in a deconstructed loafer featuring a sole set on tiny rubber studs. Car Shoe footwear expresses uniqueness with all its styles, featuring a constant attention to details, symbolizing a style that blends passion for sports and artisanal excellence, suggesting evocative imagery halfway between leisure and travel.
PASTICCERIA MARCHESI
Pasticceria Marchesi has embodied Milanese style since 1824. Excellent specialties, elegant spaces and impeccable service have accompanied moments of conviviality imbued with artisanal taste and sophisticated creativity. Founded by the Marchesi family, the pastry shop is a hub of excellence where to fully experience the Milanese spirit of good taste. Immune from passing fads, Pasticceria Marchesi has remained faithful to its traditions steeped in history and to its artisanal products. Then as now, all specialties are prepared the old-fashioned way; skilfully handmade, using high quality ingredients. The meticulous attention to details defines the good taste of Pasticceria Marchesi in its every expression. Impeccable service, pastry decoration, dishes presentation, window display and iconic packaging featuring pastel shades and gold leaf finishing.
Product and Service Features Prada Journals Born in 2013, Prada Journal conveys the spirit of innovation of the brand. The literary contest is dedicated to new talents from all over the world, who are invited to investigate the universe of images around us and to reinterpret it through the rules of writing.
The Prada Group and Cinema As part of the heritage of the Prada Group, the cinematographic experiments of Prada and Miu Miu represent the expression of an unrestricted and unbound narrative free of pre-set limitations that generated internationally acclaimed short films.Miuccia Prada considers cinematic art as a natural language embracing various spheres, as sight and sound, that allow the creation of direct and immediate interaction with others, beyond fashion. Connections of high emotional intensity are made possible through the involvement of some of the world’s most prestigious filmmakers and their greatly sensitive and empathic interpretive work.
Restoration of Galleria Vittorio Emanuele II The extraordinary restoration project by Prada, in collaboration with Versace and the contribution of Feltrinelli, the direction of the Municipality of Milan and the high surveillance of the city’s Superintendence of Cultural Heritage and Landscape, returned to the Milanese people a completely renovated Galleria Vittorio Emanuele II.The operation has unveiled the original two-colour façades, bringing the spotlight back on the architect Giuseppe Mengoni and providing precious scientific data and information on the future preservation of the monument
Production and Supply Chain Prada Group has integrated management for all phases of production. They list this as partially responsible for their success due to the high level of control this provides them. The creation and development of the product, to supply, main processes, and distribution. This very high level of control allows Prada Group to create an ability to incorporate their avant-garde designs into their very innovative products that are distributed in very exclusive places with excellent customer service. Furthermore, their control on quality is very much higher than it would be if they worked outside of their company for one or more of these production phases.
Environmental Factors Prada Group prioritizes sustainability by promoting a business culture that is working towards a more sustainable and less harmful industry. Balance and respect for the location, environment, and people involved would be key values during all parts of the creative process, manufacturing, production and retail. Because of these values, The Group has multiannual investments for research and innovation in ways to reduce the amount of land consumption and waste, use renewable energy and efficiency practices, and responsible use of paper and packaging.
Company and Organizational Structure SOCIAL RESPONSIBILITY The Prada Group believes that it is part of its corporate social responsibility to be involved in issues such as respect for people, environment, communities and artistic heritage. These principles, which have always been part of the Group’s activities, find expression in corporate culture, relations with institutions and industry associations, with supply chain partners and in cultural projects supporting the communities in the areas where it is present.
PEOPLE The Prada Group is a diversified universe of cultures, skills and nationalities that places the human factor at the heart of its activity. This wide array translates into intellectual dynamism, which is one of the essential elements that contribute to the effectiveness of the understanding of changes in society and in the market. In all areas, the Group pays close attention to the professional and job satisfaction of its collaborators, giving them the opportunity to express their potential and improve their competences.
ENVIRONMENT The environment is one of the interests of the Prada Group which feels responsible for engaging in and cultivating virtuous behaviors that contributes to the development of the company, respecting the communities and the places it operates in. The Group is committed to reducing the environmental impact of its activities, therefore, considerable multiannual investments dedicated to the reduction of land consumption, energy efficiency, use of renewable energy, reduction of waste and responsible use of paper and packaging are made within the development plans of its branches.
CULTURE Culture represents one of the Prada Group’s mainstays, a genuine vehicle for understanding changes in the society and promoting new growth opportunities.The most heterogeneous cultural spheres offer incessant sharing and dialogue insights, suggesting activities that return value to the community. Active promoter of arts that embrace beauty, the Group dedicates special attention and care to the preservation of the areas that host its activities, through art and architecture restoration and enhancements projects.
Financial and Strategic Direction Within the 2017 financial reports, Prada confirms that they plan to continue to restructure their groups and financial goals in the upcoming years. They also saw rapid progress in their digital transformation and they obtained positive results from their ready to wear lines, as well as their new high-end leather goods lines that were introduced in 2017. The total net revenue for 2017 was 1,469 million euros, which was a 5.5% decrease in comparison to 2016. However, there was a reduced utilization of mark down sales and there were increases for eyewear and fragrance sales. Although there were major investments in 2017 for Prada’s digital efforts, the cost structure is still controlled. In the future, the chief executive officer of Prada plans to continue to develop and implement initiatives that contribute to brand’s growth. They are currently in the process of redeveloping their operation processes. In 2016, Prada initiated a cost review program that was applied to all operating processes and has been reported to have delivered positive results.
Target Market and Consumer Profile Prada’s primary target market consists of men and women ages 18-34, but consumers of a variety of ages are attracted to the brand. The secondary target market for Prada are children. Many of consumers that are loyal to the Prada brand have interests in fashion, entertainment, sports, beauty, and travel (CubeYou). Prada consumers are typically a part of the upper class in relation to wealth and have some form of college education. Consumers who purchase products from Prada are often are fashion or social influencers. The brand’s consumers are also technologically savvy and are considered to be innovators.
Potential Product Lines One of the proposed products that Prada could offer is a clothing collection for infants. This would be a great opportunity for the brand, as there are not many luxury brands that offer baby clothing. Prada could not only provided clothing for infants but could also develop luxury
accessories for babies such as diaper bags, bibs, and strollers. Prada currently offers clothing products for older children, so the transition to baby clothing should not be very difficult. Because of the success of the children’s clothing line, an infant clothing line could be rewarding. Another potential product line for Prada would be a beauty collection. Prada currently offers luxury perfumes that are exceptionally popular and with effective product development, a Prada beauty line would be as well. The fashion and beauty industries are so closely related that adding a beauty line in addition to the luxury apparel that is offered through Prada could potentially transform it into a one stop destination for beauty and fashion lovers. The decision to expand to the beauty industry also provides Prada with more opportunities to utilize beauty/fashion influencers to possibly increase their profitability and brand awareness. The beauty collection would consist of categories of products for the face, lips, eyes and eyes. There would also be seasonal and holiday beauty collections.
Market and Research Analysis Market and Industry Analysis Introduction of Market Prada thrives within the global luxury market, which includes luxury cosmetics, cuisine, fashion, and automobiles (Statista). Although the global luxury market was stagnant in the years 2014 and 2015, it has since then seen growth. The global luxury market provides consumers with the highest end of goods and services. It was reported in 2017 that the global personal luxury industry good market achieved €262 billion in revenue (Bain & Company). Key regions, such as Europe, Asia, and the Americas contributed to this growth. Europe, specifically, is the top region for luxury sales as they grew by 6% at current exchange rates and €87 million in luxury retail sales. It is predicted that the global luxury market industry will continue to expand in the future and that it will reach an astounding €295-305 billion by 2020 (Bain & Company).
PEST Analysis
Political
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Companies are expected to develop policies/initiative s for sustainability and corporate social responsibility
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Political tension due to terrorism and other political disturbances
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Recent elections within the US and UK have resulted in political shifts
Economics
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Economic
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Increased level
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The luxury
fluctuations within different regions
of competition within the luxury fashion industry due to new entries and ideas
market in China is slowing down and they are accountable for 30% of luxury goods consumption (BoF)
Social
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Target markets within the luxury fashion industry have shifted and our often geared towards millennials
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Consumers needs and expectations are evolving in comparison to the past
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Fast fashion has become more popular, acceptable, and desirable for consumers within the global fashion industry
Technological
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Advancements in manufacturing technologies are allowing consumers to customize items, as well as companies the option to offer more efficient manufacturing
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Technological advancements through social media outlets
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Consumers desire instant gratification through capabilities to order through mobile devices, applications, and e-commerce
Industry Trends The current trends the global luxury market exemplify the growth and resiliency of the industry. The retail segment of the global luxury industry improved by 8% in 2017, according to Bain and Company. Wholesale only grew by 3%, however, it is expected to have a better return in the years to come. Online retail and ecommerce has contributed to the breakthrough of success within the luxury community. There was a 24% increase in luxury sales through ecommerce in 2017. The United States market was accountable for $28 million in online sales while the European and Asian markets showed growth.
Growth Potential and Opportunities ● ● ● ●
The use of technology and social media to aid in developing innovative initiatives for the promotion and sale of luxury goods The global luxury industry reported growth in 2017 and forecast to continue market growth in 208 Recovery and progression within Chinese market (one of the most profitable markets for luxury goods) European tourism to support growth in sales for the luxury goods industry
Barriers and Threats ● ● ● ● ● ●
Highly competitive and saturated industry Brand overexposure risk which leads to loss of exclusivity Increase and change in tax rates Cheaper alternatives and substitutes are being offered. Fast fashion companies provide consumers with the latest trends at affordable prices Changes in currency International tension due to terrorist attacks and political opposition
Key Success Factors ● ● ● ● ●
Achieve competitive advantage within a highly saturated market Adaptation and resiliency to shift in consumer behavior/millennial market Use of new technology to offer customization options for consumers Engaging and innovative marketing campaigns and initiatives Use of well-known influencers to promote brand
Potential Competitors Competition Profiles Lancome
Lancôme's mission-is to provide women around the world with the highest quality products and services that fulfill their quest and enthusiasm for beauty. Values- caring, innovation, expertise and the “French touch.” Company Profile- Originally a fragrance house, Lancôme was founded by a French gentleman named Armand Petitjean back in 1935. His five perfumes were an instant success and he soon moved on to skincare. The first product, a multi-tasking repair cream called Nutrix, was launched in 1936 and is still available today. Two years later he expanded into cosmetics with a pinky-red lipstick scented with roses that continued as a bestseller for the following 30 years. L'Oréal acquired Lancôme in 1964, and it is now known as one of the largest luxury skincare companies in the world. Products and Services Offered-Lancôme's best-sellers are: For skincare: Visionnaire, Génifique, Absolue, Rénergie, Blanc expert, UV Expert; For make-up: Definicils, Hypnôse star, Hypnôse Doll Eyes, Hypnôse, L'Absolu Rouge, Rouge in Love, Teint Miracle, Teint Idole Ultra 24h; For fragrance: La vie est Belle, Trésor
Target Market Profile -Lancôme is also about beauty empowerment. The brand has chosen charismatic and accomplished women as its ambassadresses: women with heart. From Julia Roberts to Kate Winslet, from Penélope Cruz to Emma Watson: all are beautiful icons who love life, who are full of energy, and talent; they are icons with whom every woman can relate. They embody a radiant, confident and universal beauty, while remaining modern and down to earth. Marketing Strategy - The Lancôme Company is trying to make its presence felt in almost all the areas. The places where it has got its outlets are all in the niche area of the world. Being a company who targets the higher ends of the society, we find that the Lancôme company has strategically placed its outlets in the areas where the percentage of their customers are residing. Almost all Lancôme products are available at leading supermarkets, malls and lifestyle stores. Lancôme is a brand name itself and the promotion is mainly through the word of mouth. The Lancôme brand itself speaks for itself. They promote through the various brand ambassadors. They have the top celebrities who are their brand ambassador. They also promote through the various outlets providing the user cards. Lancôme have various areas which provide for the various free trials of the samples which are on display.
Estee Lauder
Company Profile - Their culture is often described as a rare mix of family values with a high-performing public company. This unique mix translates into a caring, collaborative and compassionate workplace that is also demanding – with a competitive spirit that is a powerful source of motivation. Above all else, there is a focus on long-term, sustainable growth which engenders loyalty and commitment from internal and external stakeholders. “The company operates like a family," says Fabrizio Freda, President & CEO. "Families are, in fact the most caring and demanding of environments. Their culture is a unique combination of nurturing and challenging, respectful of our roots and inspired to envision the future.” Values - We are a values-driven organization. Their actions are rooted in the Lauder Family values of respect for the individual, uncompromising ethics and integrity, generosity of spirit and fearless persistence. Building on these core values they also abide by the following principles: ● ● ● ● ●
Unwavering commitment to quality and excellence. Infusing creativity and innovation throughout all aspects of the business, from product development to packaging, sampling to selling, marketing to merchandising. Nurturing and developing world-class talent. Cultivating an inclusive and diverse workplace reflects our belief that no one person, group or culture has all the knowledge, skills or information necessary for success. Acting responsibly and caring for the communities we serve translates into sustainable sourcing practices, efficient operations, green chemistry and bringing awareness and resources to global causes around health, the environments and education.
Products and Services – Estée Lauder majorly deals in luxury products and the product lines are, Skin care, Hair care, Make up and fragrances. The Skin care consists of products like BB
creme, moisturiser, Bronzer, blush, foundation, Repair serum, Mask, cleanser, toner, contouring, Eye care, Anti-Blemish, Anti-wrinkle, skin brightening, Radiant health, Mascara, Eyeliner, Eyeshadow, Brow Pencils, Lipstick, Lip liner, Lip gloss, compacts, concealers, brightening, Resilience lift. Its fragrances are sold by collections like white linen, modern muse, pleasures, beautiful, etc. There are also product lines under the label Re-Nutriv with products like Ultimate Diamond, Ultimate lift, Intensive renewal. Estee Lauder also have exclusive occasion based packages such as Lips to Envy, Night Power. Target Market - Estee Lauder positions itself to be a brand that cherishes the women’s uniqueness and celebrate women beauty. Therefore the pricing is premium and its products are priced higher than most of its competitors. The pricing strategy in the marketing mix of Estee Lauder is for targeting the affluent class of women. The brand is thus perceived to be a luxury brand. Estee Lauder is bought by the classes and not the masses. The customers who are less sensitive to prices and are affluent buy the products of this brand. There is a sales mix that is created by pricing some of its products higher than the rest. Marketing Strategy - The Americas is The Estée Lauder Companies largest region in terms of sales, contributing 41% or $4.82 billion to the Company's total net sales in FY 2017. The Americas consists of all manufacturing and sales operations within the United States, Canada and Latin America. The Company’s global headquarters are in New York City and its first manufacturing facility was established in Melville, New York. The Company first began selling products in the United States in 1946. The Estée Lauder brand began selling in prestige retail stores in Canada in 1960, during the Company’s early wave of expansion. With the acquisition of MAC in 1994 – a brand that originated in Canada – the Company expanded its footprint in the country to include manufacturing, R&D and distribution centers. The North America business is led by Chris Good, President, North America. Today, the North America business is structured with dedicated affiliate offices in the United States and Canada to service the unique needs of consumers and retailers. The biggest reason and oldest reasons for the success of Estee Lauder is the free samples. The company has also launched promotional campaigns like Gift-for-purchase and purchase-for-purchase to retain its loyal customers as well as to gain new customers. In the Gift-for-purchase is a campaign wherein the customer is offered gifts for every purchase he makes. The Purchase for purchase is used to attract new customers who were not buying their products. Estee Lauder also gives discounts to certain number of customers to motivate them to buy the products. The attractive in-store displays also are used to grab the attention of the customers.
Chanel
Mission- To be the Ultimate House of Luxury, defining style and creating desire, now and forever." The visionary of the company is for fashion to be functional. The company was shaped on Coco Chanel's term of reshaping femininity for women of her time. Company profile- Chanel was founded by Gabrielle “Coco” Chanel when the fashion designer opened her first boutique in Paris in 1909. Chanel revenues are generated from the global retail of luxury goods, read-to-wear clothing, handbags, perfumery and cosmetics. The brand’s cosmetics line includes makeup, skincare and fragrances for men and women, such as iconic perfume Chanel No.5. Chanel cosmetics are sold in upmarket department stores across the world, including Harrods, Galeries Lafayette, Bergforf Goodman, Hudson’s Bay and David Jones as well as Chanel beauty boutiques Products and Services – Chanel is one of the world’s leading fashion brand which caters to an elite audience. Being a high-end luxury premium segment brand, Chanel offers a wide range of fashion products. Chanel’s products are mostly targeted at women, but it also has a line of cologne and fragrances for men. Other product categories in its marketing mix are as follows: Haute couture Fashion, Ready-to-wear clothes, Fine Jewellery, Watches, Fragrance, Makeup, Skincare and Sunglasses.
Target Market- Chanel is a premium brand for elite customers. From the time, the first Chanel shop was established, it has been catering to the fashion needs of high-class aristocrats of the society, people who believe in indulgence and gratifying human appetite for the finer things. It’s target segment remains the same niche and cash rich customer. Marketing Strategy- Chanel SA's affiliate companies include Chanel Inc. (US), Chanel K.K. (Japan), Chanel Hong Kong, Eres, Paraffection, and others. Chanel enlists the help of eyewear behemoth Luxottica to make its name-brand sunglasses. The company's New York Corporate Headquarters houses many of the business functions supporting its Fashion, Watch and Fine Jewelry, and Fragrance and Beauté businesses, including: Merchandising, Marketing, Advertising, Public Relations, Store Design, Sales, Finance, Legal, and Human Resources. The Piscataway, New Jersey offices houses Information Technology, Distribution, Accounting, Human Resources, Research and Development, and Customer Service functions. Chanel is a widely well-known brand which has an extreme brand loyalty factor associated with it. For promotions, it usually places ads for its products in high-end fashion magazines like Marie Claire, Harper’s Bazaar, Vogue, Elle etc. Chanel also does point of sale marketing by employing classy store layouts and creative use of mannequins to lure the customers into their boutiques. It also employs supermodels and Hollywood actors to do modelling for their brand and gets a lot of promotion through the fame of the models, who also in turn benefit from the brand equity of Chanel thus creating a brand synergy between them. Chanel also gets a lot of publicity when renowned celebrities wear its Haute Couture or carry its bag on the red carpets of coveted award shows and film festivals garnering the eyeballs of fashion magazine journalists and critics who then acknowledge the brand and product through various channels like magazines, blog posts, newspapers and television shows as well.
Dior
Company Profile – Christian Dior was a French fashion designer who established one of the world’s top fashion house with the same name in 1946. The fashion house gained critical acclaim with its first fashion collection for spring-summer 1947 which received several accolades and achieved a phenomenal success. Today Christian Dior designs and retails various luxury goods for its target customers. It is controlled by the world’s largest luxury group Louis Vuitton, which is a French multinational luxury goods conglomerate, in which Dior holds 42.36% shares. Christian Dior has remained largely as a label for women’s offerings but it has now extended its product lines to men’s as well as children’s wear category. The brand has a total revenue of 41.6 billion euros and a profit of 1.279 billion euros. Christian Dior faces direct competition in various categories from Chanel, Gucci, Saint Laurent, Versace, Prada, Hermes and Giorgio Armani Product and Services- Christian Dior is a luxury brand which has a strong presence in apparel, accessories, cosmetics etc. Under these categories, it offers ready-to-wear clothing line which includes dresses, skirts, jackets & coats, blouses & t-shirts etc., shoes, bags, costume jewellery, sunglasses, and other accessories. Further Christian Dior also offers various make-up items for face, eyes, lips and nails such as foundation, powders, liners, lipsticks, manicure etc. to name a few. It has a wide range of selection of skincare products such as cleansers and toners, creams, etc. The Christian Dior brand also offers designer jewellery and timepieces to its customers as well Target Market – Christian Dior is a luxury brand and hence has premium pricing for its products. As the products as luxury goods, the prices are significantly higher than majority of the premium brands. The segment of population targeted for these products are generally not very price conscious and are willing to pay for the status symbol of these luxurious products and it has developed a loyalty based relationship with their customers allowing them to charge higher for the products
Marketing Strategy – ​Christian Dior products offers exclusivity to its customers and is offered only through the boutiques maintained by the company itself. It has retail stores in more than 210 locations with 100+ stores in Asia, 50 stores in North America, 40+ stores in Europe and rest of the stores located across the globe. The retailers can carry only the licensed products for the location. Even though Christian Dior has a website as well, it does not sell any products through its website. Only a select range of products are sold online through third party e-commerce website. This is done to maintain the exclusivity of the products to the high-class segment. Christian Dior brand does not market its products through any traditional media such as Newspaper adverts or TV adverts. Instead it published Ads only through specific channels such as Vogue magazine which caters to its target segment. Christian Dior takes customer relationship management very seriously as it is a luxury brand which enjoys loyalty from its customers and rewards them by sending them latest news regarding new products through emails and post. The brand has received visibility through various celebrities using its products publicly. Further, it frequently uses various celebrities for its fashion shows and campaigns running on its website. The Christian Dior website offers information regarding the various products and their points of purchase. The brand does not undertake any sales promotion activities.
SWOT Analysis
Strengths
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Rich history and one of the most well known luxury brands in the world
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Has a strong presence within the global luxury market with 615 stores and over 12,000 employees
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Effective marketing efforts and use of social media outlets
Weaknesses
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High exposure from RTW collections
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Weak demand in China market
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Counterfeit imitations of products being sold in illegal markets
Opportunities
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Expand brand with the introduction of new product lines, such as a clothing line for infants
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Enter into other segments of the luxury industry such as beauty, cuisine, or automotive
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Capitalize on marketing efforts through social media and well-known fashion influencers
Threats
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High competition levels within the luxury goods industry
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Effects of economy fluctuations in various regions
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Issues with sustainability and corporate social responsibility
Core Competencies and Competitive Advantage Prada’s core competencies lie within their ability to always remain innovative and relative in an ever changing society. This translates into always pushing the boundaries and being on the cutting-edge. This makes Prada brand possess the association of always being ahead of the trend. By challenging the norm and breaking down conventions, Prada’s image functions as a translation of the esoteric and intellectual. Having such a conceptual and intangible source of inspiration sets Prada apart from other classic luxury brands.
Prada does a lot of experimenting with what is considered beautiful versus ugly, and combining these two elements in new and unseen ways. This breaks down stuffy standards of what is aesthetically pleasing, a concept that is ever changing anyways. As new elements are combined, references from past, present, and future are alluded to. Inspiration for these innovative aesthetics are drawn far from the apparel industry. Prada is known for their appreciation and following incorporation of influences drawn from art, film, and photography. The brand does not limit itself to these industries within the western world, instead, Prada seeks out multicultural voices and diverse perspectives.
An opportunity for growth for Prada would be catching the attention of the millennials and generation x via innovative retail practices, having an active social media presence, and collaborating with relevant influencers. Prada’s fundamental values of embracing the progressive and diverse very much fit the current social movements and overall culture. By promoting themselves as a brand that has always been on board with some of the current trending values such as fashion, body inclusivity, gender neutrality, and more non-conformist values, Prada would gain customer loyalty. Furthermore, Prada could improve their brand reputation by increasing their emphasis on sustainability practices, such as going fur-free and providing vegan leather options. Increasing their brand transparency regarding who is making their products, where their materials come from, and where excess merchandise is going. Customers, especially from younger
generations, are now demanding products that still maintain luxury quality but are made without harmful practices.
Product Development Plan Branding Materials ● ● ● ● ●
Website Store Advertisement Social Media E-Newsletter Smart Labels (links shoppers with information about their selections before the make a purchase) ● Word of mouth
Marketing Strategy Marketing Goal he goal for Prada cosmetics is to make this just a great at the rest of the merchandise T Prada sells. We want to make sure that the cosmetics line lives up to the same reputation as the other merchandise that Prada is known for. Marketing Objectives
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Long term objective is to consistently deliver trusted creativity. Short term objective is to staying ahead of fashion and trends. Release all advertisement for the new cosmetic line during Summer of 2018 Launch Prada cosmetics through the e-store by fall of 2018. Launch Prada cosmetics in all Prada boutiques by winter 2018.
Marketing Strategy Overview Pricing Strategy: ● Value-in-Use Premium Pricing strategy: ○ Consumer benefit > cost ● Company/Product Life-cycle: ○ Brand extensions justify premium "skimming" price ○ Multi-segment Pricing ● Comparable Prices to Competitors: ○ Differentiations ○ Focus on customer loyalty ○ Cost of switching ● Product Line Pricing: ○ Complementary Products Promotional Strategies: ● Word of Mouth: ○ Free products for professionals, celebs and media ○ Builds credibility, awareness ● Motivating Action Communication: ○ Rewarding top performers ● Social media: ○ Customer Participation on website, FB and Twitter ○ Message comprehension, frequency
Unique Selling proposition: product differentiation: ● Enhancers: ○ Develop different blends of pigments to match customer's needs. ○ Develop different durability/intensity of pigments and thickness to meet consumer/ customer needs.
● Drivers: ○ Durability of long lasting pigments and relatively large product sizes. ● Quality Aesthetics: ○ Distinct packaging and limited edition.
Brand Positioning The Prada brand is known for their elegance, prestige, chic merchandise and social ranking. Consumers buy Prada more when new season trends are released. Consumers for the cosmetics brand will be expecting Prada to have high quality cosmetics.
Target Market Segmentation: Primary and Secondary Customer Profile (description of target market and research) 1. Demographics 1. Gender: Men and Women 2. Age: 25-45 3. Status: Upper class 4. Income: 75,000+ 2. Geographic 1. Large cities 2. Tourist locations 3. Suburbs 3. Sociographic 1. Socialites 2. Stay at home moms 3. Celebrities 4. Psychographic 1. Modern 2. Sophisticated 3. Attuned to stylistic innovations 4. Expects craftsmanship of the highest quality
Customer Lifestyle Board
Target Market Trends (Cosmetics)
Black Attack
GoldenGirl
Thick Lashes
Well Rounded
Brand Positioning Marketing Mix Overview Product ● Fragrances ● ● ● ● ●
Eyewear Ready to Wear Home products Jewelry Beauty products (New Product Line)
Price Premium pricing strategy- The products that Prada offers are considerably high to support their image of a luxury brand. Due to the perceived value of their brand, consumers are willing to pay the price for Prada products.
Place The Prada Group has a presence in over 70 countries. They also have direct brick and mortar stores, as well as e-commerce stores for each of their brands. Prada’s products can also be seen in select luxury department stores. The brand has stores in the United States, Hong Kong, Russia, India, Canada, and other countries.
Promotion Prada promotes their products through their online commerce website that allows them show images and give details on each of the items that are available for customers to purchase. The brand also takes advantage of social media outlets such as Instagram and Twitter to create anticipation for the premiere of their new product lines and collections. Fashion shows are also another way that Prada promotes their products. Prada also has had printed advertisements for their brand be featured in high-fashion magazines such as Vogue and Elle (MBASkool).
People The current chairman for Prada is Carlo Mazzi and the creative director is Miuccia Prada. Both positions have much input on the marketing efforts of the brand. The target market for Prada’s products are men and women ages 18-32.
Physical Space Prada’s brick and mortar stores reflect the company’s brand image as the shopping spaces provide an upscale atmosphere with luxurious decor. The products within Prada stores are merchandised in a formal, orderly manner to provide customers with much ease when
shopping. Prada’s online store is also well-organized and easy to navigate while also reflecting the standards of Prada as a luxury brand.
Process Prada carefully selects high-quality raw materials for the production of their goods. Their goal is for their suppliers and raw materials to be a reflection of the quality that is associated with their brand. Prada’s production processes are internalized in effort to preserve their standard of manufacturing. The brand also partners and collaborates with craftsman laboratories and outside suppliers for production.
Marketing Mix Strategy Product Strategy and Tactics Merchandise Plan Prada plans the development for their product lines about a year in advance. Trend analysis and market research are conducted so that the brand can develop a product line or collection that appeals to their target market. Previews of their collections are debuted during New York and Milan fashion weeks. Merchandise Categories ● Face ● Lips ● Eyes
Product
Category
Price
Shades
Product Reference Number
Quality Level & Origin
Face
$50.00
Bronze Gold, Rose Gold, Fair Gold
000001
High- Made in China
Face
$80.00
Fair, Light, Light Medium, Light Medium Neutral, Medium,
000002
High- Made in China
Prada Illuminating Highlighter
Liquid Skin Perfecting
Foundation
Medium Neutral, Tan, Tan Neutral, Deep, Deep Neutral, Mocha, Cocoa Face
$80.00
Fair, Light, Medium, Mocha, Deep
000003
High-Made in China
Lips
$40.00
Nude, Fashion Queen, Prada Power, Night Out
000004
High-Made in China
Eyes
$40.00
Night Owl, Soft Brown
000005
High-Made in China
Even-Tone Compact Finishing Powder
Prada Liquid Matte Lipsticks
Liquid Eyeliner
Brand Merchandising Concept Board
Production and Manufacturing Process Prada group is responsible for the design, manufacturing and production of majority of Prada brand’s merchandise. There are two main locations of production for Prada, Montevarchi and Scandicci, where the luxurious and world-renowned Italy leather is crafted and shoes and handbags are created​.
Montevarchi is a garden-factory located in Tuscany that provides shoemakers a creative environment that combines the outdoors within the production space. This factory is responsible for the prototyping of Prada’s womens’ shoes and other Prada group brands. The process begins with prototyping by the creative office which are then examined and approved to be turned into a technical drawing. Next, the drawing is transferred to model making where a mold of the shoe is made. This can be done manually or with the aid of digital support. A technical data sheet is made with information such as the color, type of leather, necessary thread, and structure components such as sole and heel. Next are the laboratory stage where once the material of the shoe is cut and deemed as uniform, the shoe is binded by being manually assembled or machine sewn. Once all of this is completed, the shoe enters the lasting phase where it is put on a conveyor belt and finalized. To reach the final prototype, the shoe’s upper is manually attached in the old shoemaker’s style by a skilled craftsmen.
Scandicci is a factory of leather masters that are dedicated to the entire production cycle of leather goods and handbags. The first step in the process is the prototyping where the pattern is printed and put into CAD to prepare to be machine cut. The first sample is made by a technician and then examined for quality control. The cut leather is then put through thickness lowering and skiving to be the absolute ideal thickness before components and reinforcements are glued together. The leather is then dyed, with special attention going towards the hem to assure the edge is perfect. Assembly is done by a team of assemblers and machine operators. A wooden silhouette is used as mould support during the construction and metal frame assembly when ​the
zipper and enclosures are inserted. The final stages are finishing and testing where every handbag is closely inspected to ensure they meet the very high quality standards.
PRICE STRATEGY AND COMPETITIVE POSITIONING Prada uses a premium pricing strategy meaning that high price is a fundamental part of the brand. As Prada has a very high brand value and quality, they can charge very high prices for their luxury products. For a Prada handbag the price ranges from $1,500-$3,000 and accessories are $250-$1,500. Shoes are anywhere from $800-$1300 and eyewear is around $500. For women’s ready to wear $800-$5,000 for most pieces with a few ranging up to $20,000, for men’s $500-$5,000. Prada is a luxury brand positioned for the consumption by the elite who love innovative style and excellent quality.
Place Strategy and Tactics 1. Brick and Mortar: Prada works hard to ensure that the brand essence carries to all of their locations even going to the extent of hiring internationally acclaimed arcitects, Rem Koolhas and Herzog & de Meuron to design their flagship stores called Prada Epicentures. While there are many stores located globally the most successful is on Broadway in New York. The brand’s products are sold throughout the world in malls and department stores. Prada Group has also acquired Ca’Corner della Regina, a 13th Century palace in Venice that they have transformed into an exhibition space.
2. Online: Prada has had a difficult time adjusting to the internet and e-commerce boom. Now that they have been paying more attention and taking advantage of digital channels such as instagram and other social media platforms the brand is now making a more prevalent online presence. The brand is also hoping to catch up to the online influencer wave. 3. Other Methods: Prada does sales events such as pop up shops that get their products distributed to different places and demographics as well as generating buzz on social media. They also host promotional events for upcoming collections with celebrity studded guest lists.
Marketing Promotion Plan Marketing Promotion Strategy 1. Social Media- For the new product release, Prada wil take advantage of their social media presence and following to launch their makeup collection. The development of engaging visuals and videos for their Instagram profile will create anticipation for the makeup launch. Visuals will portray consumers in the selected target market indulging in and enjoying the new Prada Beauty Collection. Social engagement using the hashtag #PradaBeauty also be helpful in bringing awareness to the new product line.
2. Influencer Marketing- Prada will also utilize influencer marketing to achieve their marketing goals for their beauty collection. Samples of some of the beauty products will be sent to select beauty influencers for their review on their social media accounts, such as Instagram and Youtube. Doing so creates a conversation about the product and interest from consumers. By the products only being distributed to a small amount of top beauty influencers, Prada is still able to maintain its status at a luxury brand with products that are not easily accessible. 3. Launch Party/Promotional Event/Public Relations- In order to create a sense of community within the beauty industry, Prada will hold a launch party event where beauty influencers, celebrities, and other successful makeup brands will meet up to celebrate the launch of the Prada Beauty Collection. The launching event will provided beauty bloggers and trend reporters an opportunity to obtain more information about the new
product line, which, consequently, will result in information about the new line being shared on their platforms.
Budget Allocation and Expected ROI Initiatially, Prada will budget $650,000 for the marketing efforts associated with their Prada Beauty Collection. Contingent on the success of the new line, this estimated budgeted amount may increase or decrease in the future.
Projected sales growth: $1.5 million Marketing Expenses: $650,000 Estimated ROI: ($1,500,000-$650,000)/$650,000= 1.307
Marketing Promotional Calendar Month March April
Event
Event
Location(s)
May June July
Release Advertisements for Fall 2018 Prada Beauty Collection
Milan, Italy
August September
Prada Beauty Launch Party
New York Fashion Week
Milan, Italy New York, New York
October November December
Release Ad for Prada Beauty Spring 2019 Collection
Milan, Italy
Advertising and Promotional Drafts
Advertisement for Spring 2019 Beauty Collection
Beauty Collection Logo
Fall 2018 Beauty Collection Launch
Service Strategy Prada’s service strategy consists of customer engagement through social media and other outlets that provide the company with an opportunity to connect with customers. Prada, as they already have done, will continue to answer customer inquiries in a timely manner, as well as resolve any issues that they may have. On the website there should be direct links that make it easy for customers to navigate to the customer service page if needed. For the beauty line
specifically, Prada could launch a promotional contest for customers who purchase products from the new line to win a $500 beauty shopping spree or free products. As stated before, to maintain their status as a luxury brand Prada would not offer these promotions very often.
Financial Planning
Profitability Gross Margin +35.99 Operating Margin +13.49 Pretax Margin +13.51 Net Margin +8.44
Efficiency Revenue/Employee 152,665 Income Per Employee 12,886 Receivables Turnover 63.20 Total Asset Turnover 1.98
Liquidity Current Ratio 2.90 Quick Ratio 1.12
Measurement and Evaluation Prada Beauty is set up to be very profitable with a high ROI (1.3). The beauty industry is currently doing better than ever with annual revenue close to $450 billion dollars in 2017. The profitability of the beauty industry is high and increasing with the advent of the social media beauty influencer. As it is now more popular to use beauty influencers over celebrities to promote a product, the potential for profit is increased by sparing the expense of a celebrity endorsement. Prada Beauty would best position themselves as a young and fashionable beauty line by heavily marketing themselves on social media and collaborating with a beauty influencer who fits the image of the brand.
Furthermore, Prada would be expanding their market reach by suddenly having products that are under $100. This broadens their demographic to include a lot of younger people who are on a budget and cannot afford a several hundred to thousand dollar Prada handbag but can now afford a Prada Beauty lipstick. This will make Prada brand more relevant to younger generations, generating the opportunity for lifelong customers that will become customers of the clothing and accessories later in life.
Risk Analysis and Growth Plan Prada group is taking a risk regarding their sustainability and company transparency. Due to the group’s heavy emphasis and brand fundamental of innovation, they need to be hyper aware of
current trends and societal movements. Right now in all aspects of society, veganism and plant based materials are in demand. Furthermore, with the addition of new technologies, products that are made without nonrenewable and animal-based materials are of the same quality and appearance that consumers have come to expect. For this reason, Prada is at risk of having disharmony within their brand image until they begin to adapt some of these more sustainable and innovative technologies and standards. Prada Beauty will be a step in the right direction by being entirely plant based and cruelty free. As time goes on, Prada brand should work towards making their entire brand meet these standards.
Also, society’s expectations regarding representation in marketing and what they want to see has changed. Customers are now more interested in seeing themselves in advertisements, a more identifiable approach. For this reason, Prada would benefit by including more diversity in their marketing with the inclusion of people who are not just extremely thin, able bodied models. By better adapting to the evolving standards of current society, Prada would better attract their most elusive demographic, the millenials and younger. As Prada Beauty is going to be inclusive to all skin colors with a wide color range in products, these products should be shown on a wide range of models. Prada Beauty should make an effort to include people of all ages, colors, genders, and abilities in their advertisements. By meeting these standards, Prada Beauty will set themselves apart from other classic luxury beauty brands.
Long-term Strategy Prada Beauty will work to establish itself as a innovative and modern beauty line that both younger and older people who are from all kinds of life will be attracted to and come to love. Prada Beauty will use all natural and cruelty free materials to display innovation and sustainable business practices, making them different from other luxury beauty brands. Prada Beauty will create their brand image with diversity in mind and this will carry into their marketing campaigns to create a cohesive and distinctive brand image. To generate anticipation and interest amongst younger populations, Prada Beauty will establish an active and well followed online presence and eventually collaborate with beauty influencers. By incorporating influencers into the Prada Beauty brand, the line will generate discussion amongst followers, broaden their reach, and strengthen their brand image.
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Photos https://www.pradagroup.com/en/brands/prada.html https://www.pradagroup.com/en/brands/car-shoe.html https://www.pradagroup.com/en/brands/church-s.html https://www.pradagroup.com/en/brands/miu-miu.html https://www.pradagroup.com/en/brands/marchesi.html https://vickiarcher.com/2017/03/dior-christian-dior-1947-1957/ https://www.dior.com/beauty/en_gb/fragrance-beauty/makeup/look-exclusives/skyline-c ollection/fr-skylncllctn-skylinecollection.html https://www.pinterest.com/angela1610/chanel/ https://www.chanel.com/en_US/fragrance-beauty/fragrance-beauty-skincare-140910
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