Bottega Veneta - Brand Building & Strategy Project by Ziyi Wang

BRAND BUILDING & STRATEGY PROJECT LXFM 730 | MARKETING STRATEGIES FOR LUXURY BRANDS AND EXPERIENCES | SPRING 2021 PROF. ALESSANDRO CANNATA BY GRACE DIPAOLO, MADELEINE HARRIS, BRONTE MONGAN, ZIYI WANG

TABLE OF CONTENTS

COMPANY’S FOUNDATIONAL FACTORS POLITICAL

FUTURE BRAND BUILDING STRATEGY EXECUTIVE SUMMARY STRATEGIC TIMELINE

HISTORICAL BACKGROUND & OVERVIEW

BOTTEGA VENETA OVERVIEW

STRATEGY OVERVIEW

ECONOMIC

PURPOSE

SOCIAL

PRICE

ART & LITERATURE

PRODUCT

TECHNOLOGICAL

PLACEMENT

BRAND ANALYSIS

PROMOTION

MISSION STATEMENTS

PEOPLE

CURRENT STATUS

CONCLUSION

SWOT ANALYSIS KAPFERER PRISM KELLER’S PYRAMID AAKER MATRIX

COMPETITIVE ANALYSIS KEY SUCCESS FACTORS CORE COMPETENCIES COMPETITIVE LANDSCAPE

FUTURE MARKET TRENDS CONSUMER SEGMENTS FUTURE CONSUMER TRENDS

SOURCES

MARKET GROWTH POTENTIAL & OPPORTUNITIES

LUXURY MARKET OVERVIEW

BOTTEGA VENETA OVERVIEW

HISTORICAL BACKGROUND & OVERVIEW Bottega Veneta came late to the economic boom of the 1950s and ’60s commonly referred to as the “Italian Miracle.” There were already several established houses throughout the country at the time including Gucci, Ferragamo, Pucci, and Valentino. The company was founded in 1966 in Vincenza, a city in the northeast region of Italian called Veneto. This served as the basis for the name. Literally translated, Bottega Veneta means “Venetian Atelier.” Entrepreneurs Michele Taddei and Renzo Zengiaro started the brand as a luxury leather goods company. According to fashion film documentarian Matt Tyraneur, “The market was flooded with hundreds of other companies vying for a place of honor in the sartorial and accessory repertoires of the international jet-set who had made Italy their playground in the time of la dolce vita.” Most leather goods were and still are, made in Tuscany, not Veneto. But Bottega Veneta had an advantage, which was their knowledge of the competition’s products (leather handbags). Most of the luxury leather goods companies at this time were using heavy leftover leathers from saddles and steamer trunks. Bottega found its niche by using a softer and more delicate leather that was still hard-wearing. They began making handbags with glove leather to create a less rigid design that was easier to sew and did not break the needles on the industrial machines they had purchased. To ensure that these softer items were still durable, Bottega used the woven leather technique of "intrecciato" which became the brand’s signature style. Former creative director Tomas Maier attributes the time-resistance and overall success of Bottega Veneta handbags to this innovative technique, and says, “That’s how those little bags from the sixties and seventies are still around. You still see women walking around with that bag.” In essence, the "intrecciato" became the company’s logo. In the 1970s, when everyone was using initials to indicate luxury (YSL, LV, V, GG), Bottega Veneta’s “quiet luxury” was enough without loud labels, spurring their hit slogan: When Your Own Initials Are Enough. As of 1979, the company had earned international prestige, with locations in key cities across the globe including New York, Venice, Milan, Rome, Paris, Hong Kong, Los Angeles, Dallas, Houston, and Palm Beach. The product line expanded to include additional interwoven accessories like shoes, wallets, trays, luggage, and briefcases to name a few. The eighties were when Bottega Veneta first gained a great deal of recognition from famous artists and celebrities alike. A regular patron, for example, was Andy Warhol. He often stopped into the New York boutique – and even went on to produce a short film for the brand. Success for Bottega Veneta continued to flourish until the 1990s when it abruptly halted. At this time, the fashion industry experienced a turbulent period of change incited by globalization, which made it difficult for independent luxury labels to survive. After a decade of decline, plus the chaos that rocked the global economy following 9/11, Bottega was acquired by the Gucci Group (today Kering) in 2001, and Tomas Maier became creative director. Despite the company’s near-bankrupt status, Maier dove right in. Stepping away from logos, Maier highlighted the brand’s famous "intrecciato" weave and focused on a more clarified design. His first order of business? To bring back the signature motto, “When Your Own Initials Are Enough.” He also instituted four “guiding principles” to bring the brand back to life: fine quality materials, artisanal craftsmanship, contemporary functionality, and timeless design. These have become the cornerstones of the company’s values. In 2006, Bottega Veneta implemented a school to train leather artisans called Scuola della Pelletteria (Rebag). A decade after Maier stepped in, Bottega Veneta had made a relevant comeback. It tripled revenues, opened over 170 stores in 19 countries, and vastly extended product offerings into men’s and women’s fashion, jewelry, timepieces, furniture, fragrance, home wear, and eyewear. It is largely considered one of the greatest brand revivals in history and continues to be recognized for its exceptional legacy of craftsmanship. Daniel Lee has served as creative director for the brand since 2018, succeeding Kering’s announcement of Maier’s resignation. To this day, Bottega Veneta is reimagining its iconic styles and remains equally committed to luxury design, craftsmanship, and heritage.

POLITICAL Bottega Veneta was founded in 1966, just over two decades after the end of World War II when fascism was pushed out of Western Europe. Benito Mussolini was captured and executed by Italian partisans in May 1945, an event that ushered in the new era of politics. After the end of the war, Italy underwent political reform. To understand the politics of Italy during the 1950s, it is important to note the prominence of the Catholic Church in Italian society at that time. Religion experienced a huge postwar resurgence. People flocked to their churches and placed great value on the traditional teachings about family. Compulsory religious education was offered up and down the country and was taught in state-run schools, which encouraged a nationwide sense of community in many ways. This rise of religious devotion made way for the Christian Democratic Party. It was considered the predominant party of the time and had the support of the Catholic church as well as an ideology from both right- and left-wing factions. It enabled the democratic process of proportional representation that the country adopted following the fall of fascism. The Christian Democratic Party represented the majority of people with the Italian Socialist Party behind it. The political structure of this time is considered “The First Republic,” in which the Christian Democratic Party is led by the majority but in harmony with the Italian Socialist Party. Democratic elections were held in which universal suffrage (everyone can vote) was instituted in 1948. Christian Democrats were led by Prime Minister Amintore Fanfani in 1954 and it was under his leadership that the country experienced the economic “Italian Miracle.” Antonio Segni was president from 1962-1964, after having served as the 34th Prime Minister of the country. Segni had been instrumental in reforms including those of agriculture and literacy which were vital in bringing the country back after the devastating impact of the war. From 1958 to 1963, and extended into the late 1960s, Italy’s economy flourished and experienced both social and industrial development like it never had before. At a 1963 state dinner in Rome, American President John F. Kennedy praised Italy and Segni’s leadership in turning the country around entirely after the “ruins” left behind in 1945. Italy indeed rose from the rubble in which it was left after the war. It had become an ally of the United States which rendered it eligible to receive almost $2 billion in relief aid under the Marshall Plan over four years from 1948 to 1952. The stimulus allowed major and pertinent growth, paving the way for the boom of industries including artisan-made luxury goods.

ECONOMIC After World War II, the United States created a program called the Marshall Plan to help recover and rebuild the economies of the western European nations that were destroyed by the war. Also known as the European Recovery Program, the program was aimed to stimulate growth and rebirth in these devastated nations. Italy was one of these countries and received a total of nearly $2 billion from 1958 to 1963. The money from the Marshall Plan stimulated what can essentially be considered a second industrial revolution for the nation, commonly referred to as the “Italian Economic Miracle.” This economic reconstruction spurred the creation of a network of highways that connected northern and southern Italy and allowed for the automotive innovations that allowed for travel. Other innovations and industries thrived as well, as agriculture became less imperative and industries like fashion and accessories, automotive, furniture, and household appliances thrived. This transformation also allowed for the political landscape to move into a democratic process after the fall of fascism. This postwar recovery was viewed and lauded by the rest of the world.

SOCIAL Bottega Veneta was founded in Vincenza, Italy in 1966 during several social movements. From 1964 into the 1970s, Italy’s birth rate fell sharply due to radial societal shifts. In 1970, Italy’s first divorce law passed and legislation that established rights for factory workers was put in place for the first time in Italy; 1971, contraception became readily available; 1978, abortion became legal; and throughout the 60s and 70s, more females attended secondary school and graduate from universities. While the legislation was shifting Italy’s society in a more progressive direction, the feminist movement infiltrated Italy’s society in the 1970s, which is partially credited to abortion and divorce laws passing. During the 1970s after co-founder Renzo Zengiaro left the company, co-founder Michele Taddei left as well and handed the company over to his ex-wife Laura Braggion. Bottega gained wider societal recognition in the 1980s when they opened a New York boutique in Manhattan. Artist Andy Warhol frequented the boutique and produced a short film for the brand. Another significant pop culture moment was when actress Lauren Hutton carried a Bottega Veneta clutch in Paul Schrader’s 1980 movie, American Gigolo. The bag was then named Lauren and gained instant popularity. Following Bottega’s great success in the 1980s, the fashion industry shifted towards a logomania trend in the 1990s. Bottega Veneta adopted more trenddriven design elements and saw a decrease in popularity. Not only was this decade contradictory to Bottega Veneta’s entire brand identity, but the new trend designs were not well received. In the early 2000s, Tomas Maier was appointed new creative director (2001) and brought bag the brand's early ideologies of less is more. The company implemented a school in 2006 to train leather artisans in the "intrecciato" style. In 2018, Bottega Veneta hired Daniel Lee to take over Maier’s position as creative director to bring a fresh image to the brand following a poor financial performance. Under Lee’s direction, the term “new Bottega” was coined and he created Bottega Veneta’s fasted selling bag in brand history: The Pouch. Additionally, Lee has brought the brand back into popularity and a return to ready-to-wear.

ART & LITERATURE La Dolce Vita was a 1960 film by Federico Fellini that is today considered a masterpiece. It was created during the Neo-Realistic art movement that Italian film experienced in the 1950s into the ’60s. The film reflected the shallow nature of a celebrity-obsessed society in postwar culture and was praised for its sharp social observations and commentary. La Dolce Vita won first prize at the 1960 Cannes Film Festival and achieved nominations for four Academy Awards. The film was concurrent with the postwar economic flourish in Italy that saw the rise of luxury brands, especially for luxury leather goods. Bottega Veneta’s inception was surely influenced by this shift and booming economic growth. Following the devastation of World War II and the fall of fascism, there was a newfound longing for a beautiful jetset lifestyle that was reflected in art, film, and literature from the 1950s to the 1960s. There was a dreamlike aspiration for a luxe, sweet life, or la dolce vita. Between the years 1966 and 1980, there was Anti-Design, which emphasized striking colors, scale distortion, irony, and kitsch. The movement was a reaction against the perfectionist aesthetics of Modernism, which began with Ettore Sottsass Jr. They embraced the uniqueness over mass-production and their designs were meant to be functional, rather than beautiful, which aligns with the core ideals of Bottega Veneta even today, which hold that its items should not only be durable in the face of wear for years to come but must also remain relevant in style throughout the life of its loyal clientele.

TECHNOLOGICAL Roads and Highways: The Autostrada de Sole project of the late 1950s in Italy was a direct result of the economic stimulus of the Marshall Plan. For the first time in history, a network of superhighways was created to link the North to the South, which gave way to a great flourish in the automotive industries as people sought to travel the country like never before. Motorcycles & Scooters: Allied forces throughout the war targeted factories responsible for making trucks, plane parts, and motorcycles, in an attempt to cripple the production of automotive tools for warfare. But after the war, renowned motorcycle companies like Benelli, Bianchi, and Moto Guzzi put all of their efforts into rebuilding, focusing on innovative new designs and engineering. They seized the opportunity to create means of traveling on the new highways that were more affordable than cars. This meant expanding product lines from just motorcycles to mopeds and scooters, as well. By the end of the 1950s, over four million motorcycles circulated the roads in Italy, over a million more than the number of cars. Cars: Although many car companies including Fiat were founded in the early 20th century, the political rise of fascism under Benito Mussolini halted growth for the industry in many ways. He wanted cars to be as low-cost as possible and limited advancements in design and engineering. Plus, with the war beginning in the late 1930s, all automotive resources went to the production of military vehicles. Once the war was over, the 1950s saw the use of cars for fun as well as for travel for the first time in Italy. Now that there were highways that linked the North to the South, people were eager to purchase means for travel. The likes of Alfa Romeo, Ferrari, Lancia, Fiat, and Pininfarina rose in popularity with the new roads and sudden demand. Additionally, racing as a sport also became prevalent during the 1950s and into the 60s and 70s in Italy. Sewing Machines: In 1947, the Necchi sewing machine was brought to Italy, and became the first zig-zag machine for widespread and home use. Before, it was used solely for industrial purposes, in particular the production of materials for wartime. But with the end of WWII, innovative design flourished alongside the thriving economy that enabled luxury goods growth. Companies in Italy were established and production was facilitated by machines like the Necchi. Television: TVs begin appearing in people’s homes. In the 1950s began several new programs and shows: talk shows, variety shows, and news programming. The sole broadcaster was Radio Audizioni Italia is still around today and is known as Radiotelvisione Italiane. Popular shows of the day include: Lascia o Raddoppia? (which translates to "Leave or Double It?") (1955), a game show similar in format to today’s Deal or No Deal. Canzonissima (1959), a talent show that displayed stand-up comedians, dancers, and singers. There were also televised sporting events, mostly soccer. Furthermore, educational programs were available and used by the government to start updating the public on news. The rise of television was a huge cultural advancement for the country during the midst of its second industrial revolution.

BRAND ANALYSIS

MISSION STATEMENTS KERING: A Modern, Creative, and Bold Vision of Luxury: At Kering, we dare to think differently as we boldly shape our vision of Luxury. A Luxury that is creative, authentic, and sustainable; one that offers powerful and genuine creative content and allows people to assert their individuality.

BOTTEGA VENETA: Inspiring individuality with innovative craftsmanship since 1966. Under the direction of Daniel Lee creativity lies at the heart of all that we do. Born in Vincenza the house is rooted in Italian culture yet maintains a truly global outlook. An inclusive brand with exclusive products Bottega Veneta is as much of a feeling as it is aesthetic.

CURRENT STATUS

Tomas Maier served as creative director for Bottega Veneta from 2001 to 2018. During that time, Maier refreshed the brand image and brought back the guiding tenets about craftsmanship, heritage, and quality to revitalize it as a whole. Maier turned the company around in a big way, but after a few years of stagnated sales, Kering brought in Daniel Lee to be the new creative director. Lee had previously worked at Celine. A new CEO, Bartolomeo Rongone, was brought on in June 2019, one year after Daniel Lee’s appointment. Lee brought Bottega huge success in his first year at the helm of the company. His Pouch bag was a monumental hit. Using the brand’s "intrecciato" weave, the bag is a soft, squashy clutch that became a phenomenon. Celebrities fell in love with it and posted it all over their social media. A February 2020 article by the New York Times claimed, “Rihanna posted a video of herself on Instagram striding toward a pool while clutching her Pouch. Kylie Jenner and Phoebe Waller-Bridge were spotted with Pouches. Rosie Huntington-Whiteley put hers on Instagram 39 times in 3 months.” The innovation and new products resulted in Bottega Veneta’s sweep at the 2019 Fashion Awards in London where the brand took home accolades in four categories. Following this flourish in popularity, the fashion world was excited to see if “boy wonder” Daniel Lee could keep it up. Then, in January 2021, the brand made a move that shocked everyone. They deleted their social media presence and went fully dark, removing their accounts from Facebook, Twitter, and Instagram. Theories about the decision ran rampant about whether this was a PR stunt, a marketing ploy, a rebrand? On April 1, 2021, the brand released its first seasonal digital magazine called Issue, an artistic endeavor that curates Bottega Veneta’s own personal branded universe. The publication is playful, creative, and includes content that looks made to live on Instagram. After its mysterious disappearance from social media, the fashion community flocked to the digital journal and continues to await the brand’s next marketing move, wondering if they can sustain the success of the previous few years.

SWOT ANALYSIS STRENGTHS

WEAKNESSES

Storied Legacy, Brand Heritage

Heavy reliance on bag sales

Craftsmanship and Artisanship

Current financial standing: decreased sales and lower revenues due to the pandemic

Innovative, Time-Resistant Technique/Quality Renewed/Refreshed perspective (Daniel Lee)

No brand hero, or face of a creator like other connoisseur brands/competitors

Subsidiary Brand of Luxury Group Kering Diverse product assortment and lines

OPPORTUNITIES

THREATS

Increased exclusivity since removing social media

Competitive Luxury Landscape

Post-pandemic luxury market growth

Balancing hype and “It” bags with longevity and continued steady growth

Reaching younger audience Continuing visibility without social media presence Increase sustainability efforts, social consciousness Updating brand image through the new digital zine

The effects pandemic on luxury consumer purchasing (short-term) 13

KAPFERER PRISM

Intrecciato: woven leather Italian Craftsmanship Logoless Nappa Leather The Knot & Pouch

Minimalist Refined Timeless Discreet

PHYSICAL

BRAND IDENTITY

Innovation Collaboration Exclusive Connoisseur

RELATIONSHIP

REFLECTION

Innovation Classic Luxurious Artisinal 14

PERSONALITY

CULTURE

Italian Craftsmanship Contemporary Understated Functional

SELFPROJECTION

Chic Bold Classic Elevated

KELLER'S PYRAMID Recent rejuvenation strengthened core consumers affinity for the brand and broadened customer base Growing community and popularity Strengthening active engagement through digital journal

RESONANCE

Innovative designs High price Frequently bought by trendsetters Wide range of products Recognizable "intrecciato" leather technique High quality & durable leather

JUDGEMENT

Trendy "In the know" Sense of achievement Confidence Happiness

FEELINGS

PERFORMANCE

IMAGERY

BRAND EQUITY

Understated luxury Approved by fashionistas

SALIENCE

55 years of brand history Vincenza leather atelier "Intrecciato" braided technique Memory structure: bags, shoes, leather accessories 15

AAKER MATRIX BRAND AS PRODUCT Scope: ready-to-wear, handbags, shoes, accessories, jewelry, and fragrances Attributes: logoless, no shoulder strap, tactile, soft, knit design, high technique, stylish, innovative, and luxurious Quality: Artisanal leather goods Country of origin: Made in Italy

BRAND AS PERSON

Daniel Lee English Innovative well-crafted simplicity

BRAND AS ORGANIZATION Craftsmanship Modernism Italian Low-Key Innovation Normcore Elegance

BRAND AS SYMBOL

Logoless No strap Iconic Knitweave

UNIQUE REVELATION High-quality craftsmanship is the key since luxury is embodied by it. Therefore, these topof-the-line products do not need branding or logos because the quality speaks for itself. Branding is inherently vulgar and violates what is obvious to the consumers who purchase products by Bottega Veneta.

BELIEF SYSTEM “When your own initials are enough.” Bottega Veneta has always been praised for its “low-key nobility” because of its subtle and meticulous aesthetics and high-quality craftsmanship. People who know how to appreciate the brand have the characteristics of “confidence, elegance, and loyalty to their own style.”

BRAND RITUALS Bottega Veneta offers an exclusive in-store experience that is intimate and highly personalized. The brand continually utilizes the Intrecciato technique in evolving ways that embrace its heritage and modernity.

BRAND LEXICON Intrecciato (Braided) - Pouch - Cabat - Square Toe 17

LUXURY MARKET OVERVIEW The global luxury market embodies both goods and experiences. The criteria for positioning brands and companies within the market is reached through a combination of price premium, quality/rarity of raw materials, craftsmanship, product exclusivity, personalization, and exclusivity of points of sale. The overall market has shown substantial growth throughout the last decade that can be attributed mostly to increases in the top three sectors. The market can be broken down into nine segments which are: Personal Luxury Goods, Luxury Cars, Hospitality, Fine wine and spirits, Gourmet Food and Fine Dining, Fine Art, High-end Furniture and Homewear, Private Jets and Yachts, and Luxury Cruises. But 3 of these 9 categories comprise over 80% of the global luxury market, and those are Personal luxury goods, cars, and luxury hospitality. Luxury cars make up the largest percentage of the global market at 495 billion euros, but personal luxury goods are the fastest growing. It reached a record 281 billion euros in 2019 with an annual growth rate of 6 percent a year. And then luxury cars and hospitality were right behind it at a growth rate of around 5% a year. Personal luxury goods, in particular luxury leather goods, is the primary sector in which Bottega Veneta performs, and continues to rise in sales. The following chart represents the majority of the sales of leather goods by Bottega Veneta as evaluated for the 2020 fiscal year in 2021:

MARKET GROWTH POTENTIAL & OPPORTUNITIES Luxury Sales in China Remain Second to None: Chinese consumers continue to blaze the way for positive sales in the luxury market. Spending in China represents 33% of the total amount spent in the luxury market worldwide, with sales showing consistent growth each year. Between 2015 and 2018, domestic spending in China represented double the amount they spent on luxury abroad. Even before the pandemic, luxury consumers were shopping more online: Online shopping in the luxury market has shown consistent growth over the last 4 years and is accelerating rapidly. Accessories remain the top category sold online. At the end of 2019, online shopping represented 10% of all luxury sales. This number is forecasted to grow to 25% by 2025. Growth of Kering: From 2019 to 2020, Kering continued raising sales by double digits with organic luxury sales growth. Online sales grew 20% during the fiscal year 2019. After Daniel Lee’s appointment in June 2018, there was a financial turnaround for over $1b. After the release of his first collection in 2019, the brand experienced one-year growth of 5.3%. Gucci accounted for 63% of Kering’s revenue at this time. YSL is the group’s second most lucrative brand, and Bottega Veneta is the third. Post-pandemic, experts are also saying that the possibilities of future acquisitions are likely in the coming years. Owning Luxury vs. Experiencing It: One of the fast-growing aspects of the luxury sector has been “experiential luxury.” This includes luxury hotels, cruises, and restaurants and can be partly attributed to millennials wanting to “experience” luxury and often “Instagrammable” moments. Baby boomers also were moving more towards luxury experiences because they had already accumulated luxury goods throughout the years. Due to restrictions of the pandemic and hesitation to travel, it is predicted that millennials will be more willing to spend money on goods than experiences in the coming years. Digital, digital, digital, and more digital: Omnichannel, online, digital, e-commerce strategies are now vital. Businesses must now start allocating more money into digital platforms and begin developing innovative new methods to reach consumers online, especially luxury retailers. While luxury retailers are known for providing consumers with superior in-store experiences, those same brands must emulate that experience online to provide an equally personalized digital experience. This also means using technologies like AI and AR to create new exciting experiences. Additionally, the pandemic has taught luxury companies how much asset digitization in the supply chain can be in helping to maintain business during a crisis. Taking technology and applying it to aspects like virtual showrooms, digital prototyping, and personal shopping capabilities can streamline the process without slowing down in case of a crisis.

COMPETITIVE ANALYSIS

KEY SUCCESS FACTORS High Quality & Wide Product Range Virtuosity: Italian fashion has a long history of quality artisanal craftsmanship and premium quality leather. As “Made-in-Italy” roots on Bottega Veneta, the brand focuses on extraordinary craftsmanship, exquisite design, classic and timeless pieces. Currently, Bottega has a wide range of product lines for men and women include ready-to-wear, handbags, shoes, accessories, jewelry, and fragrances.

Unique Brand Identity Bottega is known for its logoless products, the logo only appears discreetly on the inside of its products. Improved and distinctive Intrecciato leather-weaving is applied in Bottega’s core products like handbags, small leather goods, and luggage, which makes its products immediately recognizable. The historic slogan of Bottega Veneta – “When your own initials are enough” expresses the brand philosophy of individuality and confidence that now applies to all ranges of products.

International Expansion After acquisition by the Gucci Group, Bottega soon boomed and slowly expanded into the Asian market. It strengthened the brand image by following the stealth luxury strategy and focusing on exclusivity and select distribution, which gained the appreciation of worldwide customers.

Acquisition of Resources After Bottega Veneta was bought by the Gucci Group in 2001, the financial and human resources of the fashion group enabled Bottega to realize its full potential in the luxury market. Currently, Bottega is a subsidiary of the luxury group Kering, and it is the third-largest player within the group, behind Gucci and Yves Saint Laurent.

Marketing Strategy From Tomas Maier to the current creative director Daniel Lee, Bottega Veneta is committed to the stealth luxury marketing strategy, which is dedicated to appealing to consumers who do not want to be associated with the easy recognition of a conspicuous logo. Instead of catering to fashion trends, Bottega Veneta focuses on the brand’s own aesthetic and the finer details of construction versus a quicker turnaround.

CORE COMPETENCIES High-Quality Materials Classic Design

High Quality Materials

Functionality

Classic Design

Bottega Veneta's Core Competencies

Extraordinary Craftsmanship

Stealth Luxury

Stealth Luxury Bottega Veneta pioneered the concept of stealth luxury long before the term touched the fashion sector broadly. When the company was purchased by the Gucci group, Tomas Maier was appointed as the creative director, Vogue first time described the brand’s new style as “stealth luxury”. From the start, Bottega’s mantra “When your own initials are enough” already set the tone of the brand. Without conspicuous logos outside of its products, the details and the craftsmanship of the brand were recognizable only to connoisseurs and attracted to refined and understated luxury consumers, which was in stark contrast to conspicuous brands.

Extraordinary Craftsmanship The iconic woven leather appears delicate and simple, however, the woven skill requires hundreds and hours of labor by master craftsmen. Bottega Veneta opened a specialized school in 2006 to train leather craftsmen. That’s why though copied by many other brands worldwide, the precision and quality are hard to duplicate. Functionality The brand keeps improving and introducing products that practical for everyday use and still with plenty of forms. For example, the Women’s Fall 2017 collection introduced the iconic knot to the handbag, which makes it more special and practical. Also, Bottega combined artisanal craftsmanship and contemporary design through "intrecciato" woven leather, which enhanced the durability of its products.

COMPETITIVE LANDSCAPE Since Bottega Veneta is known for its leather products such as hand-crafted leather handbags. According to the report of the Kering Group by Statista, leather goods accounted for 74% of the revenue share of Bottega worldwide in 2020. Thus, we planned to include major players in this field. Based on 2019’s brand shares of luxury leather goods in America, the broad market competitors of Bottega are Louis Vuitton, Gucci, Yves Saint Laurent, Prada, Chanel, Burberry, and Fendi. Also, categorized as a connoisseur brand, Bottega competes with connoisseur brands like Hermès, CELINE, and Loewe.

Louis Vuitton: Under the LVMH group, Louis Vuitton is a French luxury fashion house founded in 1854 by Louis Vuitton, and currently is the most valuable luxury brand in the world. In 2020, LVMH Group’s fashion and leather goods segment brought in 21.2 billion euros in global sales, which is impressive especially considering that the global personal luxury goods market has been hit heavily by the impact of the coronavirus crisis. On the contrary to Bottega, the brand emphasizes and shows off its logo. The iconic LV monogram appears on most of its products, ranging from luxury trunks and leather goods to ready-to-wear, shoes, watches, jewelry, accessories, sunglasses, and books. Gucci: Gucci was founded by Guccio Gucci in Florence, Italy in 1921 as a leather goods manufacturer, now it becomes a major player within the global luxury goods market. As of 2019, Gucci was the fourth most valuable luxury brand worldwide, behind Louis Vuitton, Chanel, and Hermès, and it is the largest brand owned by its parent company, the Kering Group. The products of the brand include handbags, ready-to-wear, footwear, accessories, makeup, fragrances, and home decoration, and its major revenue is attributed to leather goods, such as handbags and wallets, followed by shoes and ready-to-wear. Yves Saint Laurent: Yves Saint Laurent, also known as Saint Laurent, is a French luxury fashion house founded by Yves Saint Laurent and his partner, Pierre Bergé in 1961. As the second-largest player in the luxury portfolio of the Kering group, the brand is famous for its bold and modern pieces. Today, Saint Laurent has a broad range of women’s and men’s ready-to-wear products, leather goods, shoes, and jewelry. The beauty line also presents a notable performance in the luxury beauty and fragrance market, although it is owned by a French personal care company L’Oréal. Although the brand offers a range of different luxury fashion products, with 71% of the brand’s worldwide revenue coming from the sale of leather goods as of 2020. Prada: Founded in 1913 as a leather goods shop in Milan by Mario Prada, now Prada is an international Italian luxury fashion house dedicated to the design, production, and distribution of luxury handbags, leather goods, travel accessories, shoes, ready-to-wear, perfumes, and other accessories. The brand operates its stores worldwide and has a global staff of over 13,000 employees. Although Prada’s business ventures include many ranges of products, the largest source of revenue comes from the sale of leather goods such as purses and belts. Additionally, thanks to the hit movie The Devil Wears Prada, Prada holds fame in a broader societal setting. Chanel: Founded in 1910, Chanel is a French luxury fashion house founded by couturier Coco Chanel. Its products cover women’s ready-to-wear clothes, fragrances, handbags, and watches. Chanel is a privately owned company that is currently owned by Alain Wertheimer and Gérard Wertheimer, grandsons of Pierre Wertheimer, who was an early business partner of Coco Chanel. The brand is famed for its “little black dress”, the perfume Chanel No. 5, and the Chanel Suit. The Parisian label consistently ranks the world’s leading luxury brand because of its success in category segregation, which involves confining core category products to high-end price ranges while positioning other product categories like the beauty sector at lower price points to target aspirational customers. Burberry: Burberry is a British luxury fashion house headquartered in London, England. Established in 1856, the company originally focused on outdoor attire at the onset before moving on to the high fashion market. The brand has now grown to become one of the most valuable luxury brands worldwide. Famous for its trench coats and signature tartan lining pattern, Burberry produces a wide range of products include luxury outerwear for both men and women, handbags, wallets, purses, umbrellas, fragrances, sunglasses, and cosmetic products. Fendi: Founded by Adele and Edoardo Fendi in Rome in 1925 and today is under the LVMH group. Over the years, Fendi is an Italian luxury fashion house renowned for its craftsmanship and innovation deeply linked to its Roman roots. The brand ranges from fur, ready-to-wear, leather goods, shoes, fragrances, eyewear, timepieces to accessories. Fendi is known for its fur and fur accessories, and also its leather goods such as the Baguette, 2jours, Peekaboo, and Pequin handbags.

Hermès: Hermès is a family-owned French luxury goods manufacturer established in 1837, which was originally specialized in leather saddles and harnesses for horses, the family business has substantially expanded its product line. The brand is now prized for its leather goods, lifestyle accessories, home furnishings, perfume, jewelry, watches, and ready-to-wear. As of 2020, Hermès was the third most valuable luxury brand worldwide, surpassed only by Louis Vuitton and Chanel. In 2020, half of Hermès’ revenue was generated by leather goods and saddlery products, and nearly half of the sales were created in the Asia-Pacific region. Since the main strength of the brand is craftsmanship, Hermès dedicated to pursuing excellence, which presents in each of its products and service. Hermès’ most popular products are luxury travel bags like the Birkin and Kelly models, which are named after the famous actresses Jane Birkin and Grace Kelly. Additionally, Hermès is known for its silk scarves.

CELINE: CELINE is a luxury French fashion house founded in 1945 by Céline Vipiana and has been owned by the LVMH group since 1996. From Phoebe Philo to Hedi Slimane, the brand is characterized by its timeless modernity, contemporary, and minimal style for daily women. Despite their vision being for the everyday woman, they offer a sense of privacy and exclusivity to their customer base. Same as Bottega, CELINE is categorized as a connoisseur brand because it showcases excellence while remaining private and discrete to its core customers.

LOEWE: As LVMH’s oldest luxury fashion house, LOEWE is a Spanish brand founded in 1846 in Spain by Spanish leather craftsmen. Now the brand is focusing on leather goods, clothing, perfumes, and other fashion accessories. While Spanish leather had been prized by the crowned heads of Europe since the 8th century, now the leather products from LOEWE had become the ultimate symbol of elegance and refinement to many consumers. The brand‘s leather of unrivaled sheen, suppleness, and softness is infused with modern glamour and yet informed by heritage and craftsmanship.

FUTURE MARKET TRENDS Crypto Art: Creative expression today is influenced by technological trends as much as any cultural factor. In a world that has become increasingly digitized, art has followed suit. While artists have long been producing digital works, these works could be easily copied and duplicated. With the recent rise of NFTs and “crypto art” artists have the means to create digital works, monetize them, and protect ownership and property rights. An NFT is a unique token living on a blockchain that certifies a digital asset as authentic. This shift has disrupted the art market and generated nearly $174 million since 2017. Art is one of society’s favorite store-of-value assets and although collectors of art are predominantly those who comprise the wealthiest percentile of society, crypto art promises to bring a plethora of new art market participants. Due to the nature of digital art, the opportunities for creative assets are vast, and through empowering these works with a token that validates ownership and authenticity, the potential for investment and collecting is paramount. Digitalization: Luxury companies and brands are working diligently to improve technological approaches to operations to adopt digital trends to better target and engage consumers. As a result of COVID-19 the rate at which these trends were adopted increased dramatically in correlation with the rate at which consumers began to utilize digital channels in place of physical ones. Companies are investing heavily in innovative digital marketing such as shoppable content, which has significantly reduced cart abandonment and received wide consumer enthusiasm. While experiential in-store retail will remain essential for luxury brands, digital channels will continue to evolve both as sources of inspiration and as sales channels – elevating e-commerce to a new level. In addition, luxury brands are investing in data aggregation such as IoT to better assess consumer behavior and adapt. Other digitalization trends utilized by luxury brands include Virtual Reality, Augmented Reality, personalization, visualization, and facial recognition. These innovations are all tools for luxury brands to increase discovery, interests, likability, and, ultimately, consumption in the short-term while increasing brand equity in the long term. Generational Shift: Millennials and Gen Z are driving the majority of luxury sales. According to Bain & Company, the spending power of the Gen Z customer group is expected to account for 40% of the global luxury goods market by 2035. The increasing luxury purchasing power is a force that luxury brands cannot ignore, so the fashion industry must cater to millennial and Gen Z preferences to capitalize on this demographic in the future. The new generations of younger affluent consumers will continue to rewrite the rulebook of the once bulletproof luxury industry; with new needs, new behaviors, and digital-infused lifestyles. The Gen-Z consumer grew up in a completely digital world and purchases luxury goods for the sake of others. Rather than previous generations buying luxury goods for their own satisfaction, the Gen Z consumer showcases their luxury consumption to others via social media. Gucci for example has created a pair of digital shoes for consumers so rather than investing in a physical product, the consumer can purchase a digital product to use on their social media once. For luxury brands to remain in sync with younger global luxury consumers, it is imperative they adapt their approach to speaking the language of the younger consumer and deliver digital experiences that are superior to what’s already available.

Resale Market: While the pandemic negatively hit high-street and luxury retailers selling new clothing, the resale market went the opposite way. Luxury resale platforms are maturing and growing beyond internet sales channels. The secondhand apparel market is valued at about $28 billion today and is forecast to reach $64 billion within five years, according to ThredUp annual report. The attractiveness of the luxury consignment industry lies in the potential environmental benefits. Many luxury consumers are aware that the fashion industry is a major contributor to many environmental issues the planet is facing right now, thereby taking actions such as buying secondary clothing to alleviate the negative impact of fashion waste. In addition to environmental benefits, the resale market offers an opportunity for luxury brands to solidify the value of their products and gain new entry-level customers. However, many luxury brands have yet to capitalize off the resale market and previously looked at this market as direct competition to their new season products. However, resale companies like The RealReal are beginning to secure partnerships with luxury brands creating competition between resale companies to secure brand partnerships. Following the steps of Burberry and Stella McCartney, Gucci announced a partnership with The RealReal in October 2020, hinting that the relationship between luxury’s primary and secondary markets is set to continue to grow in 2021. Experiential Travel & Hospitality: The Covid-19 pandemic shifted the ideal travel experience for the ultra-luxury consumer to private, curated long-term stays. Large-scale resorts and hotels were forced to shut down for a period, and wealthy individuals looking to fulfill their travel desires rented private planes, yachts, and luxury villas. Hospitality groups with branded estates and villa offerings were at an advantage and saw a surge in bookings. Luxury travelers are also looking to stay for longer periods and engage with the local culture. Despite limited inperson service, travelers experience the destinations through local produce and seasonal fare. As always, luxury travelers expect flexibility and ease and prefer to have all reservations and events booked for them before arrival. Ultimately, privacy is the new luxury from private accommodations, transportation, amenities, and service. Sustainability: Fashion is the second most polluting industry in the world and eco-conscious consumers are demanding sustainable products. Luxury brands are at an advantage as products are manufactured for long-term use. However, material choice is an increasing debate specifically over leather. Vegan leather alternatives such as mushroom leather and pineapple leather are growing in popularity. Some consumers prefer to purchase animal alternatives, while others believe leather is a sustainable fabric choice as long as the material is sourced ethically. The sustainable leather trend is expected to stay long term and luxury fashion houses that depend on leather goods must adapt to this trend.

Needs: (Esteem) Functional and exceptional quality Discretion Classic and timeless Connoisseur The Bottega Veneta customer purchases products to satisfy a need for functional personal leather goods with exceptional quality, craftsmanship, and aesthetics. These consumers are driven by timeless, classic, and discrete silhouettes. Although Bottega Veneta’s products are not branded nor garner logos, connoisseurs are knowledgeable of Bottega’s motifs, specifically the distinct "intrecciato" woven leather. Therefore, consumers who purchase Bottega personal leather goods gain status and receive recognition from like-minded consumers. (Benefits) Italian heritage Longevity Time Resistant/Timelessness The Bottega Veneta customer is offered the benefit of cultural experience, driven by Bottega’s deep Italian heritage and traditions, from the technical applications utilized in leather goods to store experiences. In addition, the consumer is offered the benefit of longevity. Bottega Veneta leather goods are crafted by hand with exceptional standards, the result is products that withstand time and use. Consumers who purchase Bottega benefit from the initial investment as it will serve them both functionally and aesthetically over long periods.

Values: (Functional) High-quality products offer wearability and utility (Aesthetic) Exclusive and superior quality of materials and design & Italian craftsmanship (Investment) Time resistance & longevity of quality, function, and value

CONSUMER SEGMENTS

Mental Space vs. Market Space Present Market Space: Bottega Veneta’s present market space is made up of young adults ages 25+ with middle to high income and becoming increasingly affluent. These consumers are aspirational and heavily influenced by fashion gatekeepers, seeking information through social media platforms. This means the consumer is largely influenced by trends as well as history, resulting in a combined desire to invest in luxury goods for recognition and as investment archival pieces. This consumer style is characterized by combining luxury designers with fast fashion to embrace a high-low street style. Present Mental Space: Bottega Veneta’s mental space is made up of mature and established consumers ages 30+ with high net worths and large disposable incomes. This consumer is a discerning connoisseur and characterized by an understated and timelessly chic aesthetic. This means the consumer is extremely well-versed in luxury culture and experiences. The consumer finds branding vulgar and violates what is obvious to them: that luxury and quality speak for themselves. This mental space consumer validates the brand’s intended space.

MARKET SPACE Younger consumers, ages 25+ influenced by social media and fashion gatekeepers. Characterized by combining designer goods with fast fashion in a high-low style.

Mature and established consumers, ages 30+ who are cultured with a high income. Connoisseur of luxury goods and experiences, characterized by understated and timeless chicness.

MENTAL SPACE 29

FUTURE CONSUMER TRENDS

Sense of Nostalgia: This is being referred to by forecasting experts as a “reminiscence bump.” Following the pandemic, a noticeable cultural trend towards “nostalgia” has taken place. For example, according to the Recording Industry Association of America, more vinyl records were sold than CDs for the first time since the 1980s, and streaming platforms like Hulu reported huge spikes in viewership of television shows from that period like the Golden Girls. It even extended to food, where supermarkets reported higher demand for “retro” items like a 67% increase in rice pudding sales as reported by the UK’s grocery store, Waitrose. Sales of Nintendo consoles and “retro” games shot up by 152% in Australia, New Zealand, and Southeast Asia. Experts predict that this affinity to purchase more “nostalgic” products will continue to increase in luxury sectors including food and beverage, lifestyle and interiors, and fashion in the coming years. In December of 2020, Women’s Wear Daily called Nostalgia and Familiarity the runway’s biggest mega-trend, citing designers like Miuccia Prada, Donatella Versace, Dior, and Valentino going back to their storied houses’ signature silhouettes of the past. Maria Grazia Chirui commented that consumers wanted clothes that felt like “old friends or heirlooms.” Social Exhaustion (ie: “Social Jetlag”): Even well before the pandemic, consumers were experiencing a sense of exhaustion, or “social jetlag,” a term that was created by neuroscientist and chronobiologist Dr. Till Roenneberg in 2017. The term refers to the fatigue that has resulted from consumers’ constant and “go, go, go” lifestyles. The overall sense of burnout has led to worsened health and decreased sleep. According to WGSN, the “sleep economy” which includes services, products, and apps to increase and optimize relaxation, is only set to continue growing in the coming years and is expected to be worth $40 billion in the next two years, an 8% increase from its current status according to McKinsey. This exhaustion fosters our adjacent consumer trends of digitalization (increased online shopping) as well as rising demand for self-care and wellness products/services. It also supports the continued rise of luxury travel and hospitality as the world reopens and people look to relieve exhaustion by going on vacations. Self-Care and Wellness: As people’s emotional exhaustion has increased with a rising sense of burnout amongst consumers, so has the desire for “self-care” and wellness products experience and services to alleviate stress. According to a company by Bain in late 2020, consumers need luxury brands to help “with anxiety reduction, sensory appeal, motivation, and therapeutic value.” In the last two years, there have been spikes in homeware, which womenswear director for Farfetch, Celenie Laura Fleur Seidel told Vogue Business reflects a desire for “creating a comforting sanctuary.” Self-care and wellness are projected to continue being a huge priority for luxury brands in the future as people seek products and experiences that will make them happy and reduce the tensions of everyday life. “Wellness sectors are no longer siloed industries. They will increasingly converge as we integrate wellness into our homes and communities, our work, and our travel.” -Global Wellness Institute Report, 2019

Social Consciousness: According to WGSN, “Gen Zers have grown up with the pressure of cleaning up the world they inherited, from racial and economic injustice to the environmental crisis, and hope has become a powerful motivator.” As these Gen-Z continue to constitute more prominent percentages of luxury consumers, their values inevitably imbue the industry with demands for ethical practices and social cognizance. And with their increasing purchasing power in the luxury sectors like personal goods and fashion comes the pervasive social consciousness that their generation embodies and values. Millennials also remain increasingly socially conscious. By 2026, Millennials and Gen-Z will make up 61% of the luxury market. According to a study from Nielson in 2019, 73% of Millennials are willing to spend more money on a brand they know is sustainable and socially conscious. Plus, 81% of millennials expect brands that they buy to be fully transparent about sustainability and social consciousness in order to become repeat consumers of the brand. The expectations for transparency are rising, and so are the demands for consciousness throughout luxury brands’ supply chains. Getting Inspired: As Millennials and Gen-Z continue becoming the dominant demographics of the luxury sector, more and more research efforts are finding that inspiration is important to these consumers. Gen Z spends 50% of their “purchase journey” looking for inspiration as opposed to 37% for Gen X. More than 70% of Gen Z across the globe and 82% of Gen Z in the US say they make purchase decisions while looking for inspiration and curating their choices. The biggest medium for finding inspiration is social media. Within the umbrella of social media, consumers’ top three sources for inspiration are: brand-owned social media, multi-brand specialty retailers, and lifestyle publications.

FUTURE BRAND BUILDING STRATEGY FOR BRAND EQUITY AUGMENTATION

EXECUTIVE SUMMARY

Bottega Veneta is a connoisseur brand whose rich legacy embodies luxury through craftsmanship and superior quality independent of logos or branding. But with the wildly successful first three years of Daniel Lee’s tenure, Bottega saw a spike in the hype and subsequent decrease in the discretion that has defined it for over half a century. The brand began its retreat from the fanfare by expunging all social media, a move intended to get back to its core values of elusiveness and exclusivity. Our strategy seeks to continue restoring Bottega’s core principles while increasing brand equity and awareness. It also positions Bottega in its rightful place as a connoisseur brand by moving it away from the near meta-luxury status to which it has been nearing in recent years. To achieve this outcome, two new product extensions will be implemented over a timeline of three decades. Beauty by Bottega Veneta will create a new stream of revenue that is consumer-centered. The cosmetics will be created in partnership with sustainable French Beauty brand, La Bouche Rouge. Meanwhile, limited-edition furniture capitalizes on Bottega’s established strengths of superior Italian leather artisanship. Aimed at luxury connoisseurs who seek to make purchases that encompass superiority, discretion, and sophistication, a Bottega furniture extension emphasizes the mental space of their consumers. Together, these two product extensions and their adjacent initiatives will serve to build brand equity for Bottega Veneta by the year 2051.

STRATEGIC TIMELINE 2021 - 2025

2025 - 2035

2035 - 2045

2051

Develop & Launch Beauty Collaboration

Develop & Launch Furniture Collection

Capitalize on NFT digital asset twin of furniture products

Increased Brand Equity

Introduce AR try-on feature

Plan video game interactivity with Beauty Line

Introduce video game interactivity with Beauty Line

Strategy: Our strategy for Bottega Veneta is to capitalize on the hype and popularity of the last few years by going into two new product categories, but doing it in a way that best represents Bottega as a brand. Beauty and cosmetics are a way to get a Bottega product into the hands of consumers, aspirational and connoisseur alike. This extension into beauty will lend itself to expanding brand awareness and increasing brand equity, positioning Bottega to increase revenue and access a new consumer without sacrificing its superiority or artisanship. The strategy entails partnering with a credible specialty and luxury beauty brand, La Bouche Rouge, whose values are in direct alignment with Bottega while still opening a new door for their new product extension. The other side of our strategy is to use Bottega’s greatest strength for an additional product extension into furniture. This is a natural fit since they already have legitimacy in the areas of leather craftsmanship and exquisite quality. Bottega has done furniture in the past but very infrequently and only made-to-order. In our strategy, there will be small, limited-edition capsule collections of just a few pieces that drop once a year, rendering them incredibly exclusive and speaking to the values and needs of their primary consumer and other connoisseurs. This will entail partnering with another legitimate Italian manufacturer without diluting quality with licensing out production or spreading itself too thin. This part of our strategy speaks directly to the needs of Bottega Veneta’s primary consumer. Awareness: Since Bottega Veneta is a connoisseur brand, it needs to maintain the niche-specific selective awareness, and it only communicates within its tribe rather than reaching aboard. Loyal consumers in this tribe are considered discerning connoisseurs who are characterized by pursuing an understated and timelessly chic aesthetic. To increase brand awareness of Bottega within its tribe in a thirty-year strategy, the new beauty line will be collaborating with sustainable indie beauty brand, Le Bouche Rouge, which can increase the loyalty of core users and attract beauty connoisseurs with its aesthetic, sustainability, and brand equity. Also, we will create an identifiable lexicon for products in the furniture line, which will be the symbol of the future connoisseur.

Associations: It is important for Bottega to continue tapping into the emotional, investment, and aesthetic associations in their new product categories. Bottega Veneta is currently seeing increased awareness and hype status, therefore, the furniture category will be released in limited edition drops and the cosmetic line will be launched in collaboration with indie beauty brand, Le Bouche Rouge, to continue high demand. Bottega Veneta will build upon the emotional association through the stealth category of cosmetics. Aspirational yet in-the-know consumers will now access the brand through purchasing a Bottega beauty product, satisfying their emotional desire to own a Bottega product. Bottega will build upon their investment association through the furniture collections that will be paired with an NFT twin. Bottega Veneta products are already viewed as investment pieces with high resale values, however, furniture displayed as art collections will take the investment association to the next level. Additionally, as the fashion industry taps into the NFT market, a Bottega furniture consumer will also be investing in digital investment. Furniture is the ultimate investment and will increase long-term brand equity. Finally, Bottega Veneta’s current aesthetic, the leather "intrecciato" design, will continue in both the cosmetic packaging and furniture material.

CANNATA’S DIAMOND

Density: Bottega Veneta is currently seeing an increase in brand awareness resulting in high brand density. This is a challenge that Bottega Veneta is currently combating in order to stay exclusive and selective. To continue growing, Bottega Veneta will need to meet the needs of connoisseur segments by offering new product lines that are positioned exclusively to protect brand density. Positioning of the beauty collaboration and furniture collection will strengthen density amongst connoisseurs and prevent brand immigration. multi-brand specialty retailers, and lifestyle publications. Loyalty: Brand loyalty is strong with the established and traditional consumer base. However, Bottega Veneta has the opportunity to convert hype around the brand and products into loyalty within their mental and market space. Through product extensions in beauty, Bottega will utilize brand associations and values that resonate with connoisseur consumers to build loyalty in a new product category and for the brand overall. Broadened awareness across a wider audience will result in repeat customers. Additionally, when approaching connoisseur segments Bottega has the potential to strengthen loyalty through limited-edition offerings within the furniture. This will be accomplished by communicating through Bottega’s discreet and elevated Intrecciato design, with emphasis on incorporating the technique across craftsman furniture and beauty extensions. 35

PURPOSE

The purpose of our two-prong strategy, which will span 30 years, is to increase and augment existing brand equity for Bottega Veneta through two product extensions. The first product extension is beauty. Beauty/cosmetics is an untapped niche for the connoisseur brand at this time. But in looking to the future, beauty can access a wider audience of consumers who aspire to inhabit the mental space of the Bottega customer. This customer is sophisticated, understated, and values exclusivity. The extension of Bottega Veneta to cosmetics is a concept that uses the current hype to sell stealth products to the masses, increasing revenue without sacrificing the appeal of exclusivity and excellence. This beauty line will be in collaboration with La Bouche Rouge: an indie beauty brand that emphasizes sustainability and social responsibility. It is a specialized brand with strong values, rooted in aesthetic beauty and practicality. Their designs are refillable and elegant with a focus on simplicity, sophistication, and craftsmanship: brand tenets that directly align with Bottega. La Bouche Rouge currently uses leather casing to refill products once they run out. This is high-end as well as sustainable: a partnership that will augment Bottega’s brand equity in the beauty product category, with La Bouche Rouge lending it credibility in the eyes of beauty connoisseur consumers. The second part of our approach goes back to Bottega Veneta’s strong heritage and its core identity in craftsmanship, quality, and artistic expression. To convey this major facet of the brand, Bottega will also begin offering handcrafted Italian furniture in exclusive, capsule collection drops. These limited edition pieces speak not only to the primary values of Italian artisanship but also the mental space of a consumer who values subtlety and quality above all else. These collections will be promoted and distributed in an extremely high-brow fashion, tapping into the style of gallery and fine art exhibitions, which elevate the offering to match the preference of the connoisseur consumer. Through these two approaches, Bottega will create a new channel for profitability and revenue as well as brand salience, carving out a new space for the brand in the minds of consumers while retaining its established associations in luxury.

PRICE Furniture: Over the course of years, as a high equity brand, Bottega consistently keeps extra pricing. The extra luxury ingredients within the operating of Bottega can elevate the consumers’ perception of value, baseline price, mental price zone that they associate with the brand. Therefore, we will continue Bottega Veneta’s pricing strategy to maintain brand equity. For the furniture line, which aims to reflect Bottega’s strong heritage and its core identity to consolidate core consumers, the high price of furniture is attributed to the rarity of products, the craftsmanship, and the high-quality materials. Additionally, by treating Bottega Veneta furniture as art (placing and promoting it as such) these limited edition pieces are further emphasized as real luxury investments. With such strictly limited availability and access only through art museums and galleries (no retail availability or showrooms like buying regular furniture), there will be no price cap on these pieces in the future, placing them into a different league of luxury. They are thus unique long-term investments with heightened scarcity, set to continue increasing in value over time without a cost limit just like buying a piece of fine art. Ex. Ottoman: $15,000 Bench: $17,000 - $20,000 Leather sofa: $70,000 - $130,000

Keep raising the average price of the product range: The beauty line of Bottega will attract potential customers through lower prices, thereby increasing brand awareness. However, when the brand becomes too popular due to its lower pricing, it will trigger the bandwagon effect, which is higher brand density will threaten scarcity. As a connoisseur brand, Bottega needs to keep low brand density to remain exclusivity to the mass market. In order to attract potential customers but also keep the brand’s prestige, Bottega can keep raising the average price of the core product range (RTW and leather accessories) to maintain the snob effect and avoid brand immigration. According to the Veblen effect, is abnormal market behavior where consumers purchase the higher-priced goods whereas similar low-priced substitutes (but not identical) are available, is caused either by consumers’ belief that higher price means higher quality (perception of higher aesthetic and/or functional values), or by consumers’ desire for conspicuous consumption (self-esteem – belonging – symbolic value), or by consumers’ belief of future price increase (investment value), validates that constantly raising the average price of the product range is a way to keep core users and make Bottega desirable to the masses.

Beauty: To protect Bottega’s exclusivity and excellence, the pricing of Bottega Veneta X La Bouche Rouge will be aligned with Bottega’s extra pricing strategy. The target customers are Bottega’s core customers and beauty connoisseurs. Take lipsticks as an example. Bottega Veneta X La Bouche Rouge will use leather casing to refill products once they run out. Based on the cost and original price range of Bottega’s leather accessories, the leather case of the lipstick will be about $150, and the lipstick refill will be approximately $60.

PRODUCT: COSMETICS Bottega Veneta will expand their product offerings by partnering with the luxury beauty brand La Bouche Rouge to create a collaborative cosmetic line. The Bottega collaboration line will include 6 items: bronzer, highlighter, powder, concealer, eyeshadow palette, and lipstick. The beauty line plans to stay subtle and reflect natural, understated hues to appeal to their sophisticated consumer. Just as their consumer is not looking to draw unnecessary attention with logo products, the beauty products aim to enhance the natural features for an elevated, no-makeup makeup look. La Bouche Rouge products already align with the Bottega beauty vision of clean, elegant beauty products.

Features: The face products (bronzer, highlighter, powder, concealer) will cater to consumers of all skin tones. The formula will be lightweight with a dewy finish with buildable coverage. The bronzer, highlighter, and powder will be in compact powder form, and the foundation and concealer will be liquid. The eyeshadow palette is the only eye product launching in the partnership line. The palette will consist of 8 colors inspired by Bottega Veneta bags. The palette will have neutral, earthy tones named after their leather colors such as caramel, an orangebeige; chalk, an off white; fondant, a deep brown; and peachy, a nude pink. The goal is to create consistency across the color palette of all Bottega products. The Bottega collaboration will include 4 lipstick colors. Similar to the eyeshadow palette, the lipsticks will emulate Bottega Veneta’s leather goods colors, specifically the colors of their iconic pouch bag. The lipstick colors will be variations of nudes and deep reds in a matte finish to contrast the dewy finish of the skin products. Consumers will have the option to purchase both the compact powder and lipsticks in refills or with a Bottega "intrecciato" case.

Packaging: La Bouche Rouge currently sells their lipsticks and compact face products in leather cases with refillable products. The Bottega Veneta collaboration will reflect Bottega’s brand image with leather, intrecciato cases. The Bottega x Le Bouche Rouge packaging appeals to both the Bottega and current Le Bouche Rouge consumers who appreciate exceptional detail and craftsmanship. The color of the leather cases and refills will be fondant, Bottega’s deep brown. Bottega Veneta’s brand name will not be showcased on the product casing.

PRODUCT: FURNITURE

Bottega Veneta will build and expand on their current made-to-order furniture offerings. Each capsule collection will include limited edition pieces in 5 categories: Sofa, chair, stool, bench/love seat, and an ottoman. The limited-edition collections will help Bottega Veneta manage brand density through limited supply resulting in natural scarcity. All furniture products will be handmade in Bottega Veneta’s manufacturing facility in Italy reflecting craftsmanship and quality. The differentiating feature in Bottega Veneta’s home furniture will be the "intrecciato" leather incorporated in every piece. Each furniture piece is regarded as a work of design and valued as an art investment rather than functionality.

Design: The designs will be linear and structured to appeal to the consumer who values subtlety. The simple design allows the consumer to appreciate the artisanship and quality of the leather, rather than a unique design with one exception. The exception to the unique design will be the shape of the sofa. The sofa will have a curved shape drawing inspiration from the brand’s cult-favorite pouch bag. This creates a harmony between product categories and creates a staple shape for Bottega that will be recognized as a brand lexicon in the future. Finally, the color of each product is customizable for each consumer but limited to the current, earthy tones offered in the brand's leather goods products.

PLACEMENT

The beauty collaboration with La Bouche Rouge will be distributed through La Bouche Rouge’s ecommerce website, where a separate section will be dedicated to the products within the offering. In addition, the collaboration will be distributed via luxury retailers that currently carry La Bouche Rouge collections: Harrods, Selfridge’s, Forty Five Ten, Galeries Lafayette, Bergdorf Goodman, Saks Fifth Avenue, and Luisa Via Roma. Lastly, the beauty collaboration will also be distributed through Bottega Veneta storefronts in select metropolitan cities with a high concentration of connoisseur consumers. This distribution strategy will aid Bottega Veneta in gaining foot traffic in-store and exposure to other product categories while accessing other connoisseur segments through luxury retailers who carry La Bouche Rouge. This approach to distribution highly controlled availability and “distributive rarity”. The beauty collaboration with La Bouche Rouge will be set up with understated and chic Intrecciatoinspired displays that house cosmetic products. Bottega Veneta motifs and imagery like rich deep tones and leathers will speak to the core identity and trigger emotions tied to the Italian heritage of the brand. Bottega Veneta beauty counter displays will provide an elevated experience that is both aesthetic and ephemeral. This reflects the values that define the mental space of Bottega Veneta, communicating via brand lexicon will resonate with connoisseur consumers who value the craftsmanship and quality of understated products. Furniture collections will be displayed at pop-up exhibitions at museums and renowned gallery locations in relevant cities across the U.S. and Europe: Gagosian NYC, Tate London, Brooklyn Museum (NYC), the Pompidou (Paris), the Broad (Los Angeles), the Art Institute of Chicago, Peggy Guggenheim Collection (Venice). In these galleries and curated setups, furniture will be displayed with art for a maximized luxury experience. From these exhibitions, a representative or “docent” will be able to field your inquiry about purchasing one of the limited available numbers in your specific location. This keeps in line with Bottega’s discreet, elusive, and understated brand identity. This approach to placement is highly controlled availability and “distributive rarity”.

PROMOTION Beauty: Within the next decade, there will be a huge shift in the luxury landscape in terms of how consumers interact with fashion and beauty products. While we will still cater to the more traditional values of a connoisseur who is more susceptible to print promotion via luxury publications. There is a greater opportunity for beauty to reach our mental space consumers through a burgeoning digital niche in the future. As such, we will incorporate AR beauty try-on to incorporate into the La Bouche Rouge website. To push this concept a step further, we will also create an interactive, visual experience through a video game application that will fuse the beauty line with other Bottega Veneta product lines like ready-to-wear and leather goods. - Promotion via the curated boutique setups in department stores and retailers Harrods, Selfridge’s, Forty Five Ten, Galeries Lafayette, Bergdorf Goodman, Saks Fifth Avenue, and Luisa Via Roma. - Ads in major digital luxury publications: Vogue, Harper’s Bazaar, W, WWD, ELLE. - AR try-on feature through La Bouche Rouge’s website to test shades/colors. - Video game interactivity opportunity developed by Bottega and distributed as an app. The game features a “glam room” situation where your avatar picks up products and tries them on, swatches colors, and matches accessories with possible looks. Users can acquire points the more they play in order to accrue more product options to interact with.

Furniture: In museums and art galleries. Pieces will be interspersed among the art to provide a fully immersive, high-end view as a promotion. Gagosian NYC, Tate London, Brooklyn Museum (NYC), the Pompidou (Paris), the Broad (Los Angeles), the Art Institute of Chicago, Peggy Guggenheim Collection (Venice). In the weeks leading up to the opening of the galleries, which will each be open at the same time for one month advertising the newest limited edition furniture drop, the date, location and hours will be printed in Bottega’s new digital Journal, Issue. Otherwise, there will be no advance notice or promotion of when the collection will be available for art viewing at the designated locations. There will be no loud promotional efforts nor efforts on the brand’s part to “sell to you” or facilitate sales, driving up the desire, exclusivity, and demand. In the future, there is also the opportunity to capitalize on the trend of NFTs that creates a digital twin for each product sold. This would mean monetizing NFTs to sell digital assets of the limited edition furniture pieces. These combined promotional efforts take divergent approaches to each product extension and cater to both consumers in order to increase overall brand equity. The following values are met through these strategies: Aesthetic, Ephemeral, Emotional, Investment, Functional.

PEOPLE

Inside: Over the next thirty years, we will gradually build cultural background by associating Bottega with Italian craftsmanship and “intercciato”. We will show the virtuosity of Bottega by showcasing craftsmanship to the mass market audience, thereby enhancing the customer’s brand awareness and brand association. To build high “human” content in relevant components of the value chain. As Bottega expands into more regions, the inclusivity of employees within the company is essential to build a more diverse environment on the inside. Besides, digitalization is a trend in the luxury industry, so it’s important to emphasize customer service both online and in-store to build a seamless customer experience.

Outside: To continue Bottega’s low-key and private brand image, rather than using celebrity ambassadors or influencer endorsements, we will use well-known artists, photographers, and models in campaigns based on target consumers’ characteristics to develop a tribe to share aspirational values to the mass market. Within the tribe, core users have high disposable income to purchase luxury goods; they are confident, subtle, sophisticated, and prefer understated luxury. Therefore, limited drops of furniture line and high-end beauty line can attract them. The long-term goal of Bottega is to increase brand loyalty by building a strong sense of tribe.

CONCLUSION Since 1966, Bottega Veneta solidified their position in the luxury leather goods market with the tagline: When your own initials are enough. Since the brand’s conception, Bottega Veneta’s brand identity is rooted in their leather, "intrecciato" design. Once the Italian brand was acquired by Gucci Group, now known as Kering, the brand operated under the creative direction of Tomas Maier. Following slow financial growth, Kering appointed British designer, Daniel Lee, as creative director. Under his tenure, Bottega Veneta experienced massive financial success and saw an increase in brand awareness. In 2021, Bottega Veneta is now faced with the challenge to manage brand equity, deter oversaturation and ensure their position as a connoisseur brand. We are confident that a beauty partnership with an indie cosmetic company and a product extension into furniture will result in increased brand equity over the next 30 years.

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LXFM 730 | MARKETING STRATEGIES FOR LUXURY BRANDS AND EXPERIENCES | SPRING 2021 | PROF. ALESSANDRO CANNATA | BY GRACE DIPAOLO, MADELEINE HARRIS, BRONTE MONGAN, ZIYI WANG