Marketing_Strategies_and_Retailing_Concepts

Introduction The issue: The chosen topic is focusing on the changes and challenges undergone by the Luxury Apparel Industry in the present as a result of the changing business environment and customer expectations.  The problems I have identified are: - Changing of important aspects in the luxury apparel market such as: o The expansion of the luxury consumer market to include a broader mass market o Competition from mass fashion brands o The reinterpretation of luxury by the consumer society o The increase in the number of the world’s wealthy and changing attitudes in their spending patterns. o Changing consumer psychology and perception of luxury (the products can be accessed by internet, consumers don’t only buy products but also sell or borrow them) -Challenges for the luxury department: o The different evolutionary stages of the luxury market in several parts of the world (Europe, US, Middle East, Asia, Africa) o Rapid market expansion and competition as a result of easier entry into the industry, the emergence of new luxury markets and also of the increase in wealth and mobility of the luxury consumer. The aim of my thesis is to describe the current situation of the Luxury Fashion Industry, and determine which competitive strategies could be adopted by the Luxury Fashion Brands in order to cope with the current changes and new challenges of the business environment. The final part of the thesis is represented by a study case of one of the leading companies in the Luxury Fashion Industry, The Prada Group.  My Objectives can be summarized as following: - to provide a framework of business management techniques that can be applied to the luxury goods market and beyond - to review strategies that can be used to interpret current and future market changes and ways that luxury brands can be alert to face competitive challenges - to find new approaches towards the business of smartly bringing objects of desire into the marketplace - According to the theoretical information presented in the first three chapters: o Analyze the current situation of the Prada Group, and find out how the Company is coping with the challenges previously described. o Analyze the marketing and retailing strategies of Prada Retailing UK, and, according to the current trends of the Luxury Fashion Sector, find out what could be improved in order to increase profit and sales.  The approach: In order to accomplish this objectives, the following steps have been went over: In the first Chapter, I have described in detail the present aspects of the Luxury Industry, focusing on the strategy of successfully creating and managing luxury brands, as a core competence of the luxury marketing strategy. I have also described the process of developing a Business Model, applied in the Luxury Fashion Sector, and its importance. The first chapter also presents information about how the Marketing Strategies should be applied in the Luxury Apparel Market. The second Chapter deals with the luxury fashion consumer, as a decisive factor of any marketing strategy. The customer profiles, behaviors and the buying decision process have been analyzed, in order to be able to develop effective strategies for customer acquisition and development. This can be achieved through the implementation of the Customer Relationship Marketing (CRM) Concept, which is also described in detail. In the third Chapter I have presented an emerging retail channel in the Luxury Fashion Market, which is represented by the E-commerce. I have also described in detail all the potential risks of this channel, but also the great opportunities and benefits it can offer to Luxury Brands, as well as new approaches to overcome the risks previously described. The fourth Chapter is represented by the Study Case of the Italian Fashion House Prada, which presents the practical application of the theoretical information shown previously. The last Chapter gathers my personal conclusions and suggestions. Chapter I: The Luxury Fashion Industry The luxury fashion industry is a global multi-billion euro sector comprising of a multitude of brands with high relevance. Among these, the most influential brands in the Fashion Industry are Louis Vuitton, Gucci, Chanel, Hermes and Prada, being also among the most valuable brands in the whole world. Despite the large size and income generation of the global luxury fashion industry, the sector has witnessed a slow growth in its strategic business direction. The traditional business methods and conventional advertising strategies need to be replaced today with modern and sophisticated business practices, required by the rapid development and complexity of the global business environment. In an attempt to find a synergy between its origins in tradition and the requirements of modern business, the global luxury goods sector is currently undergoing an important evolution and several management shifts. These changes range from the use of business concepts such as brand equity and brand asset valuation to e-business; and the development of consolidations and private equity financing. There has been a shift in the focus of the luxury market from ‘products’ to ‘consumers’ and the ‘competition’. The rife competitive business environment makes developing cutting-edge strategies, based on relentless innovation, a necessity. A competitive approach in today’s business environment involves reaching consumers through new media such as Internet Shopping and Mobile Shopping. Luxury brands need to represent something substantial and valuable to customers through their brands’ offerings. Consumers are overwhelmed with product variety and choices, therefore purchase decisions are now mostly based on brand choices. This means that the brand that consistently reinforces the appeal to consumers through it’s differentiated offerings will draw the most loyal customers. The branding aspect of luxury goods management is integral to a luxury brand’s sustainability. The brand is the reason that consumers associate themselves with a luxury company. It is what creates and sustains the attraction for products. The result of a successful branding process is a strong attachment that luxury consumers have to brands, that often defies logic. Brands should not be managed like products; they are a complete package that provides a source of identity for products, essential for the associations and perceptions eventually developed in the minds of consumers. This is what draws consumers to luxury brands and remains their source of satisfaction. Although the ‘brand’ is the core competence in the luxury goods sector and Brand Management is the most influential business aspect, the concept is still not properly understood and developed in this industry. In most cases, the brand is managed through the view of product development and the brand portfolio is seen as the same as the product portfolio. The sequence is often to first develop products and make branding decisions afterwards, which is a wrong approach, considering today’s business environment. Branding decisions should be at the core of all the corporate decisions that a luxury brand makes, including product development. The process of branding begins with crafting a clear brand concept and brand identity and projecting it to the public through an equally clear brand personality and brand image. What the consumers see and interpret through the brand image leads to a positioning of the brand in their minds through perceptions and associations. This further leads to the allocation of a space for that brand in their minds according to their feelings towards the brand. This is called the brand share, and influences further purchase decisions and subsequently brand loyalty. Branding and Brand-Strategy Management are the most important tools the luxury fashion sector has, because brands are invaluable creators of wealth for companies. The aim of each company should be to have high brand equity, which is reached when the sum of all distinctive qualities of a brand results in the continuous consumers’ demand and their commitment to the brand. Developing and effectively managing a luxury brand requires a consistent integrated strategy, innovative techniques, rigorous management control and constant auditing. This is the reason that there are few existing brands that can claim true ‘luxury’ status. The successful brands are those that understand the challenge of finding a balance between being timeless through a firm brand concept and heritage; being current and relevant for the moment through strong brand positioning; and being innovative in crafting a future, all at the same time. The concept of branding. Brands are powerful and symbolic elements that have the potential of influencing cultures, societies and generations. The instant recognition and definition of certain products is mainly as the result of the brand. They play a daily role in consumers’ lives, from the product decisions and choices they make to the people they choose to speak and associate with. They are also wealth-creators and a source of steady income stream for the companies that own them.