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Report book
1. 1
Business Environmental Analysis & Strategic
Business plan for Saint Laurant Paris
Aseel Ismail
Asheligh Scheidler
Parul Jenjea
Ravneet Sachadeva
FASH 502/ 2016
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5. 5
Saint Laurent Paris is a well-known luxury brand
owned by Kering Group. Yves Saint Laurent was
founded by Yves Saint Laurent and his partner Pierre
Berge, assisted by several former Dior employees
(Yves Saint Laurent worked at Dior before launching
his own haute couture maison) and backed financially
by the American J. Mack Robinson, officially opened
the House of Saint Laurent on the rue Spontini in
December 1961, presenting the first true Yves Saint
Laurent collection under the famed YSL logo designed
by Cassandre a month later.
New Owners of the brand:
• Due to huge debts, the company was sold to Sanofi
in 1993.
• In 1999, Gucci (owned by PPR then) took over the
company appointing Tom Ford as the designer of the
ready-to-wear line.
• The last haute couture collection by Yves Saint
Laurent was in 2002, which closed down after his
retirement.
• In 2012, YSL was rebranded as ‘Saint Laurent Paris’
by the new Creative Directory, Hedi Slimane who
gave an edgy design identity that appeals to younger
consumer.
This report aims to analyze the company’s macro
environment that includes the existing political,
economical, social, technological, environmental
and legal issues and their implication on the brand
‘Saint Laurent Paris’ and understanding the micro
environment by examining the company’s market size,
industry size, industry trends and competitors’ analysis
in terms of objectives, Strategies, strengths, weakness,
product, customer profile, price, place and promotion.
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17. 17
Paris luxury and sportswear group Kering saw a sharp
increase in profit in 2015 at its smaller luxury brands
like Bottega Veneta and Saint Laurent Paris offset
the poorer performance of its main Gucci and Puma
labels, which continued to struggle (The Wall Street
Journal 2015).
Kering, whose luxury brands also include Bottega
Veneta and Yves Saint Laurent reported that their
net profit rose to €528.9 million ($600.6 million) from
€49.6 million a year earlier. These two brands showed
continued strong growth and made up for the relatively
weak showings at Gucci and Puma, which is 86%
owned by Kering. Bottega Veneta and Yves Saint
Laurent maintained their
hot streaks. Bottega Veneta sales rose 11% while
Yves Saint Laurent sales increased 27%. Yves Saint
Laurent revenue has doubled in the past three years
alone, the company said (The Wall Street Journal 2015).
Kering said the luxury market in the U.S. and Japan was
especially strong in 2014. Its luxury division reported
sales up 10% and 14% in each of those regions,
respectively. The Asia Pacific area grew just 4% as
political turmoil and slowing Chinese economic growth
cut sales growth in Hong Kong and mainland China,
but Western Europe picked up pace during the last
quarter(The Wall Street Journal 2015).
The credit behind the success of Saint Laurent Paris can
be given to Hedi Slimane, the creative director of Saint
Laurent who was appointed in March 2012. Since when
he stripped off the name ‘Yves’ from the company’s
ready-to-wear line, the house showed spectacular
results. In the three years since he took the creative
reins, the brand has more than doubled annual sales
revenue to €707 million in 2014 (about $787 million), up
from €353 million in 2011 (Business of Fashion 2015).
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19. 19
Kering reported the brand key figures of Saint Laurent
Paris for 2014 were:
-€707Million in Revenue
-€105Million in recurring operating income
-1712 average numbers of employees
-128 directly operated stores
The Breakdown of 2014 Revenue as per product cate-
gory is as follows:
-Leather goods 47%
-Shoes 19%
-Ready-to-wear 24%
-Other 10%
According to Kering group the number of directly oper-
ated stores has increased from 115 in 2013 to 128 in
2014.
The Revenue in total has increased from €557 Million
to €707 Million in 2014 which is around 25 percent
increase and the recurring operating income has also
increased by 25% from 2013 to 2014.
The luxury apparel and footwear has growth 10% in
2013, where it has the largest number of companies.
The top three companies are Ralph Lauren, PVH
Corp, and Hugo Boss with an accounted for 42.8%.
Moreover, most of the companies were based in Italy,
but the companies that were based in the U.S. saw the
fastest growth in 2013 in this sector, such as Calvin
Klein and Warnaco as well as Christian Louboutin and
Jimmy Choo.
Bags and accessories companies has growth by 4.7%
and the top three companies are Luxottica Group,
Safilo Group and Kate Spade who was the fastest
growth company by 60.9% in 2013. On the other hand,
Luxottica’s drop by 13.9% in 2012 to 3.2% in 2013.
The cosmetics and fragrance companies are larger by
$3.126 million, with seven of the eleven companies
in the group greater than $1 billion. The top three
companies are Estee Lauder, L’Oréal and Shiseido
where they have good sales up to $5 billion.
Moving to Jewelry and watch companies where they
did a good performance in 2013 by a growth of 13.5%
of the top 100. This sector includes the largest number
of companies at 31%. The top three companies are
Chow Tai Fook, Swatch Group and Rolex who share a
42.9% of this group’s sales.
The ten multiple luxury good categories companies
have the largest average size by $6.8 billion and a
31.9% of the top 100 luxury good brands.
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The overall luxury industry comprises nine segments
in total, including personal luxury goods, cars, luxury
hospitality, luxury cruises, designer furniture, fine food,
fine wines and spirits, yachts and private jets. The
three biggest segments (in order) are cars, personal
luxury goods and luxury hospitality.
Factoring all segments, the overall luxury market
exceeded €850 billion in 2014, showing a healthy
growth of 7% overall, driven primarily by luxury cars
(10%) and luxury hospitality (9%). (Bain Worldwide
Luxury goods report, 2014)
While the global luxury market surpassed €1 trillion
in retail sales value in 2015, sales of personal luxury
goods – which accounted for 80% of the total market –
are expected to grow only 1% at constant exchange, to
€253 billion.
Compared to 3% growth for the same period last
year and a 7% rise in 2013, the prediction marks the
deepening of a luxury lull, which has been creeping up
on the market for some time. Within specific categories
of luxury goods, accessories captured 29% of the
market and grew by 4% in 2014 —more than apparel
and hard luxury (jewelry and high-end watches), the
next two largest categories.
For the first time since 2007, the growth of high-end
shoes surpassed that of leather goods, emerging as
an evident status symbol, albeit at a lower ticket price
than other leather goods.
LVMH (Louis Vuitton Moet Hennessy) is the most
valuable luxury brand in the world, with a brand value
of about €23.74 billion. The LVMH Group’s total
revenue for the 2014 fiscal year was about €30.64
billion. (Statista.com)
New markets and segments are giving the industry
growth points. One challenge for luxury companies is
to maintain brand equity and cultivate their customer
relationships.
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24. CONSUMER SPENDING TREND
The US remains the largest global market with a value
of €64.9 billion, bigger than the next four (China,
France, Italy and Japan) combined. Moreover, the US
is continuing to grow rapidly, with estimated growth of
5% in 2014.
The importance of the US market for luxury brands is
epitomized by the magnitude of New York City alone,
which is a bigger market for personal luxury goods
than the second-largest country, Japan
The market for luxury goods in China contracted in
2014, yet purchases by Chinese consumers now
represent about a third of the global market.
Globally, many markets now depend on touristic
spending for luxury goods, not just on local consumers.
(Bain Worldwide Luxury goods report, 2014)
CHANGES IN DISTRIBUTION
Company-owned retail stores continued to gain share
relative to wholesale channels. From 2007 through
2014, the share of company-owned retail sales has
gained 10 percentage points and now totals nearly one-
third of the luxury-goods market.
Retail channels grew 5% in 2014 alone. Monobrand
stores now represent more than one-third of the overall
market, while monobrand distribution across formats
already claims 52%.The airport channel continues to
gain share, with a CAGR of 11% from 2011 through
2014. Airports now represent 5% of total luxury sales
and are particularly critical in Asia and Europe.
The online luxury market, which has grown twelvefold
in the past 11 years, now makes up 5% of all sales. In
terms of location, digital shopping is more developed in
the Americas. From a category standpoint, accessories
and apparel dominate online at 41% and 28% of sales,
respectively. Retailers (such as department stores)
are still the top-performing players online, followed by
e-tailers, and then only by individual brands, some of
which are struggling to find the right formula for this
channel. (Bain Worldwide Luxury goods report, 2014)
INDIVIDUAL CATEGORY PERFORMANCE
Since 2012, accessories have become the largest
category within luxury goods (at 29% of total sales in
2014), followed by apparel (25%), hard luxury (22%)
and beauty (20%). In 2014, this pattern held true, as
accessories grew 4% year over year—more than any
other personal-luxury-goods category and more than
the market overall. Shoes are becoming an accessible
status symbol, and that category has grown faster
than luxury leather goods every year since 2012. (Bain
Worldwide Luxury goods report, 2014).
THE IMPORTANCE OF TECHNOLOGY
Technology will continue to influence the entire value
chain within the sector.
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The luxury industry as a digital “latecomer”: It is a
popular criticism to suggest that luxury brands have
been too slow to include digital, and specifically
e-commerce, in their business. This slower adaptation
has its basis in the need for luxury brands to first
and foremost protect brand heritage. This legitimate
concern about diluting the brand’s uniqueness and
exclusivity in the broadly accessible online world
requires brands to move cautiously to ensure
sustainable, long-term value creation.
Looking forward, brands that can integrate technology
into brand and product experience are well placed
to engage future luxury consumers. Consumer
experience will be inextricably linked with innovative
use of digital platforms to connect with the growing
number of internet and smart phone users in leading
luxury markets. A number of companies are drawing on
their artistic and innovative traditions, creating highly
polished, visually enchanting online content.
Some companies have created entertaining apps, such
as Hermès’s “Tie Break,”14 a game that immerses
users in the brand experience.
Luxury brands that choose to push boundaries when
it comes to creating visually enticing and experiential
digital platforms via short films, apps, microsites, and
“#events” such as Burberry’s “Art of the Trench”15 are
likeliest to succeed with consumers both on and offline.
The emergence of smartwatches and wearables are
two examples where brands have pushed technology
boundaries, not just at point of marketing but also at
the product development level. (Bain Worldwide Luxury
goods report, 2014).
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CHANGES IN THE CHINESE LUXURY MARKET
For much of the past decade, China has been the key
driver of the global growth in sales of luxury products
and services. But over the course of the past eighteen
months a number of factors—some predictable, others
less so—have combined to slow what had been a
torrid pace. The upshot of these developments is that
China has been transformed from a veritable gold
mine into a market with a more challenging operating
environment for purveyors of luxury goods.
In retrospect, some sort of slowdown was bound to
occur. Recently released earnings reports of many
global luxury brands are comparatively poor. Revenues
only grew modestly and profits are down, in some
cases like Prada severely, who reported for the third
quarter of 2014 a 44% decrease in profits against a
sales drop of 5.6%.
From 2004 to 2012, sales of foreign luxury brands rose
at an annualized rate of 25%. That record catapulted
China into the fifth-largest market for luxury goods,
trailing the United States, Japan, Italy and France.
Based on that performance, many analysts were
confidently predicting that by the end of the decade
China would surpass the U.S. as the world’s leading
luxury goods market.In addition to political factors,
luxury goods companies are also being forced to
adapt to changing behavioral patterns among Chinese
consumers.
The rise of newly-rich Chinese has led to a sharp
increase in foreign travel. Reflecting that development,
over the last five years luxury brands sales not only
increased sharply in Mainland China, but also with
Chinese customers snapping up these products
abroad, mostly in Hong Kong and in Europe. (Bain
Worldwide Luxury goods report, 2014)
MERGERS AND TAKEOVERS
LVMH, Kering, Richemont, and Chanel, among others,
have used vertical as well as horizontal acquisitions
to become the largest luxury groups in the world. In
a bid to protect artisan skills, jobs, and competitive
advantage, companies are bringing craftsmanship,
expertise, and production in-house.
In May 2014, Chanel, through its subsidiary Maison
Lesage, acquired a 70% stake in Jean-François
Lesage, owner of the India-based embroidery atelier
Vastrakala.
In mid-2014, Valentino Fashion Group—owned by
Mayhoola for Investments since 2012—acquired two
suppliers for its accessories division: a 51% stake in
Pelletterie Sant’Agostino, a manufacturer of leather
bags (since renamed Valentino Bags Lab), and a
40% stake in Figli de Enio Pescini, a maker of brass
components for Valentino bags and other luxury
brands.
In May 2014, Giorgio Armani gained full ownership of
Presidio International (doing business as A/X Armani
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30. Exchange), a joint venture company established in
2005 with Como Holdings, a UK company that held
the production and distribution license for A/X Armani
Exchange in the United States, Canada, Central and
South America, and Asia-Pacific. The acquisition of
Como’s 50% stake gives Armani complete control over
the youth-oriented, fashion-forward collection, which is
available in more than 250 stores worldwide.
HUGO BOSS took full control of its store network
in China and Macau in June 2014, acquiring the
40% stake in a joint venture held by its longstanding
franchise partner Rainbow Group. In 2013, HUGO
BOSS generated around 9% of its sales in China, the
group’s single biggest market in Asia and fourth-largest
market worldwide. At the end of 2013, the company
operated 126 freestanding stores and shop-in-shops
in the country, establishing HUGO BOSS as a highly
recognized premium and luxury apparel brand in
China.
As the luxury goods players look for sustainable
growth, horizontal and vertical acquisitions will
continue to play
a major role in the sector. Strategic acquirers as well
as financial investors will continue to scour the market
for brands with global potential, helping them broaden
their product offers, strengthen their operational
management, expand their distribution networks, and
pursue international development opportunities. (Bain
Worldwide Luxury goods report, 2014).
ENGAGING THE LUXURY CUSTOMER
The ever-sophisticated luxury consumer is increasingly
digitally-savvy, time-sensitive, and socially aware. To
engage such a consumer the luxury industry has three
significant challenges. The first is technology: 2015 so
far has very much been a “smart” year in the luxury
sector, and the sector needs to continue to forge a
strong relationship with an ever-increasing array of
technologies. Second, the rapidly evolving consumer
profile makes it critical for companies to understand
the changing desires, buying behaviors and channels
of luxury consumers. Underpinning both of these
factors is the luxury brand’s commitment to its history,
provenance, and community. (Bain Worldwide Luxury
goods report, 2014).
ENHANCED CUSTOMER EXPERIENCE
Luxury brands that use technology to make their
consumers’ lives easier and make interactions more
engaging will rapidly build stronger brand value and
broaden their market footprint. Moreover, given the
increasing number of devices used by consumers, all
content must be seamlessly available across multiple
platforms. Beyond convenience, however, brands must
keep the customer engaged before, during, and after
the actual purchase, continuing the relationship and
enriching it through valuable and entertaining digital
content. Gucci has been very highly ranked in digital
customer experience and Coach has been recognized
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for their capabilities in both e-commerce reach and
digital customer experience.
The rise of e-tailing, the havoc caused by the recent
Great Recession and the increased homogenization of
the American shopping experience have combined to
generate an upheaval in the country’s real commercial
real estate landscape. The upshot: increasingly, luxury
retailers are becoming the new mall magnets in the
nation’s shopping malls.
The internet notwithstanding, consumers still like to go
to malls to shop; they just need an exciting, attractive
reason to go. Luxury retailers are providing that
attraction. If there is one constant, it is the performance
of high-end shopping centers, known in the trade as
Class A malls.
As a consequence, these Class A malls are now
driving the retail real estate recovery. Average vacancy
rates at these malls is running between 2.5% and 5%;
by contrast, vacancy rates at so-called Class C malls
hover around 11%. (Bain Worldwide Luxury goods
report, 2014).
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OBJECTIVE
Burberry pushes itself to be a distinctive global
luxury brand with four focuses: brand first, famous
for product, customer-centric, and productive and
responsible. With recent leadership changes, including
Christopher Bailey being named Chief Creative and
Chief Executive Officer, Burberry hopes to reassert
the impact and youthfulness of the 159-old brand.
The company currently operates under 3 sub-brands:
Burberry Porsum for fashion collections, Burberry
London, for tailored and work attire, and Burberry Brit
for more relaxed and casual day-to-day wear. Under
Bailey’s leadership, the company will dissolve these 3
brands and combine under the single, unified Burberry
name.
STRATEGIES
The company saw many overall increases between
2014 and 2015, partially due to their refocused
strategies. As noted by the Burberry Annual Report
2014-2015, the key focuses during this time frame
were runway shows, flagship markets, marketing
innovation, and external recognition. Through all of
these channels, Burberry focused on the theme of
‘heritage’, which was marked through the relaunch and
updated design of its iconic trench coat. The company
strives for increased connection with both the origins
of the brand and the modern customer. It plans to
open a manufacturing and weaving facility in the UK by
2019 to bring back an authenticity to the British image,
expand further into the growing cosmetics market,
expand existing men’s and children’s lines, and,
certainly not least, continue to work on blurring the line
between physical and digital interaction by increasing
participation and personalization via internet, apps,
and generalized advertising.
STRENGTHS
One of Burberry’s most obvious strengths is its
distinctive British identity. It is the premiere British
based brand and pride’s itself on that accolade.
The refocus of the company on its roots has been
well received, with sales up overall. These financial
increases, though smaller than other companies, will
continue to be a strength as the company plans to
continue to push and capitalize on these successes.
New initiatives, keeping up with the “new and now”,
and identifying with the customer are also strengths of
this brand. One new implementation to Burberry retail
locations will be the Scarf Bar. At this bar, customers
are able to have a personalized experience with the
help of a sales associate to pick out and customize the
perfect scarf. The customer will be able to select the
check of the scarf, monogram and thread color. This
allows the company to create a memorable connection
with the consumer to promote brand loyalty. Also,
Christopher Bailey has resolved to move the 3 sub-
labels to one unified label. This will help dissipate
confusion among customers and allow the brand to
grow and develop as a single unit. It will cut down
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34. costs for employment, production, promotion, and
many other areas.
WEAKNESSES
Burberry is still trying to grow a brand that at one point
had been stalled. Per the 2014-2015 annual report, the
company recognizes that a key weakness lies in the
cosmetics and beauty area. There is great potential
for growth, with expansion into this field, however
there are already many luxury brands that have a
stronghold. Additionally, although company continues
to experience overall growth, the numbers reflected are
single or low double digit percentages. In some areas,
such as licensing, in particular, there was unchanged
growth for the fiscal period. Additionally, a challenge
that is currently being resolved is a digital delivery.
Within the Asian Pacific region, Burberry experienced
delayed delivery periods for customers due to slow
production. This is a area that is being honed in on for
improvement and resolve in 2016.
PRODUCT
The product line of Burberry includes women’s
apparel, men’s apparel, children’s apparel, beauty
(including fragrance), and accessories which includes
the esteemed scarves, embroidered ponchos, leather
goods, and other accessories. The strategy of Bailey
was successful through the numbers as the Heritage
trench coats drove 11% underlying growth in Women’s
and 10% underlying growth in Men’s. Accessories
was led at 12% underlying growth by the Heritage
scarves and personalized ponchos leading the way.
Additionally, the 2014 launch of My Burberry fragrance
boosted the sales in the Beauty department.
CUSTOMER PROFILE
The overall feel of Burberry is fresh, youthful, and
spirited. The brand has intentionally expanded to
appeal to more of an array of customers, however
the ideal consumer profile would be a young man
or woman between the approximate ages of 21-35,
who is a professional, has many friends and social
engagements to attend, is well groomed, excited about
living, appreciates tradition and is proper yet playful.
This profile is promoted through many advertisements
featuring models such as Cara Delavigne, Kate Moss,
and other youthful faces. The brand aims to be “forever
young” and timeless.
PRICE
Women’s Apparel $125-13,000
Men’s Apparel: $105-2,295
Children’s Apparel: $60-1695
Beauty: $22-2800
Accessories: $150-20,000
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35. 35
PLACE
Burberry is headquartered in London, England.
Products are sold globally through brick-and-mortar
retail stores, Burberry.com and through third party
wholesale customers; both on and offline. The
company holds 79 signature stores in the Americas,
74 in EMEIA, and 66 in the Asian Pacific region. The
leading revenue comes from Asian Pacific with £938
million, followed by £869 million in EMEIA and £648
million in the Americas.
PROMOTION
Several promotional focuses existed during 2014-
2015 which will continue into 2016. First, in the spirit
of returning to roots and heritage, Burberry chose
to focus on runway shows and giving all consumers
access to them. The shows were held in London,
4 times during the year and were live streamed to
consumers via the internet, LINE in Japan, Twitter.
Other features such as Twitter’s “buy now” facet
were utilized for the beauty products featured on the
runway and live music was performed to enhance the
atmosphere, as opposed to the deep house tracks
normally played.
The goal for 2016 is to continue this digital promotion
strategy while maintaining the print stronghold in
magazines, billboards, and within shopping areas.
Burberry hopes to show the expansion of the brand
via online videos and ads, large city center jumbo-tron
promotions, and customer centered experiences with
models, promotors and executives.
Flagship store creation and promotions are also
high on the agenda. Burberry recently launched a
flagship store in Los Angeles, Shanghai, Osaka and a
standalone beauty store in Seoul, all with a celebration
centering around festive themes. Additionally, The
brand continues to refine and redirect where it is sold
regarding retail and wholesale. The aim is to only sell
in places that will be a stronghold and add value and
relevance to the brand.
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OBJECTIVE
Gucci, founded in 1921 by Guccio Gucci, is still
headquartered in its birthplace; Florence. The brand
has a long running history very representative of Italian
culture and craftsman ship. The bran prides itself on
having a modern approach to luxury; aiming to keep
styles eclectic and contemporary with underlying
romance. Bought by the Kering Group in 1999, Gucci
as a brand still strives to uphold its Italian reputation
while staying relevant in the fast moving world of
fashion by selling through signature boutiques,
wholesale retail, and online.
STRATEGIES
One of Gucci’s main focuses and strategies is their
signature stores. These stores, spread across the
world bring in 79% of overall profit, improving 2% from
2013-2014. Additionally, Gucci has recently decided
to focus on the Asian Pacific area to ramp up sales.
This was accomplished as Japanese sales increased
by 9.5%. In North America, business has remained
steady for the fashion house, with an increase of 5.4%
in sales.
With new leadership the brand also continues to
focus on promoting to a younger demographic and
to increase product diversity to allow more consumer
access to the company. In particular, there has been
an increase of the number of fashion jewelry pieces
which are designed and sell at a lower price point.
STRENGTHS
The Gucci logo, trademark red and green web stripe
designed from a horse girth, horse bit and Gucci print
are all extremely well known and recognizable, almost
to the household level. The symbols have become
iconic, and with the company cracking down on phony
replicas, the prestige of the brand is returning. Since
the empire was partially built and well spread through
the aristocratic equestrian community, a refocus on the
traditional look of the brand has reignited the interest of
many high society customers.
Another current strength of the brand is the response
of the fashion community to the new creative director
Alessandro Michele, who replaced Frida Giannini in
January of 2015. Although not new to the brand, as
Michele had been designing since 2002 for Gucci,
he is bringing new life and style to the collections.
He has dramatically returned to the storylines of the
collections, which he refers to as his “agenda”. This
allows for diversity in styling, patterns, and designs
while still providing a cohesive idea for the customer to
buy into.
Finally, as gender roles and dressing become
increasingly fluid in society today, Gucci appeal
increases. The brand has long been known for
transitional pieces such as their men’s and women’s
hobo bag which was first introduced in the 1970s. The
label continues to play to this niche and strongpoint
with tailored looks on women and feminine accents on
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38. men.
WEAKNESSES
One major weakness Gucci faces is continuing to
rebuild the brand after many knock-off and counterfeit
production items were on the black market in the early
2000’s. This badly damaged the brand by cheapening
its aesthetic to the public, making the items seem less
aspirational.
Despite the positive response to Gucci’s newest
member, Alessandro Michele, the company was
plagued by scandal with the abrupt departure of both
former creative director Frida Giannini and former CEO
Patrizio di Marco. The pair suddenly resigned their
positions after being ousted for a long term love affair.
While in some ways this added to the dramatic aura
of the house, it also left leadership in a tight spot and
having to make quick decisions.
The proof of weakness is also in the numbers. Gucci
overall has suffered financially with a 1.1% decrease
in profit as a whole. This is despite increase in sales
within the North American and Asian Pacific.
PRODUCT
Leather goods
Shoes
Women’s Apparel
Men’s Apparel
Children’s
Jewelry
Accessories
Eyewear (Licensed)
Beauty and Fragrance (Licensed)
CUSTOMER PROFILE
The ideal Gucci woman has been described as
“daring, curiously compelling—and with a streak of
mystery and eccentricity.” The overall customer profile
is currently in slight transition, due to the vision of
Michele reinventing the aesthetic of Gucci, but the
overall aura remains the young, sexy, risk-taker. While
a main portion of marketing and sales is aimed toward
women, Gucci often includes young men as well far
more often than other brands in advertising. The ideal
customer is always on the go to events and vacations
and has an interesting career that provides ample
means for this lifestyle.
PRICE
Leather goods: $520-$49,300
Shoes: $150-$3,100
Women’s Apparel: $590-$47,000
Men’s Apparel: $200-$16,300
Children’s Apparel: $90-$3,600
Jewelry: $170-$15,500
Accessories: $150-$4,600
Eyewear (Licensed): $205-$1,195
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39. 39
Fragrance & Beauty (Licensed): $28-$200
PLACE
Gucci holds its strongest sales in the Asian Pacific
followed by Western Europe and North America. Japan
is noted in its own category rather than Asia Pacific
because there was a specific push for the Gucci brand
to be represented in this area, with an overall increase
of 9.5% in the past fiscal year. The strongest point
of sale is through Gucci signature boutiques which
account for 79% of all of sales.
PROMOTION
Gucci promotes through a number of channels
including magazine and newspaper ads, television
commercials, billboards, internet advertising,
promotional events, celebrity clientele and fashion
show promotions. In the past Gucci has been
represented by celebrity spokespersons such as
Cameron Diaz, Blake Lively, Rhianna and others. The
company has previously sponsored ads which have
not been received well by the public due to the sexual
nature of the content. However, in recent advertising,
Gucci models are fully clothed and convey instead a
vibe of retro 70s quirkiness, individuality, and pizzazz
with glamour.
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41. 41
OBJECTIVE
Givenchy aims to “sensuously [reinterpret] the codes
of elegance, sophistication and femininity” through its
equally luxurious and intriguing designs. The brand
exudes a dark, chic coolness that no other brand can
seem to encapsulate. It aims to express creativity and
individuality in a way that is fashion forward and trend
setting. This company wants to get the product to the
consumer as quickly as possible to retain interest,
appeal and cutting edge.
STRATEGY
Many strategies come into play within the house of
Givenchy, one of the most recent being the hire of
Laura Dubin-Wander as President of U.S. Business,
formerly Vice President of Dior. This is important to
note because over the past fiscal year, the United
States has accounted for 20% of Givenchy’s overall
business. The label is mostly sold through wholesale
retailers including Neiman Marcus, Bergdorf Goodman
and Saks Fifth Avenue, however there are 3 signature
boutiques located in New York, Las Vegas, and Miami.
In 2015, LVMH reported that Givenchy had “sustained
growth” in apparel, beauty/fragrance, and leather
goods.
STRENGTHS
Strengths include a well established and well
recognized brand, notable celebrity clientele, and
strong presence in social media. Givenchy is very
easily recognizable due to the fact that the overall
feel of each piece has a strong brand presence while
varying in actual design. The company is smart to use
the free marketing and advertising of red carpets by
featuring a Maison area of the fashion website which
highlights who wore what Givenchy item when and
where.
Despite not having a direct online shopping portal, the
company website is very well developed and promotes
the brand strongly. The company utilizes other
platforms such as Instagram and keeps the aesthetic
of the brand consistently throughout all areas. The
most recent collections and runway shows are
streamed upon entering the fashion website and on the
separate beauty site.
Givenchy’s aura of cool and exclusive is also a
strength. It feels somewhat like a “club” that only the
right people can get into. This was further promoted
by the AW15 NYC fashion show location being out of
the norm and current A-list celebrities being front row.
To those already familiar with the brand, the designs
are enough, however to those new to the scene or
unfamiliar, these are all easy ways to get drawn into
Givenchy.
WEAKNESSES
The brand is cutting edge, which many love, however
for the general public this can be a double edge
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42. sword. This has been present in the past through
Riccardo Tisci using a transgender model in the Fall
2010 collection and currently with the use of extreme
facial ornamentation resembling that of ancient Middle
Eastern tradition. While both fashion forward and
intriguing to the trained fashion eye, for some less
ambitious customers this may convey an intimidation
of the brand.
Another weakness within the brand is that while it
does have it’s own application through the Apple store,
there is no direct website for customers to access
for purchasing. Stores with links are noted where
the customer can shop online, but there is no direct
purchasing from Givenchy, which some customers
may not like because it loses some of the brand
identification going through another party seller.
PRODUCT
Women’s Apparel
Men’s Apparel
Beauty & Fragrance
Leather Goods
Shoes
Accessories
Jewelry
CUSTOMER PROFILE
Givenchy’s aim is to appeal to the mature, yet young
city dweller who is strong yet gentle, has a strong
sense of self and is baroquely romantic. The customer
appreciates intricacy, elegance and style but also
incorporates it into his or her existing wardrobe and
does so with an edge. The individual is also educated
and understand the concepts and construction behind
the Givenchy designs.
PRICE
Women’s Apparel: $570-$7,990
Men’s Apparel: $440-$4,795
Beauty & Fragrance: $50-$122
Leather Goods: $450-$4590
Shoes: $295-$2,195
Accessories: $375-$895
Jewelry: $295-$3,995
PLACE
Givenchy headquarters is located in Paris, France and
was founded in 1952. While most of their business is
done through wholesale retailers such as Saks Fifth
Avenue, Bergdorf Goodman, Barney’s New York and
Neiman Marcus, there are select signature boutique
stores located around the world, 3 of which are located
in the United States.
PROMOTION
Like many other brands, Givenchy wants to have
brand exclusivity but at the same time market directly
to its customers. A prime example of this promotion
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43. 43
was on September 2, 2014 when the brand launched a
micro website that gave away free fashion show tickets
to the first 820 fans that registered. It was a great
success and brought many new customers and fans to
the label.
Givenchy continually pushes to be on the cutting edge
of cool through designs, advertising campaigns and
even runway show locations. The SS16 New York
fashion show caused a stir with a new, different, further
location than many of the other labels. This caused
the brand to look exclusive, those present to seem
dedicated, and was a blatant display of customer
loyalty to other houses and the world.
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45. 45
This strategic business plan was created to provide an
in depth analysis of the current state of Saint Laurent
Paris within the fashion industry and also to propose a
marketing plan for the development of a new product
which will aid in continued positive brand growth, public
recognition and an increase in annual revenue.
Saint Laurent Paris, a globally recognized
luxury brand owned by The Kering Group, designs
and markets a wide range of men’s and women’s
ready-to-wear products, leather goods, shoes, jewelry,
fragrances and cosmetics. Current strengths lie in
the quality of products and iconic nature of the brand
name, however in recent years the company has
undergone fundamental changes under the vision
of new Creative Director Hedi Slimane. Slimane
rebranded the previously known Yves Saint Laurent
as Saint Laurent Paris and in doing so made many
updates since 2008 to the brand image, store aura
and aesthetic, and the products offered. The main
aims were to target a wider range of customers,
focus on brand lifestyle development and enhance
customer relationships. The resulting modern and edgy
rock’n’roll attitude of the products caused revenues
to soar 38.2% overall in early 2015. The brand has
focused greatly on its directly-operated stores, which
account for 64% of total sales and despite success
with recent expansion into the Middle East and Asia,
continues to have the most annual growth in the North
America and Western Europe; growing 32.9% and
29.3% in 2015, respectively.
Based on research and development findings,
the enclosed plan suggests that Saint Laurent Paris
continue to capitalize on the upward momentum it has
obtained and expand into a new emerging product line:
luxury timepieces. The Deloitte Swiss Watch Industry
Study 2015 found exponential growth in the export
and sales of watches globally, but in particular in the
United States, which displayed consistent growth over
2 years, and in Western Europe, via tourist sales. The
most trusted and reliable partner found to work with
for licensing on this business venture is the Fossil
Group, which designs, manufactures, and distributes
for many other reputable brands. The Fossil Group’s
manufacturing facilities in China and Switzerland and
distribution centers in Dallas, Germany and Asia are
also beneficial and can help control exchange rates
and fees. A Gantt Chart created displays a proposed
timeline of events for development and production of
the timepieces. The project should be granted 1% of
total revenue from 2015, costing a total of $1,074,000.
This figure is based on the plan of creating 6 different
watch designs and distributing 5 of each style to 37
directly operated stores between the United States
and Western Europe. Thirteen additional pieces will
be created and distributed in a pre-launch to celebrity
brand representatives from the Music Project for
advertising and publicity purposes. Assuming that all
of the products included in this medium risk growth
strategy plan sell, Saint Laurent is projected to have
net revenue of $14,099,700.
EXECUTAVE SUMMARY
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46. ELEVATOR PITCH
Yves Saint Laurent is a global brand at the forefront
of fashion; designing and marketing a broad range of
women’s and men’s ready-to-wear products, leather
goods, shoes, jewelry, fragrances and cosmetics.
The eponymous brand was founded by designer Yves
Saint Laurent and his partner, Pierre Bergé in 1961, and
popularized fashion trends such as the beatnik look,
safari jackets, tight pants and tall, thigh-high boots,
including the creation of the most famous classic tuxedo
suit for women in 1966, Le Smoking suit.
When Hedi Silmane was appointed the Creative director
of the brand in 2012, he announced that he would be
reviving Yves Saint Laurent’s couture line in 2015,
which had closed down in 2002 following the designer’s
ill health and subsequent death in 2008.
The brand has undergone fundamental changes since
the arrival of Slimane, from the bold rebranding of
Saint Laurent Paris to re-establishing their relationship
with the music industry through rock ‘n’ roll brand
representatives such as Courtney Love and Marilyn
Manson.
Saint Laurent Paris continues to pursue ambitious retail
expansion, which started in 2012 with the launch of its
new store concept. In 2015 the focus will not only be
on emerging markets, like the Middle East, China and
South-East Asia, but also on further development in the
US, Japan and Europe, with openings or refurbishments
in most of the major cities. Additional investments will be
made to continue the development and optimization of
the site and online customer experience.
MISSION STATEMENT
Kering stands for Imagination! Our mission is vast,
but it’s simple. We exist to help our customers look
and feel good while making a positive contribution to
people and the planet. (Kering.com)
Strengths:
• Significant brand history, strong identity, recognition,
vision, product design and credibility.
• Historic legacy of being the first haute couture
house to make ready-to-wear.
• Successful rebranding results.
• Developing into emerging markets allowing the
brand to grow their retail presence.
• Production between France and Italy in a historic
workshop to insure brand quality.
• Successful blend of creativity and strategic
management.
• Inherent sustainability in the Kering Group to create
value and a competitive advantage.
• Strong financial supporter: Kering.
• Extensive amount of loyal customers worldwide.
• Forward design aesthetic.
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47. 47
Weaknesses:
• Negative impact of rebranding; unclear market
position.
• Brand awareness lower than counter parts.
• Loss of previous loyal customers, opposing voices
about renaming.
• New target excludes older consumers who are
considered an important composition of the Luxury
market.
• Not competitive digitally. Which is the main market
for their new target.
• Compared with their main competitors, they don’t
offer some facilities and products which their main
competitors do, such as a mobile application and
Saint Laurent watches.
Opportunities:
• Rebranding is a chance to launch new products that
is offered by the new competitors and not currently
offered by Saint Laurent.
• Entering new emerging markets such as India.
• Develop existing markets such as Europe, Japan,
and America. Due to Asia’s demand for Luxury
goods, it would be the next big market for Saint
Laurent.
• Strong growth in wealthy and middle class markets.
• Make branding more coherent throughout the
company.
• Develop digital platforms such as an app specially
with the new branding and target audience.
• Technology enhancement largely improves
operational efficiency and in-store customer
experience.
• High street market customers investing in luxury
products.
Threats:
• New competitors entering the market.
• Other emerging affordable luxury brands.
• Suppliers bargaining power is relatively high.
• The brand face intense competition from Gucci, its
parent company which is a more identifiable brand.
• Potential of losing brand reputation due to
rebranding.
• New rock n’ roll image is on trend now but could it
date?
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48. MARKETING GOALS:
• Reach a wider audience through introduction of a
new product line.
• Target new customers.
• Enhance customer relationships.
• Focus on brand development and marketing .
• Innovating and expanding new and emerging
merchandise categories.
In the first half of 2015, the success of the collections
designed by Hedi Slimane – Creative Director with
total responsibility for the brand’s image – and the
strategic relevance of its product offering helped
further strengthen Yves Saint Laurent’s brand appeal.
This appeal – which was given an additional boost
by continued investments in the brand’s stores and a
360° communication strategy – resulted in very robust
growth for Yves Saint Laurent during the period. Yves
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49. 49
Saint Laurent’s revenue totalled €443 million for first-
half 2015, a year-on-year surge of 38.2% as reported
and 24.3% based on comparable exchange rates.
As for the Group’s other Luxury brands, the pace of
growth accelerated in the second quarter, reaching
27.3% based on comparable data versus 21.2% in
the first. The investments undertaken for the directly-
operated store network since 2012 have enabled
Yves Saint Laurent to increase the portion of sales
generated through this exclusive distribution channel,
which accounted for around 64% of the brand’s total
sales in first-half 2015. Revenue from retail sales in
directly-operated stores advanced by 25.7% during the
period, driven by a sharp increase in same-store sales.
Wholesale sales were up 21.9% based on comparable
data, illustrating independent distributor appreciation of
the brand as a major growth driver for their business.
This distribution channel also remains strategically
important for Yves Saint Laurent as it represents a
perfect fit with its retail channel. Following on from
the upswing in the last quarter of 2014, revenue from
royalties rose by 21.5% in the first six months of
2015, compared with a relatively weak performance
in first-half 2014. All of Yves Saint Laurent’s main
product categories registered very strong sales growth
during the period. The brand’s Leather Goods offering
continues to prove highly attractive, particularly as the
price structure has been partially revisited to reflect
changes in exchange rates and market conditions in
certain regions. Sales posted by this category climbed
by 22.6%. Revenue from Ready-to-Wear sales jumped
by 26.8% at constant exchange rates and this category
once again occupied an essential place in the brand’s
product offering, with well-balanced sales of Women’s
and Men’s collections. Yves Saint Laurent notched
up revenue increases across all of its geographic
regions in the first six months of 2015. In emerging
markets – which contributed 29.5% of the brand’s
total revenue for the period – sales grew 10.7%. The
economic climate in Hong Kong and Mainland China
weighed on the brand’s performance in Greater China,
although revenue nonetheless climbed by 7.1% in
this region based on comparable data. Business was
buoyant in other Asia-Pacific countries as well as in
Latin America, but was less brisk in the Middle East
and Eastern Europe. Sales in Yves Saint Laurent’s
traditional markets soared by 31.1% on a comparable
basis, reflecting the brand’s renewed appeal both
with local customers and with tourists from emerging
markets. Revenue growth reached extremely high
levels across all of these regions, coming in at 34.2%
in Japan, where the brand was in remarkably high
demand, 32.9% in North America, and 29.3% in
Western Europe. Yves Saint Laurent ended the first
half of 2015 with recurring operating income of €61
million, versus around €41 million in the corresponding
prior-year period, representing a year-on-year increase
of 47.9%. Recurring operating margin reached 13.7%,
up by 100 basis points as reported. This rise was even
higher after stripping out the impacts of fluctuations in
exchange rates and currency hedges. It was led by a
further increase in gross margin (excluding currency
hedges) and a better absorption of fixed costs, and
was achieved despite the brand-development costs
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50. incurred to expand the store network and implement
an active brand marketing policy. Given the growing
weight of depreciation and amortisation, EBITDA rose
at a faster pace than recurring operating income,
coming in at €80 million. The EBITDA margin was
18.0%, up 170 basis points on first-half 2014. As
of June 30, 2015, the Yves Saint Laurent brand
directly operated 132 stores, including 56 in emerging
markets. There were only four net store additions
during the period, as operating investments were
focused more on extending, relocating and refurbishing
existing stores. Overall, the brand’s gross operating
investments came to nearly €28 million, representing a
€5 million increase on first-half 2014.
DEMOGRAPHICS:
• Ages 20-35.
• Highly educated (university, masters).
• Professional in a fast paced environment. Most
likely investment finances, PR, music industry,
fashion industry or another trendy management
position.
• Earns $85,000+ annually.
• Dresses contemporary and with an edge. May
shop seasonally if financially able.
• Single or married with no children.
• Maintains a busy personal and social lifestyle.
• Most likely lives a urban lifestyle in a large city.
PSYCHOGRAPHICS:
• Enjoys fashion and the next cool thing.
• Has a “rock and roll” attitude.
• Not afraid to live against the stigma of what is
accepted.
• Rebellious and independent minded free spirit
• Enjoys going out to the latest restaurants, clubs
and bars with friends.
• Hard worker but also maintains a healthy physique
and active social life.
• His/her go to is classic black and white
• Experiments with textures, fabrics, metals, and
embellishments.
• Understands global issues/events and has
widespread interests.
• Listens to diverse types of music and attends
concerts often.
• Loves to dance and let loose.
• Strong personal sense of self.
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52. Product development is the complete process
of bringing a new product into existing markets.
It is described as the transformation of a market
opportunity into a product available for sale and it can
be tangible (that is, something physical you can touch)
or intangible (like a service, experience, or belief).
In Product development strategy, a company creates
new products and services targeted at its existing
markets to achieve growth.
This involves extending the product range available
to the firm’s existing markets. These products may be
obtained by:
(i) Investment in research and development of
additional products
(ii) Acquisition of rights to produce someone else’s
product
(iii) Buying in the product and “branding” it
(iv) Joint development with ownership of another
product who need access to the firm’s distribution
channels or brands.
PRODUCT STRATEGY
The overall strategy in developing Saint Laurent
Paris Timepieces is to continue to drive up sales
growth through attracting a younger millennial
generation and to expand product range. Research
has shown that the new attitude and style of the
company has been well received and the brand
wants to continue to promote this edgy-chic, rock
and roll lifestyle image, which has proven to be
so appealing to younger generations. Equally as
PRODUCT USPS:
• Saint Laurent Paris watches are powered by
solar energy instead of conventional battery as an
efficient source of energy
• The designs are a blend of rock-chic and luxury,
with most of the designs being androgynous – keep-
ing in tune with the androgynous apparel that we
often see the product line
• The removable clock-face in one of the designs
converts the watch into a piece of jewelry or a fash-
ion accessory
• One-of-a-kind designs that target the millennial gen-
eration, with unique design aesthetics
MODERATE
RISK
LOW
RISK
HIGH
RISK
MEDIUM
RISK
1- MARKET
PENETRATION
2- MARKET
EXTENSION
3- PRODUCT
DEVELOPMENT
Ansoff’s Matrix
4- DIVERSITICATION
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53. 53
important, we want to keep the current consumer
satisfied and interested through offering new products
with innovative features, unique styles and a fresh
take on classics. We want the Saint Laurent Paris
customer to be brand loyal in all aspects of fashion,
and with the recent growth in the luxury timepiece
industry in the United States and a projected spike
in sales to European tourists (Deloitte 2015) the
time is optimal for this product line expansion.
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66. PRICE:
The image above shows the price range of the Saint Laurant watches, it starts at $695 for the casual up to $3995 for the diamond one.
PRICE:
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67. 67
The image above shows a comparision of the samples competitiores watches from casual to luxury jewelery watches, the price range
of Gevenchy starts at $579 up to $2899, Gucci starts at $599 up to $3999 and Burberry starts at $270 up to $4000 for the luxury swiss
made one
$695
$3995
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68. BRAND POSITIONING:
The chart above shows the current position of the brand in
terms of fashion level and price level against other brands in the
industry.
The chart above shows the current position of the brand in
terms of design and style, from high street to high luxury, and
from edgy stylish and youthful to feminine and elegant against
other brands in the industry.
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69. 69
The chart above shows the future position of the brand against most of the watch brands in the industry
in terms of price and style. from high price to low price and from high design to high technical it also
categorizes the watches from jewelery watches to sport, mechanical, fashion, lifestyle and specialists.
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70. DISTRIBUTION PLAN:
The distribution plan involves several areas including
production of goods, transport of merchandise and
any specialized displays to the specified retailers, pre-
launch promotional plan implementation, and launch
party execution. An allotment of 30% of the overall
budget has been given to this area for marketing and
sales, totaling $322,200. The research information
projecting that sales in watches will continue to spike
in the United States directly operated stores and also
to tourists within Western Europe, Saint Laurent Par-
is has chosen to distribute 5 of each of the 6 styles of
watched to each of 37 directly operated boutiques in
these regions only. The company feels that this strate-
gic distribution and exclusivity will help drive sales of
the watches even higher. Approximately 2-3 months
before the official launch of the new products, a Pre-
Launch will take place in which each of the 13 musical
artists currently representing Saint Laurent through the
ongoing Music Project will receive the watch of their
choice. The purpose of this Pre-Launch is to begin to
give the timepieces exposure to the public, paparazzi,
and media personalities. The representatives will also
participate in a formal advertisement campaign to pro-
mote their watch of choice; which will be run in maga-
zines, official social media and promoted on the Saint
Laurent website. It is the intent of the company to build
public anticipation for the release of the new items in
December.
On December 16 the market launch will take place,
beginning with a party hosted inside the New York City
and Paris Saint Laurent flagship stores. The new time-
pieces will be on display and celebrities, media, heads
of wholesale retailers, and other fashion dignitaries will
be invited for a personal viewing. The launch will stay
within brand identity with appropriate music, cocktails,
photography opportunities, and a creative/contempo-
rary black tie dress requirement.
Team
As important as it is to have a strategic business plan,
it is equally essential to have the right people for its
execution. When a company launch a new product
and market under the umbrella of a well-known brand
name, failure rates and marketing costs are reduced
(Keller, 1993). As Saint Laurent Paris is a well estab-
lished brand, it would not have to recruit a lot of people
for this launch except a few that require specialization
in specific fields. Product Development under the Cre-
ative Director, Hedi Slimane, can be carried out. Hedi
Slimane has a creative studio (LA), that has a team of
designers that can draft initial ideas and sketches of
the watches after Research and Development stage.
If there’s a need the management can take a deci-
sion to hire a product development team that will be
involved in R&D, planning and execution of this partic-
ular category but it is suggested to keep the expenses
as minimum as possible, have this category under the
accessories product department. The existing mar-
keting team is enough to ensure the right marketing
strategy to launch the product as they know every
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71. 71
detail of what the brand has already done and how
to translate that into strategies that will work in global
markets. However, there will be a need for a Supplier
that we suggest should be the Fossil Group who will
further help in designing (technical design) and man-
ufacturing of watches (explained in Operational Plan),
a procurement administrator who looks after the ven-
dor relations, purchasing and contract. Then there will
be a need to hire a material manager who will further
recruit his team to look after inventory and logistics
and perform inspection of procured quantity. There will
be a need to update the Sales department by training
the Sales Manager and Sales Staff with new tactics to
sell this product effectively. Also, there needs to have a
new customer support department for this product line
as it is related with technology. Customer support will
help the customers to demonstrate the features of this
new product and how to use them.
Important role in the team would be of the the market-
ing team that would include
• overall strategic view of organizational goals for
the global expansion.
• watch global market factors that are most rele-
vant to the business.
There would be a need for people to run the marketing
initiatives, including content marketing and social me-
dia marketing. The management may require special-
ists in particular areas or someone in charge of coordi-
nating the entire marketing strategy.
Key Executives For Yves Saint Laurent S.A.S.
Chief Executive Officer: Francesca Bellettini
Chief Financial Officer : Alberto Da Passano
Director of Human Resources : Luc Rafflin
Creative and Image Director : Hedi Slimane
Brand Director : Jean-Denis Voin
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75. 75
Operational plan is the next step to marketing plan
and is essential to the success of the business plan,
and will be important not just to financiers, but also to
management and to the employees. It is required for
the team to understand exactly how to execute the
business plan and what is expected out of each one of
them. However, there is a one difference between the
operations plan that is prepared for internal use and
one that is given to potential lenders and investors but
the latter does not include much detail.
Operational plan starts from the very first step that
includes the R&D team to start with initial research the
best location to have the launch of the the product by
looking at the sales statistics of the particular product
and the the most brand sales in particular region and
also conducting a market survey to identify the target
customers along with taking feedback from existing
customers about the new product.
Below are the key components of the operational plan
that are essential to the success of the suggested
business plan.
Market Survey/ BetaMode
It is very important for a marketing team to run a
market survey before launching the product to assess
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76. customer needs and identify target customers. The
brand now targets the young audience, it would be
a good strategy to adopt a more iterative approach
to product launches by giving early access to new
product to by innovators or early adopters who are
for instance the the key influencers of the brand like
Harry Styles, Justin Bieber and other music artists, in
order to gain feedback which could enhance product
development before general release.
Location
When asked about the next big growth market for
luxury timepieces, The Deloitte Swiss Watch Industry
Study 2015 mentioned several countries, but the US
and India in particular. Thanks to its fast recovery from
recession, the USA economy is strong and consumer
spending has increased sharply in the past few years.
After many years of strong growth, export of watches
to Hong Kong have experienced a downward trend
since 2012. This was accelerated by the Umbrella
Revolution, the Hong Kong student demonstrations
that started in September 2014 and had a strong
negative impact on tourism and sales of luxury
products, and the decline continued further in 2015. In
contrast, sales to the US, the second-most important
market, continue to grow and to confirm its position of
one of the most consistent markets over the past two
years.
It was also mentioned in the report that there was a
sharp increase in expected sales to foreign tourists in
Europe. An additional export channel is sales to foreign
tourists in Switzerland and other European countries.
Sales to tourists in Switzerland are not officially
measured, as the FH (Federation of the Swiss Watch
Industry) tracks only export statistics; however, they
are estimated to make up 5% of the global market.
Compared to last year, watch executives are now
much more positive about sales to tourists in other
European countries than about sales in Switzerland.
This can be explained by the strong Swiss Franc,
which makes Switzerland less attractive to foreign
tourists than in previous years.
The two most growing area in terms of maximum
sales of luxury timepieces are USA and Europe, and
according to the KPI’s of Saint Laurent Paris, USA and
Europe are the two countries getting the maximum
revenue share, therefore, the new product should
be launched in the SLP flagship stores of USA and
Europe.
Product Supply and License
Looking at the various watch manufacturers, it is most
sensible to get licensing of watches done by a reliable
source. According to the research, Fossil group turns
out to be the most reliable watchmaker. Fossil has
had a financial success with its own brands and this
success has led a number of deals for licensed watch
lines. Other licensed watch lines that Fossil designs,
manufactures, and distributes include Burberry,
DKNY, Emporio Armani, Armani Exchange, Columbia
Sportswear, Diesel, Frank Gehry, Karl Lagerfeld, Tory
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77. 77
Burch, Kate Spade, Michael Kors, Callaway Golf, Davis
Cup, Marc by Marc Jacobs, Skagen Designs, Michele
and Adidas. When referencing Fossil’s watch lines,
they are generally regarded as a “manufacturer”. It is
essential for a luxury brand like Saint Laurent to have
a supplier that has a good reputation in the market.
Moreover, Fossil has manufacturing facilities in China
and Switzerland and distribution centers in Dallas,
Germany, and Asia. This can control the effect of change
in exchange rate on the production price as they have
manufacturing in different countries.
Inventory Management
As we’re launching this product as a ‘Limited Edition’
available in only brand’s flagship stores, it becomes
important for us to have an inventory plan. Based on
the scarcity principle; creating an impression of excess
demand by restricting supply. If we have too much
inventory, we’re wasting money; if you have too little,
we’re losing out on sales. Having good relationships with
the suppliers can help manage the inventory effectively.
We have outlined the time line of the entire business
plan in the form of Gantt Chart to make it easier to
show activities (tasks or events) against days/weeks/
months. On the left of the chart is a list of the activities
and along the top is a suitable time scale. Each activity
is represented by a bar; the position and length of the
bar reflects the start date, duration and end date of
the activity. This will allow the management to see at a
glance:
• What the various activities are
• When each activity begins and ends
• How long each activity is scheduled to last?
• Where activities overlap with other activities, and
by how much
• The start and end date of the whole project
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80. The Saint Laurent Paris watch collection will be
launched just before Christmas on December 16, 2016
in 37 stores across France (11), Italy (4), Germany (4)
and USA18). Depending on the success of the product
in these key countries, the products will be rolled out
in other countries in Asia, Africa, Middle East and rest
of Europe. The limited edition collection comprises of 6
designs and estimating an initial production of 5 pieces
per design, the plan is to start with 30 pieces per store.
Apart from the roll out in stores, 13 watches will
be made exclusively for the fore-runners of the brand
and music artists who have collaborated with Hedi Sil-
mane on the Music Project, namely Tobias , Josh Hom-
me , Joni Mitchell , James Edward , Joe Dallesandro ,
Marianne Faithfull , Curtis Harding , Daft Punk , Courtney
Love , Kim Gordon , Marilyn Manson And Christopher
Owens.
The table on the right illustrates the projection
based on utilizing 1% of the annual revenue of 2015
(973.6 million Euro, approx. $1074 million) based on
figures from Kering.com
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81. 81
Below calculations are based on the following:
Average unit cost price of a watch = $114
Total units to be produced = 37 X 30 + 13 = 1,123
Total cost of the project (in USD): 1,074,000
*All figures are based on approximate values
Percentage wise distribution:
30% Marketing
25% Visual Merchandising and store refurbishing (including
POS, props, display cases etc.)
15% Product development and manufacturing
10% Team (new recruitment like product designer, inventory
manager etc.)
10% Logistics/operations (including warehousing)
5% Packaging
5% Miscellaneous
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