Hermès’ Success Story or “Targeting the Ultra-Rich”

Last week, French luxury group Hermès posted a 16 percent rise in second-quarter sales, reaching $1.19 billion (£788m), with highest growth originating in Asia and North America. According to experts, the secret of company’s success is its strong ability to combine heritage with innovation, managing to capture new customers along the way. Luxury Daily magazine also noted that the high revenue of the brand might be due to the to sales of home furnishings and a strong spring/summer 2013 marketing campaign.
Lets take a look at all the above mentioned factors and analyse the impact they might have had on the sales.

Hermès Spring/Summer 13 campaign
The SS13 campaign was very strong indeed, with a particular focus on sport deluxe, which goes well in line with Hermès sports heritage.
The campaign can be described as “Delightful sport life captured in its best moments by Nathaniel Goldberg with the gorgeous Iselin Steiro at the Lake Como, Italy.”

Hermès home furnishings
Hermes has made a huge investment in home furnishings. Designers such as Antonia Citterio, Enzo Mari and Nigel Peake among others, have been commissioned to create designs of fabrics, wallpaper, sofas, chairs, tables, and room dividers. This year, Hermès has unveiled its new collection of bespoke furnishings “Les Nécessaires d’Hermes” by Philippe Nigro. Exposed at the Milan International Furniture Fair in a unique construction created from superimposed origami houses, the interior creations haven’t failed to fascinate the visitors.

Hermès Heritage
Founded as a house of harness- and saddle-making in 1839 in Paris, Hermès has always been proud of its heritage and craftsmanship. Well, what is the best way to show off its incredible and unique “savoir-faire” to the curious customers, other than to go on tour and demonstare it first-hand? Therefore, it is only natural that Hermès came up with the idea of the “Festival des Métiers”, which is a world tour, where Hermès fans have a chance to have a “rendez-vous” with the brand’s craftspeople and experience the fascinating insight into the exquisite production of Hermès hand-made objects.

Targeting the Ultra-Rich
When taking a closer look at Hermès, which sells £300 silk scarves and £10,000 Birkin handbags, it is not difficult to see which customer group the company is targeting. According to Forbes, there are 1,426 billionaires recorded this year, which is 200 more than in 2012. With the increasing number of super-wealthy customers, the demand of exclusive luxury goods is also continuously on a rise. A while ago, a Hermès diamond BIRKIN was sold for $203,150 setting a new world record for the most expensive handbag ever sold at a public auction.

Moreover, according to Forbes most billionaires in the world originate from US, which is one of the countries with the strongest sales growth for Hermès. Sales originated in Asia also experienced a surge, despite the new official policy forbidding business related gift-giving in China. The strong growth in Asia might be due to changing behaviour of the luxury customer, particularly in China, where exclusivity and craftsmannship are becoming more and more important.

Conclusions

1. Positioning

Hermès has a very strong positioning in the luxury market, which it owes its almost 200-year old heritage, exquisite craftsmannship and savvy marketing mix which we are going to analyse further below.

2. Pricing

The incredibly high prices provoke the sense of exclusivity, which is exactly what the luxury consumers are after.
Another way of achieving exclusivity is launching limited edition series. Hermès is a big supporter of limited editions as well as generally limited amount of products being sold in their stores. (I remember that my friend who wanted to buy a Hermès belt had to visit their store about 4 times before finally getting one, as it was sold out every time he came in – they intentionally don’t order a big stock of products to maintain exclusivity.)

3. Heritage

As mentioned before, Hermès has a long and solid heritage. However, the most interesting fact about it is the way the brand is communicating it to the customers. I think that the “Festival des Métiers” world tour is one of the best marketing strategies developped for this purpose, as personal contact has always made a stronger impact than any images or videos could ever have.

4. Designer Collaborations

With regard to home furnishings, Hermès is making the most out of its products through collaborations with famous interior designers. As a result, both the brand and the designer benefit from each other’s reputation, boosting the sales of the exquisite home creations at the same time.

There are many other aspects which have to be taken into consideration when analysing a brand’s marketing strategy, but I think that we’ve gone through the most important ones for Hermes.

Let me know what you think about the brand. Do you own or want to own any of their products? What do you think about their positioning and their marketing strategy?
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How Chanel became N°1 luxury fashion brand in China

According to the World Luxury Index™ China, “Chanel has become the #1 most sought-after global luxury brand in China”, overtaking competitors such as Louis Vuitton and Gucci.

Chanel’s beauty products
This year’s report has also revealed that part of Chanel’s success is thanks to its huge stake in beauty segment, as 22.70% of Chinese consumer interest whithin luxury market is in beauty, compared to fashion which accounts 14.90%.
Chanel’s dedication to its beauty products most likely has helped the brand to get the first rank in the report, overtaking Louis Vuitton which is rather focused on fashion.

Chanel has a wide range of beauty products, with celebrities such as Diane Kruger being the latest face of its beauty advertising campaign.

Events & Exhibitions
Another great venture started by Chanel is its “Little Black Jacket Exhibition” tour which is going around the world, including cities such as Beijing and Shanghai. It is not the first time Chanel is hosting an exhibition in China. Its last event was “Culture Chanel” in Guangzhou, which I am looking into further below. In general, events and exhibitions like those ones really push the image of the brand as they have a very special vibe around them and stimulate all senses of the audience, leaving a more lasting impression than any other type of advertising.

1. Chanel’s little black jacket exhibition

Chanel’s little black jacket exhibition in Beijing and Shanghai with celebrtity attendance certainly had a huge impact on Chinese luxury customers and increased the prestige of the brand.

2. Culture Chanel exhibition in Guangzhou (China)

In a collaboration with Jean-Louis Froment, Chanel decided to organise this exhibition which should reinforce the idea of a fusion between art and fashion.

According to Jean-Louis Froment, “this movement is driven by a cultural aura that has surrounded the brand since its very beginnings, embodied by its creator, Gabrielle Chanel, who has created a language all of her own. This language, which is part of the history of women and of all the artistic forms of modernity, has spanned many eras: it has given the brand’s creations recognition that is unrivalled, a quest for excellence and the desire to give these creations the status they deserve.”

Bags and Wallets
Moreover, the report states that bags and wallets dominate the fashion market in China, accounting for almost 90% of total interest. Celine’s “Luggage,” consolidates its iconic status in the mainland as the #1 most popular handbag model, followed by Hermès’ Birkin and Chanel’s 2.55. It is a little surprising that Louis Vuitton is not in the top 3, although it has overall the second rank in the report. Talking to a friend from China lately about this issue, I found out that the typical Louis Vuitton Monogram bag is apparently already too common in China and has lost its exclusivity. On the other hand, Chanel’s vision is to remail an exclusive brand. The creative director Karl Lagerfeld mentions in an interview “We don’t have the urgency to expand. We are an exclusive brand and we want to stay exclusive so it’s strategic to not be everywhere. What we are starting to learn is that like every developed market, the clients there want things other people can’t get. That’s what defines luxury in many ways so we’ve been careful, but in a very calculated way.”

“The original square buckle, Link Check, metal chain strap leather string… Chanel 2.55 was born in February 1955, after half a century of temper, carrying the old tradition and modern innovation, the perfect blend of classic visual appeal and practicality Chanel 2.55 handbag, keen attention by numerous fashion and fashion fanatics worship.”

Chinese brand ambassadors
Celebrity endorsement in China is very important as it gives people someone to relate and to aspire to. Many Western luxury brands use East-Asian embassadors as they can deliver the brand’s messaging better than any other celebrity.

Chanel’s ambassador is a well-known Chinese actress Zhou Xun, who has been selected for her strong fashion sense. Karl Lagerfeld is describing the actress as “a synthesis of young Coco Chanel and Ballet Troupe Zizi Jeanmaire.”

What do you think about Chanel? Do you think its ranking in China is well deserved?
If you like this and other articles on my blog, please feel free to like and share it with your friends!
Let me know your thoughts and don’t forget to follow my blog for more Fashion.Marketing.Secrets!

Tatjana

Ted Baker’s success story

With a 33p surge in sales announcement last week, Ted Baker proves to be on the right track to a worldwide success.
The 25-year old brand has been expanding internationally for the last few years, opening new stores and concessions in Asia, US, Canada, Europe and Australia.
Currently, the number of Ted’s stores globally stands at 300 and the brand is reportedly planning to expand in the Middle Eastern cities such as Dubai and Abu Dhabi.

Not surprisingly, the sales of the UK brand are mostly boosted by positve reaction of international customers to the humorous and quirky brand and its well-crafted quality products.

When taking a closer look at Ted Baker’s marketing strategy, we can see that the brand has a very unique approach which makes it stand out from the competition and in my opinion is partly responsible for its success.

The brand positions itself in the accessible luxury segment with its prices ranging from 30 to 500 pounds and everything in between.
It is targeting young fashionable customers with a colourfull fashion sense and a desire for good quality products.

Let’s take a closer look at Ted Baker’s marketing strategy. It is fun and approachable, but also cool and luxurious at the same time, which is quite an unusual mix.
Therefore, the brand has to make sure that the product quality is impeccable, otherwise its down-to-earth strategy might bring down ist luxury status quite quickly.
However, as the sales boom, Ted Baker seem to have found the perfect balance between the two traits.

In order to identify Teds accessible attitude, its enough just to take a look at their Facebook page. On the other hand, the company is also organising different events and is advertising in glossy magazines to ensure their positioning in the high-end fashion sector.

Ted Baker is the master of competitions

– they are taking place almost every week

 

– allow the company to engage better with its consumers

 

– help to increase the number of facebook followers

 

– bring the fun spirit of the brand closer to the customers

BUT

– too many competitions (similar to sales) can decrease the luxury status of a brand

 

– if a brand is easily accessible it becomes less desirable

Ted Baker uses special occasions and public holidays to boost sales

– occasions such as Valentine’s Day, Father’s Day, Mother’s Day etc.

 

– suggesting perfect gifts for the special person

 

– organising store activities around that date to increase footfall

Ted Baker uses innovative marketing campaigns to stand out from the competition

– Ted’s Drawing room

 

– Life music performances for store opening and other events

 

– Men’s tailoring events

 

– Shopping events (Discount All Day at a certain store)

 

– Sweet shoppe

 

– Vogue Fashion Night Out

Ted Baker emphasizes its British heritage

– British themed Events and store decoration

 

– integrated London in ist logo

 

– British culture and products are very valued internationally

Ted Baker advertises in glossy magazines

– positioning at the same level as other luxury brands

 

– British VOGUE collaboration for the recent 25-years jubilee

 

– interviews with Ted Baker help the audience to understand better the brand

As we can see, Ted has a quite interesting marketing mix, organising activities of which I just named a few. It is defnitely an interesting brand to watch and I think we all are very curious how it is going to progress over time.

What do you think of Ted Baker and its marketing strategy? Do you like the brand’s clothes?
If you like this and other articles on my blog, please feel free to like and share it with your friends!
Let me know your thoughts and don’t forget to follow my blog for more Fashion.Marketing.Secrets!

Tatjana

Fashion Invasion in China – Secrets of Western Luxury Brands

More and more fashion brands have been eyeing China in search for expansion. Until now Chinese consumers have been known for their increasing desire for authentic luxury brands as a mean to show off their rising wealth.

With its successful launch in Hong Kong, TOPSHOP sets not only a milestone to its further expansion in China, but also an example for other high street retailers and high-end labels to follow. Within a few weeks after TOPSHOPs launch, high-street brand New Look announced its plans to launch in China, as well as Hobbs and Paul Smith while Vivienne Westwood and Mulberry are planning to expand their presence in China in search for higher profits.

But which marketing strategies can fashion brands use to achieve success in China? Lets take a look at 3 Western luxury fashion brands who have proved to be marketing experts on Asian grounds. Could you guess who I’m talking about? I think it’s not that difficult: Louis Vuitton, Burberry and Coach.

Louis Vuitton’s Marketing in China

1. Exclusive distribution through flagship stores
2. Educate the population about brand’s heritage (Shanghai exhibition in French pavilion)
3. Adapt product to demand (focusing on mens fashion and gift items such as stationery and luxury writing instruments)
4. Celebrity endorsement (Taiwanese-Canadian model/actor Godfrey Gao as a first ever Asian brand ambassador for the French fashion house aiming to increase popularity and boost sales of man-bags)
5. Collaboration with a renown Japanese artist Yayoi Kusama (this was a very successful venture in terms of marketing as it was impossible to overlook the crazy polka dot pattern in LV flagship stores)

Burberry’s Marketing in China

1. Digital Innovation and Social Media (Simplified Chinese version of Burberry.com as well as collaborations with Social Media platforms such as Sina Weibo, Kaixin001, Douban, YouKu and regional Twitter accounts)
2. Mandarin-speaking sales staff in all European flagship stores
3. Introduction of 24/7 Customer Service in Hong Kong
4. Strong focus on menswear
5. Brand Events (Burberry Live Digital Event in Beijing)

Coach Marketing in China
1. Strong direct presence in Asian market (over 100 stores in China)
2. Focus on mens assortments
3. High investment in consumer research (adapting the goods to consumer preferences)
4. Integration of Social Media (We Chat on its Weibo page)
5. Celebrity collaboration with a pop-star, Leehom Wang.

Having analysed all the three brands, it’s about time to merge their strategies into some conclusions, which can be useful for brands who seek marketing advice on Asian grounds.

1. Familiarise potential customers with your brand
This can be done through diverse events, shows, exhibitions and so on. The idea is that potential customers have to understand first what is so special about your brand. If you can’t pride yourself with a century long heritage, use digital technology to astonish your audience. The greater the event, the more important and luxurious your brand will appear.
2. Analyse the market and your target group
Don’t be frugal with consumer research, as it helps you to understand which products are really in demand. All the above listed brands have adapted their products to the Chinese consumer, introducing gifting items and a wider range of menswear products.
3. Get involved in Chinese Social Media
Chinese are very social people and you need to understand and be able to take advantage of their Social Networks that way you can benefit from it.

4. It all begins in your own country
Many Asians spend a lot while travelling in Europe or in the United States. This is your chance to make an everlasting impression and win them for your brand. Make your stores as tourist-friendly as possible with multi-lingual sales staff and special treatment for VIP customers.

5. Collaborate with Asian celebrities
Many people are being influenced by celebrities. There are lots of Asian pop stars, actors and models who are perfect for collaborations. Just make sure you research well, before picking your celebrities, as endorsement can also go terribly wrong if not used correctly.

These are some of my hot tips to help you invade China with your products.
Please share your thoughts if you had any experience with Chinese market and which marketing strategies you think work best.

Thanks for reading and make sure to suscribe for more Fashion.Marketing.Secrets!

Tatjana

5 Hot Tips to make the most of your Facebook fan page

Nowadays, every successful fashion brand is using Facebook to improve its digital presence and to support its marketing strategy. The reasons are obvious – the cost is relatively low and the brands get a chance to communicate directly with their audience, obtaining immediate feedback about their products, CRM, stores, campaigns, etc.

However, the most exciting question is – which content will I put on my Facebook page that will engage my followers and increase their number?

In order to solve this question I took a look at the most powerful and successful luxury fashion brands of all time! Analysing their strategy I made several conclusions with regard to content creation.

First of all, there are 2 types of content which can be posted on your Facebook page. On one hand, the brand can use the OFFLINE content by communicating all sorts of news that might be interesting for its fans. These could be new collections and products, store openings, events, collaborations and so on. On the other hand, the brand can share content which is created specifically for its Facebook audience, the so-called ONLINE content. The first option informs your Facebook fans while the second one actively engages them and can be used to improve the relationship between the brand and the customer.

Two types of Facebook Content

Thereby, a healthy balance of both contents is important to inform and entertain your Facebook audience at the same time.

In the following I will present the 5 Tips to get most out of your Facebook fan page.

Tip 1: Create buzz around your campaign by Burberry (15 million Facebook followers)
Make the most of your campaign by uploading previews, backstage images and videos, campaign related pictures as well as the campaign itself.

Tip 2: Appreciate your Facebook fans by Armani (4.2 million Facebook followers)
It always feels good when someone shows you that they care about you. So why shouldn’t you let your Facebook fans know that you care about them? Appreciate their support like Armani does!

Tip 3: Share exclusive interviews of people who stand behind your brand by Louis Vuitton (13.5 million Facebook followers)

Knowledge incites curiosity! The more people know about your brand, the more interested they will become to find out more! Share an exclusive interview with your creative director, designers, maybe even your CEO? Tell people what your brand is all about!

Tip 4: Make friends with bloggers and let them present your products by Gucci (10.7 million Facebook followers)

Connect with other people from the digital world – most of them will be happy to support you!

Tip 5: Ask questions and run competitions by Ted Baker (111 thousand Facebook followers)

Ted Baker is the master of questions and competitions! Competitions are a great way to increase the number of your Facebook fans, especially if they have to get most “likes” or “shares” to win.
By asking questions you also engage directly with your digital audience, find out about their preferences and make them feel important.

Of course, all of the above mentioned brands use a mixture of techniques on their Facebook fan page.
There are many other things you can do – just use your imagination! For example if you have a strong Print Coverage, share it with your Facebook fans as Allsaints does!
The best thing to do is to choose a theme or a brand idea and build your strategy around it. For example Louis Vuitton always connects its products with travelling. Therefore, the brand can post anything related to a journey (e.g. Louis Vuitton’s “The Art of Packing”) and it will still be meaningful and entertaining.

What ideas do you have for creative Facebook posts?
Share your thoughts and thanks for reading!

Hyper Smash

What is RETARGETING and how Luxury Brands can benefit from it

What is retargeting and how does it work?

Apparently, the E-Commerce world is full of “window shoppers”, meaning that usually only 2% of website visitors actually buy something on the first visit to an online store. Now these are really bad news for the companies who are spending all this money on advertising campaigns in order to catch people’s attention and bring the potential customers to their website in the first place.

Therefore, “Retargeting” attempts to bring back the other 98% by showing them ads of your brand or products as they browse other websites, aiming to increase the ROI of the Marketing campaigns.
The picture below explains more in detail how retargeting works.

If you want to find out more, you can also check out this video about retargeting.

According to ComScore and ValueClick Media who have conducted a survey, analysing 103 campaigns from 39 advertisers across seven industries between July 2009 and March 2010, retargeting achieved an average 727% lift in site visitation within four weeks of exposure.

Many big companies like Virgin Atlantic and Amazon are already using the retargeting methods to its fullest extent, but is this technique also applicable to Luxury Brands or will it cause more damage than good?

Retargeting vs. Luxury
Luxury brands have to be very careful when using retargeting. The reason for that lies in the actual concept of luxury, meaning that the products are not easily attainable, making the brand all the more desirable.
As a result, following your customers across the web might annoy them and damage the brand image in the long run. On the other hand, if used correctly retargeting can also have a very beneficial effect on luxury brands.

How can Luxury brands use retargeting without damaging their premium brand image?
I’ve listed some suggestions of how to use retargeting method in a smart way, so the marketing is still in line with the overall message of exclusivity.

Segment the Customer Correctly
Luxury is a very specific segment and its whole nature suggests that it should be targeted to a limited and specific audience. The fact that the person has been on the website already implies general interest in the brand. On the other hand, if the person leaves the website without purchasing anything it is the priority of the company to find out why.
Therefore, if marketers can reveal more information about the “potential” customers, such as what products they have looked at and how much time they have spent on the website, they can tailor their ad correspondingly. However, in order to avoid paranoia, rather than stalking the “online window shoppers” with the pair of jeans they’ve just been looking at couple of minutes ago, the company might suggest a similar or a complimentary product.

Control the Environment
If you are selling luxury fashion you don’t want your advert to come up on some dubious websites. Make sure the banners show up on websites which are somehow related to your product or at least have a certain aspect of credibility. Just imagine a Swarovski banner popping out on some random blog about hair loss…

Put a Frequency Cap
Once more, following the user around the internet the whole day will only cause annoyance and might have a reverse effect. Particularly in luxury segment less is more, otherwise the brand will lose its exclusivity. Showing the ad once a day or even less might already do the trick.

Time Frame
Usually, it takes time for people to develop a longing for certain luxury product or brand. Therefore, it might be advisable to wait for couple of days before retargeting the person. Meanwhile, the potential customer might get confronted with the brand through other media channels, such as Print or TV, reinforcing the desire to purchase the product. Consequently, the possibility for the “window shopper” to be ready for the purchase will be much higher if the company is going to retarget him after a certain period of time.

Use Creative Adverts
There are many possibilities to unleash your creative side when retargeting customers. The banners can reach from generic brand message, featured products, new collections up to Sale ads and Vouchers. They can be animated or static and have many different shapes and sizes. In order to reduce banner fatigue, marketers should avoid showing one banner to the same customer – it makes much more sense to rotate a selection of banners through user’s web journey.

Optimize Landing Pages that Speak Directly to the Viewers
If a fashion company is advertising its newest bags collection on the retargeting banner, the landing page should be related to bags, not the general homepage. It is in company’s interest to make it as easy as possible for customers to find what they need. So if you as a potential customer see a banner which advertises a 20% Sale, but upon clicking on it, are directed to the newest spring collection which doesn’t have any price reductions, you might get disappointed and leave the website straight away.

Offer an Easy Exit Option
Some people might have just accidently entered your website, although they’re not really interested in the products or simply cannot afford them. In that case, they should have the option to stop the banner from following them around, before it starts causing frustration or sense of paranoia.

Give Converted Consumers Time to Rest
Finally, once a customer has been converted, it is better to give him time to rest and enjoy the product he just bought before chasing him down with new adverts. Active buyers shouldn’t be forgotten, but there is only a limited amount of things they can possibly buy, especially when we are talking about luxury items.

I hope you can use those suggestions to get inspiration for your own retargeting campaigns. If you have any comments or other ideas, feel free to share them with me and other readers in the comments section.
Thank you for your support,
Tatjana

Hyper Smash