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B-Case 4

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B-Case 4

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B-Case 4

  1. 1. <ul><li>Chappuis Halder & Cie </li></ul><ul><li>Retail-Small Luxury Brands </li></ul><ul><li>January 2010 </li></ul>
  2. 2. Profitability of small brands is an issue in large but low profit sectors like Fashion Apparel and Perfume & Cosmetics <ul><ul><li>Industry growth from 1998 to 2008 was about 8% p.a. </li></ul></ul><ul><ul><li>Taking the current macroeconomic context into account, we estimate a growth rate of 3% to 5% over the next three years, slightly below historical long term trend </li></ul></ul>Growth Rate (2001-2008) [%] Average Operating Margin [%] Market size 2008[USD bn] Wine& Champagne Fashion Apparel Leather Goods & Shoes Jewelry& Watches Home Acc. Perfume& Cosmetics Luxury goods segment performance GROWTH IS TO SLOW DOWN IN THE NEXT YEARS
  3. 3. We propose to use a four factors methodology to assess small brands strategy ASSESS SMALL BRANDS STRATEGY 1. Positioning <ul><ul><li>Relevance of brand image and product sophistication define four distinctive categories: bridge luxury, showplace luxury, enthusiasm luxury and authentic luxury </li></ul></ul>2. Regional branding <ul><ul><li>Using a ethnical tonality in campaigns and a matching product </li></ul></ul><ul><ul><li>Seduce customer through heritage and longing </li></ul></ul>4. Cost structure <ul><ul><li>Depending on the segment different costs ruling the value chain </li></ul></ul><ul><ul><li>To identify big ticket items is the way to succeed </li></ul></ul>3. Key success factors of the industry <ul><ul><li>The competitive dynamics of the segments are quite different </li></ul></ul><ul><ul><li>Success can not only be associated with brand, advertising or functionality </li></ul></ul>
  4. 4. Four distinctive categories defined by relevance of brand image and product sophistication a re driving the market Global luxury market categories OUT- STANDING OUTSTANDING Relevance of brand image HIGH Relevance of product sophistication HIGH Custom made designer products with finest materials and lavish manufacturing Customized designer products with finest materials and lavish manufacturing Industrial designer products with finest materials and efficient manufacturing Industrial designer products with basic materials and efficient manufacturing AUTHENTIC LUXURY ENTHUSIASM LUXURY SHOWPLACE LUXURY BRIDGE LUXURY
  5. 5. Leverage existing competence - address luxury rather than innovation Positioning luxury/premium fragrances AUTHENTIC LUXURY ENTHUSIASM LUXURY SHOWPLACE LUXURY “ I tried it before, I know about it” “ It’s for people like me” “ It’s good” “ It’s better” “ It’s my brand” Authentic branding Using a true luxury tonality and a matching product OUT- STANDING OUTSTANDING Relevance of brand image HIGH Relevance of product sophistication HIGH
  6. 6. Example with Biotherm – community building Intensity of dialog Time months REMARKS <ul><ul><li>Lifeline Concept Biotherm Mailing </li></ul></ul><ul><ul><li>Developing a stream of contacts to bring customers closer to the brand </li></ul></ul>“ I tried it before, I know about it” “ It’s for people like me” “ It’s good” “ It’s better” “ It’s my brand”
  7. 7. CH& Cie strongly believe into reversing the mega brands market maker approach in order to foster smaller brands of the portfolio MARKET MAKER APPROACH Strategy, volume and manufacturer distribution structure Retailer distribution structure Store delivery frequency In-store processes Availability Sales and Customer Satisfaction Sales and Customer Satisfaction Availability In-store processes Store delivery frequency Retailer distribution structure drives determines requires requires requires requires aligns determines impacts drives Strategy, volume and manufacturer distribution structure CUSTOMER CENTRIC APPROACH

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