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Elie saab final
This case study analyzes Elie Saab's competitive positioning in the luxury fashion industry. Elie Saab primarily competes in the haute couture and high-end luxury segment against other luxury fashion houses. It targets super wealthy customers, especially celebrities and royalty. While haute couture is its core business, Elie Saab has expanded into ready-to-wear, accessories, and other luxury products. It uses various modes of entry internationally including licensing, partnerships, and company-owned stores. The growing Asian luxury market, especially China, presents opportunities for future growth. Elie Saab must balance maintaining its luxury brand image while expanding into more accessible and higher volume product lines.
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Elie saab final
- 1. CASE STUDY Marielle AH-CHINE KristinaBOKOVA Margaux CHERIF-CHEIKH FENG Tiantian HUANG Yingying
- 2. COMPETITIVE ANALYISIS Industry Forces ABSOLUTE LUXURY/HIGH-END LUXURY SEGMENT Competitors other haute couture houses (Chanel, Christian Dior, Jean Paul Gautier, Valentino, etc. ) ELIE SAAB -Competitive Couture Pricing Without Compromising On Service -Exceptional Service & Top-of-the-line Quality -High Exclusivity -Customer Segments Targeting Super-wealthy, High-end Market (Celebrities, Royalty, Rich And Famous)
- 3. Industry Forces Substitutes -“Democratization” of fashion - H&M x MMM Suppliers - Very dependent on materials and fabric suppliers
- 4. FORESIGHT Key trends Technologicaltrends - increasing influence of social media and digital marketing activities Regulatory - Tax advantages in some countries - Higher prices due to import duties and taxes
- 5. FORESIGHT Keytrends Socioeconomic trends - Growing number of “extreme net-worth individuals”, especially in Asia Chinese consumers account for 20% of the global luxury sales Asian consumers (i.e., adding Japan, Korea, and Southeast Asia) account for more than 50% of the global luxury sales
- 6. MARKET ANALYSIS Market trends Market Issues - Changing consumers’ taste and preferences Younger consumer base in Asia Aging of customers in Europe, US & Japan Market Segments - Accessories & hard luxury largest category Needs & Demands - chase for higher quality and greater craftsmanship/materials favors absolute/high-end luxury offerings
- 7. MARKET ANALYSIS Market trends Switching Costs - High brand loyalty Revenue Attractiveness - Asian market (China and Hong Kong) + emerging Markets - Absolute luxury segment €40B in 2011
- 8. MACROECONOMICS Macro-economic forces Globalmarket - Luxury fundamentals remain strong in the medium term
- 9. BUSINESS MODEL Value Proposition Design - Brand/status – Customization - Price NEED? A unique design made of exquisite materials WHAT? Haute Couture, RTW, accessories and wedding dresses FUTURE? Any luxurious and exclusive products Efficiency of fittings Personalized services Lifetime experience Very selected manufacturers
- 10. BUSINESS MODEL Customers Niche market PRIMARY TARGET: Feminine, Elegant and Personal assistance Super Wealthy Women Co-creation NATURAL TARGET: Self-service Celebrities and Royalties FUTURE PLANS: To diversify
- 11. BUSINESS MODEL Distribution Channels AWARENESS: Events, Catalogues, Advertorials to the corporate website, Interactive portal, Ads EVALUATION: Visit the stores, Try the dresses, Watch the catwalk shows PURCHASE: Flagship stores, Concessions, Multi-brand retailers, Catwalks DELIVERY: On site, at home AFTER SALE: Guarantee repair
- 12. BUSINESS MODEL Key activities Design of luxury stores Haute Couture Customers proximity Animate the online website
- 13. BUSINESS MODEL Key resources PHYSICAL: Stores, fabrics, sewing materials INTELLECTUAL: Website HUMAN: Creative + Business FINANCIAL: Shareholders, Bank loan
- 14. BUSINESS MODEL Key partnerships TO BE SOLD: Retailers, Department stores, Beauté Prestige International TO BE KNOWN: Celebrities, Charitable organizations TO EXPAND THE BRAND UNIVERSE: Hotels, Yacht companies KEY SUPPLIERS: Fabrics supplier, RTW manufacturer
- 15. BUSINESS MODEL Cost and Revenue structure MOST IMPORTANT COSTS: General, selling and administrative expenses, Cost materials and outsourced production, Salaries and Fashion shows THE MOST EXPENSIVE KEY RESOURCES: Stores and Fabrics THE MOST EXPENSIVE KEY ACTIVITY: Fashion shows REVENUES: Sales, Licensing, Partnerships RTW: $1500-$21000 Haute Couture: $34000-$1000000
- 16. ES’s core business: HauteCouture. Four primary product lines: Haute Couture, RTW, Accessories, Wedding Dresses.
- 17. Diversified : enhance itsprestige in every aspect of the luxury sector. SIGNATURE HOTELS 2008 Tatweer/Dubai Properties Signature Hotels U.K. BOUTIQUE AT HARRODS 2008.7 ‘Eveningwear’ Department, First Floor
- 18. PARFUM ELIE SAAB 2009.9 10-year fragrance and cosmetic license contract. LUXURY YACHTS DESIGN 2010.1 Weyves International Ltd. and Oceanco FLAGSHIP STORE IN DUBAI 2010.7 First flagship store in the Gulf region, The Dubai Mall
- 19. VARIOUS MODES OFENTRY Licensing Partnerships Third-party Distribution Company-owned Stores.
- 20. Licensing PROS AND CONS Minimizesrisk and investment. Speed of entry Able to circumvent trade barriers High ROI (Return On Investment) Lack of control over use of assets. Licensee may become competitor. Knowledge spillovers License period is limited
- 21. Partnerships PROS AND CONS Overcomesownership restrictions , cultural distance Combines resources of 2 companies. Potential for learning Viewed as insider Difficult to manage Less investment required Dilution of control Greater risk than exporting a & licensi Knowledge spillovers Partner may become a competitor.
- 22. Third-party Distribution PROS ANDCONS Trade barriers & tariffs add to costs. Minimizes risk and investment. Transport costs Speed of entry Limits access to local information Maximizes scale; Company viewed as an outsider uses existing facilities.
- 23. Company-owned Stores. PROS ANDCONS Greater knowledge of local market Can better apply specialized skills Minimizes knowledge spillover Can be viewed as an insider Higher risk than other modes Requires more resources and commitment May be difficult to manage the local resources.
- 24. Strengths, Weaknesses, Opportunities AndThreats (SWOT) Analysis ES’s Competitive Advantage?
- 25. SWOT Strengths Weaknesses •Member of the Chambre Syndicale •Weak presence in multi-brand shops de la Couture •The dilution of the brand into many •Direct ownership of its stores except activities (yachts, hotels…) and the Dubai (for local expertise) plan to expand even further •One of the few certified « Couture » •Still low sales in Asia, USA and Russia house •Trust and loyalty of stars and royalty Opportunities Threats •The rise of the number of World •Trend : to mix luxury and High-net-worth individuals (HNWI) affordability and of their wealth, especially in •Trend : people tend on dressing Asia more casual •The asian market •Party ladies are no longer high-class •Huge potential in Asia not yet aristocracy but new-world billionaire fulfilled
- 26. Elie Saab’s competitiveadvantage The ultimate personalized experience provided by the brand for Haute Couture customers. + the personality and know-how of the designer Elie Saab Elie Saab really applies the principles of Haute Couture.
- 27. STGAE OF ProductLife Cycle Change OF Company’s Positioning And Differentiation Strategy
- 28. Haute couture : Maturityphase. Elie Saab has a great expertise in this activity. Sales are hight but tend to stagnate. Ready-to-wear & accessories : Sales are in constant progression. More recent activity in Elie Saab portfolio.
- 29. Positioning and differenciation •At first, the brand focused exclusively into Haute Couture and exceptional custom-made clothing for super wealthy customers. • Launch of a Ready-to-wear activity to extend the portfolio More affordable and easier to produce in large volumes A greater return on investment and turnover. Less exclusive global situation but more accessibility and commercial attractiveness
- 30. Should ES targeta new market? For example, the emerging ‘affordable luxury market?’
- 31.
- 32. Affordable Luxury Market lower cost (material/human) higher production volume higher turnover higher profit margin
- 33. Haute Couture vsReady-to-wear “more accessible” -Main income resource Catered to “super wealthy” -Rarely sold
- 34.
- 35.
- 36.
- 37. In these emergingmarkets…
- 38. BUT… The prerequisiteof this strategy of growing in new markets is to maintain the brand’s image and prevent it from being diluted . Individualization Communication loyalty
- 39. OVERALL RECOMMENDATIONS Marketing Mix Strategy
- 40. Our overall recommendationsfor ES Maintain is brand image: “High-end, one-of-a-kind designs made from the finest fabrics and materials” High quality customized service
- 41. Product Diversification “Mass” class - main part of luxury consumers Accessories & cosmetics, etc. “New rich” – status/wealth Domestic outfit, luxury hotels, automobiles and yachts’ decoration, etc.
- 42. Consolidation Thehaute couture has always been and must continue to be the core and soul of ES’s business.
- 43. Pricing A pair ofsunglasses 350€ – 400€ A custom-made couture $30,000 - $1,000,000 gown A pair of plain trousers $1,200 A fur jacet $21,000
- 44. If asked toequate ES with examples of automobiles…
- 45. Promotion Increasing promotion spendingon new media
- 46. Making full useof celebrity effect
- 47. Distribution Another trendin the luxury industry is that manufacturer/retailer relationships have lost an element of trust. A bad choice of licensee retailer may result in a disaster for a brand’s image.
- 48. Company-owned Stores HONG KONG, Jan. 2012
- 49.
Editor's Notes
- #3 ELIE SAAB CAN BE POSITIONED AS A BRAND IN THE ABSOLUTE LUXURY/HIGH-END LUXURY SEGMENT Elie Saab offers : competitive couture pricing without compromising on service exceptional service & top-of-the-line quality Eli Saab is remains a very exclusive brand by targeting: super-wealthy, high-end market, which includes celebrities, royalty, rich and famous.
- #5 We see an evolution of the shopping channels and increasing influence of social media, digital marketing activities The convergence of stores with all of this is creating an “multichannel” experience for consumers and has a positive effect on online sales. Some countries offer tax advantages and attract that way regional shopping tourism in South –East Asia (e.g. relevant Indonesian travelling flows to Singapore). Prices are on average 30%-60% higher due to import duties and taxes in Central Asia. So a lot of Asian people are coming to Europe to shop.
- #6 The number of “extreme net-worth individuals” keeps growing, especially in Asia. Chinese consumers, including their spending as tourists, now account for over 20 percent of global luxury sales. Asian consumers (i.e., adding Japan, Korea, and Southeast Asia) account for more than 50 percent. The growth rates for Asia Pacific excl China fro 2012 14 to 16% and for China around 18% to 22%
- #7 The average age of Asian luxury consumers is decreasing steadily, while that in Japan, Europe and the United States increases, creating a new generation of luxury consumers, but with very different tastes and preferences. Accessories and hard luxury categories, champions of the last years, are expected to consistently outperform the overall market in the years ahead. Consumers are chasing higher quality and greater craftsmanship/materials, which favors absolute luxury offerings. As a result of that, the products in the absolute luxury segment with high-end brands like Elie Saab are outperforming more accessible products.
- #8 1. Asian market is gradually maturing but still offers very relevant growth opportunities Additionally market will keep growing, driven by emerging markets as Latin America and India 2. Absolute Luxury segment will keep outperforming the market in the years to come.
- #17 Saab began with producing signature dresses for the ultra-high end market. But with the knowledge that the brand can’t live on haute couture alone, and with the desire to expand his product line to cater to a wider audience, Saab launched a ready-to-wear line in 1998 produced in the city of Milan. The ES brand has become one of the preferred brands among the elite market, and we still have much ground to cover. We plan on reaching all parts of the globe and understand the unique needs of our high-end customers.
- #18 ES’s vision was to place the brand on any product that was considered luxurious and exclusive. The company planned on diversifying the brand portfolio by offering new products such as eyewear, casual wear, men’s clothing, swimsuits, lingerie, leather goods, home line, airplanes, cars and car accessories, hotels, hotel amenities, luxury sports (golf), information technology and high—tech products. The company was also considering sub-brands and online sales.
- #20 WITH the augmenting business also comes with global expansion. To international markets, there are four entry modes
- #23 45 multi-brand retailers and department stores across the world, such as Bergdorf Goodman and Neiman Marcus
- #24 Seeing a rise in Asian clients at its stores, Elie Saab is now investing in freestanding shops in China. “ We’re starting to see a lot of Asian customers in our existing boutiques, whether in Paris or in London or even in Dubai, and we feel that the brand has had enough exposure for the consumer to start recognizing it,” Elie Saab managing director Chucri Cavalcanti told WWD. Although the label is already in multi-brand stores in Taiwan, Singapore and China, the company is ready for a bigger brand presence in Asia. Elie Saab’s Asia venture will begin with a Hong Kong store followed by stores in Beijing and Shanghai by early 2013. “ We think that Hong Kong could be our starting base in Asia from which we can get into mainland China and into other countries in Asia, like Korea, like Taiwan, like Singapore, in a much easier way once the brand is well established in Hong Kong, which is a very cosmopolitan, international market,” said Cavalcanti.
- #34 “ Much of the company’s success in the previous five years was attributable to its rapid growth in the ready-to-wear (RTW) product line”, said Chucri Cavalcanti, the company’s managing director.
- #36 geographically speaking, the new markets can also be referred to as the emerging countries such as the Middle East, China, Russia, or India as their average personal incomes rise significantly.
- #37 China, for example, is expected to replace Japan as the world's top consumer of luxury goods by 2012.
- #38 In these developing countries, luxurious goods are more about a demonstration of social status than in the western markets, and a lot of people are willing to save months of salaries just to by a Louis Vuitton handbag.
- #39 In the luxury industry, the brand’s identity is the essential concern of a company. It determines, to a certain extend, the success of a brand. Because not only it is the key to distinguish the brand from others, but also it is the channel of communication between the brand and its target customers and it defines its clients’ level of loyalty.
- #43 The development of advantageous items should be intensified, and only in this case can ES hold an invincible position in this industry and grow in all-round way.
- #44 even though we suggest ES to get into “affordable luxury” markets, we insist on a relatively high price in each market.
- #47 By dressing all those stars, celebrities and royal heads, Saab managed to increase the brand’s awareness without taking the risk of being limited or negatively influenced by a“Muse”.
- #49 So we think that to ES, the best way is to limit the number of licensed distributors and open more company-owned stores and ateliers among the world, especially in the emerging new markets.