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KiranaNow - Strategic Company Analysis
- 1. KiranaNow Dual Degree ExitExam 2017 Master in Management IE Business School
- 2. Amazon’s KiranaNow 2013 Amazonenters Indian market with only 2 Categories: Books & Movies 2014 expansion of other categories 2015 Pilot of KiranaNow Hyperlocal marketplace solution for Kirana stores Small local “mom-and-pop” stores Express or Scheduled Delivery of Kirana products
- 3. AGENDA 01 02 03 EXTERNAL SITUATION ANALYSIS PESTEL& Porter’s 5 Forces INTERNAL SITUATION ANALYSIS SWOT & Problem Identification SOLUTION ALTERNATIVES 3 Possible Options RECOMMENDATION Implementation Plan 04
- 4. External Situation Analysis through PESTEL& Porter’s 5 Forces
- 5.
- 6. 1 2 3 45 PORTER’S5 Forces Threat of new entrants, bargaining power suppliers & buyers, SUBSTITUTES, rivalry among competitors
- 7. 1 2 3 45 Threatof New Entrants - High Endogenous entry barrier: Highly concentrated market with strong brands Low entry barriers in marketplace model: low initial investment Highly attractive market: Exponential annual growth of market and customer base
- 8. 1 2 3 45 BargainingPower of Suppliers - Moderate Small commission on already thin margins Strong loyal customer base with existing delivery option Benefit from online market integration
- 9. 1 2 3 45 BargainingPower of Buyers - High Low switching costs Undifferentiated products Loyal relationships with Kiranas – negotiation / credit / promotion
- 10. 1 2 3 4 Threatof Substitutes - High Direct shopping at Kirana store Large supermarket chains with competitive pricing Shoppings done by maids / Eating at restaurants 5
- 11. 1 2 3 45 RivalryAmong Competitors – Moderate/ High Several large players with early mover advantage High threat of new entrants Undifferentiated offering / increasing customer demand
- 12. Internal Situation Analysis through SWOTAnalysis and Problem Identification
- 13. Strengths Weaknesses Opportunities Threats •Leveraging Amazon’s resources and capabilities • Convenient cancellation and delivery policies • No distribution centers & lower costs • Economies of scale • Competitive pricing model • Funding backup in case of price war • Strong brand image • Little quality control and low quality data • Costly cancellation and return policies • Difficult to predict customer behaviour • Inflexible payment options in a cash-dominated country (90% of transactions cash and 50% of population own bank account) • Network of drivers, suppliers and buyers needs time to be established and sustainable SWOT • Kirana stores are niche segment • Growing phone & internet penetration • Increasing acceptance of digital buying • Technology push, modernizing Kiranas • Growth in online grocery shopping • Increasing disposable income, rising GDP • First-mover advantage: achieve high market penetration • Change in regulations to allow FDI in inventory based models • Low technological penetration in India • Consumer preference: offline shopping • Strategic deal between Walmart and Flipkart • Dynamic sector with frequent market entries and exits • Changes in regulations • Strong bargaining power of buyers, mainly due to very low switching costs
- 14. The Challenges Low Customer Demand Consumer preference: offline shopping Low technology adaption: customers & suppliers Value proposition: increase convenience, flawless high-quality shopping experience, customer retention schemes. 1 Market-Based Model FDI regulations prevent inventory-based online retail model High delivery costs Difficulties assuring product availability and limited product portfolio Quality control of perishable goods difficult up to impossible to achieve 2
- 15. Employee Turnover Veryhigh attrition rates Business model requires high number of trained staff Negative effect on the business scalability 3 High Competition Increasing rapidly due to low entry barriers and attractive economic, social and technological market trends Inevestments and mergers among competition Failure of similar ventures in the past 4 The Challenges
- 16. Solution Alternatives definition of 3Possible Options
- 17. Change to B2B supplybusinesses (Kiranas, Restaurants) through inventory-based model Integrate KiranaNow in AmazonNow and establish partnerships with large supermarket chains Continue Business but adapt operations and enhance offering to better address challenges
- 18. Change to B2B Supplybusinesses (Kiranas, Restaurants) through inventory-based model Integrate KiranaNow in AmazonNow and establish partnerships with large supermarket chains but adapt operations and enhance offering to better address challenges Continue Business
- 19.
- 20. Two Possible Paths 1 Enter market andexpand alone 2 Enter and expand by acquiring ZopNow
- 21. Financial Analysis Independent Expansionvs. Acquisition of ZopNow Calculation of NPV for both projects Estimations based on PepperTap & Grofers Expansion into 17 Cities, cost 10$m ZopNow Acquisition price: 25$m CAGR: 62% Online grocery growth: 30% NPV 1: - 22$m NPV 2: 400$k Decision: Acquire ZopNow
- 22. Financial Analysis Independent Expansionvs. Acquisition of ZopNow Input Source CAGR Revenue share Acquisition price ($million) Merger cost ($million) Expected revenues 1 ($) Growth rate CFs 1 ($) Expected revenues 2 ($) CFs 2 ($) 0,62 2% 25 10,00 65.106,30 0,3 203.457 Online grocery market online vs. overall grocery market Rule of thumb 2-3 times raised funds Required for expansion in 10 cities Without Zopnow (20’188 orders/day); based on Grofers revenues Growth rate of retail industry Infinite growing annuity calculation NPV 1 NPV 2 -22.796.543 129.000 403.125 403.090 With Zopnow (40.000 orders/day) Infinit growing annuity calculation Revenues Burn Rate Losses Bigbasket Grofers $87,24m $ 2,22m $6m $2m 42,92 34,86 Company
- 23. Operations Chain After orderis fulfilled, user rates experience Places order on AmazonNow application Partner store receives order digitally Picker assembles order within time given by Amazon Amazon algorithm chooses and notifies best driverDriver picks up order at partner store and delivers to user User 1 2 3 5 4 Cash payment collected if chosen 6 Automated online payment if chosen Partner receives payment minus commission 2
- 24. Organizational Strategy Attrition rateand high staff demand lead to increased costs for staffing and training Well trained and qualified staff is crucial for business success Incentives to increase employee motivation: corporate culture and reawarding system
- 25. MARKETING Value: 5-Box PositioningModel ”Kirana Now has a small product variety and doesn't promise quality or standard. The technology is unreliable and drivers are tardy ” ”I order at Kirana Now sometimes, but can’t pay with cash and I am not getting the same prices as with my local Kirana, therefore visit them directly” ”Get a large variety of high quality products delivered to your door in less than 2h at at a great value for money. Simply order and pay using our mobile app ” “Amazon’s high quality and brand products are superior, while the simple and reliable user experience makes my life easier and saves time.” “I buy all my groceries and necessaire at Kirana Now because it is the most convenient option and they have everything I need” Current Belief Current Do Desired BeliefConsumer Proposition Desired Do
- 26. $ PriceProduct Deliver Value: Product PricePlacing, Positioning • Enhance offering • Standardize products • Better quality control • Smooth customer experience
- 27. $ Price Deliver Value: Product PricePlacing, Positioning Product • Enhance offering • Standardize products • Better quality control • Smooth customer experience • Competitive prices across all segments • Rising willingness to pay for convenience • High quality = high price
- 28. Placing Promotion Deliver Value:Product Price Placing, Positioning • Easy use on mobile devices • Scheduled delivery option • Catering to flexibility needs • Expansion throughout India
- 29. Promotion Deliver Value: Product PricePlacing, Positioning Placing • Easy use on mobile devices • Scheduled delivery option • Catering to flexibility needs • Expansion throughout India • Online and mobile targeting • SEO, PPC, email newsletters • Social media • Magazines and high frequency areas • Discount and loyalty program
- 31.
- 32. Summary Cease operations withKiranas Leverage technology advantage and user base Potential acquisition of ZopNow Prepare for FDI approval for B2C inventory based model Partner with supermarkets through AmazonNow Immediately venture into inventory led model
- 33. AmazonNow Dual Degree ExitExam 2017 Master in Management IE Business School
Editor's Notes
- #6 Context (PESTEL - Fragrance market in Spain) Political Spain Overview (European Union, 2017): Lies on Iberian Peninsula Capital: Madrid Other big cities: Barcelona, Valencia, Sevilla, Zaragoza, Malaga. Parliamentary Monarchy, ruling political party: Partido Popular (right wing) Economic GDP (PPP) 2016 estimate: Per capita $36,451(33rd) Most important sectors of Spain’s economy (in 2015) were wholesale and retail trade, transport, accommodation and food services (24.5 %), public administration, defence, education, human health and social work activities (18.7 %), and industry (17.0 %). Spain’s main export partners are France, Germany and the UK, while its main import partners are Germany, France and China. Economic crisis in 2013 Unemployment decreased Inflation has been rising recently - Econ. Env. Slides Social Spain population: 48,563,476 (Jul, 2016), (CIA, 2017) The growth has slowed down in last 4 years (WorldBank, 2017) Female and male percentage in population 50/50 Technological Social media Innovation is important Communication is easier, customers want to feel connected to the brand New channels → channel marketing (Instagram, Snapchat, blogs etc.) Environmental They follow EU regulations for environmental issues. Sustainable development has been an important value for companies recently. (Hugo Boss, 2017) Legal Before being placed on the European market, all cosmetics products must be listed on a centralised database, the Cosmetic Products Notification Portal (CPNP), managed by the European Commission. When a product has been notified in the CPNP, there is no need for any further notification at national level. (Cosmetics Europe, 2017)
- #14 Competitors - Differentiation What makes us different from the competition? Paco Rabanne Market leader (7% of the market share) and key competitor (Euro Share 2016: 13,4) Main product lines: Invictus and One Million As Paco Rabanne is key competitor SWOT-Analysis gives detailed understanding (no SWOT for other competitors done, due to resource restraints and high similarity of attributes): Strengths: Very strong, successful campaigns without celebrity endorsement. Especially One Million ad had big impact on the market Scents are known to have strong lingering smells that are attractive to women Good brand image and brand equity. Strong innovations and brand communication High visibility on shelves Weaknesses: Two very similar campaigns before, --> change / innovation necessary for next release Scents are more expensive than Hugo. Opportunities: Loyalty of their customers Leverage on existing recognition in market Threats: Hugo Boss has been closing the gap between them and Paco Rabanne in fragrance market Other competitors: Loewe Fragrances (Euro Share 2016: 8,3) - Esencia, Solo Armani (Euro Share 2016: 7,2) - Code & Acqua di Gio Christian Dior (Euro Share 2016: 6,2) - Sauvage (Johnny Depp campaign)
- #18 Promotion Focus on digital marketing strategy and connect all marketing activities with some part of digital content (see communication strategy) Events: Instagram #Challenge & Sponsor VIP Lounge at the Mutua Open Madrid Challenge: upload instagram pictures with Hashtag: #ConquerTheMoment to win invitation to VIP Lounge at Mutua Open Madrid (winners chosen by marketing team) Hey guys! Hugo by Hugo Boss is doing an awesome contest at the moment. The lucky winners will be going to the Mutua Madrid Open with @hugo_official All you have to do is take a picture that you believe represents the edgy spirit of Hugo Man and use the hashtag #conquerthemoment Hope to see you in Madrid! Start off Challenge with Influencers, who are also invited to event At Mutua Open event sponsored by Hugo Boss (staff dressed in hugo boss polo shirts, banners of current campaign, logo will appear on the main courts and on the commercials and flyers, etc.) All guests receive a Hugo Boss gift set The estimated price of the event is: 30.000€ VIP lounge including staff, cocktail and photographers Vogue Fashion Night Out: Fashion event, takes place in September, but it will be assumed that a similar event takes place in the first half of 2018 (June) City shops, restaurants, bars, etc. open at night In addition, main Vogue space with fashion shows and cocktails Target group: Mainly teenagers and young adults, living in the city, enjoying fashion events and the city’s nightlife scene Form of participation: Hire trained sales people and place them at shops such as Sephora, El Corte Ingles, Douglas, etc. to give out free samples and let people try Hugo Man Samples include promo code, which can be used in shops or online to receive 10% Goal: Create a lot of repercusion as it is one of the main fashion events in Spain and we could easily approach a big number of potential clients. Estimated Cost for this event: 10.500€ PRIMAVERA SOUND 1- month music festival from taking place in June, in 2014: 190.000 attendants Main event: weekend 2-4th of June Participation: Secondary sponsor for the whole event throughout the whole month During the three days of the main event there will be 3 Hugo stands, giving out total of 10.000 free baseball caps with Hugo logo and hashtag #ConquerTheMoment 4 selected influencers will be invited to main weekend doing one post each, every of day of the weekend (accommodation costs, expenses and travel costs covered)
- #19 Promotion Focus on digital marketing strategy and connect all marketing activities with some part of digital content (see communication strategy) Events: Instagram #Challenge & Sponsor VIP Lounge at the Mutua Open Madrid Challenge: upload instagram pictures with Hashtag: #ConquerTheMoment to win invitation to VIP Lounge at Mutua Open Madrid (winners chosen by marketing team) Hey guys! Hugo by Hugo Boss is doing an awesome contest at the moment. The lucky winners will be going to the Mutua Madrid Open with @hugo_official All you have to do is take a picture that you believe represents the edgy spirit of Hugo Man and use the hashtag #conquerthemoment Hope to see you in Madrid! Start off Challenge with Influencers, who are also invited to event At Mutua Open event sponsored by Hugo Boss (staff dressed in hugo boss polo shirts, banners of current campaign, logo will appear on the main courts and on the commercials and flyers, etc.) All guests receive a Hugo Boss gift set The estimated price of the event is: 30.000€ VIP lounge including staff, cocktail and photographers Vogue Fashion Night Out: Fashion event, takes place in September, but it will be assumed that a similar event takes place in the first half of 2018 (June) City shops, restaurants, bars, etc. open at night In addition, main Vogue space with fashion shows and cocktails Target group: Mainly teenagers and young adults, living in the city, enjoying fashion events and the city’s nightlife scene Form of participation: Hire trained sales people and place them at shops such as Sephora, El Corte Ingles, Douglas, etc. to give out free samples and let people try Hugo Man Samples include promo code, which can be used in shops or online to receive 10% Goal: Create a lot of repercusion as it is one of the main fashion events in Spain and we could easily approach a big number of potential clients. Estimated Cost for this event: 10.500€ PRIMAVERA SOUND 1- month music festival from taking place in June, in 2014: 190.000 attendants Main event: weekend 2-4th of June Participation: Secondary sponsor for the whole event throughout the whole month During the three days of the main event there will be 3 Hugo stands, giving out total of 10.000 free baseball caps with Hugo logo and hashtag #ConquerTheMoment 4 selected influencers will be invited to main weekend doing one post each, every of day of the weekend (accommodation costs, expenses and travel costs covered)
- #21 Promotion Focus on digital marketing strategy and connect all marketing activities with some part of digital content (see communication strategy) Events: Instagram #Challenge & Sponsor VIP Lounge at the Mutua Open Madrid Challenge: upload instagram pictures with Hashtag: #ConquerTheMoment to win invitation to VIP Lounge at Mutua Open Madrid (winners chosen by marketing team) Hey guys! Hugo by Hugo Boss is doing an awesome contest at the moment. The lucky winners will be going to the Mutua Madrid Open with @hugo_official All you have to do is take a picture that you believe represents the edgy spirit of Hugo Man and use the hashtag #conquerthemoment Hope to see you in Madrid! Start off Challenge with Influencers, who are also invited to event At Mutua Open event sponsored by Hugo Boss (staff dressed in hugo boss polo shirts, banners of current campaign, logo will appear on the main courts and on the commercials and flyers, etc.) All guests receive a Hugo Boss gift set The estimated price of the event is: 30.000€ VIP lounge including staff, cocktail and photographers Vogue Fashion Night Out: Fashion event, takes place in September, but it will be assumed that a similar event takes place in the first half of 2018 (June) City shops, restaurants, bars, etc. open at night In addition, main Vogue space with fashion shows and cocktails Target group: Mainly teenagers and young adults, living in the city, enjoying fashion events and the city’s nightlife scene Form of participation: Hire trained sales people and place them at shops such as Sephora, El Corte Ingles, Douglas, etc. to give out free samples and let people try Hugo Man Samples include promo code, which can be used in shops or online to receive 10% Goal: Create a lot of repercusion as it is one of the main fashion events in Spain and we could easily approach a big number of potential clients. Estimated Cost for this event: 10.500€ PRIMAVERA SOUND 1- month music festival from taking place in June, in 2014: 190.000 attendants Main event: weekend 2-4th of June Participation: Secondary sponsor for the whole event throughout the whole month During the three days of the main event there will be 3 Hugo stands, giving out total of 10.000 free baseball caps with Hugo logo and hashtag #ConquerTheMoment 4 selected influencers will be invited to main weekend doing one post each, every of day of the weekend (accommodation costs, expenses and travel costs covered)
- #22 Company - Advantage What is the asset that enables us to meet that need? ) Facts & Figures and Experience Hugo Boss was established in Metzingen, Germany in 1923 $3 billion turnover 1.4000 employees Serving in 125 countries (It says 127 in their official Group Profile) 7.700 points of sale Hugo Boss was established as a company for luxury menswear however they have recently been giving importance to fragrance lines. Hugo Boss is #7 in Spanish market and #2 in male fragrance market They launched their first fragrance Boss Number One in 1985 Hugo was launched in 1995 Boss Bottled in 1998 The Scent in 2015 ) Vision and Goals Vision: “HUGO BOSS inspires people towards success” Value sustainable development and care for the environment Invest in innovations and value education Aim to provide premium fashion and accessories for men and women Objective as stated in group profile is continuous increase in the appeal of the brand ( Group Hugo Boss) ) Brands and Brand Image The Boss core brand: authentic understated luxury Boss Orange: urban casualwear collection Boss Green: modern sportswear and active performance wear Focus Brand: Hugo Progressive looks and edgy, urban attitude. Hugo Man: the fragrance “Delivering a fresh boost of confidence from the moment it is sprayed, HUGO Man is a fragrance for those who venture to live their dreams. It is a source of daring spirit and relentless inspiration.” It is adventurous and fresh but it’s also luxurious without the seriousness of it. Hugo Boss does not want this brand to have a similar brand image to the core brand. It is targeting a lower income segment as they stress that their fragrances are for both leisure and business but as a part of its usual upper class target, without the businessman attitude.
- #23 Company - Advantage What is the asset that enables us to meet that need? ) Facts & Figures and Experience Hugo Boss was established in Metzingen, Germany in 1923 $3 billion turnover 1.4000 employees Serving in 125 countries (It says 127 in their official Group Profile) 7.700 points of sale Hugo Boss was established as a company for luxury menswear however they have recently been giving importance to fragrance lines. Hugo Boss is #7 in Spanish market and #2 in male fragrance market They launched their first fragrance Boss Number One in 1985 Hugo was launched in 1995 Boss Bottled in 1998 The Scent in 2015 ) Vision and Goals Vision: “HUGO BOSS inspires people towards success” Value sustainable development and care for the environment Invest in innovations and value education Aim to provide premium fashion and accessories for men and women Objective as stated in group profile is continuous increase in the appeal of the brand ( Group Hugo Boss) ) Brands and Brand Image The Boss core brand: authentic understated luxury Boss Orange: urban casualwear collection Boss Green: modern sportswear and active performance wear Focus Brand: Hugo Progressive looks and edgy, urban attitude. Hugo Man: the fragrance “Delivering a fresh boost of confidence from the moment it is sprayed, HUGO Man is a fragrance for those who venture to live their dreams. It is a source of daring spirit and relentless inspiration.” It is adventurous and fresh but it’s also luxurious without the seriousness of it. Hugo Boss does not want this brand to have a similar brand image to the core brand. It is targeting a lower income segment as they stress that their fragrances are for both leisure and business but as a part of its usual upper class target, without the businessman attitude.
- #24 Company - Advantage What is the asset that enables us to meet that need? ) Facts & Figures and Experience Hugo Boss was established in Metzingen, Germany in 1923 $3 billion turnover 1.4000 employees Serving in 125 countries (It says 127 in their official Group Profile) 7.700 points of sale Hugo Boss was established as a company for luxury menswear however they have recently been giving importance to fragrance lines. Hugo Boss is #7 in Spanish market and #2 in male fragrance market They launched their first fragrance Boss Number One in 1985 Hugo was launched in 1995 Boss Bottled in 1998 The Scent in 2015 ) Vision and Goals Vision: “HUGO BOSS inspires people towards success” Value sustainable development and care for the environment Invest in innovations and value education Aim to provide premium fashion and accessories for men and women Objective as stated in group profile is continuous increase in the appeal of the brand ( Group Hugo Boss) ) Brands and Brand Image The Boss core brand: authentic understated luxury Boss Orange: urban casualwear collection Boss Green: modern sportswear and active performance wear Focus Brand: Hugo Progressive looks and edgy, urban attitude. Hugo Man: the fragrance “Delivering a fresh boost of confidence from the moment it is sprayed, HUGO Man is a fragrance for those who venture to live their dreams. It is a source of daring spirit and relentless inspiration.” It is adventurous and fresh but it’s also luxurious without the seriousness of it. Hugo Boss does not want this brand to have a similar brand image to the core brand. It is targeting a lower income segment as they stress that their fragrances are for both leisure and business but as a part of its usual upper class target, without the businessman attitude.
- #25 Company - Advantage What is the asset that enables us to meet that need? ) Facts & Figures and Experience Hugo Boss was established in Metzingen, Germany in 1923 $3 billion turnover 1.4000 employees Serving in 125 countries (It says 127 in their official Group Profile) 7.700 points of sale Hugo Boss was established as a company for luxury menswear however they have recently been giving importance to fragrance lines. Hugo Boss is #7 in Spanish market and #2 in male fragrance market They launched their first fragrance Boss Number One in 1985 Hugo was launched in 1995 Boss Bottled in 1998 The Scent in 2015 ) Vision and Goals Vision: “HUGO BOSS inspires people towards success” Value sustainable development and care for the environment Invest in innovations and value education Aim to provide premium fashion and accessories for men and women Objective as stated in group profile is continuous increase in the appeal of the brand ( Group Hugo Boss) ) Brands and Brand Image The Boss core brand: authentic understated luxury Boss Orange: urban casualwear collection Boss Green: modern sportswear and active performance wear Focus Brand: Hugo Progressive looks and edgy, urban attitude. Hugo Man: the fragrance “Delivering a fresh boost of confidence from the moment it is sprayed, HUGO Man is a fragrance for those who venture to live their dreams. It is a source of daring spirit and relentless inspiration.” It is adventurous and fresh but it’s also luxurious without the seriousness of it. Hugo Boss does not want this brand to have a similar brand image to the core brand. It is targeting a lower income segment as they stress that their fragrances are for both leisure and business but as a part of its usual upper class target, without the businessman attitude.
- #26 Positioning We aim to position Hugo as an approachable brand rather than a high-end product which is thought to be very expensive and luxurious. This positioning strategy focuses on ensuring that the brand image that customers have of Hugo Man reflects the definition attributed by Hugo for the fragrance which are urban, edgy and progressive. The positioning strategy is very important since this is both differentiating the brand from the competition as well as creating a distinctive, desirable place in the market with Hugo’s own brand image. 5-box positioning statement Current belief: Hugo as a brand is too formal and unapproachable, I do not feel connected in anyway. This current belief is due to the fact that Hugo is overshadowed by the Hugo Boss core brand. To change this perception, Hugo should create a brand image for itself different than Hugo Boss’ and separate itself with a proper marketing strategy and customer services. Current do: I prefer buying other brands which are more approachable, like Paco Rabanne. The customers seek brands or campaigns they feel connected to, like that for Paco Rabanne’s One Million. Customers connected with the model and thus, sales figures skyrocketed. Hugo’s first priority should be establishing a strong connection with the target customer. Representation is very important. Consumer proposition: Hugo Man is a perfume for modern young men who are adventurous, daring and inspiring. This customer value proposition focuses on the customer’s personality in order to make them feel connected to Hugo. It is a different proposition than what the core brand has and it is important that it creates a distinct brand image for Hugo, which is urban, edgy and progressive whereas the core brand is subtly luxurious and more traditional. Desired belief: Hugo Man is a brand I connect with and I believe supports my lifestyle. This marketing strategy is supposed to achieve that the potential customers feel connected to Hugo as a brand and understand it’s brand personality exciting and sincere. Desired do: I feel Hugo Man reflects my personality and who I aspire to be, therefore I will start using it. After achieving the change in the potential customers’ beliefs, the next step is creating a strong enough connection with the customers to turn them into loyal buyers. If the brand is communicative and the marketing strategy evolves accordingly, Hugo Man can get the attention of the target group and increase their market shares.
- #27 Product Status Quo: Hugo Man The HUGO brand stands for progressive looks and an edgy, urban attitude whereas the core BOSS brand represents authentic, understated luxury. Hugo Man is a fragrance under the HUGO brand. Hugo is classified as a refreshing, spicy, lavender, amber fragrance. This masculine scent possesses a blend of woods, fresh citrus and spicy leaves. It is recommended for daytime wear. (Hugo Boss Group, 2016) Hugo as Entry Segment with three sub brands (Hugo Man, Hugo Red, Hugo Just Different) all sold in 4 sizes (40mL, 75ml, 125ml, 200ml) Sales have been declining for male and young users. Desired Goal: Can’t change product But due to the high fragmentation in the fragrance sector a new message of an old product can be considered as a new product and can change image → how we want image to be perceived described in 5 box positioning model and positioning statement
- #28 Pricing Status Quo: 40mL: 41€ 75mL: 46€ 125mL: 55€ 200mL: 65€ Prices have been reduced due to the economic crisis, recommended price for 200 mL bottle is 95€ while the market price is set in 65€ Case restriction: Pricing cannot be changed and stays the same.
- #29 Placing Status Quo: Department and Traditional Stores (37% of Hugo Boss business, declining, key customer: El Corte Inglés) National Chains (52% of Hugo Boss business, increasing, key customers: Primor, Boybell, IF, Druni, Douglas, Sephora, Marionnaud) Regional Chains (11% of Hugo Boss business, increasing, key customers: Arenal Marvimundo, San Remo, Priet, …) E-Commerce (1% of Hugo Boss business, increasing) Desired Goal: Offline Retail Channels As 99% of Hugo Boss business is realized in stores, keep focus on these channels. 7/10 purchase decisions are made in front of the shelf → presence in retail channels is very important Shelf space has been deteriorated as a consequence of current performance and there should be a focus on retrieving shelf space through: Seasonal windows: Increased presence during Valentine’s and Father’s day Promotional: If it is not possible to increase shelf space through agreements with the retail shops, a non-permanent solution can be proposed for the product to show its potential. If this proposition works out we would have leverage to make another proposition for increased shelf space. On the other hand we can try to bring Hugo Man to eye-level in carefully chosen retailers (around places our target group frequents) to see how it performs and act accordingly after we get the results. Furthermore, a strong focus will be set on further promotion strategies in order to increase sales numbers and consequently shelf space E-Commerce However, e-commerce has been growing rapidly, in Spain by a year-on-year-growth of 20.3 percent during the second quarter of 2016, and is predicted to increase even more in the future (Ecommerce News, 2017) Online retailing for beauty and personal care products could be a new trend in Europe and is expected to increase by more than 8 percent year on year until 2019 (Ecommerce News, 2016) Increasing sales in that Channel will be addressed through a brick and click strategy → promotional codes given out with samples (further explained in promotion)
- #33 Company - Advantage What is the asset that enables us to meet that need? ) Facts & Figures and Experience Hugo Boss was established in Metzingen, Germany in 1923 $3 billion turnover 1.4000 employees Serving in 125 countries (It says 127 in their official Group Profile) 7.700 points of sale Hugo Boss was established as a company for luxury menswear however they have recently been giving importance to fragrance lines. Hugo Boss is #7 in Spanish market and #2 in male fragrance market They launched their first fragrance Boss Number One in 1985 Hugo was launched in 1995 Boss Bottled in 1998 The Scent in 2015 ) Vision and Goals Vision: “HUGO BOSS inspires people towards success” Value sustainable development and care for the environment Invest in innovations and value education Aim to provide premium fashion and accessories for men and women Objective as stated in group profile is continuous increase in the appeal of the brand ( Group Hugo Boss) ) Brands and Brand Image The Boss core brand: authentic understated luxury Boss Orange: urban casualwear collection Boss Green: modern sportswear and active performance wear Focus Brand: Hugo Progressive looks and edgy, urban attitude. Hugo Man: the fragrance “Delivering a fresh boost of confidence from the moment it is sprayed, HUGO Man is a fragrance for those who venture to live their dreams. It is a source of daring spirit and relentless inspiration.” It is adventurous and fresh but it’s also luxurious without the seriousness of it. Hugo Boss does not want this brand to have a similar brand image to the core brand. It is targeting a lower income segment as they stress that their fragrances are for both leisure and business but as a part of its usual upper class target, without the businessman attitude.