Marketing Principles: Report
Analysis of the Marketing prospects of Hermès
Company Coursework 1: Addison Lee
Company Coursework 2: Hermès
Module Leader: Norman Peng
Seminar Tutor: Ilya Girson
Student: Nishant Agarwal
Student ID: w16865114
Hermès is a French uplifted luxury fashion goods designers and manufacturers. The brand was established in 1837, The logo is a Duc carriage with a horse, which originally was a Memphis then was modified by Dr. Rudolf Wolf in 1929. The logo comprises of a carriage attached to a horse interpreting the company's humble origins as a horse saddlery. They specialise in leather, scarves, ties, men's and women's wear, perfume, watches, stationery, footwear, gloves, enamelware, decorative arts, tableware, and jewellery.
Hermès was known as ‘Harness Workshop' in Grands Boulevards quarter of Paris dedicated to serving European Noblemen, in 1837 their specialisation was premium quality harnesses and bridles for the carriage trade. The company expanded in the span of 20 years, son of the founder Thierry Hermès Charles-Émile Hermès took over the business and retained the name of the company by the help of his sons Adolphe Hermès and Émile-Maurice Hermès. They expanded by introducing saddlery and announced retail, where they sold their goods to the elite of Europe, North Africa, Russia, Asia, and the Americas. Hermes offered the Haut à Courroies bag, specially designed for riders to carry their saddles with them, creating exports for all the loyal elite consumers in different countries making a better brand name. After the retirement of their father Charles-Émile Hermès their children took the command over the business they changed the name of the company Hermès Frères.
For the next 89 years the company was being controlled and well handled by the family of Thierry Hermès the last Hermès who was controlling the firm was Jean Louis Dumas, in 1989 there was a new CEO to the business Patrick Thomas he held the company for 22 years in which he did leave the firm for a few years in 1997 to rejoin in 2003, he controlled the firm till 2012. In 2012 there was a new CEO to the firm that was the sixth generation to the Hermès Family Axel Dumas.
The net income calculated in 2016 is €1,100.3 million and a revenue of €5,202.2 million. Pierre-Alexis Dumas is the artistic director of Hermès. Under his direction, the firm has seen its biggest growth in decades, with sales of 4 billion euros in 2014. The number of employees working for Hermès in 2016 were 12,834.
The firm sells one silk scarf every 20 seconds, Birkin bag has the longest waiting list for an accessory today reported to be around 6 years, they have 240 stores all across the world which shows the success the brand. The total net worth of the firm is €50 billion in 2016. Therefore this is the history and the present ethic of the company where it is being inherited by the family from generations, this is the ethic and the sustainability of the business where it is a successful brand.
Hermès advertisement of 1923
SWOT And Positioning Strategy Analysis
Hermès heritage is a history of more than 170 years which has known clothing and designs. The company always believed in conception, this uniqueness in traditional designs always pulled the consumers attention to the brand. As seen in the name they believe in the god Hermès, he was a know to be God of Trade, that shows that they have their unique traditional ways of designing, manufacturing and selling the product. Hermès always has the production and distribution of a prestigious luxurious products. This strategic use of traditional manufacturing and design made the brand driven by very wealthy in a portion of demand for luxury goods by high profiled clients and celebrities. One of their biggest strengths are “Kelly” and “Berkin” bags they are highly valued and have a very long waitlists, for example Birkin bag has the longest waiting list for an accessory today reported to be around 6 years, the list increases rapidly for these bags. Hermès has build its brand inaccessible, which says that their brand has an exclusive reputation and an elevated social status. The logo defines travel and transportation. Their brand valuation is magnificent brand value and highly prestigious luxury products. What defines Hermès is the classic uniqueness, which captures the market between 25-65 age group as they are used to seeing this exclusive brand. People like the brand is because Hermès is a status symbol, their brand image is recognised by the premium societies, they make products in endless different styles, leather, hardware and sizes creating detailed adjustments to the products, as the family owned company they have kept the traditional approach to the firm, they have skilled craftsmen for the job to maintain the perfection of the brand they create all new types to keep their customers happy by adding jewellery on the bags and other rare products to keep them delighted by the brand by focusing on their choices and make it connected to the buyer.
Hermès has a huge number for customer market where they have to make products in large quantities, styles, sizes and the exotic products, some of which products are made of animal skin which gives them a drawback. As the customers need for the products that are made from real skin, for example crocodile skin . The bag which is made has an increasing demand, it requires 3-4 crocodiles to produce a product, these exotic products are not enough to respond to the rising demand especially the crocodile skin. As the the low inventory of the raw materials creates a low sales in the business. As there is an intense competition in the luxury brands in the market it creates limited market growth for Hermès, the company also faces a lot of fake imitation of the brand that affects the brand value and affects the sales of the business.
Hermès has expanded its market globally to sell their products to all across the world, this has created a rise in demand for the products and higher sales. Entering the niche market created limited growth but also increased the value of the brand and its products to get a better opportunity to be sold globally and grow globally. They have made the their brand user friendly by using e-commerce, this allows them to expand their business through digital revolution and increase the sales of the business worldwide. They are getting the opportunity to export and import products that helps them to increase the economy of their country and also have a greater value in their country and also in the countries they are selling their products. The technology has always helped them market their products and to have a higher reach till the customers, the advertising increased the recall for the brand. They have changed themselves as per the market requirements, they started a new from under Hermès named “Shang Xia” in China. This brand is being produced be Chinese designer, material, techniques and production, it is a new aspect in the luxury market reaching through Europe and USA, where as even china has a upcoming growing market for luxury.
Where as Hermès has an intense competition in the niche market that generates reduction in market share, there are loads for companies which are major competitors and are strong brands for example Louis Vuitton, Gucci, and other high-end fashion brands. The new brand under Hermès named “Shang Xia” will take time to create brand value and a respect in the market as compared to Hermès, because the firm Hermès has a history of years that created the brand value. There is always a chance of opportunity cost for a customer when the person is about to buy a product, because of large competition in the market there are loads of substitutes for the products. Hermès is a global brand, when ever there is a global effects it always affects the business, they always have an unstable market for example recession.
Breakdown Of Revenue (Hermès)
Porter's Five Forces Analysis
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