View
0
Download
0
Category
Preview:
Citation preview
2
CONTENT
Page
ABSTRACT-------------------------------------------------------------------------------------3
INRTODUCTION
- Brand Name & Logo---------------------------------------------------------------- 5
- History---------------------------------------------------------------------------------- 6
- Area--------------------------------------------------------------------------------------9
- Product & Packaging---------------------------------------------------------------11
-
BRAND STRATEGY
- Brand Image, Concept, Core Value, Target Group-------------------------20
- Positioning-----------------------------------------------------------------------------21
- Brand Value
- Customer Services------------------------------------------------------------------22
- Price Strategy
- Business Mode----------------------------------------------------------------------24
- Marketing Trend---------------------------------------------------------------------26
- New Brand----------------------------------------------------------------------------27
- Promotion-----------------------------------------------------------------------------28
ANALYSIS
- S.W.O.T Analysis-------------------------------------------------------------------38
- Advantage & Disadvantage of Hermes Family Business-----------------44
CONCLUSION--------------------------------------------------------------------------------46
RECOMMENTATION-----------------------------------------------------------------------47
REFERENCE---------------------------------------------------------------------------------48
APPENDIX-------------------------------------------------------------------------------------50
3
ABSTRACT
“Why do luxury brands still develop and expand even the economy goes down?”
“How can a person spend thousands of dollars to buy a handbag or a scarf?”
These questions always are asked by people. The objective of this article is to give the
answers for these questions.
Hermes will be the perfect sample to solve the questions.
Hermes was founded by Thierry Hermes in Paris in 1837. It’s a French company which
designs and manufactures luxury products such as leather goods, silk goods, clothing,
perfumes, etc. It knows how to deal with bad economy and attract customer. Ever the
price is extremely high.
The first part is introduction of Hermes. The second part is research on Hermes brand
strategies. After the brand strategies research, this article will analyze the S.W.O.T for
Hermes and discus with Hermes family business mode.
5
Brand name:
Hermès
Logo:
Shape and Colors of the Hermes Logo
The now iconic logo of Hermes was designed and introduced in the early 1950s. It
comprises of a Duc carriage which is attached to a horse, perhaps interpreting the
company’s humble origins as a horse saddlery manufacturer.
The orange color in the Hermes logo gives the brand its distinctive style and authentic
edge. The taglines in the print advertisements are commonly featured in French,
highlighting the company’s beginnings and its country of origin.
Font of the Hermes Logo
The Hermes logo uses a slightly modified form of the Memphis typeface which was
originally designed by Dr. Rudolf Wolf in 1929.
Figure1.1
6
History
1837, Hermès began as a harness workshop shop in the Grands Boulevards quarter of
Paris by Thierry Hermès. The shop served Europe noblemen, creating the finest wrought
bridles and harnesses for carriages.
1855, Hermès won the first prize in its class at the 1855 Exposition Universelle in Paris.
The clients of Thierry were the stylish Parisian beau monde and European royalty.
1880s, the line was expanded by Thierry Hermès’s son and successor, Charles Emile
Hermès to include the manufacture of saddles. And a new store located near the Palais
de l'Elysee.
Hermes flagship store location: 24 Faubourg Saint-Honoré.
Thierry Hermès, founder of Hermès
Thierry Hermès
Thierry Hermès was born in 1801
in Krefeld, Germany. His father,
Thierry Hermès, was French, and
his mother, Agnese Kuhnen, was
German. He was named after his
father. He was born as a French
citizen as Krefeld was part of
Napoleon's empire.After he lost his
entire family to disease and war, he
moved to France in 1821.
7
1920s, Emile Maurice Hermès was responsible for the successful diversification of the
business. He was the first man to introduce the zipper to France, and obtained exclusive
rights to use it in leather clothing and accessories.
In 1918, the first leather golf jacket with a zipper, made by Hermès, was introduced.
Hermès Frères advertisement, 1923
In 1922 the company introduced its first handbags, and they secured a foothold in the
United States in 1924. 1929, Hermès produced the first women’s fashion apparel
collection in Paris.
1930s, Hermès added scarf to their product line, and set up their own scarf factory in
1937.
In 1930, Hermès manufactured ‘Kelly Bag’.
1940s, more new products were released, including silk ties in 1946 and perfume in
1949.
8
1945 Emile Maurice adopts the calèche as a company logo.
1950s, after Emile Maurice died in 1951, Robert Dumas-Hermes took leadership of
Hermès. Robert was responsible for the introduction of Hermès Tie, the beach tower and
the Perfumes.
In 1956, “Kelly Bag” which Grace Kelly made world famous.
Grace Kelly with ‘Kelly Bag’
1970s, Hermès focused on international expansion, opened stores across the United
States, Japan and Europe. But the company started to falter and lagged behind its
competitors.
In 1978, Robert died and the company was succeeded by his son Jean-Louis Dumas-
Hermes. Jean-Louis traveled the world extensively, brought back ideas that are
incorporated into every aspect of Hermès product development.
1984, the most iconic Hermes Birkin bag was created by Jean Louis Dumans.
1990s, annual sales had greatly increased. Hermès continued to expand their line,
including crystal and porcelain tableware.
By 2008 Hermès had 14 divisions providing a wide range of products, including
menswear, perfume, women’s fashion, footwear and jewelry.
9
Area
Distribution
Distribution subsidiaries in 25 countries:
Germany, Argentina, Australia, Belgium, Canada, China, Hong Kong, Taiwan, South,
Korea, Spain, USA, France, Greece, India, Italy, Japan, Malaysia, Mexico, Portugal,
Principality of Monaco, Czech Republic, United Kingdom, Russia, Singapore,
Switzerland, Thailand, Turkey
Stores:
Hermès products are available worldwide through a network of 315 exclusive stores.
Hermès watches, perfumes and tableware are also sold through networks of specialised
stores and in airport duty-free stores.
10
Manufacture
The Hermès group boasts 46 production units, including 35 in France, spread across 39
different sites. At these sites Hermès craftsmen fashion high-quality articles, working
with selected raw materials such as leather or silk. Rigorous attention to the
consumption of natural resources, such as water and energy, and respecting the
environment remain key priorities for all our production units and métiers.
11
Product sector:
Hermès is active in fourteen different sectors:
Leather Goods and saddlery,
Men’s and Women’s Ready-to-Wear,
Footwear,
Belts
Gloves,
Hats,
Silk and textiles,
Jewellery,
Furniture,
Wallpaper,
Interior fabrics
Tableware
Perfumes,
Watches,
Petit h
12
Product Line:
Women:
Men:
READY TO WEAR
SKI
SWIMWEAR
SCARVES
BANDANAS
STOLES AND SHAWLS
BELTS
SHOES
ACCESSORIE
READY TO WEAR
TIES
SCARVES
POCKET SQUARES
BELTS
SHOES
ACCESSORIES
13
Jewelry & Watches:
Leather:
EXCEPTIONAL JEWELRY
GOLD AND DIAMONDS
GOLD JEWELRY
SILVER JEWELRY
ENAMEL JEWELRY
CRYSTAL JEWELRY
HORN JEWELRY
LACQUERED JEWELRY
LEATHER JEWELRY
WATCHES
BAGS AND LUGGAGE
SMALL LEATHER GOODS
AGENDAS
NOTEBOOKS
ACCESSORIES
14
Fragrances:
Home:
WOMEN
MEN
TO SHARE
BABY GIFTS
BATH LINENS
BEACH
BED LINENS
BLANKETS & PILLOWS
DECORATIVE OBJECTS
DESK ACCESSORIES
GAMES
PETS
SPORTS
TABLEWARE
16
The most iconic products
Hermès is most famous for its Kelly bag and Birkin bag.
Kelly Bag
The Kelly bag was designed by Robert Dumas in the 1930s and was originally called
‘sac a courroie pour dames’ meaning ‘bags with straps for ladies’. The bag was made
famous by the actress Grace Kelly when in 1956 she used the bag to hide her
pregnancy from the paparazzi. Photographs of this beautiful bag were on covers of
magazines around the world making it an overnight sensation. Hence it was renamed
the "Kelly" bag.
17
Birkin Bag
The Hermes Birkin bag is the most iconic handbag in the world and was created in 1984
by Jean Louis Dumas. He tweaked the original Haut à Courroies bag which was used to
carry equestrian gear so it was more versatile, easier to carry and modern. Jane Birkin
was the inspiration for this, hence the name.
Hermes Marron Fonce Porosus Crocodile Birkin 35cm Bag
The muse Jane Birkin with her ‘Birkin Bag’.
20
Brand Image:
The brand image of Hermes is to build on its persistent in top grade, principle in high
quality and the unique France style. The reason why its products possess the timeless
glamour is because the fashion elements were integrated into the foundation.
Hermes dedicates to maintaining the classical and quality with the combining the top
craftsmanship, durable functions with the concision, elegant and delicate design.
Hermes is not only the symbol of identity and status, but also the fashion items that can
make your life always be fresh and never fogy.
Concept:
Uniqueness of traditions and design.
Core Value:
Conception, manufacture and distribution of prestigious luxurious products
Almost 200 hundred years “Expert in noble material and know-how”
Target Group:
Hermes’s target customers are both adults and teenagers who love fashion. Their
customers look for high quality, good features, and wonderful after sale services in
Hermes’s products.
The buyers of Hermes have high incomes so they do not seem to care about expensive
prices. What they are looking for in Hermes’ leather goods are limited edition items and
differentiations. Luxury customers want to own something that not a lot of people can
buy or afford.
21
Positioning:
Elegant style
Inaccessible price
Durable quality
Ever Lasting design
Brand Value:
Hermes ranks at number 2 in the top 3 ‘Top 10 Luxury Brands of 2013’. (Millward Brown,
2013)
And its brand value is $21,844 Million (USD).
Top 10 Luxury Brands of 2013, (Millward Brown, 2013)
22
Customer Service:
Hermes’s business-level strategy is luxury. They provide extremely high level of services.
For example, if you purchase a Kelly or Birkin handbag from Hermes, you will not only
enjoy a high quality, fashionable and limited edition product, but also life-time guarantee
service. Hermes offers “spa treatment” to renew customers’ old handbag, and make
them look like new. It differs their products to others.
Pricing Strategy
Inaccessible Price:
Hermes has been set its price by conception, manufacturing and distribution. Therefore,
the high-end position of its products enables the company has set its price by avoiding
competitive influence.
Price premiums, the strengths of Hermes enable its brand command the highest price
while all customers are willing to pay for its iconic products (Loken et al, p21)
Uncompromised Price:
Hermes hasn’t made discount its products for any events, occasions or VIP.
23
Price range for certain products:
• Birkin Bag: $7,400 to $150,000 USD
Hermes Alezan Swift Birkin 35cm Bag: $12,900.00 USD
• Scarves: $300 to $850 USD
Hermes Equateur Silk Twill Scarf 140: $790.00 (USD)
• Tie: $150 to $400 USD
Hermes 7 Small Chain Silk twill tie: $195 USD
24
• Belts: $770 to $18,000 USD
Hermes Porosus Crocodile Belt: $6,350 USD
Business Mode: Family-own business
Hermes did a long-term of family-own business from 1837 till now, passed over down
six generation. In 2006, after Jean Louis Dumas retiring, Patrick Thomas became the
new CEO, the first time not a family member. But in 2014 Axel Dumas will succeed him
upon his retirement which is the sixth generation of Hermes family.
THE SIX GENERATION OF HERMES BUSINESS
1st GENERATION: Thierry Hermes (1801-1878)
Time of leadership: 1837-1859
2nd GENERATION: Thierry’s son, Charles-Émile (1844-1918)
Time of leadership: 1859-1902
25
3rd GENERATION: Charles-Émile’s sons, Adolphe and Émile-Maurice
Time of leadership: 1902-1951
(Emile Maurice)
4th GENERATION: Émile-Maurice’s son-in-law (husband of Jacqueline Hermes),
Robert Dumas Hermes (1898-1978)
Time of leadership: 1951-1978
5th GENERATION: Robert Dumas Hermes’s son, Jean Louis Dumas (1938-2010)
Time of leadership: 1978-2006
26
6th GENERATION: Axel Dumas (1970-now)
Time of leadership: 2014 until now
Marketing Trend:
Luxury industry also started suffering due to economic issues in these years.
While the United States experienced high unemployment rates, and European increases
in debt, China went through a hot economic growth. Depending on these facts, Hermes
wanted to change direction and focused more on Asian areas especially in Mainland
China.
27
New Brand: SHANG XIA
About SHANG XIA:
SHANG XIA is a contemporary brand founded in 2008 to bring the excellence of Chinese and other Asian craftsmanship into contemporary lifestyle through the encounter of heritage and innovation. Together with the Hermes Group, Chinese designer Ms. Jiang Qiong Er has set up the SHANG XIA company in Shanghai to create a 21 st century brand from the best of traditional Chinese and other Asian craftsmanship and design. Focusing on the home, the collections include furniture, decorative objects, accessories, garments and an extended experience of tea. New categories will complete this range later.
SHANG XIA shares with Hermes its passion and unwavering commitment to quality and search of excellence in designing products for the home and everyday use.
PROMOTION
Social Media
Customers can follow Hermes on these social media:
Hermes official website
Google plus
Printerest
Youtube
Tumblr
The logo of SHANG XIA The SHANG XIA boutique in Paris
33
Hermès origami app:
French leather goods maker Hermès is bringing its print magazine into the digital space
with an origami tablet application for Apple and Android devices.
Through the Monde d’Hermès app, consumers can virtually fold pages of the magazine
into shapes and then share them via social media or email. This app will likely
encourage consumers who only interact with the brand online to pick up the print
magazine.
35
Advertising strategy:
Hermes is increasing its overall marketing budget by just under 10 percent this year to a
touch above 100 million euros ($141.1 million), but only a third will be on advertising,
Chief Executive Patrick Thomas said.
"The rest of the budget goes on shop windows, exhibitions, private public relations
operations," he said, including invitations to 10-15 customers to themed store openings.
"We don't believe so much in advertising to explain the particularity of Hermes," he
added.
Hermes are also using the Internet in innovative ways to draw attention to their brands.
Hermes is using the Internet to push sales with merchant sites in the United States and
most European countries. Web-based sales account for only about 1 percent of the total
currently but are growing at 40-50 percent annually.
Celebrity effect also a great ‘free’ advertisement for Hermes.
36
Visual Merchandise
The window displays of Hermes are always simple but creative and unique. Store interior designs are luxury and classic. Separating zones by type of products.
38
S.W.O.T Analysis:
STRENGTH
High quality products and services
Hermes does not make products but extremely good ones. Their products are
always durable. Hermes also provide life-time guarantee service. They offers “spa
treatment” to renew customers’ old handbag, and make them look like new.
Good distribution network
Hermes has distribution subsidiaries in 25 countries. And Hermès products are
available worldwide through a network of 315 exclusive stores.
Family-own business
Hermes is a family company. Hermes family had controlled the business for six
generation since 1837. Family-own business made them keep perfect control of the
brand and privileging its positioning on long-term. It also made customers more trust
on the brand.
Second position in top 10 luxury brand
Hermes was the second position in top 10 luxury brand in 2013. It means Hermes
has a great performance on finance and high brand value.
Great skilled craftsmen
Hermès imported craftsmen and women from its workshops in France to
demonstrate the techniques they use to create luxury items like leather handbags,
silk scarves and gold jewelry. It’s like a national celebration of the artisanal quality
that has been associated with the house since 1837.
39
Steady growth of financial
Hermes keep increase their revenue in these 5 years.
Have their own crocodile farm
Hermes has to face a high cost of importing their raw material because of high
demands and low supplies. So they decided to branch out into crocodile farming in
Australia.
Long history and great heritage
From 1837 to 2014, Hermes passed over 177 years. The brand name becomes
more powerful during these 177 years. They keep their products in high quality and
well-design.
40
WEAK
Extreme high price
Hermes products are expensive. The price is inaccessible and never make discount!
It make most of the people they cannot afford the price, so the market is limited. And
higher price makes higher exception. If somebody spend a lot of money to purchase
Hermes product, a little problem can make him/her very disappointed.
Low productivity-Long waiting Time
Since Hermes promised all the handbags are hand-made. It takes long time for
producing. For example, customers put their names on a waiting list for up to two
years and pay up to $60,000 for the Birkin Bags. Nowadays, more people like ‘fast
fashion’, they prefer to buy something no need to wait, even someone buy the fake
products.
Advertising strategy
Learning from the research, Hermes should start generating a better advertising
strategy. Having products named after well-known people is not attractive enough to
persuade customers to make a purchase decision. Hermes’s advertising will vastly
improve when these individuals appear more in the media. Young adults and
teenagers now are affected a lot by celebrities. These individuals will mimic the
shopping behaviors of their favorite singers or actors in the near future.
Limited in product
The three main production of Hermes are leather goods sector, tanning and precious
leather sector and textile sector. They may expand their product line, such as add
make-up product.
Dose not offer opportunity for private retailers
Less stores than other powerful competitors
41
For example, Louis Vuitton owns more than 460 distribution stores. Hermes only has
more than 300 stores.
Brand still not available in so many countries
For example, Louis Vuitton operates in 65 countries, but Hermes only in 25.
OPPORTUNITY
Expand kids and pets section
Hermes is still missing kid and pet sections in their product lines which can create
million dollars each year for them. They should have their kid and pet divisions which
focus on designing and production of these special products
Open convenient shopping stop
Extreme wealthy customers are normally busy and do not have enough time to shop.
To create a convenient shopping stop, Hermes should have their cosmetics product
line so their customers can find all items that they need to have a perfect outlook
which includes make up, clothing, and accessories.
Strengthening online store
Online shopping becomes the most trendy shopping method. There are lots of
opportunity in online marketing. Hermes should catch the chance.
More Stores-More Customers
Hermes should spend more money on market research to open and expand more
stores like other competitors.
More cooperation with strong brands
It will make the brand name more valuable. The cooperation brands may not only in
fashion industry, but also in home decor, car, hotel and so on.
42
Develop make-up product line
A lots of luxury brand started their own make-up product line, such as Burberry, Marc
by Marc Jacobs, Tom ford and Christian Dior. Hermes has strong brand name, if
they sell make-up product, people would like to buy it.
Create partnership
Make-up Art Cosmetics (M.A.C) is a promising partner that Hermes can work with.
M.A.C is known as a high-end cosmetic brand which has massive demand in
consumer good industry. This partnership is a perfect combination. It not only
complete the missing product line of Hermes but also brings Estee Lauder from
consumer good industry to luxury one. This project will promise millions of dollars in
benefit.
THREAT
Only focusing on luxury items
Only focusing on luxury items will become a high risk investment to Hermes. What will
happen if customers change their tastes or economy goes down and people looking for
cheaper price items? Diversifying is a great way to reduce risk for Hermes and make
their future much more stable. They can start opening a business that sells cosmetic
items which many wealthy customers are desired, too.
Environment issue
Hermes International also got involve in some problems with general environment.
Killing crocodile to get skin now becomes their most critical general environmental
dimension. PETA organization already gave a warning to Hermes about this unethical
production.
43
Strong competitor
Louis Vuitton, Gucci, Prada and Chanel
Louis Vuitton try to “swallow” this company by buying more and more Hermes’s stake.
From 2000 to 2010, LVMH has since raised its stake to more than 22 percent, giving it
16 percent of the voting rights.
Louis Vuitton has some similar strategies like Hermes does such as price strategy,
service and personnel differentiation, and distribution channel strategy. The price of
Louis Vuitton and Hermes’ products are only going up. The two companies never ever
sell their products with any discounts or lower the price in any circumstances.
But Louis Vuitton owned more stores in more countries. And they are the first brand of
the ’10 most powerful’ luxury brand.
44
Advantage and Disadvantage of Hermes family’ experiences
Advantage:
Hermes is a private company which is running by Hermes’s family members so it creates
a great management system. Hermes family has long time experience working within the
luxury industry. The family-own business module is better for them to keep perfect
control of the brand. They know how to produce excellent products which satisfy
customers’ desire. None of competitors can make a Hermes family member to come to
work for them and share their experiences of production processes. And nothing can
substitute these experiences.
Disadvantage:
- Management with Sentiments - Lack of openness - Rivalry between family members
Challenge of Hermes family business
Since the surprise raid on the company by tycoon Bernard Arnault last fall and winter,
when Arnault’s LVMH progressively announced that it had acquired first more than 17%
and then more than 20% of Hermès’s stock, certain family members have even become
mute. At Hermès headquarters on the rue du Faubourg Saint Honoré, the possible
takeover attempt is perceived as a true clash of cultures: on one side an implacable
giant of finance; on the other, “an artisan attached to esthetic and ethical values”.
46
Conclusion
Hermes is the second powerful brand in luxury industry. They spent almost 200 years to
make the brand as famous as today. With 3,000 million euro in average revenue,
Hermes has a very strong financial position and potential growth compare to other
competitors.
Well-design, good quality and fashionable these three key factor make wealthy people
who have high level of income are always interested in Hermes items.
Hermes has an excellent store distribution which own more than 300 stores all over the
world. Hermes is not making good products, they are making excellent merchandise.
Patrick Thomas’s leadership helped Hermes expand a lot in Asian countries and going
to expand more. Hermes will change direction and focused more on Asian areas
especially in Mainland China.
47
Recommendation
Hermes is a powerful brand that is well positioned within its industry thereby the strong
potentialities. It has bright and successful future.
For further development, Hermes should expand more stores and operate in more
countries. According to the analysis, Hermes can pay more attention in Asia, especially
in China. Because, the increase in demand also has driven highly competitive in niche
markets and has created huge opportunities for presenting its brand in Asian market at
the same time.
Creation of brand extension by launching new market and design. Hermes should add
new items to their production line, such as make-up products. And they may try to not
only focus on luxury marketing.
Hermes should find the way to solve the environment problem. Try their best to find an
alternative leather which is better to the environment.
For against with the strong competitors, Hermes should control more of the shares and
try to find a strong brand as partner. Constantly maintain its inaccessible image and
waiting list strategy which created Hermes different from its competitors.
Finally, hope Axel Dumas who is the new Hermes CEO will bring some new idea for
Hermes.
48
REFERENCE
Hermes Analysis In Business Marketing Essay, (2010) [online] Available:
http://www.ukessays.com/essays/marketing/hermes-analysis-in-business-marketing-
essay.php
BellaDonna Artistry (2012) History of Hermes. [online] Available: http://www.my-
fashionbank.com/articles/article44.html
Spotted KTC (2014) Hermes Bag Price List Reference Guide, [online], Available:
http://www.spottedfashion.com/2014/03/19/hermes-bag-price-list-reference-guide/
[2014.03.19]
Hermes (2014) Hermes Financial Information, [online], Available:
http://finance.hermes.com/en
Phuong Tran (2012), Environmental Problem, The Hermes International Journal, 2010-
1-1, pp. 5
Unknown writer (2009), Luxury groups use movies, dinners to boost image, [online],
Available: http://www.smh.com.au/executive-style/luxury/luxury-groups-use-movies-
dinners-to-boost-image-20090612-c5q5.html [2009-06-12]
Hermès (2014), KEY CONSOLIDATED DATA,2013 ANNUAL REPORT: OVERVIEW OF
THE GROUP - REVIEW OF OPERATIONS, 2014-04-10, pp. 21
Marianne Lohse (2012), HERMÈS: A FAMILY AFFAIR, [online], Available:
http://www.francetoday.com/articles/2012/02/20/hermes_a_family_affair.html [2012-02-
20]
49
ANDREA DIVIRGILIO (2013), LVMH vs Hermes: An Attempt To Take Over The Family
Business, [online], available: http://www.bornrich.com/lvmh-vs-hermes-an-attempt-to-
take-over-the-family-business.html [2013-06-05]
Sophie Doran (2014), What the 2014 BrandZ™ Top 100 Means for Luxury, [online], available:
http://luxurysociety.com/articles/2014/05/what-the-2014-brandztm-top-100-means-for-luxury
[2014-05-21]
Zoe Wood (2011), In France, making billions is often a family business,[online], available:
http://www.theguardian.com/world/2011/mar/23/new-europe-france-family-businesses-
pernod-lvmh-dior [2011-03-23]
David Murray (2009), Hermes starts crocodile farming in Australia to make handbags,
[online], available: http://www.dailytelegraph.com.au/archive/money/hermes-starts-
crocodile-farming-in-australia-to-make-handbags/story-e6frezc0-
1225733463990?nk=d53849072093f550b7cd6f8d1d57d830 [2009-06-12]
Recommended