Hermes Analysis In Business Marketing Essay

Background
A current situation in the global economy, many businesses have been forcing by a dramatic increase in the competitive business world thereby causing globalization. This phenomenon also has directly affected the demand in luxury products which also has grown extremely in some specific regions. However, these particular markets have driven very wealthy in a portion of demand for luxury goods by high profile clients and celebrities especially in Asian markets. Therefore, the increase in demand also has driven highly competitive in niche markets as well (Wikivest 2010). Many huge luxury fashion brands like Louis Vuitton, Gucci and Hermes which were ranked the top three most powerful luxury brands in the world in 2010 (Millwardbrown 2010), have adopted and created great brand strategies to play on global competition which has several challenges such as new competitors, rapidly changeable technology, internal and external factors (Loken et al, p. xv), and expand its participation in offshore markets. Moreover, the strength of its brand management is able to gain competitive advantage and has edge over rivals in the same mainstream industries. The purpose of this report is to present an application and a comprehension of the key concepts and techniques used in Strategic Brand Management including positioning of brand, corporate brand management, consumer relationship management and brand strategies. The seven primary stages in introduction are the foundation of the brand which is brand history, current market status, positioning the brand, assessing the international and regional mix, current customers and their perception of the brand and decision of brand manager. The second part is brand analysis which will provide the strengths and weakness of current brand strategy. After that, the third section will provide recommendations on future strategy for the brand. Finally, summary is the last section.

Brand History
The luxury brand is called Hermes that has 14 partitions presenting a large variety of creations, comprising mens fashion, fragrance, women clothing, leather goods and jewelry. Moreover, this brand is accepted to be the leader in the magnificence bag of the industry especially the leather product which develops from saddles of horse.

1837
The Hermes Fashion House was established in Paris by Thierry Hermes. The company started to produce the saddle.

1878

Charles-Emile Hermes who was a son of Thierry succeeded in the bag industry by creating the first bag which called Kelly model. Moreover, the company opened a new store position around the Palais de l'Elysee.

1902
The company opened the product to the European Royal Families., the company started to expand the product high international market such as Romania King, Japan Emperor and France President. After that, next generation Emile-Maurice renamed the company to Hermes Freres. The company emphasized in the luggage and the leather goods because the car industrial in Canada and the US was developing.

1929-1938
During the economic slumped, the company had the strategy to focus on the international market. Then, the company developed the product for car industrial particularly car confront.

1949
The scarf was the significant item to push the company from the crisis time. The silk was used in new design to produce the scarf and ties in its products. Furthermore, the company developed the material, including wool, raffia, linen, and leather. Thus, the color was improved to have the difference styles such as orange. In the part of product, the company evaluated the women to the way of life, for instance women close for bike: divided skirt, the shoulder bag. In that period, there were five workshops so as to sew the cloth and the accessory. Next, the company increased the target group and product line in the fashion market such as the accessory for travel, sport and car.

1956
The product which made people know the Hermes was Kelly Bag and Berkin the famous leather bags among fashionistas. Moreover the company had the concept See in scene by using the window celebration in Duchesse de Windsor to attract the consumers.

1978
The products were distributed to the global market by Jean-Luise Dumas. Hermes opened the branch in the US, Japan, and Europe. In this period, the chairman has the role to develop new innovation especially crystal and porcelain tableware.

1993
The company introduced in the stock market. However, the main shareholder still was the Hermes Family (Gris et al, 2009 and Articalbase, 2009). In the present, Hermes uses the innovation diversification and customization to drive the business in the competitive market. Long tradition of the company is the strength point to support brand image in the high level market. Hermes persists to be a valued image in the international

fashion attributable to the painstaking craftsmanship personified in all their creations and the reputation connected with them. There are three criterias to maintain in the luxury market consist of material value, immaterial value and consumer distance. In addition, the company has the strategy that differs from the competitors, for example, low volume of product advertising and the know-how that is the mastery in the quality product for a long time (Gris et al, 2009). Moreover, Hermes has mostly controlled and run its business by Hermes family (70%) and public share (29%). Therefore, this unique structure of Hermes has let the family to completely maintain the effective control of its brand.

Core Values Expert in noble material and know-how

The company values constantly continue with its objectives of the foundation, which include the following: Conception uniqueness of traditions and designs Productions and distributions of prestigious luxurious products

Current market status

Recently, the demand in luxury products has grown extremely in some specific regions, but these particular markets have driven very wealthy in a portion of demand for luxury goods by high profile clients and celebrities. Especially in Asian markets, Hermes has earned 30% of all sales of products from Japan which is an insatiable passion foe luxury items (see figure 1). http://00o00.blogspot.com/2009/07/hermes-financial-results-forfirst-half.html

Figure 1: Hermes Financial results for first half of 2009

Therefore, the increase in demand also has driven highly competitive in niche markets (Wikivest 2010) and has created huge opportunities for presenting its brand in Asian market at the same time.

Figure 2: Hermes Financial results for first half of 2009

The chart shows that the main revenue growth of Hermes came from leather goods and saddlery. The demand of iconic leather bags of Hermes, especially which are called Kelly and Berkin, strongly has increased in each year (see figure 1) http://00o00.blogspot.com/2009/07/hermesfinancial-results-for-first-half.html

Product strategies
Brand image Hermes has build its brand as inaccessible values which mean that not everyone can own its. Therefore, the reputation of its brand also increases a social status in an exclusive group.

France is an icon of unique national identity French chic which can increase valuable creation. Unique theme and image of Hermes is transportation and travel such as leather travel bag. Brand extension Hermes has used the brand extension strategy to provide different kind of products by creating luxury image such as elegant clothing, perfume, fashion accessories, table wear and leather bags under the parent name for accessing the familiarity of customers( Loken et al, p.13),(see picture 1). Moreover, Hermes leather bags are the most expensive fashion item in the world.

Picture 1: Hermes products

In this report will introduce only the most popular items of Hermes which are called Kelly handbag and berkin handbag for analyzing its strategies. Kelly and Berkin leather bags are the top of mind among fashionistas and women as the most desirable handbags in the world. The iconic leather bags created its image as luxury and inaccessible price which has thrived a valuable assets in social status. Just like Patrick Thomas said that The bag isnt an expense, its an investment (Macala, 2009a).

Picture 2: Hermes Berkin

The iconic leather handbag of Hermes, which is called Berkin(see picture 2), named after Jane Berkin who was an actress and a co-designer in this bag. Its a supply marketing which have been the most expensive luxury goods in the world. The price is around $ 9000 in particular exotic skins. It has been produced by hand-craftsmanship over 48 hours, and it has limited quantities. Berkin also has been available various size including 30 cm, 35 cm, 40 cm and 45 cm for creating attractive decision of customers. Moreover, Hermes has aimed to use only natural materials while its competitors have used new man made materials. Hermes has continuously introduced new exotic materials such as as alligator, crocodile and even ostrich. All these talents and resources are able to increase the higher standard. (handbag-help 2006). Product extension - Hermes also launched Kelly bag which named after famous actress Grace Kelly. In 1956, the princess of Monaco took the Kelly bag to hide her pregnant stomach from the paparazzi thereby splashing a reputation of Hermes bag all over the world. The Kelly bag is smaller than Berkin bag, and it also provide various leather like Birkin does. Its price starts from around 4,ooo US dollars until 25,ooo US dollars depending on color, leather and other deatails. http://handbagsluggage.suite101.com/article.cfm/history_of_the_hermes_kelly_bag Hermes has produced a global product which means that it has created just single design including products packaging, material, shape, form, color and other elements in the same way. Furthermore, the customers are

enabled to choose the material, color and the kind of hardware and then when it finished, its your bag and your style (Needles 2009). This strategy has been able to gain competitive advantage of its business by protecting brand image, reducing cost production and inventory cost and creating customer loyalty because of the same qualities of products which have made higher reliability. All products of Hermes have made completely under the company name which can guarantee the durable qualities of its luxury goods. Hermes has both innovative design and iconic design. Innovative designs follow trends fashion each season for increasing customer bases, and iconic design has created the dependability of its products. Product design is not only how product works, but also how it looks, feels, or even sounds and smells (Loken et al, p.xvi) Modern design can create the value proportions of its brand by affecting customer rationally and emotionally. Waiting list strategy - The long waiting list is the great marketing strategy of Hermes. Things will get more valuable if it is rare (Birkinboutique 2010). The years-long waiting list for unique items has been a significant strategy to attract all high-end shoppers by creating exclusive and rare values of its products. For instance, Berkin leather handbag has been a powerful fashion items around the world. It has maintained the best in customer mind. Although, you are the richest or the most famous person in the world, you have to get over 2 years old waiting list.

Pricing strategies
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) Hermes hasnt made discount its products for any events, occasions or VIP. More expensive price is values.

Distribution strategies
One of the key strategies is retail environment. The company operated in the worldwide market including France, Japan, Europe, the USA and Asia Pacific which are hot fashion districts. The company has distributed its products through 267 exclusive shops around the world which can reinforce its brand image.(Loken et al, p.24) All products of Hermes have been sold only its traditional shop, and it has no desire online shopping. The distributions in many upscale worldwide like Japan, China, the USA and Europe are an international strategy of Hermes to expand customer

base and increase sales. Especially, in China is currently the largest luxury market in the world.

Strengths of Hermes
Strong brand valuation Prestige products Great controllable distribution in recession and uniqueness of know how. Products are inaccessible. Hermes heritage is a long history of more than 170 years.

Weaknesses
Inadequate of exotic leathers Because of customer demand for its iconic leather bags has been getting increase in every year. One bag has to use 3 to 4 crocodiles for producing, so the exotic leathers are not enough to respond customer need especially in crocodile skin.

Opportunities
Hermes started to open its own crocodile farm in Australia. This is a result of high customer demand for its iconic leather bag. This chance can assist Hermes to perfectly control their raw materials and to quickly respond customer satisfaction (Jones 2010). Creation of new market and design. Hermes launched new Chinese brand which is called Shang Xia. This brand is designed and produced by Chinese designer, materials and techniques and production. It is a new phenomenon in luxury market which mostly produces in Europe or the USA. However, China is a new potential market and recourse of luxury fashion of Hermes (Mull 2010). Hermes has a new designer Christophe Lemaire who reformed Lacoste for creating women collection. Distribution and renovation its stores are great opportunities to enlarge customer base. Hermes projected to double expand its boutique in China within five years (Pablofinance 2010).

Threats
New luxury trend The products of Hermes are unique and hardly substitute, but the company might face the possible threats thereby causing new products from competitors which is entirely different and can attract the customers for short term. Holding luxury group New demand from emerging countries Current global economy is uncertainty. The major competitors of Hermes have been strongly in the top brand in their industries such as Louis Vuitton, Prada, Gucci and other high fashion brands. However, Hermes has constantly sustained its company by using fundamental luxury standards such as authentic, excellent quality,

craftsmanship, uniqueness, aspiration and timeless (Hines and Bruce, 2007, p. 157). For example, the waiting list strategy is a unique marketing strategy of Hermes which hardly nominate by the rivals. Like, Pascale Mussard said that Hermes is not positioned regarding the others because we broach the product creation, in each know how, with our meaning and with our history (Gris et al, 2009, p. 5). Moreover, strong marketing, unique production and efficient human resource management also play an important role to drive its business growth.

Positioning the brand

According to Millward Brown Optimor, which is dedicated to maximizing the financial returns from brand strategy and marketing investment (Millwardbrown 2010). Hermes was ranked at number two in the top three most powerful luxury brands in the world in 2010 also including Louis Vuitton which ranked on the top and Gucci (Mastrull 2010). Hermes created very strong position in customer perspectives thereby causing its brand personality which is elegant, inaccessible, durable and ever lasting, and its French heritage also guarantees artisan skills, great production ans awareness in a high social status. The personality of its brand can attract great customer perceptions, impressions and felling of its products when compared with its competitors in the same category. Moreover, its one of the top three iconic symbols of classic style forever and luxury goods in customer minds around the world. Hermes has presented its brand image as inaccessible assets and the best quality of leather goods which can provide unique benefits in customer minds. Therefore, this strong brand position enables Hermes to gain the greatest advantage, customer loyalty and to dominate over its rivals.

Assessing the international and regional mix

Hermes is a global brand which is one of the most valuable luxury fashions of France. Its global products create a unique attractive image among fashionistas and high profile clients by using superior innovative materials, hot trendy design and excellent reputation. This means that the brand provides the high qualities of products, designs and other segments all over the world in the same way. Moreover, the brand also has used the same global strategic management skills and strong structure of unique organization to maintain its long term strategies which are masterful skills of know how and controllable distributor even under dynamic economy. Its magnetic strategies have been operated and maintained by Hermes family which has great abilities to serve its business goals and sustain a competitive advantage in its luxury market. However, in term of advertising strategy, the brand has to deeply understand its main target group. For example, Hermes has increased its revenue growth from Asian countries especially in China and Japan. Therefore, the brand planned to spend its budget slightly more in China than other countries. http://www.reuters.com/article/idUSTRE5572K820090608

Current customers and their perception of the brand

The ability of brands to understand its target audience enables its brands can directly improve marketing strategies for the key customers. Traditionally, Hermes has been a unique luxury brand known around the world by creating the best leather goods and durable fashion forward items. These reputations and qualities have been adored by its particular group of customers. Age group - Most customers are mature 25+. Gender - Female Socio-economic background - High profile financial background status and rich people. Although, Hermes has been sale low volume, but it has created high margin thereby causing its inaccessible price from the particular customers who can afford it. This means that the brand differently focuses on specific group of customer. -Famous person, dignitaries and celebrities such as Queen Elizabeth II, Madonna and Victoria Beckham who are great loyalists of its brand and can patient its long waiting list.

Picture 3: Victoria Beckham with her Hermes versions

Victoria Beckham is one of Hermes fans (see picture 3). She owns Hermes handbag over 100 versions which amounted to more than $ 2.2 millions. Her Hermes addiction strongly boosted her reputations and Queen of fashion. http://www.purseblog.com/hermes/victoria-beckham-hermesbirkin.html Characteristics - Most customers are fashionable and stylish and also attract a designer brand. The customers are always aware of good looking, trends of fashion and public eyes.

Brand Managers decision

The customer base of Hermes has remained clearly in high-end societies or super luxury customers thereby ensuring financial certainty. However, the middle class customers around the world also want to reach this brand for boosting their high social status. Therefore, the demand of Hermes products has significantly increased in each year. Hermes is an adorable brand among women because of its special identity. The brand has used the best leathers, fabrics and materials, sewed by high skill person, and started inaccessible price with years-long waiting list. Moreover, Hermes treats its customers very attentive. The customer service of Hermes is completely different from other luxury brands. Some brands like Coach,

services its customers very quickly to shop its store, and then send the customers out the door with new stuffs and logo-emblazoned Coach shopping bag. Conversely, Hermes has received just few orders from its high class customers who walk in their boutiques. All customers have to orders the bag from display, and they can specifically choose their own style such as colors, materials and other options. Therefore, the bag is your bag and your creation. Furthermore, when the customers would like to get a recondition of their leather items, they are able to bring its goods back to any Hermes store which can deliver their leather goods to the factory in Paris for repairing, and their bag will be fixed by the same handcraftsmanship who made its bag.

2. Brand Analysis
The analysis of advertising strategy factors is able to assist the brand to comprehend the resources and capabilities of its firm that are strength or weakness, and these also enable its brand to achieve a competitive advantage over the rivals. Hermes is an established its core values of brand over the competitors which mean that the skills and resources of its brand have been acquired through practice overtime. At the beginning, Hermes created the unique techniques and skills of know how of leather goods which was the famous handcraft technique, classical style and set Hermes outstanding from its competitors. Up in the current time, Hermes still has maintained and improved its strong resources and capabilities to remain the lucrative position. Advertising strategies or campaigns are able to create the brilliant values thereby supporting its marketing plan also directly communicating ideas and products to its consumers. Hermes has considered in its target audient and creative mix which are an outstanding performance from others.

Advertising strategy The strengths

While other brands created mass advertising to reach higher volume, Hermes hasnt changed its advertising strategy. It constantly maintains the core value of brand which is inaccessible. Moreover, Hermes deeply knows its specific target groups that help the brand to communicate easier. Foe example, the brand planned to spend its budget slightly more in China than other countries. http://www.reuters.com/article/idUSTRE5572K820090608 Communication medias The characteristics of the customers enable Hermes to correctly consider what media can use for communicating with its consumers. Hermes mostly does advertise in print media including luxury and high fashion magazines such as Vogue magazine (see picture 4). These communicated tools can smartly provide fabulous images, attractive colors, theme and adorable products rather than other tools.

http://www.iasdr2009.org/ap/Papers/Orally%20Presented%20Papers/Desig n%20Management/Luxury%20Brand%20Strategy%20of%20Louis%20Vuitt on.pdf

Picture 4: Hermes in Vogue magazine

Celebrity endorsement of luxury fashion Celebrity endorsement plays greatly an important role in fashion industry thereby adding values of brands, creating global brand awareness, good position and aura of its brands. Many brands around the world including Hermes have used this principal channel to built great brand communications. http://www.satishserial.com/issn09729348/finaljournal03.pdf. There are many ways that luxury brands have used celebrities to promote its brands include the following: The photographs of celebrities to use luxury products in their daily lives are appeared on various events, parties, gossip newspapers and magazines such as Vogue magazine which is the most popular guide book among fashion icons around the world. This tactic might be not a common thing in luxury industry, but it highly exposes a true lifestyle of famous person thereby strongly splashing brand reputations. Therefore, the celebrities are great promotional tools for short-term benefits (see picture 5)

Picture 5: The celebrities with their luxury stuffs

Hermes used the name of products which is the name after of celebrities to increase its valuable goods. For example, The Hermes iconic leather bags Kelly and Berkin bags named after Grace Kelly and Jane Berkin. Outdoor advertising Fashion show Fashion show is the one way of marketing plans which can promote new products and get feedbacks from consumers. Moreover, this promotional tool is not just the runway to show the latest goods, but the brand can built good feelings, creations, impressions and inspirations for the consumers. The long history of Hermes and a worth heritage have promoted valuable component of brand image. Movies Products have used by famous actors in movies that can boost the reputations of its products. For example, Sandra Bullock played as the main actress in the movie the proposal with a Hermes Birkin bag. Hermes also created its own website www. Hermes.com which provide various languages and separate in each country to promote its latest products and to respond customer questions and all services. Therefore, the principal goal of advertising strategy is a creation of brand awareness and attractive product. Firstly, the brand has to understand its target audient which help the brand using correct media. Secondly, art works, illustrations, graphics, colors and theme should be created more attractive, relevant and easier understanding because the reader can quickly capture the advertisements.

3. Recommendations

Over the past ten years, luxury market has grown dramatically thereby causing a great demand of high social status. Most customers buy luxury brands because of its high qualities of products and the symbolic personality of brand image. Status brand strategies are intuitively recognized by marketing professionals and practitioners (Vigneron and Johnson, 1999, p. 3) , a reputation of high luxury brand can active in the top of customer minds as a result from inaccessible price, good quality, esthetics, rarity and uniqueness. Therefore, requirements of prestige goods also have increased in the global market particularly in the USA and Asian networks. Moreover, magnificent three key success factors of luxury fashion market also play the front role to gain a competitive advantage over the rivals in a mainstream industry. Hermes is one of the favorite fashion brands in high communities. It is a powerful brand that is well positioned within its industry thereby the strong potentialities. The goals of the brand are to become the great leader in its niche market and to distribute its influential products throughout the world. However, the expansions of its reputations and products in this competitive world are certainly a big issue. The abilities of Hermes to expand its brand to offshore markets enable the firm to gain strong profits growth, especially, in Asia which has been constantly a powerful performer of Hermes final report every year. Recently, the demand in luxury products has grown extremely in some specific regions, but these particular markets have driven very wealthy in a portion of demand for luxury goods by high profile clients and celebrities. Especially in Asian markets, Hermes has earned 30% of all sales of products from Japan which is an insatiable passion foe luxury items. Therefore, the increase in demand also has driven highly competitive in niche markets (Wikivest 2010) and has created huge opportunities for presenting its brand in Asian market at the same time In addition, the following lists are recommendations on future strategy for the brand to create brand saliency. Specifically focus on Asia marketplaces for expanding variable markets and customer bases. - Creation of brand extension by launching new market and design. Hermes launched new Chinese brand which is called Shang Xia. This brand is designed and produced by Chinese designer, materials and techniques and production. It is a new phenomenon in luxury market which mostly produces in Europe or the USA. However, China is a new potential market and recourse of luxury fashion of Hermes (Mull 2010). This created great opportunities of future plans. Continue to maintain the efficiency of handcraftsmanship skills, materials and fabrics for sustaining its reputations. Constantly maintain its inaccessible image and waiting list strategy which created Hermes different from its competitors

Therefore, the continuous development in every section of the brand will maintain its competitive advantage to compete with the rivals in the long run.

4. Summary
In a life cycle of strategic brand management, the brand should aware the value of maintaining and improving the brand thereby keeping the valuable assets. The brand can increase values of products thereby expanding franchise and brand equity. Firstly, the brand should define its niche market which gives a relevant differentiate benefits to the brand. Secondly, the ability of the brand to provide its special products and unique image through many communications such as the media, advertising and public relations enables the brand to exploit it competitive advantage over the rivals. Finally, improving its products and considering for the future. Hermes will sustain its competitive advantage over other competitors by implementing its prestige products, which is inaccessible price and high quality, maintaining strong reputation of the best leather bag and distributing its boutique in fashion districts especially in Asian luxury markets. Moreover, they should constantly maintain its unique production process and skills of handcraftsmanship. In consequently, it is easy to guarantee the quality of product and believe in the brand image.