Monday, August 10, 2015
MAR 396I Designer Case Study - Prada Italian Fashion House
Designer Case Study - Prada
Prada is an Italian fashion house, which was founded in 1913. The company offers luxury leather goods, handbags, clothing, eyewear, various accessories and fragrances, all of which are very stylish and belong to the luxury designer products. The company’s principles, Patrizio Bertelli and Miuccia Prada, laid the grounds for the successful operation of the company back in 1970s. Miuccia Prada was the one with a creative and unordinary approach who helped attract the world’s attention to the company. The company is also strongly associated with culture, architecture and art. This definitely sets it apart from its competitors. Prada Company belongs to a Group with three other brand names on board: Miu Miu, Church’s and Car Shoe. The Group’s operation extends across 70 countries and features multi-channel marketing.
Prada’s multi-channel marketing includes various intermediaries worldwide. They are retailers, which are represented by single brand stores (specialty stores called “Prada Epicenters”), and the independent multi-brand stores (department stores and franchises). For example, intermediaries such as Macy’s or Saks Fifth Avenue help Prada customers to obtain the products they really want like sunglasses, fragrance, leather goods or clothing where and when they want them. I believe Prada has effective and more importantly efficient channels that enable the company to be present at most select points of sale at multiple levels of distribution and target multiple markets. For example, their up-to-date inventory is featured in Prada’s own specialty stores or franchises, while what is not trendy any longer is sent to outlet malls for further resale at a more affordable price. There is a direct marketing channel, an e-store for leather goods and accessories, which could be purchased directly from Prada without middlemen. With the differentiated marketing channels there is a definite cooperation among all members because they all try to achieve the same common goal of making long-term profit and providing 100% customer satisfaction. This is why everyone who is involved in the process has to ensure continuous stream of Prada products to consumers in a timely manner. For this reason Prada utilizes an effective supply chain, which is supported by a centralized system that combines retail, logistics and other important factors, which help find answers to financial questions and provide access to current information about distribution and sales of Prada products. The up-to-date information about stock both at warehouse and all the stores helps the company to constantly work towards customer service improvement. This is done by logistics department and the centralized system, which help address the fluctuations in supply and demand as soon as possible. This effective system also helps decrease the total inventory and variable costs. Since Prada manufactures their products outside their headquarters, this effective system is very important in order to make sure everything is done on time for the new trends to be sold. Prada manufactures a lot of its products in countries where costs of labor are much lower than in Italy. For example, Turkey, Vietnam, Romania and China (most likely there are other exterior manufacturers). This is no surprise, as many designers want to cut down on various costs. Plus, the laws that let a company put “Made in Italy” labels are not very strict, so Prada can price their outsourced products the same as they do the ones made in Italy. In addition to that Prada established 12 in house production facilities, 11 of which are located in Italy and one in United Kingdom. The in-house production although not as cheap provides an opportunity to have more control over quality of the products and various costs, as well as constant improvement of the production techniques.
So who is Prada’s end consumer? Miuccia once said this in one of her interviews, “I choose a wider audience. I also think when I’m doing the shows I try to be more obvious, more loud, more clear.” Judging by this statement it is possible to segment the target market by following demographic characteristics: Age – 25-40, Gender - Male and female, Income - $100,000 and up, Education – minimum a college degree, Social Class – belong to the higher class, Ethnic group/Race – various ethnic backgrounds. However, demographics alone do not fully describe the target market of the company. The company has a unique style and sells various products both for men and women. The company offers exclusivity. Therefore, it is important to further differentiate the market through psychographic segmentation. Business women under 45 could be definitely seen wearing Prada products because the brand provides a sense of self-fulfillment. It also represents class and sophistication. Their suits are all strict, made in business appropriate colors and very elegant. People, who have high interest in fashion world might be also segmented. These are mostly women and men who work in the fashion industry and have to stay up to date with the latest trends. For example, fashion magazine editors and fashion show organizers.
To sum up the description of the target market, the target consumer is the one with an active life style and strong position in society, fashion conscious, wealthy and willing to spend more for quality and exclusivity. This target market does not want to age (especially women) and want to have interesting lives. Prada’s products provide a great opportunity for their target customers to look great, and help them feel self-confident. Prada is the symbol of chic, class, sophistication and taste. Keeping these descriptions in mind, there are several advertising medias that are a great fit for the company’s advertising campaign. I would definitely suggest the company to keep advertising in print publications like fashion magazines (Vogue, InStyle and more). Product placement is another option. Celebrities and other influential figures are great live promoters of the new trends. So providing a beautiful gown for a red-carpet event might be a great option as well as featuring the product in a movie or a music video. Since Prada has an online store for accessories, I would also emphasize the importance of the Internet advertising through side ads, search engine optimization, and direct links to the stores on various supported websites.
Advertising campaign has to be backed up with an overall carefully designed marketing plan in order to attract the target market. This is done through marketing mix, which consists of the four basic elements: product, price, place, and promotion. Let me first introduce in more detail which products the company is selling under Prada brand name. A wide selection of apparel for men and women, luxury leather goods such as handbags, wallets, shoes and other small leather accessories, designer eyewear, fragrances and other products (LG Prada cellphone). These products were all designed to satisfy their customers’ needs and wants.
Pricing strategy is very important for Prada because it reflects the main concept and image behind the company. The average price for a best-selling handbag is around $3000. The price reflects the status and places Prada side by side with its main competitors Chanel, Gucci or Louise Vuitton. Their customers are willing to pay this much because they value the brand’s quality, details and design. Prada’s overall pricing strategy is well formed by the smart management and the whole Prada team that make the brand so desirable. Luxury goods like that are selling at premium prices. The carefully selected target market will definitely pay more to have products by their favorite designer.
Prada products are sold in more than 70 countries, both through directly operated stores, department stores, multi-brand stores and online. The products are available when and where the potential customers want them. As I have already mentioned above, the marketing channel includes both single-brand and multi-brand stores. This ensures the convenient way for the customers to purchase the products. Another point worth mentioning is the e-store that Prada has. The appropriateness of the online store may not be the best for clothing but for accessories it is a faster way for the end consumers to obtain what they want. Prada prefers to sell apparel in stores because of the personal touch they want their customers to feel when they are inside the stores. Prada is an exclusive brand, and therefore their stores are mostly located in big cities where their target market values the fashion and designers. In addition, Prada features state of the art stores, which were specifically designed for the company. This visual appeal helps Prada differentiate its concept from other competitors.
Promotion as the last element of the marketing mix is very important for the company. It helps the target market to get acquainted with the latest projects, designs and products the company is involved in. Marketers communicate this information through advertising, personal selling, sales promotions, fashion shows, blogs, and more. Prada selected various means of promotion so that their target market stays connected to the company and its offerings. Fashion show is one of the best examples that Prada uses for promotion. Introducing the new collection each season ensures various fashion magazines, blogs, and TV channels (like Fashion TV) talk about the brand. In addition, Prada does not only appreciate the fast changing fashion world but also art, cinema, architecture and other cultural events. This is why the company established Prada Foundation in 1993 to promote "the most radical of intellectual challenges in art and contemporary culture". The foundation is worldwide known. This foundation definitely adds the value to the brand. The company also sponsored various sports teams like Luna Rossa (2000, 2003, 2007 and 2013) at America's Cup campaigns. All of these promotional activities add publicity to the company and make it more recognizable not only among the fashion world but in other spheres of life.
So what makes Prada such haute designer today? I believe it’s the brand equity. It is the marketing and financial value associated with the brand’s strengths in the market. Prada has strong brand equity and this is why its products are recognized worldwide and accepted. This also means that consumers who know about the brand equity will be willing to pay much more for such products. Prada’s brand equity is managed through constant reinforcement of the new and innovative collections. The company has to make sure all the products have a sense of boldness and innovation in addition to distinction from other competitors. The brand’s name is its equity. If Prada licensed the use of its name to any other product, that product would immediately be priced higher than the similar ones just because of the association with Prada name. The association would also imply high standards and quality, which would attract potential customers. Another way how strong brand equity could be supported is by how profitable the company is. Although the economic times are tough, the brand is still somewhat successful.
To sum it up, Prada is doing a great job with its business model because all the components are carefully analyzed and working seamlessly together to achieve some of the common goals across the marketing channels, which are making a profit, customer satisfaction and unique competitive design of the products. The company’s smart management and talented designer set the company apart from its rivals by utilizing the marketing mix elements that work together to establish brand equity. In addition, strong customer base worldwide appreciates the designer brand so much, that they will support it as long as the company will produce the state-of-the-art and stylish products.
Please Note! All of the work posted in my blog is my personal insight into problem solving and answering questions. It is subjective opinions based on scholarly readings. The information may have some errors. I am not a professor.
If you see something you would like to contribute to or correct, you are more than welcome to comment below. I would appreciate it!