CASE STUDY

Marielle AH-CHINEKristina BOKOVAMargaux CHERIF-CHEIKHFENG TiantianHUANG Yingying

COMPETITIVE ANALYISISIndustry Forces

ABSOLUTE LUXURY/HIGH-END LUXURY SEGMENT

Competitors other haute couture houses

(Chanel, Christian Dior, Jean Paul Gautier, Valentino, etc. )

ELIE SAAB

-Competitive Couture Pricing Without Compromising On Service

-Exceptional Service & Top-of-the-line Quality

-High Exclusivity

-Customer Segments Targeting Super-wealthy, High-end Market (Celebrities, Royalty, Rich And Famous)

Industry Forces

Substitutes

- “Democratization” of fashion - H&M x MMM

Suppliers

- Very dependent on materials and fabric suppliers

FORESIGHTKey trends

Technological trends

- increasing influence of social media and digital marketing activities

Regulatory

- Tax advantages in some countries

- Higher prices due to import duties and taxes

FORESIGHTKey trends

Socioeconomic trends

- Growing number of “extreme net-worth individuals”, especially in Asia

Chinese consumers account for 20% of the global luxury sales

Asian consumers (i.e., adding Japan, Korea, and Southeast Asia) account for more than 50% of the global luxury sales

MARKET ANALYSISMarket trends

Market Issues

- Changing consumers’ taste and preferences

Younger consumer base in Asia

Aging of customers in Europe, US & Japan

Market Segments

- Accessories & hard luxury largest category

Needs & Demands

- chase for higher quality and greater craftsmanship/materials favors absolute/high-end luxury offerings

MARKET ANALYSISMarket trends

Switching Costs

- High brand loyalty

Revenue Attractiveness

- Asian market (China and Hong Kong) + emerging Markets

- Absolute luxury segment €40B in 2011

MACROECONOMICSMacro-economic forces

Global market

- Luxury fundamentals

remain strong in the

medium term

BUSINESS MODELValue Proposition

Design - Brand/status – Customization - Price

NEED?

A unique design made of exquisite materials

WHAT?

Haute Couture, RTW, accessories and wedding dresses

FUTURE?

Any luxurious and exclusive products

Efficiency of fittings

Personalized services

Lifetime experience

Very selected manufacturers

BUSINESS MODELCustomers

Niche market

PRIMARY TARGET:

Feminine, Elegant and

Super Wealthy Women

NATURAL TARGET:

Celebrities and Royalties

FUTURE PLANS:

To diversify

Personal assistance Co-creation Self-service

BUSINESS MODELDistribution Channels

AWARENESS:

Events, Catalogues, Advertorials to the corporate website, Interactive portal, Ads

EVALUATION:

Visit the stores, Try the dresses, Watch the catwalk shows

PURCHASE:

Flagship stores, Concessions, Multi-brand retailers, Catwalks

DELIVERY:

On site, at home

AFTER SALE:

Guarantee repair

BUSINESS MODELKey activities

Design of luxury stores

Haute Couture

Customers proximity

Animate the online website

BUSINESS MODELKey resources

PHYSICAL:

Stores, fabrics, sewing materials

INTELLECTUAL:

Website

HUMAN:

Creative + Business

FINANCIAL:

Shareholders, Bank loan

BUSINESS MODELKey partnerships

TO BE SOLD:

Retailers, Department stores, Beauté Prestige International

TO BE KNOWN:

Celebrities, Charitable organizations

TO EXPAND THE BRAND UNIVERSE:

Hotels, Yacht companies

KEY SUPPLIERS:

Fabrics supplier, RTW manufacturer

BUSINESS MODELCost and Revenue structure

MOST IMPORTANT COSTS:General, selling and administrative expenses, Cost materials and outsourced production, Salaries and Fashion shows

THE MOST EXPENSIVE KEY RESOURCES:

Stores and Fabrics

THE MOST EXPENSIVE KEY ACTIVITY:

Fashion shows

REVENUES:

Sales, Licensing, Partnerships

RTW: $1500-$21000

Haute Couture: $34000-$1000000

ES’s core business:

Haute Couture.

Four primary product lines:Haute Couture, RTW, Accessories,Wedding Dresses. 

Diversified : enhance its prestige in every aspect of the luxury sector. 

SIGNATURE HOTELS

2008 Tatweer/Dubai Properties Signature Hotels

U.K. BOUTIQUE AT HARRODS

2008.7 ‘Eveningwear’ Department, First Floor

PARFUM ELIE SAAB

2009.9

10-year fragrance and cosmetic license contract.

LUXURY YACHTS DESIGN

2010.1 Weyves International Ltd. and Oceanco

FLAGSHIP STORE IN DUBAI

2010.7 First flagship store in the Gulf region, The Dubai Mall

VARIOUS MODES OF ENTRY

Licensing

Partnerships

Third-party Distribution

Company-owned Stores.

LicensingPROS AND CONS

Minimizes risk and investment.Speed of entryAble to circumvent trade barriersHigh ROI (Return On Investment)

Lack of control over use of assets.Licensee may become competitor.Knowledge spilloversLicense period is limited

PartnershipsPROS AND CONS

Overcomes ownership restrictions , cultural distanceCombines resources of 2 companies.Potential for learningViewed as insiderLess investment required

Difficult to manageDilution of controlGreater risk than exporting a & licensingKnowledge spilloversPartner may become a competitor.

Third-party DistributionPROS AND CONS

Minimizes risk and investment.Speed of entryMaximizes scale; uses existing facilities.

Trade barriers & tariffs add to costs.Transport costsLimits access to local informationCompany viewed as an outsider

Company-owned Stores. PROS AND CONS

Greater knowledge of local marketCan better apply specialized skillsMinimizes knowledge spilloverCan be viewed as an insider

Higher risk than other modesRequires more resources and commitmentMay be difficult to manage the local resources.

Strengths, Weaknesses, Opportunities And Threats (SWOT) Analysis

ES’s Competitive Advantage?

Strengths •Member of the Chambre Syndicale de la Couture•Direct ownership of its stores except Dubai (for local expertise)•One of the few certified « Couture » house•Trust and loyalty of stars and royalty

Weaknesses •Weak presence in multi-brand shops•The dilution of the brand into many activities (yachts, hotels…) and the plan to expand even further•Still low sales in Asia, USA and Russia

Opportunities •The rise of the number of World High-net-worth individuals (HNWI) and of their wealth, especially in Asia•The asian market •Huge potential in Asia not yet fulfilled

Threats •Trend : to mix luxury and affordability•Trend : people tend on dressing more casual•Party ladies are no longer high-class aristocracy but new-world billionaire

SWOT

Elie Saab’s competitive advantage

The ultimate personalized experience provided by the brand for Haute Couture customers.

+ the personality and know-how of the designer Elie Saab

Elie Saab really applies the principles of Haute Couture.

STGAE OF Product Life CycleChange OF Company’s Positioning And Differentiation Strategy

Haute couture : Maturity phase.Elie Saab has a great expertise in this activity. Sales are hight but tend to stagnate.

Ready-to-wear & accessories : Sales are in constant progression.More recent activity in Elie Saab portfolio.

Positioning and differenciation

• At first, the brand focused exclusively into Haute Couture and exceptional custom-made clothing for super wealthy customers.

• Launch of a Ready-to-wear activity to extend the portfolio

More affordable and easier to produce in large volumes

A greater return on investment and turnover.

Less exclusive global situation but more accessibility and commercial attractiveness

For example, the emerging ‘affordable luxury market?’

Should ES target a new market?

Our answer is:

lower cost (material/human)

higher production volume

higher turnover

higher profit margin

Affordable Luxury Market

Catered to “super wealthy” -Rarely sold

“more accessible”-Main income

resource

Haute Couture vs Ready-to-wear

Similarly…

Geographically …

e.g. CHINA

In these emerging markets…

The prerequisite of this strategy of growing in new markets is to maintain the brand’s image and prevent it from being diluted .

Individualization

loyalty

Communication

BUT…

OVERALL RECOMMENDATIONS

Marketing Mix Strategy

Our overall recommendations for ES

Maintain is brand image:

“High-end, one-of-a-kind designs made from the finest fabrics and materials”

High quality customized service

Product

“Mass” class - main part of luxury consumers

Accessories & cosmetics, etc.

“New rich” – status/wealth

Domestic outfit, luxury hotels, automobiles and yachts’ decoration, etc.

Diversification

The haute couture has always been and must continue to be the core and soul of ES’s business.

Consolidation

Pricing

A pair of sunglasses 350€ – 400€

A custom-made couture gown

$30,000 - $1,000,000

A pair of plain trousers $1,200

A fur jacet $21,000

If asked to equate ES with examples of automobiles…

Promotion

Increasing promotion spending on new media

Making full use of celebrity effect

Distribution

Another trend in the luxury industry is that manufacturer/retailer relationships have lost an element of trust.

A bad choice of licensee retailer may result in a disaster for a brand’s image.

HONG KONG, Jan. 2012

Company-owned Stores

Merci !