Loro Piana's Marketing Strategy Analysis (Research Paper Sample)

Loro Piana's Marketing Strategy Analysis
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Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc632253 \h 3Background of the Brand PAGEREF _Toc632254 \h 4Current Performance PAGEREF _Toc632255 \h 4Target Market PAGEREF _Toc632256 \h 5Competitor POD and POP PAGEREF _Toc632257 \h 5PESTLE Analysis of Macro Environment Factors PAGEREF _Toc632258 \h 6SWOT Analysis PAGEREF _Toc632259 \h 7Marketing Mix 7P’s PAGEREF _Toc632260 \h 9Product PAGEREF _Toc632261 \h 9Pricing PAGEREF _Toc632262 \h 10Place PAGEREF _Toc632263 \h 10People PAGEREF _Toc632264 \h 10Process PAGEREF _Toc632265 \h 11Physical Evidence PAGEREF _Toc632266 \h 11Promotion PAGEREF _Toc632267 \h 11Above and Below the Line Marketing Mix PAGEREF _Toc632268 \h 11Marketing Tools PAGEREF _Toc632269 \h 11The Creative Strategy PAGEREF _Toc632270 \h 12AIDA and DRIP Models PAGEREF _Toc632271 \h 123P’s of Marketing Communication PAGEREF _Toc632272 \h 12USP and ESP PAGEREF _Toc632273 \h 13Recommendations PAGEREF _Toc632274 \h 13Conclusion PAGEREF _Toc632275 \h 13References PAGEREF _Toc632276 \h 15Appendix PAGEREF _Toc632277 \h 17
Executive Summary
The Loro Piana Corporation is one of the largest and most popular global luxury clothing brands. Currently, a subsidiary of the multinational luxury fashion chain LVMH, the company specializes in producing high-end fashion items made exclusively from wool and cashmere. An analysis of the company's financial performance reveals it has experienced growing demand in recent years, and as a result, has improved both its revenues and profits. The company also has high asset values, as determined by the analysis of its parent company's financial statements. In terms of branding, Loro Piana is a highly respected luxury brand in the fashion market, which is the basis of its marketing strategy. In addition, the company's efficient supply chain and distribution network is also a source of competitive advantage. Despite its past growth, Loro Piana still has numerous opportunities for future growth due to the many unexploited markets. However, stiff competition and the threat of counterfeit products are the main factors limiting the company's growth.
Background of the Brand
Loro Piana is a renowned Italian clothing brand specializing in luxury products made using unique and high-quality materials. Initially founded in the 1800s as a trading company by the Loro Piana family, the company officially started selling branded items in 1960. It gained recognition as a distinct brand of clothing items (King, 2015, 1). Since then, the brand has grown tremendously in the highly competitive fashion industry and is currently known for its elegant designs and high-quality products. Initially a family business, the company was sold in 2013 to fashion giant LVMH for over 2 billion euros (Roberts & Rotondi, 2016, 1). Despite the sale, the organization still retains several members of the Piana family in its board and management. In terms of operations, Loro Piana is currently a global brand that maintains stores in multiple countries. However, its manufacturing plants remain in Italy, and a highly efficient distribution network is used to move products to different markets.
Current Performance
The financial performance of LVMH, Loro Piana's parent company, has improved substantially over the last three years. The company's share of the market has increased in the recent past due to an increase in the demand for luxury products. LVMH revenues rose by 13.4% in 2017 and by 5.4% in 2016 (LVMH, 2017, 20). This indicates that demand is growing, meaning the increase in revenues is likely to be sustained in the future. The net profit after taxes of the company increased by 28.7% in 2017 compared to 2016 (LVMH, 2017, 20). The increase in the revenues and profits of the organization means it has been able to retain its share of the market while at the same time attracting new customers.
The asset values of the organization also increased in the recent past as a result of growing profitability and rising demand. The total assets held by the company increased by 15% in 2017, up from 3.5% in 2016 (LVMH, 2017, 21). The increase is due to investment in joint ventures made by the organization and an increase in the inventories held by the company. The total liabilities of the company increased by 20.7% in 2017. Despite this, the company maintains a favourable liquidity position and can settle outstanding liabilities from existing current assets.
Target Market
The organization mainly targets the high-end fashion market. To be successful in this market, the company uses high-quality raw materials to distinguish its products from competing brands. The raw materials used by the company are sourced from different parts of the world. The company continuously invests in research projects to identify suitable raw materials in different parts of the world by analyzing their quality (Lentz, 2014, 1). Geographically, the company's primary market includes Europe, Asia, and America. Its products are sold through stores in different countries that are either directly owned by the brand or operated under a franchise agreement with a third party.
Competitor POD and POP
The quality of the company's products is a critical factor that differentiates it from the competition. The brand strategy of the company relies on the quality of raw materials used in its products. To maintain the highest possible quality standards, the company sources high-quality raw materials that suit its needs from different parts of the world (Scarano, 2016, 1). Product differentiation, which the company has adopted, is an effective way of improving both the short term and long term financial performance. According to Banker (2014, 1), product differentiation, as explained in Porter's theory of generic strategies, enables a firm to improve its current performance and sustain the improvement for the foreseeable future. Loro Piana will therefore be able to sustain improvements made in financial performance in future. In addition to the high quality of its products, part of the company's strategy also includes not changing the focus of its brand, irrespective of the changes in the industry (Segreti, 2015, 1). As a result, the organization manufactures the same products in the same way and has not changed even as changes occur in the fashion industry.
Loro Piana shares several qualities with most other luxury fashion brands. First, the organization uses a similar distribution strategy to reach consumers like its parent company LVMH and other luxury brands. This includes maintaining its stores in major markets that feature the same design. Second, the pricing strategy adopted by the company is also similar to that used by other luxury fashion brands. The prices charged for its products conform to the luxury fashion market prices but are still comparable to those charged by other brands.
PESTLE Analysis of Macro Environment Factors
The UK enjoys a relatively stable political environment that is conducive for business. The government supports the private sector and proactively tackles issues that can hinder the growth of businesses. However, the recent exit from the European Union has made it more difficult for the country to do business internationally, which can impact the business activities of international companies such as Loro Piana.
The UK also has a stable and growing economy ideal for a luxury brand like Loro Piana. Due to the strong economy, more people in the country have high purchasing power, and consequently, more people can buy luxury products. In addition, the UK's free-market economy also makes it easier for international brands like Loro Piana to do business.
The UK has a significantly high population, which means there is a ready market for different types of products. The majority of the population also maintains a high standard of living, ideal for a luxury brand like Loro Piana. The country also has an excellent infrastructure, making it relatively easy to do business in the country.
The UK is considered a technologically advanced country with the needed infrastructure that can support business operations. In addition to having many trained experts in different technological fields, the government encourages innovation and has laws that protect intellectual property. This is ideal for a multinational like Loro Piana that needs high-quality technological infrastructure to manage its international operations.
Legally, the country has an efficient justice system that can support business operations. The justice system in the country is fair and reliable, which is also an ideal condition for a multinational looking to do business in the country. In addition, well-developed and enforceable laws that cover different aspects of business, such as employment and contracts, are already in place in the country. This is ideal for multinationals doing business in the country and makes it easier to deal with consumers and other businesses.
Since Loro Piana does not maintain manufacturing operations in the UK, it is not likely to violate any current environmental laws. However, the organization will still have to adopt local environmental policies and procedures since sustainability is a crucial government agenda in the UK. This will also not be complicated for the company since its primary goal is to distribute its products in the country.
SWOT Analysis
A vital strength of the organization is its strong brand value. Loro Piana, as a brand, has a reputation for quality and is quite popular in the high-end fashio...