MARKETING MANAGEMENT – I ASSIGNMENT

TOPIC: HERMES

Submitted By

RassalShaji
Reg. No: P19144

RAJAGIRI BUSINESS SCHOOL

KOCHI

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 MARKETING ANALYSIS ON HERMES

 BRIEF INTRODUCTION OF THE COMPANY

Founded in 1837, by Thierry Hermès, a French harness maker, the company has carefully
diversified, across different product categories to satisfy the needs of its loyal traditional
wealthy customer base and limit the company dependence on any business line or region
while preserving its brand equity. The group always maintained an extreme control over its
development, production and distribution network, focusing on superior quality, keeping a
very long-term perspective, seeking higher profit on a lower sales volumes and considering
Group’s duties beyond financial return to be the preservation of a certain human and cultural
capital.

The business is integrated, centred on a unique brand strategy, rooted in its longstanding
history of producing ultra-high quality distinguishable products requiring high levels of
craftsmanship, mixing an essence of understated elegance, creativity, and inimitable service.
The group production is organized by “Metiers” – the artisanal divisions (Leather, Ready-To-
Wear (RTW), Silk, Fragrances, Watches, Petith) but customers are the same, human capital
and IT systems are common, and processes are centralized, with a very high involvement of
the family.

The group distinctive positioning, combines a unique pricing power (though management
emphasizes that it charges only costs plus a fair margin) –and commands superior pricing
points – with the ability to sell entry-level items such as silk products, jewellery or small
leather goods so as to capture not only the value it creates for its core target group but also
the value generated by inviting aspirational customers in the group’s base.

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  PRODUCT DETAILS
.
The company website gives the following are the different types of Products produced by
them:

1. Women
This segment basically comprises of ready to wear ,scarves and silk
accessories,shoes,bags and small leather goods,belts,hats and gloves, High
Jewelry,Jewlery, Fashion jewelry,Fragrances,watches,apple watch hermes, beach and
sport.

2. Men

This segment basically comprises of ready to wear, ties and pocket squares,
shoes,bags and small leather goods,belts,accessories,High Jewelry,Jewelery, Fashion
jewelry,Fragrances,watches,apple watch hermes, beach and sport.

3. Home

This segment basically comprises of Textiles, Baby Gifts, Games and Sports,
Tableware,Furniture,Lighting,Wallpapers,Beach,Exceptional Pieces

4. Fashion Jewlery

This segment basically comprises of Women-Enamel jewelry,Leather

jewelry,Lacquered metal jewelry,Horn Jewelry and Men.

5. Watches

This segment basically comprises of Women and Men and Apple Watch Hermes

6. Fragrances

This segment comprises of The Exclusives, The Founders, The Women Universe, The
Men Universe, The Art of Living,

7. Shoes

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 This segment comprises of Women and Men

8. Bags and Small Leather Goods

This segment basically comprises of Women’s bags and Clutches,Women’s small

leather goods,Men’s bags,Men’s small leather goods,luggage,accessories,

9. Scarves and Silk accessories

This segment comprises of Women and Men

10. Equestrian

This segment consists of saddles,Horses,Dog,Rider and Stable

11. Ties and Pocket Squares

12. Petit H

13. Reading and Writing

14. Baby Gifts

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  SEGMENTATION AND TARGET MARKET SEGMENTS

Whom Does Hermes Target?

1. Hermes targets both Male and Female who belong to the upper strata of the
society and are usually High Net worth Individuals –more than $1million
worth of liquid assets.

2. For the Hermes customer price is not an issue and they will not flinch at
paying a USD $10,000 premium for a customised Hermes suitcase or any
luxury good for that matter.
3. For a typical Hermes male customer –wearing Hermes is all about the
exclusivity and making a statement. For instance Celebrities and Film stars
wear Hermes T-shirts and scarves which cost between Rs 50,000 to Rs
300,000.A typical male customer would be between the age group 25-40 and
is likely to a fashion conscious and travel extensively.

4. With regards to a typical Hermes women customer she is sophisticated,

highly educated and highly brand conscious, she wants her products to be one
of a kind and wants her accessories and wearable to be flashy and eye
catching.

Just being rich enough a typical Hermes customer cannot get a product in
hand,she has to be patient enough may be even wait months to get a hermes
product like Birkin Bag in her hand. The typical Hermes women customer
would be in the age group of mid 30’s to 60.

Hermes stores are located only in premium wealthy neighbourhoods, duty free
shops in airports whereby High Net worth individuals can easily access.

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  USP AND POSITIONING MESSAGE

The unique selling proposition of Hermes is its ability to churn out unique customized
products to cater to the super rich and premium luxury segments of the market.
Urging its customers to dream big Hermes skilled designers and craftsman put in their
utmost to fulfill special and unusual customer requests.

In a nutshell they design and sell products that is unique and bear the hallmark of
Hermes.

Positioning of the brand-

A few key variables that separates Hermes from other brands is the uniqueness and
exclusivity of its products. Each Hermes product is handmade by skilled craftsman
and it’s highly unlikely to find similar offering across any Hermes store in the world.

Moreover the company purposefully makes its customers wait for months after
ordering to get the product in their hands so there is a exclusivity and uniqueness
factor that sets it apart from its competitor and hence its positioning in the market is
quite unique.

 ISSUES AND CHALLENGES

Hostile takeover attempt by LMVH :

The biggest challenge that Hermès has faced to its independent existence is the continued
interest of rival luxury fashion house LVMH which owns the famous brand Louis
Vuitton. The company LVMH had acquired a small take in Hermes gradually over a
period of time which led to long legal battles which Hermes won after a tough battle and
the support of the Hermes family.

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  Replishnment of raw materials: Also LMVH have a significant share in a Hong Kong
based company that supplies leather to Hermes. Hence supplies of raw material could
become an issue.

 No new iconic products: The most iconic Hermes product has been the Hermes
Birkin bags which was launched in the 1980.After which the number of iconic products
launched by the company have been few and hence there is a possibility that the company
would run out of iconic sub brands in the future.

 Counterfeit products –Imitation is the biggest threat in the luxury goods industry and this
rampant across both online and offline channel.

 Animal Abuses:

The company makes most of its products from ostrich hides, crocodile skins etc. and
hence the company has received the flak of many organizations such as PETA regarding
the treatment of animals with respect to this.

 SUGGESTIONS TO OVERCOME ISSUES AND CHALLENGES

To overcome supply chain issues the company can adopt vertical integration
by supplier acquisitions through joint ventures or mergers to ensure steady of
raw materials.
Focus and expansion to Asian markets and to be more aggressive in the
Chinese market

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 Effective campaigns across all social media platforms to create better product
awareness to effectively combat counterfeit. Moreover the company has to
improve its overall marketing presence.

New Sources of innovation-Outsourcing of design talents enlarge creative

sources on an international cultural heritage and reduce creativity cost in
Euro-zone and hence launch more iconic designs like birkin bags so the
company can sustain better from competition in the long run.

The company should focus on new materials that are ecofriendly and energy
efficient rather than depending on animal hides.

 REFERNCES

 https://www.forbes.com
 http://mds.marshall.edu/cgi/viewcontent.cgi?article=1421&context=etd
 https://martinroll.com/resources/articles/strategy/hermes-the-strategy-behind-the-global-
luxury-success/
 https://www.ukessays.com/essays/marketing/hermes-analysis-in-business-marketing-
essay.php

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