MODULE TITLE: Principles of Fashion Marketing ARTD 1077 LEYI CHEN

MODULE TITLE: Principles of Fashion Marketing ARTD 1077 LEYI CHEN 25504258

Contents Introduction 3 Macro environment 4 Micro influences 7 Customer segmentation 10 Marketing strategy 13 Product lines 14 Pricing strategies 16 Channels of distribution 17 Fashion promotion 19 Brand identity 20 Future challenges & opportunities 21 Bibliography 22

Introduction Alexander McQueen is a fashion brand established in 1992 by the designer Lee Alexander McQueen(1969-2010). Today the brand is owning its ready to wear collections, bags, shoes, accessories and jewellery, especially be acclaimed for the skull scarves and bumster pants. At early stage, the brand only sold collections for women, in 2004, it launched the first menswear collection. In order to expand the target market, McQueen licensed his name for a lower priced denim line, McQ. I want to be the purveyor of a certain silhouette or a way of cutting, so that when I'm dead and gone, people will know that the twenty-first century was started by Alexander McQueen. - Alexander McQueen. Being regarded as a fashion legend, McQueen s never failed to grab the attention. His dark collections displayed in the runaway shows built him a controversial image, also made him being awarded the title British Designer of the Year four times. McQueen was found dead on 11 February, 2010 in his London home. He had became one of the greatest designers of the time. "McQueen influenced a whole generation of designers. His brilliant imagination knew no bounds as he conjured up collection after collection of extraordinary designs," said Alexandra Shulman, the editor of British Vogue. Sarah Burton is the new creative director at McQueen. This report is going to illustrate the marketing elements that have direct or indirect impacts on Alexander McQueen. 3

Macro environment Th e macro marketing environment refers to the wider situation impacting on all businesses, said Posner (2011), is outside a company s direct control and comprises a complex set of variables that can be simplified into four key areas. -Political, economic, social and technological. The report below undertakes a PEST analysis based on these factors. Political F rance currently attracts eight times more Chinese visitors than the UK. Harmonizing the visa system should lead to the UK performing as well as France. -Julia Carrick (chief executive of walpole British luxury) A new visa plan was introduced by the tourism chiefs in the United Kingdom to attract more wealthy Chinese visitors, involving the dual processing of British and Schengen applications. As a result of Britain s bureaucratic system which it refused to join the Schengen system so far, 61 percent of Chinese people chose not to come to UK, it missed out on 1.2 billion pounds from Chinese visitors a year by estimating. If the proposal is accepted, Chinese applicants will not need to apply for a single British visa, but only submit one form and one set of documents to receive both Schengen and British visas. Value added tax- On 4 January 2011 VAT was rose to 20% in UK, which lead to the increase in price. Luxury goods have been more expensive for local people so that it may influences the sales of Alexander McQueen a little. In addition, foreign people like international student who cannot get tax refund may choose to buy luxury products outside UK for lower price. Fig.2 Alexander McQueen Pre-Fall (2009) 4

Economic Recession- due to the economic recession in UK, people are more likely to spend money on value and mass market, as they have less spending power. Luxury designer brands like Alexander McQueen would lose part of their potential customers since they may not have enough spare budgets to waste. Luxury products are not necessities for people so that the demand would be affected while recession periods. Fig.3 Alexander McQueen Fall (2010) Consumer confidence-people in Asia like Chinese and Japanese have great passion to buy luxury goods because of the culture and the confidence with their income. China s gross domestic product is expected to reach 100 trillion yuan in 2020, said Yang Weimin, vice-head of the Office of the Central Leading Group on Finance and Economic Affairs. Due to the economic growth in China, Alexander McQueen has newly opened a flagship store in Shanghai, to attract more wealthy customers by showing its charm with the layout in store. 5

Social Travel-nowadays people are more likely to spend their free time on traveling, and Europe is a popular area to choose. A lot of Asia people are going to Europe specially for shopping because of the very high prices of luxury brands in their own countries. The rising rate of tourism develops a huge number of sales in the retail industry, especially the highend market, luxury brands could easily have these tourists s attention and sell products quickly to them since they are happy for the big price difference here. Rise of aging population, this may have positive effects for luxury brands, as there are more people who have accumulated more wealth than younger ones and may willing to buy luxuries. However, most senior citizens are very thrifty, we could see more of them in Marks& Spencer and not on Bond Street. This could be a potential problem for luxury brands on the other hand. Culture- film and television now have a great impact on fashion. People now are also focused on the clothing of the actors and actresses, other than the story line only. A popular film or TV series may cause a fashion trend, and some people may willing to pay a large amount of money for a piece of clothing that the lead role wore in the drama. Wilson (2011) stated that films themselves also acted as showcases for chic and avant-garde clothes and interiors, and television has been particularly influential in popularizing retro-chic - period clothes, but from the recent past. Technological Social networks like Facebook, Twitter, and blogging are becoming an important part of human life. Lots of luxury brands have established their homepages on these websites, to show their new promotional campaign, or recommend some new launched products for their fans. It is a quick way of getting in touch with loyal or potential customers. On-line shopping- Alexander McQueen provides on-line shopping on its official website in US and UK, and people could read the price of its products. In order to follow the technology development, most luxury brands did the same thing, which may help them earn an extra profit from those people who cannot get to the retail store. E-mails- after you buy something in the store, you will be asked to fill in a form to give your name and your contact address. Louis Vuittion is very good at it, the e-mail with new product information will regularly come into my inbox, and remind me to have a look at its new season s series. 6

Micro influences The micro marketing environment factors which includes a company itself, its customers, competitors, suppliers, distributors and other stakeholders that would have a direct impact on the company, is tend to be more controllable compared to the macro environment. By utilising Porter s model of five forces, we could identify the competitive powers of Alexander McQueen. Fig.4 Porter s five forces. (2009) 1. The bargaining power of suppliers- suppliers provides the materials that Alexander McQueen needs to operate the company. As a luxury fashion brand, McQueen should be an important customer of its suppliers, and its power of controlling the price may be stronger, however, while the situation that the supplier owns the best or the only resource on the market, McQueen might not find another substitute, and the cost of switching suppliers could be high in terms of time and capital, as a result, the bargaining power of suppliers is increased. An effective way of balancing this issue is to keep close relationship with the suppliers, and also have multi-sources of supply. 7

2. The bargaining power of buyers- the chance that Alexander McQueen s customers buying in bulk quantity is quite low since its high fashion products are well differentiated with other brands in the niche market. The power of buyers of affecting its price is very weak, and I believe McQueen s loyal customers would care more about its design rather than the price. Fig.5 Rose & Skull Clutch(2012) 3.Rivalry between competitors in the marketthe intensity rivalry is related to the number of competitors and their capabilities a lot. As a fashion retailer, there are many designer s brands in the market, which target at the same customers as Alexander McQueen. For example, Stella McCartney, who also awarded for Designer of the Year, her collections include women s ready-to-wear, accessories, lingerie, eyewear, fragrance and kids. In this case, McQueen earns a competitive advantage of making menswear collections. However, those luxury brands like Louis Vuitton, Prada and Gucci might own much more customers because of the highly worldwide reputation. 8

4. Threat of new entrants to the market- since Alexander McQueen is still growing, the threat of new entrants is very important. In fashion industry, the cost of set up a new brand is very high, and the time it needs to be well-known in the public could be relatively long. New entrants seem not easy to threaten McQueen, but there is still some chance that a new brand would take over a part of its market share by surprising and great design. Fig.6 Platform Booties 5. Threat of substitute products and services- applied when customers could switch to buy a competitor s products easily. If Alexander McQueen launched a new collection that could not meet customers expectations, it might easily lose them. Since there are many fashion brands, customers would choose the right product for themselves, from the entire market. This threat is vital to McQueen, so that to understand what customers needs and wants is essential. The reason to be a designer is to sell. Fashion is not pure art. It is creativity with the goal of having as many customers as possible wearing the product (Arnault, A.I., quoted in Agins, 1999). 9

Customer segmentation Customer segmentation helps enhance a company s understanding of its customers so that it can position its brand and offer products and services designed to appeal to the targeted customers. (Posner, 2011) As a high fashion brand, Alexander McQueen would define its customers are both women and men, who pursue fashion and could afford to buy luxury goods. Fig.7 Roger's Diffusion of Innovations, Marketing Fashion POSNER, H (2011) According to Roger (1995, p.119) Diffusion of Innovation Theory, Alexander McQueen s customers might be the 2.5% innovators and the 13.5% early adopters. McQueen s design goes against every idea of common sense and marketing imaginable, said David Wolfe(Agins 1999), while McQueen was hired as the head designer at Givenchy in 1996, If any publicity is good publicity, then this works. But I will be surprised if it does. His creations adorned such celebrities as Sarah Jessica Parker, Rihanna and Lady Gaga, and the customers who likes some of his controversial works such as the bumster pants and the armadillo shoes, would definitely be the innovators- a small percentage of adventurous people who initiate trends or adopt innovation before others, said Posner (2011), they are risk-takers and visionaries. 10

Fig.8 Lady Gaga (2012) Lady Gaga wore McQueen s armadillo shoes which had made models refused to attend its catwalk show in her Bad Romance music video, and broke a record at auction for paying $133,075 for an Alexander McQueen dress. In 2009, she received the MTV Music Award, wore McQueen s 1998 collection. It is obvious that Alexander McQueen targets the niche and differentiated market. According to the demographic variables of income and social classes, McQueen s target customers should have high income and have enough bank balance, the social class determines what types of clothes people wear in daily life, and such a high price ready-to-wear collection that McQueen sells would attract upper class more than middle and lower class people. Fig.9 Lady Gaga (2009) 11

Lindsay is a 29-year-old woman working in a top advertising company in London, as the Creative Director. She was studied at University of the Arts London, supported by her wealthy family. Her father runs a successful retail business, and Lindsay is his only daughter. Lindsay has a keen interest in fashion, because of the experience in university, she has a strong fashion sense as well. When she is free she would like to visit some fashion brands websites, such as Alexander McQueen, Prada and Yves Saint Laurent. When these brands launch their new collections, Lindsay always started to save some money and arrange the time to go to the flagship stores on Bond Street. She is going to marry with a banker next month, and they both like to travel to France or Italy to spend their honeymoon. Her fiancé likes to buy some gifts for her frequently, for example, Chanel fragrances, La Mer skin care products or Dior bags. As a result Lindsay could save a large amount of money on other things, especially fashion accessories. She has purchased a number of Alexander McQueen s skull scarves, and often wear them on weekend. Apart from being addicted with fashion brands, Lindsay likes music a lot, since her work is very busy, she has not going to a live concert for long time. 12

Marketing Stategy Positioning is about where a brand or product is perceived to be within the market place relative to the other brands or products operating within the same sector, Posner (2011) said. HIgh fashionability Low price High price A perceptual map could be used to give a visual overview of the position for a company and its competitor. Fig.10 Positioning map Low fashionability Alexander McQueen may want to collect some secondary information from previous data and the internet, as the cost of secondary research is relative low. In addition, the current sales level may give a clue of customers thinking. If McQueen is now making considerable profits, and the sales appears to increase with time, it might show that customers are satisfied by its products with the relatively high price. On the other hand, if the research shows that customers have some complaint about its price, McQueen could do further primary research such as questionnaires and interviews, and then decide whether to reposition itself or not. Making primary research has become easier with the development of technology. McQueen does require its customers to fill in a card with their personal details so that it is quick and convenient to send a short questionnaire by e-mails to them. Marketing positioning helps Alexander McQueen define itself in an objective view, and would force it to identify and explore its competitive advantage or USP to survive and expand in the market. 13 This map which identifies two criteria -fashionability and price, has given a direct view of each brand s positon in the market. By understanding the market position of Alexander McQueen, it could decide whether to compete directly against a competitor or how to differentiate and compete by being different (Posner, 2011). Since the current position of McQueen is similar to those luxury brands like Miu Miu and Gucci, it could consider to reposition itself or remain the same marketing strategy by undertaking a market research. Understanding what customers needs and wants would provide the brand a more clear decision-making process.

Product lines 14

Alexander McQueen offers a wide of products to customers, including womenswear, menswear, bags, shoes, accessories, jewellery, and a shoe collection which collaborate with Puma. McQueen s product attributes are beyond the basic level of offering protection, but give intangible benefits for consumers, which satisfies their desires by integrating fashion design into the products. It takes the full potential quality to give the customers best expectations, thus the brand status is enhanced, and a premium pricing strategy could be used. Alexander McQueen Prada 425.00 410.00 Black classic lace-up show with full leather outer, interior and sole Brushed calf leather laced derby shoe rubber sole 15

Pricing strategies Material and design Fig. 11 Pricing Strategy (2010) Comparing the prices of McQueen s scarves, the silk skull scarf is 165.00, the skull pashmina is more expensive, costs 245.00. The fashion scarves with different prints charges from 325.00 to 445.00. The classic collections are cheaper indeed. Considering the four main pricing strategies, economy, penetration, skimming and premium pricing, Alexander McQueen is obviously using premium pricing strategy. Offering high quality products might be the first factor of being a luxury designer brand. The quality of fabric and the raw materials decides a big part of the selling price, for example, the ice pink feather peplum top costed 1,775.00, as the materials are 100% silk with feathers, it would be reasonable to charge customers at such a high price. However, the price has been cut down to 714.00, which indicates that the mark-up McQueen added on the cost is very high on the other hand. 16

Channels of distribution manufacturer retailer consumer Indirect channel Alexander McQueen s products are manufactured by a third company, then send to the retail store and finally get to the consumer. Emerging retail trends. Considering the mega trend. With the popularize of smart phones, consumers are willing to do mobile shopping. This way of getting new product information quickly has been accepted by many people, Alexander McQueen has not accessed to this area, it may not be a real problem since the images display on phones are not as clear as on the computer, and people still like to enjoy the experience shopping in store at present. Internet has made a great influence on the distribution strategy. Going to a retail store has been partly replaced by online shopping, and since Alexander McQueen has opened its e-store on the official website, it would contribute to an increase in sales a lot. The cost of operating it is much lower than opening a retail store, as there is no rent for it, also the expenses of salaries and bills are reduced. Since customers need to pay for the delivery cost themselves, McQueen could earn more from it. BRIC, since middle class people in these countries has became richer, their desire of buying luxury or designer fashion brands products would expand a lot. Opening flagship stores in BRIC areas is a main retail trend now. It may be easier to earn high profits at these countries, because of the using of geographic pricing- luxury brands usually would charge higher prices there. 17

18 Online store image

Fashion promotion Catwalk shows Alexander McQueen is famous for the amazing displays in the runaway shows. Fashion activities are centred on seasons and collections. For luxury brands it is always an important part of promotion while new season s collection is going to launch. price reductions Price reductions are commonly used by most fashion brands, except some premier luxury brands like Louis Vuitton and Hermes. Posner (2011) stated that this helps to sell stock through, brings cash into the business and helps to free up retail space for new product. Alexander McQueen also has a seasonal sales on its online website for some products. By observing it frequently, I found that the discount would be greater with time, for example, the original price of a ivory metal bow belt was 525.00, when the sales period started, it was reduced to 315.00, but now it only costs 214.00. 19 Limited editions- one way of stimulating customers desires to increase the sales is to offer a limited edition collection. Alexander McQueen has its exclusives available in store and also on the website. Since social networks has became a big part of human life, Alexander McQueen also set up its own homepages on Twitter and Facebook. Links are attached under every single product on its official website.

Brand identity The tangible brand name and logo is a direct way to define a brand. Alexander McQueen use fonts n upper case as its logo, and put the lower case c into the character Q. The well-designed logo of McQueen is significant for people to recognize it. The distinctive skull is used for many McQueen s products as a signifier of the brand. The store environment also plays a key role on branding. The space, layout and service provided for customers would reflect on its image. Reputation is a great strength of McQueen. The international awareness built by McQueen s unique design, and high quality products would contribute to it success, and help get the customers loyalty as well. 20

Future challenges & opportunities Since Sarah Burton took over the company, the overall design has become more wearable. As a result, more people would choose the brand. On the other hand, the brand reputation that McQueen had built may change over time. Heavy market competition is a key challenge that McQueen may face in the future. Since its product range is wide, from womenswear, menswear to accessories, there are quite a few competitors which target to the same group of consumers, such as Jil Sander and Givenchy. In order to gain more market share and earn more profit revenue, McQueen could expand new markets in Asia, for example, open more stores in other big cities in China. The next several years, McQueen could develop its own iphone app, to offer a better access to its consumer. YSL, Chanel and Dolce & Gabbana etc., that have successfully using it as a way of promotion, would give McQueen some ideas. In terms of price, McQueen s clothes charges very high in order to target a premium niche market. However, the difference between the original selling price and discounted price is very high, which may cause a problem of losing customer loyalty. If McQueen expands well in the future, and the brand awareness is increased to a certain level, it may consider not to offer discount like Louis Vuitton and Hermes who are also at the higher end of the market is doing, to build a stronger brand identity. 21

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