Products Development
There is a major difference between luxury and fashion companies in dealing with the product development process.
| Luxury | 1. Most of the products are not seasonal and therefore at the end of the season are not discounted. 2. Some products (say, leather goods) have a longer product life cycle. They are iconic, timeless, and long lasting. |
| Fashion | 1. Seasonality 2. Huge variety of categories (styles, sizes, models, etc) 3. Short product life cycle 4. Long supply chain / industrial pipeline 5. A lot of activities and roles between creativity and management |
Each business model has a different way to approach the product development process. Product development is different according to the different position of brands. But, no matter, the positioning in fashion market, each company follows trends. In fashion collections or even in luxury collections trends are in a way more or less incorporated.
A trend is a certain direction followed by people in the industry in terms of materials, shapes, patterns, and/or colors. Trends might last a season, or might be long lasting, and then they might become a classic. When a certain trend is accepted in a certain moment in time, the seasons after the trend that was established will usually be the opposite of the trend that we had in the past.
In the past, trends were decided almost three years ago, by the actors within the textile pipeline; or general consensus. Nowadays, with the internet and social media actually other influencers, such as bloggers, came into play. New technology also allows consumers to scout trends in a very short time, and also create trends themselves.
Stylistic Identity
All companies follow fashion trends. But at the same time, they need to maintain a certain individual character, and maintain their positioning, preserving their individual style. Stylistic identity is the individual style that each company has on the market and that makes it recognizable. It is related to the collections, stylistic and aesthetic codes that belong to a certain brand: logo, fabrics, patterns, details, lines, etc. Each company should have the original and unique stylistic identity in order to interpret the styles and trends on the market.
A very important element of the stylistic identity is the origin and heritage of the brand. The origin of brands and designers are influencing the way they see style. The country of origin is a very powerful and strong inspiration for many designers in the world. The lifestyle behind countries, even if it is a stereotype, is still something very aspirational that many customers are willing to buy in.
Another element to the stylistic identity is the country of origin in terms of competences and know how. Claiming that a product is made in Italy works a guarantee of authenticity and craftsmanship. Within the style and stylistic identity of each brands, there are usually some iconic products.
Iconic products are more relevant for luxury brands than for fashion brands, but increasingly, icons are part of product strategies of these companies, because they make brands very easy to be recognizable. Iconic products that embody the heritage and the DNA of the brand, are re-proposed season after season in collections, being re-interpreted according to the seasonal tread. Iconic products are also made in collaboration with bloggers, celebrities, or retailers.
Develop a Seasonal Collection
A collection is seasonal group of products, usually structured and organized on different bases:
- price ranges
- occasions of use product
- typologies and product categories
and this collection is the seasonal offer of each fashion and luxury company on the market.
Historically the concept of collection was developed in France by the haute couture. The couturier of each collection was developing a group of products that were completely seasonal and were presented in fashion shows every six months.
Modern collections are a mix of products that are totally new and seasonal, together with products that are called carry-overs (from previous seasons). There are also icons in the seasonal collections, with minor changes in terms of colors or materials.
a company that works on seasonal collections start working on the collection from 3 to 12 months before the presentation to the retail and to the buyer. And usually works on up to 3 collections a year in parallel. So, it is quite a complicated management of time and activities. There are a few phases:
- Collection planning
- Brand managers or merchandisers drive the process
- Analyze the performance of the past season
- Merchandisers prepare a collection briefing for designers and product managers, where some guidelines in terms of price levels, bestseller categories, etc are addressed.
- Collection creation
- The process is driven by design director.
- Based on the briefing, designers define the mood and inspiration for the collection. The mood and inspiration can be related with the seasonal trends, but also can be authentic and original.
- After the inspiration phase, then designers develop specific themes and product concepts that will be part of the collection’s structure.
- There are some checks, along this process, in order to work with product managers and understand the pricing and the margins connected to groups of products and individual products.
- Freeze collection when it is ready to be produced.
- Sampling
- Driven by managers and technical people. For example: product managers work with supply chain.
- Create prototypes, purchase materials, create color card, Make price.
- Produce sample collection in order to be presented to the actual buyers or in the show room, or during the fashion show.
- The orders are collected after the presentation of the sample collection.
- The production process can start. Here is the end of the product development process, and the supply management and the operational process starts.
Brand Identity
Brands are important in any industry, because they carry values and meanings. But in fashion and luxury, brands are key and crucial to deliver benefits. We buy products, not only for what the product does, but mainly for what the product stands for. The meaning is given by brands. There could be:
- Tangible benefits: durability, safety, performance.
- Emotional benefits: status, belonging, fun, pleasure, coolness.
The product strategy can be formulated and implemented according to the different missions that brands have in the marketplace. According to a scale proposed by the American Professor, David Aaker, emotional benefits can be segmented into:
| Auto-directed emotional benefits | Respond to a need for a personal gratification of the individual. “When I buy or use this brand I feel …” |
| Hetero-directed emotional benefits | Meet the need of a customer to express their personality into social context. “When I buy or use this brand I am … |
| Social benefits | Allow the person to express a membership to a certain lifestyle. Meet the need of self-actualization, feeling part of a community. |
Brand scope is the number of market segments that a brand covers. The scope could be either wide or narrow.
- Uncorrelated target / categories
- correlated target / categories
- Single-category
If we cross the brand scope on the vertical axis, with the kinds of benefits on the horizontal axis, we could get a mapping landscape where we can position different brands, and actually these brands do deliver a different kind of identity to the customer with a different value proposition, at the end, a different product strategy.
| Authority brands (e.g. Loro Piana) | Narrow scope Specialized Considered as real authorities Focus on patents, innovations, distinctive styles or products Some experimental product benefits |
| Iconic brands (e.g. Hermes, Chanel, Cartier) | Hetero-directed emotional benefits Wider scope Religious signs Carriers of universal values Stories expressed through a wide range of products. Products are usually instantly recognizable defined by their iconic codes. |
| Lifestyle brands | Deliver social benefits with a quite range of products. Lifestyle is a way a person or a group lives. It includes patterns of social relation, consumption, entertainment and dressing styles. These brands are usually associated, in terms of scope, to a variety of products. |
Fashion Communication
When products incorporate the tangible dimension of fashion goods, it is through communication, that companies create emotional association, consumer benefits, and a lifestyle. Communication is what transforms the product into a brand. Fashion communication mainly focuses on the so-called dream factor.
However, communication at the same time also has the aim of making this dream accessible to everyone. It’s through communication that companies create the desire of this world. Communication has to balance exclusivity of the message with the accessibility of the media.
Communication also depends on brand positioning; communicating a mass market, sport, or casual product is not the same than communicating a luxury one. And as well of the different objectives the company may have. Generally speaking, we differentiate different levels of communication:
- Communicate a product in a seasonal collection.
- Communicate a brand that is the essence goes beyond a single collection, and makes the companies recognizable and identifiable.
- Communicate the company itself.
Companies may have different objectives they want to pursue:
- Brand awareness: well known among consumers.
- Brand image: speak with trend setters and aspirational customers.
- Logo
- Heritage
- Storytelling
- Craftsmanship
- Reputation: everyone needs to be aligned to the companies strategy.
- Numbers
- Strategy
- Corporate social responsibility
Key Characteristics
- Images are important.
- Fashion communication is very visual. It’s based on pictures with the product and the logo, most of the time, that’s all.
- Fashion is direct and universal language. Fashion products are a communication cord on their own because through the product, the designers represent the evolution of the style as it is connected to society itself. The product itself is the best protagonist to talk about the lifestyle that it conveys.
- Let customers interpret the communication. It is the freedom to give his/her personal view. Sometimes words frame the communication too much.
- Fashion companies do not want to be informative. They want to be emotional and inspirational.
- Non-verbal communication is much more effective and memorable than verbal communication.
- Designer’s role is important
- Ultimate decision-maker as far as the creativity of communication is concerned, because the product conveys their own name.
- They prefer to work with external professionals like art directors, stylists, casting directors, rather than traditional advertising agencies.
- The fact that the designer is making the ultimate decision also makes fashion communication very consistent. It is about product, visual, designer and celebrities connections.
- The detail is important
- Communication in fashion is about taking care of many different small details, all of them are making a difference.
- Fashion brands are fighting to occupy the first positions. September issue of magazine is the most important one.
- Creating the Buzz
- Companies need to be disruptive, fractured to innovate the language.
Communication in fashion is a very powerful language. This is also granted thanks to the direct control of most of the activities. Fashion companies tend to be quite control freaks and they manage in house, usually, most of their activities:
- photo-shooting,
- media planning and buying,
- event creation,
- digital environment.
This high level of internal control assures consistency and the attention to the details that is key.
Build a Strong Communication Identity
Building a strong communication identity is a necessity for brands that want to create a lifestyle. If all the messages coming out are consistent this will help to re-enforce the direction. On the contrary, if messages are not aligned, one can take away from the others. It is fundamental that everyone within the communication department, but also specialists working outside the company, are aligned to the same vision, the one of the company itself.
What are the key elements constituting a strong communication identity?
| Concept (what) | Each company should be able to associate the brand’s personality to a few keywords. Successful brands are those that are able to convey strong concepts in their communication. |
| Tone of voice (how) | A brand might decide to be a little more informative and rational in the way they present themselves. Chatty, leisure, ironic tone of voice. It could be more emotional. This is generally speaking a combination of the images, the text, the headline, and the attitude of the models themselves. |
| Photo-shooting | Photo-shooting itself is very important to define a brand’s identity. Those companies that have been able to identify some key characteristics also made their communication more memorable across the different product seasons. Colors, models, locations. |
| The media | The media helps to position the message in a specific way. It’s so important to select glossy magazines. What the companies want, is to have pages that pay for the advertising, but as well, a space in the editorials. Besides magazines, there are other media like billboards, windows, new media. |
Masstige ( Mass + Prestige )
People are searching for individual gratification in little daily pleasures that are expensive but yet not inaccessible. This search for a consumption that is more sophisticated than one of the mass market but yet not as expensive nor unreachable to most of people as the one of luxury products gives the room for premiumization of product categories which were once considered undifferentiated.
In other words, there is a way for mass market companies to escape the commodity trap, to move the competition away from price and therefore cost, into something that gives the customer a value that is more emotional.
Masstige refers to retail categories that include:
- brands and products that have high end and prestigious characteristics, and
- an affordable price and a diffusion that is more spread in terms of distribution than the one of prestige products.
Masstige can also be seen as the combination of mass and prestige, two different elements of marketing mixed. Finally, in fashion, masstige refers to the concept of “mix and match”. The fact is that today, in order to give a cool image of ourselves we should combine in our outfit some luxury accessories together with some products that are more affordable.
Think about water, ice cream, chocolate, they used to be pretty undifferentiated products. Thanks to the application of Masstige techniques they’ve been transformed into something that is commodity chic. This new offer is possible because the customer has changed. Today the customer is much more sophisticated but also open minded, willing to browse from the top to the mass. Therefore there are new consumer consumptions such as the “mix and match”, but as well as conspicuous austerity, selective extravagance, and rocketing are taking place.
Rocketing means that the same customer will overspend in some product categories while making savings in others. This could be a consequence of budget constraints, or could be for diminishing the sense of guilt, or compensating the shopping behavior. More and more customers are extravagant in their selection and because of that they’re also more inclined and open to accept that brands (that used to belong to different market segments but are nowadays also occupying this masstige territory).
How fast-moving consumer goods companies may move into prestige? Feeding the press with the right story angle. We want our brand in the media to be something that is able to catch the attention. To create the wow factor:
- Imitate their fashion codes in their communication.
- Choose top models for testimonials in ad campaigns
- Create artificially limited editions
It is true that mass market companies can leverage on some elements of the marketing mix. Yet, the experience they’re going to provide to the customer will never be unique. Because the product cannot be bespoke, and there is the service which makes the difference. It is possible for other industries, and especially for fast moving consumer goods, to imitate some elements that belong to luxury. But they could play one single instrument, they could never play the orchestra altogether at the same time.
The Digital Challenge
Fashion companies have to play with the magic. They have to make people dream, but they cannot leave themselves anymore to a nice advertising company. They have to develop original and relevant content: the product itself and the music, art and lifestyle that go along with product itself.
- Virtual world is not virtual anymore. On the contrary it’s also part of our physical experience.
- One size does not fit all. We have different social media, different tools, different geographies, and therefore companies need to be able to convey a strong and consistent message, but at same time localize the strategy as far as PR and digital approach is concerned.
- Companies should aim at creating a transmedia storytelling, which is a story that unfolds across multiple platforms. Each medium contributing to unfold a piece of the story and that sees the listeners of the story, the consumers, as active participants, letting the customer being part of this story, playing an active role.
Retail Management
When we talk about distribution and retail management in this world, there are actually two very different channels:
| Wholesale | The brand, usually an industrial company, works with intermediates. It does not control the retail activity but it interacts with distributors and retailers. B2B (business-to-business). “Sell in” to the retailer, who will “sell out” to the customers. |
| Retail | The brand directly manages the retail network. B2C (business-to-consumer) |
In the past the wholesale model (distributing through a middleman) was the main channel for fashion and luxury brands in Europe in particular. Now, in the last decade, most of the luxury and fashion companies in many market segments, from luxury to premium to the mass market became retailers.
Omni-channel is an important trend, more and more wholesale and retail logic are mixing, and the brand has a challenge in managing the two channels in the same way, with the same perspective of the brand identity and image.
Retail Trends
The first trend is now in the world of retail, many, many new business models and formats came out.
- Fast fashion retailers
- E-commerce
- Concession (retail spaces managed by the brand)
- New format of multi-brand store
- Transformation of department stores
Second trend is the globalization of retail presence of many major luxury and fashion brands. All the brands are present in all the major capitals of the world side by side. And the location game is a very important word in retailing and is becoming really tough.
The third trend is the actually the evolution of consumers on emerging markets that actually haven’t really emerged. So the fact that in these areas the retail scene might be very different from the retail scene that we have in Europe or US. New malls, new department stores, new concepts, and new outlets are coming out.
Last trend is customer experience. It’s very important that any brand will deliver the right customer experience to the right customer.
Channels and Formats
When a fashion and luxury company has to manage its distribution strategy, the key issue is how to build and to maintain a certain brand identity image through a variety, a mix of formats. This is really important nowadays in this business. There are 3 major types of channels:
- Retail (B2C, “Sell out”)
- Wholesale (B2B, “Sell in”)
- Trans-national (duty free stores, Internet online sales)
We usually identify 4 formats of retail channels:
| Flagship store | The leading store within a group, usually the biggest in size and stock holding, used as a benchmark. |
| Self-standing store | A boutique of the brand on the high streets, smaller than flagship. Usually owned by the brand. |
| Shop-in-shop | A medium-sized boutique inside an independent retail entity, say shopping mall. |
| Factory outlets | Directly managed by fashion and luxury brands. |
and 3 formats of wholesale channel:
| Corner | A retail area / space personalized with the brand image within an independent retail entity. |
| Wall unit | A retail area / space within a department store organized as a wall dedicated to the brand and with the brand name on top but no personalization. |
| Factory outlets | Managed by wholesaler. |
| Online partner | Managed by wholesaler. |
formats of trans-national channel:
| Duty free stores | Travel related |
| E-commerce | Great growth in the last years |
Retail Management
- Define retail formats: right number, right structure, right locations across different geographical areas and locations.
- Think about your target: define the kind of selection, the assortment, service level, mix of products, pricing, etc.
- Work on the stores: relational marketing activities, customer database, events on the point of sale, communication activities, direct marketing.
- Retail operations: in-store service policies.
- People management: retail training, academies.
Retail Identity
The outcome of a retail identity strategy for a luxury or fashion brand is to give the customer, in any place or in any touch point, the same image and the same kind of experience of the brand. The tools you can use:
- Location makes the positioning.
- Windows are the first contact with customers.
- Visual merchandising and layout of the store (free-flow, circular, spin, etc.)
- Staff management, the way they are dressed, and interact with the customers.
- Omni-channel perspective, this identity management has to be done online.
My Certificate
For more on Fashion & Luxury: Products Development, Communication, Retail, please refer to the wonderful course here https://www.coursera.org/learn/mafash
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