Management of Fashion Companies-Bocconi University
Business Model 2: fashion designers
quality over price: willing to pay more for higher quality even if not the highest quality Creative vision comes first-product is a result of the creative mind- the designers. The designers are the heart of this business model.
Make to stock: total lead time, production lead time whether production is push or pull
- adopt a make-to-stock production approach: production is based on a forecast, so it is a push production strategy; - are so-called customer-centric and, from a commercial point of view, adopt a pull strategy- market trends pull product development.
4 variables to consider in segmentation
Clients: woman, men, children Price: High, MH, Medium, ML, Low Material: leather, wool, cotton, silk End Uses: External (formal, casual, active) or Underwear (also beachwear)
Make to stock pros and cons
Cons • Brands might be perceived as followers. • Over-stocks' risks if the products are not sold as expected—-- small production batches. • Less predictable cash flow Pros • Speed and flexibility in terms of production and delivery. Pro/con • Close to the market, on average lower product quality.
'Dream factor' role of fashion
Creates a desire for the customer to want to be a part of the world of that brand-customers want to be a part of the brand's story
Why have to choose which social media to use?
Each media platform has its own target, objectives, and metrics So depending on the message you are trying to send/who is your target audience dictates which you use Need to have a glocal approach and not a global approach. So you need to select things that are relevant at local level like choosing a local influencer/correct social media app Need for global guidelines but glocal specialization
3 P's of sustainability
Planet-reduce impact of the planet People-stakeholders plus shareholders Profit-sustainability but with the traditional bottom-line approach-not worry only about profits but the creation of shared value-shared also by people and the planet
Make to order
Producing after acquiring orders from the market (distributors, wholesalers, retailers)takes longer but it is justified for high-end brands with high stylistic content, to minimize unsold stocks that would be out of fashion the following season. • Producing exclusive, creative, expensive articles without historical or forecast sales data can lead to heavy losses and capital immobilized in inventory. • The purchasing lead time of many materials is weeks or months. They are very sophisticated, innovative, and exclusive (i.e., fibers, colors, decorations, etc.) so that sometimes suppliers do not have materials stock, they are produced ad hoc-when needed. • The production lead time is long as well (weeks) because quality is fundamental and must always be guaranteed and craftsmanship requires know-how and time.
Pros and Cons of Omnichannel
Pros of omnichannel distribution Possibility to create a "channel-less" experience throughout all touchpoints Cons of omnichannel distribution Channel conflict
Lead time reduction in make to order (3)
Samples collections Selling campaign: Material purchasing starts before the selling campaign and goes on during it. The advanced purchases are based on forecasts and on finished garments sales projections Procurement Production: Production begins as soon as a sufficient quantity of raw materials is available, without waiting for a complete materials delivery. Delivery: Deliveries also start as soon as finished garments are available for shipment.
planned obsolescence
Seasons are a way to create planned obsolescence(purposely shortened to make people buy new products or another trend), defined as the artificial shortening of products' life cycle.-designer creates a design that is meant to phase out after a certain period of time. This makes the product have a lifespan of a limited time frame, often forcing the consumer to upgrade to a new - and sometimes more expensive - piece. (cars)
What does social media help companies do and what are the three types of media?
Social Media and social networks -drives sales online and in other channels -helps us better understand consumer needs Owned Media: any account where the company or agency that works with company can personalize and customize the account-you control 100% of what you write and the entire brand image that results Paid Media: a company pays money to be advertised above the others, you can also buy keywords so then customers see your company first-directed towards owned media Earned Media: when others talk about your company and products for free-you have zero control over what they say. This also allows true customer feedback.
Premium Brand Ex: Diesel
The brand has high industrial competency and can produce high SKUs or units. First brand in the world to offer vintage denim by directly treating the fabric with an industrialized process
Generation Z
The search for the truth is the root of all Gen Z behavior undefined (dont define yourself in one way) communaholic (be radically inclusive) dialoguer (have fewer confrontations and more dialogue) realistic (live life pragmatically)
4 building blocks of fashion and luxury business models
Value Prop: The offer to the market: products, services(after-sale services: bring customers back to change or repair their products), experiences(differing offers into the food and beverage industry Clients' segment: Targeted by the value proposition. Match what you are offering with the customer segment you are trying to reach Communication and distribution channels: To reach the clients and offer them the value proposition-how to reach custies Value chain organization: Degree of vertical integration. control over one or more stages in the production or distribution of a product.
What does the IT system at Li and Fung allow it to do
better coordinate the supply chain processes, centralize data across multiple offices interact with customers (commercial licensees) interact with its suppliers (production licensees) track orders and make last-minute changes in response to the change of the markets (high flexibility), minimizing the risk of obsolescence of their product offerings
Seasonality of fashion?
clothes grouped into main seasons during the year (autumn/winter and spring/summer)-not really linked to the weather tho cus of different temperatures in different places
What is the role of fashion designers ?
point of reference for the customers
"New" customer's journey includes
researching online and comparing with what in-store and other prices of competitors, asking AI or chatbots on the website, waiting and sleeping on it, buying online or going into the store and purchasing
When does a trend become fashion?
trend becomes a fashion when it has been chosen/adopted/purchased/used by a high number of people
What does nonverbal communication of fashion mean?-2
(The way people dress talks about how people are, it shapes people's identities.)-how people want to be perceived and it shapes identity or behavior Clothes and other body adornments are used as nonverbal communication that might indicate occupation, rank, gender, class, wealth, group affiliation, etc.
Make to Order: total lead time, production lead time whether production is push or pull
*Lead time: the time passing from the moment a process begins until the moment the process ends -production is based on sales orders (pull strategy) -commercially they are a push company because they push the product on the market (start trends and anticipate future demand)
How to create masstige (3)
- Choosing top models, VIPs for testimonials in advertisement campaigns Ex: Niaomi cambell with H and M for bras - Elevating product status with the signature of designers and celebrities: SMEG toasters and dolce and gabbana Masstige - Creating limited editions -Bvlgari and pellegrino
What is BasicNets It platform allow companies to do
-can coordinate upstream and downstream operations
What characteristics deine a brand?
A Brand can be defined as a name, term, sign or symbol or a combination of all these things, intended to IDENTIFY the goods/services of one seller and to differentiate them from those of competitors. Name: logo or the name of the brand can be based of the creator's name (Christian Dior) Symbol: Apple, Nike, Starbucks-no need to read name of brand but can recognize from logo Jingle: Mcdonalds song or Netflix login Slogan: Mcdonalds-im loving it, Nike- just do it Lettering: the way the brand name is written even if you dont know the language you can still tell the company name
Parallel phases make to order-"Programmato" timing
Some phases are not in sequence, must be anticipated and run but in parallel
Upstream definition and how basic net operates upstream
Upstream supply chain is the process of getting materials to the manufacturer • Through a network of thousands of suppliers worldwide, BasicNet Sourcing Centers look for quality-conscious, sustainable, cost-competitive manufacturers to match the production needs. • No products are manufactured directly by the BasicNet Group: all manufacturing is outsourced to third parties. • Moreover, the Sourcing Centers-purchasing offices, on behalf of the commercial licensees, supervise and optimize all manufacturing phases-coordiante everything
Make to stock: network-based vs vertically integrated
Vertically integrated firms make their own specialized inputs. In networks, manufacturers procure specialized inputs from suppliers that, in turn, sell to several manufacturers.
What psychological theory is involved in fashion?
Heuristics-What we wear and how and when we wear it, provide others with a shorthand to read the surface of a social situation.-make an instant picture of who a person is and context of situation
How has covid 19 impacted on the global luxury consumer habits?
Higher local spending in covid-19 but now disappearing Long-term: importance of sustainability 360 degree and the importance of 2nd hand/vintage (present in BCG and AltaGamma)
Advantages of doing direct channel of distribution
- Builds brand image - A more personalized experience for the client: this includes the location of the store and visual displays-360 degree shopping experience - Control over collecting data from consumers. - In-store workers can directly collect information about what customers want via face-to-face conversations - Control over price compared to selling through a wholesaler-higher margins - Control over the service provided in store - Control over the assortment of products available in store - Get to know the customers (CRM-customers relations management)
Business Model 3: premium brands
-balance between quality and at a fair price • Marketing is one of the main value drivers, but the industrial know-how is also fundamental. • Time to market is crucial-- quick release of products. Brands that change content • Mix flexibility is mandatory-capability to produce at reasonable costs in a reasonable time with a huge variety of products(SKUs) that will vary within a model, type, color, and sizes within a certain product category but also in a quick time period for a reasonable cost-not sustainable
What is fashion? -6 things
-fashion is everywhere + creativity + trend(imposes a way for people to dress and act) + correspondence (capability of people to follow a specific trend) -nonverbal -Fashion is a continuous succession of stylistic changes (fashion seasons- encourage turnover) -Fashion is about creating the 'dream factor' (2) -Fashion is made of different actors -Fashion is made of many different business models
is customization next for premium brands?
-yes, customization only occurs right now at high luxury level (ex: made to measure, jewel choice, hand made jewelery design
Wideness and variety of fashion collections
.- The variety, depends on the number of product categories in the collection. When products belonging to different categories (clothing, accessories, shoes) are coordinated with each other, we speak of total look collections. - The wideness, represented by the number of SKUs included in the collection. A SKU can be determined differently according to the product categories (clothing, accessories, leather goods, etc.) and, usually, is the result of the combination of model/size/colour or model/size/colour/fabric
Production Model for Network Based production model
1. Begin by developing sketches (in programato there is more effort in finding new material, fibers, colors, and shapes-identify the signature of the designer while in fast fashion retailers and considered as followers -following trends of big fashion companies. Lead time (length of time to complete process) is less for fast fashion. 2. Companies look for suppliers (most of the time these brands dont have their own factories or plants, instead outsource, so must identify the right suppliers that will provide raw material, fabric, buttons, etc. need to develop product lines 3. Companies then buy the products 4. Bulk production then takes place (high number of SKUs), in progomatto products are quality controlled one by one with great detail. Made to stock does random quality inspections instead-so less lead time needed 5. Products are shipped 6. Products in store Total lead time is 12 weeks instead of made to order which takes 7-9 months
Main Features of Luxury Products (7)
1. Superior quality Superior product performance, and superior material quality. Be able to create a correlation between superior quality and performance no matter how you define. 2. Craftsmanship Using specific capabilities and knowhow as a synonym of prestigious products and take time and care to be made (not mass-produced trash) 3. Timeless and recognizable style and design Ex: the kelly bag was made for princess kelly and is still recognizable to this day. Made the bag a status of a dream life and passed down through generations 4. Creation of a lifestyle Spread of a company's style throughout all the accessories or components of one's life. Ex: Hermes cups, candleholders, ashtrays. Also creating new occasions of use-food and beverage but also hospitality: Gucci restaurants 5. Exclusivity Limited editions, customizations, waiting lists 6. Uniqueness Raw materials, fibers, components, shapes Ex: Gucci bamboo bag-initially cus leather cost was high so substitute with another alternative (bamboo) 7. Association with a country of origin The origin lends an especially strong reputation to a certain product category, as it might be seen as a source of excellence.
How to do industry segmentation?
1.Define the business: facts & figures, trends, customer profile 2. Select key variables that will be used to group brands into different clusters (price range, style, clients, end uses,...) 3. Position all competitors according to these variables-find similar companies or competitors 4. Identify clusters of firms with similar positioning giving to each cluster a name related to the way they compete (more than 3, but no more than 8-10 per cluster) 3-8 companies belonging to that cluster. In order to identify subclusters within the segment, you need to compare the actors within the clusters. 5. Identify the Key Success Factors - KSFs (product, channel, media)-state the important elements required for a company to compete in its target markets, growth outlooks and empty spots. 6. Drive conclusions on the industry attractiveness (i.e.: is this an attractive industry allowing companies to gain above average and sustainable profits? Which segment is better performing? Why? Where is there more potential for growth? Why? What are the most relevant future trends?
What is strongly linked with fashion designer model?
Fashion shows Originally addressed to a public of experts (i.e. journalists or fashion buyers), nowadays are addressed to the general public, to the brand clients, and to consumers. More tech cause more people to share and give feedback on the shows Fashion shows indeed are not a commercial tool anymore but are a strategic asset for brand storytelling.
4 stages of a product life cycle-high vs low fashion content life line map
A specific color, shape, pattern with a high fashion content then has shorter life cycle Not all fashion products have a very high fashion content (like white t-shirts, blue jeans)- a more standardized product and are able to carry over between the seasons. Also highly iconic pieces have carryover (black birkin, armani suits)- dont change during time and become a status symbol
What is Basic Net, what is their mission, and how do they operate?
Basic Net is a network company Mission of Basic Net-develop concepts, and styles, coordinate the network of licenses upstream and downstream (commerical licensesing) and develop an IT system that will allow all these actors involved guaranteed speed, efficiency, and standard quality. More than 400 partners worldwide-leverage on network of suppliers due to increased efficiency, fastness, and flexibility (based on real demand)-customers change what they want First virtual marketplace • The traditional textile company is transformed into a network-based business model: modular, innovative, and flexible. • The Web centrality makes BasicNet the first "Virtual" Marketplace in Italy in the history of clothing. • All steps in the supply chain take place solely on BasicNet IT platforms, guaranteeing speed, efficiency, and flexibility.
Benetton example of flexibility
Benetton created tinto in capo (dyed after finished) Benetton offered a SKUs in variety of colors, sizes, etc. As soon as people started purchasing they kept track of what was being sold and then immediately started to produce more of that. However, starting production after the product was being bought would lead to long lead time. Instead start to produce SKUs only in beige and then dye them as soon as consumer data came back
Masstige definition and how it originates
Brands within this segment are "mass" in terms of distribution (widely available) and in terms of pricing (reasonable premium price compared to non-luxury brands). • They are "prestige" in terms of communication as they use most of the codes of the luxury brands such as limited editions and celebrity endorsement (Kitchen et al. 2009). • Brands are often the result of line or brand extensions from luxury brands that want to appeal to the masses while still being affordable in order to be highly profitable. ex: hermes apple watch strap or bvlgari and pellegrino
What does a department store contain and characteristics of each
Contain shop in shop, corner, wall unit, and open sale Shop in shop: Stores within an external commercial structure (usually a mall) think Sephora in Kohls, 3-4 walls + floor, Entrance through a door (SEPARATE AREA), Specialized sales associates-think if you receive a receipt from LV and not Nordstrom then you are in a shop in shop Corner: External commercial setting (typically a department store), NOT A SEPARATE AREA, 2-3 walls + floor, Specialized or non-specialized sales associates **a brand has a nice little corner with some floor space Wall unit: a space, where you can usually find shoes, leather goods, accessories, cosmetics. Open Sale - a retail space at lower level of department stores with a multi-brand offer focused on the product categories such as accessories, jewels, interior design etc.**think just floor space with a bunch of different brands combined into a small area
Different segments within the sustainability area so need different strategies-no size fits all, whats one of the biggest ones?
LOHAS: Lifestyle of Health and Sustainability consumers-consumer type but also a market of goods and services that puts at the center-health, the environment and sustainability -very hybrid characterstics/possibly contradicting?
For consumer segmentation what should a company consider besides demographics?
Demographics (gender, age, generation) are important but not the only thing: but there is also psychographics-the lifestyle approach. Psychographics define your personality(interest, attitudes, and opinions) and makes you prone to make certain purchases-consumption behavior-(prefer sustainability, willing to spend more money)
Social Media strategies in fashion: key steps/points to creating one
Determine who you are trying to reach/target audience (positioning of company which relates to brand identity) Build up a social media plan: Define objectives (need to know who you are/brand image in order to determine the right objectives-Ex: oakley eyewear will promote more durability and effectiveness than Gucci glasses), allocation of resources and time Involve the audience in the implementation: Ex-art of the trench by Burberry, you upload the a pic of you in a trench to the website and if approved they would post it on the blog Produce content that involves the fan/follower: invite fans or followers to have more input in the company like inviting fans to attend virtual fashion shows Use the right "web oriented" language and "tone of voice": consistent and coherent tone of language on all platforms Engage through technology: mass market players are strong in this-shoppable videos Involve the bloggers or influencers: bloggers can be perceived as the gatekeepers to the community the company may want to target Create online shopping experience Grant online and offline integration Monitoring
Fashion adaption consumer type timline-5
Fashion innovators: trigger the start of the trend-designer, makeups artists, stylists, editors-they look for innovation in fashion industry Fashion Opinion leaders: they are the spreaders and share the pros and cons of innovations discovered by fashion innovators. They are the main facilitators between the F.I. and the masses. They are Key opinion leaders (KOLs) are people or organizations that have such a strong social status that their recommendations and opinions are listened to when making important decisions. Ex: Rihanna, Chiara Ferragni, Greta Thunberg-as long as you have a lot of followers you can communicate through social media is the important role played by them. Masses is the majority amount of people using that product
Levis Li and Fung Tier example
Ex: Levis outsources production, Li and Fung (first tier) helps levis find the right suppliers for each component(2nd tier), those suppliers may then also find other suppliers to outsource to (tier 3), this may continue to a 4th tier. Must be managed with sustainability in mind-most times doesnt guarantee knowledge of what is going on in each tier-could lead to child labor being used without company being aware. Some companies will list their suppliers up to a certain tier to prove that they are a good company and checking their fragmented supply chain
Impact of web/cross-channel on sales
Fashion sales will continue to grow mainly driven by cross-channel sales and web-driven sales volumes
Fast fashion company characteristics
Fast fashion products are created during the sales season, thanks to a very fast creative and production process: there is almost total immediacy between production and sale. • Fast fashion models usually reproduce the styles of the garments, usually produced according to a make-to-order logic, which is successfully selling. • Shorter lead times: creative development, purchasing, production, quality control. • Quality is not a substantial requirement for purchasing: fast fashion is linked to seasonal and trendy items in which the customer seeks the stylistic content of the moment and not an everlasting quality. • To guarantee speed, the suppliers' network must be very well structured and dependable. • The time to market is shortened but the company is exposed to a risk of unsold products in case they do not properly interpret market trends.
What are characteristics of flagship stores and what are they considered by the companies
Flagship stores: - Central locations in metropolitan city centers usually - Highest level of control - All product categories - DOS: directly operated stores - Specialized sales assistants - Selling area 200-5000sqm This is the retail space where there are the most investments of the brand. This is the temple of the brand-- the physical representation of what the brand stands for. There are no rules for how many and where flagships are. Prada has two in Milan, Abercrombie has only one flagship in the world, so it depends
Future of Social Media
Focus on digital touchpoints but need a transmedia/seemless experience connecting communication and distribution
Vertically integrated company-Distribution center
Folded garments(moved through tech-carousel- based on mail. Read barcode to see where it goes and the carousel will drop it at the correct area. Hand garments Communication with store-orders collected 2x a week by a store.
How does Gen Z get information and do companies need to do to keep up?
Gen Z: the information is reaching them instead of them searching for information-making touchpoints more crucial. -more important to look for a customized approach (1:1 or 1:few approach) -even the store needs to be more updated and more customized journeys-can personalize clothes. Personalize experiences with virtual touchpoints (online and offline) and in-store tech like virtual experiences
Pyramid of fashion segmentation and the levels of each and their key success factors
Haute Couture: The haute couture segment is made of historical and long-lasting French and Italian "couturiers" such as Dior or Loro Piana. • The key success factors: creativity, superior quality and uniqueness. -used to create "the dream" Ready-to-wear segment: corresponds to designer brands, mainly Italian, such as Giorgio Armani, Prada, and Gucci. • The key success factor for these brands is a strong brand image associated with glamour. To be able to innovate and be linked with a style that usually changes and also they anticipate the style of the future Diffusion section: The diffusion segment gathers the more accessible lines of the "ready to wear" segment, such as Armani Collezioni, as well as the most premium industrial brands such as Max Mara, and new designers. • The key success factors for these brands are style and quality at a medium-high price. Also, have industrial brands produce more but still have good quality and prices such as Max Mara bridge segment Mainly regroups European and American premium industrial brands such as Tommy Hilfiger and Guess. The key success factors for these brands are fashionability and acceptable quality at a lower than the previous price. Less craftsman but high volume Mass Market The mass market regroups the mass retailers that offer a wide range of products at affordable prices such as Zara and C&A .• The key success factors for these brands are fashionability, accessibility, and affordability for the mass majority of the customers.
What happens when product attributes are in synthesis with the brand
If the Brand is the synthesis of product attributes, the product itself contains those elements of differentiation that give meaning to the brand. The Brand, therefore, represents the motivation that drives the consumer to repeat the purchase over time because it assumes the function of guaranteeing of the product itself. If the consumer loves a product then the consumer loves the brand and knows the quality is good so will continue to purchase
General Distribution Strategy image--can look
Increasing control over distribution: most fashion brands in the last 30 years have become retailers
Industry segmentation definition
Industry segmentation aims at defining the segment in which the firms compete. The fashion system is made up of many industries/segmentations: - textile- clothing- knitwear- leather- shoes- Eyewear Industry segmentation it forces companies to identify their own competitive positioning within the industry
What does Li and Fung stress
Li and Fung stresses end to end supply chain: reduces costs and increases efficiency-guaranteeing quick response to changing market trends-while keeping a standard quality. Also allows full data from beginning to end to replan what needs to be produced next.
Luxury vs fast fashion
Luxury brands replace products depending on seasons while fast fashion retailers are usually able to provide new garments on shelves with a high intensity every 10 days to 2 weeks
Make to stock vs make to order vs assemble to order with respected delivery times
Make to stock: -sold from catalog -A steady consumption in the past helps predicting the future -Even if it is hard to predict the future, but the customer does not accept long delivery times, you might be required to make some of your product to stock. -If there is no stock your service level degrades and the customer needs to wait for the next receipt from production. *Delivery time: the time customers are willing to wait before receiving the products Make to order: -no forecast on products that are made to order from a customer. You start production after the customer's request comes in and not, like with MTS, beforehand.-must pull materials -the availability check in the Sales Order needs a lead time; the time it takes to replenish or produce the product -Delivery time = the time needed to make a product: Made to order Assemble to Order: -In make-to-order, products are made from scratch and customized to the customer's specific requirements. In assemble-to-order, products are assembled from previously completed sub-assemblies once an order comes in. -a production scheduling strategy in which a retailer collects the raw materials needed to make a product in advance. -Delivery time = the time needed to assemble a product: Assemble to order
Vertically integrated company- Sourcing and manufacturing
Marking: line up different parts of a product to minimize waste of raw materials Automation-cutting and distribution center (after assembled by outsourced is sent back to home facility to be wrapped and sent to distribution center) Outsource: less value-added areas like assembling (suppliers that work solely for the brand)
Where do trends come from?-dont need know but have an idea
Media and arts: music-Maneskin, contemporary art, architecture Technology: meta-verse, fibers(Gore-tex:light, warm), material components Design Creativity: invent a trend from common accessories or components (Versace with safety pins on dress) Textile: Nylon use by Prada instead of leather for bags Socio-Cultural Trends: behaviors of people, diversity, post-pandemic trends-more comfortable wear and accessories)
What is social media and why do people spend time/invest in social networks?
Network of people with common interests communicating with each other electronically Social Media Answers/Satisfies 6 needs: Entertainment, transaction, relationship, interest, internalization(find or discover your group), recognition (to be perceived as an expert)
Omnichannel vs. multichannel—What is the difference?
Omnichannel distribution is a multichannel approach taken by companies to give customers a way to purchase and receive orders from several sales channels with seamless integration. The major difference between omnichannel and multichannel distribution is the level of integration. Multichannel is usually identified as a non-integrated way to approach customers, while omnichannel requires coherent and absolute integration. The boundaries between channels tend to vanish in an omnichannel environment, giving the customer a consistent brand experience. Multichannel retail is the distribution of products in multiple channels: for example, selling goods on a website as well as in a physical store. Omnichannel retail, however, takes it further by considering the needs of customers and reaching them where they are, through all available channels.
Make to order Pros and Cons
Pros: - Enhancing the stylistic hallmark of the brand and communicating its values through the creation of exclusive and prestigious collections. - Predictable cash flow. Cons • Overstock risks minimization. • Planning in terms of timing and resourcing allocation. • Far from the market, impossibility to fine-tune the merchandise on offer. So, the main collections are enhanced by pre-collections and seasonal lines are integrated with"flashes" and "capsules"
Vertically integrated company- retail
Prototype: no advertising so need to make the stores a reflection of a company and be able to best market the clothes. Also reproduce the same environment no matter which store you enter in the world. Finally, standardize so everything is kept under control and minimize costs
Pros of Network based companies
Speed Efficiency (costs) Flexibility Coordination (guaranteed by IT networks)
Vertical integration strength
Speed• Efficiency (Costs)• Flexibility• Coordination and communication (IT) Same as network-based but with different operations structure
How does a brand start to incorporate both attributes and values into products
The Brand is the sum of tangible (linked to the product) and intangible attributes (associated to Brand story and values)-not only about physical characteristics of the brand but also the intangible benefits-buy a product because it makes you feel better or feel inside of a family, there is a connection created when buying a product/brand
trickle up theory
The fashion trends start among the younger or lower-income groups and became the source of inspiration for stylists and designers. Examples: teddy boys, hippies, punks(Vivienne Westwood), and clothing items such as jeans, miniskirts, and sneakers.
Different formats of e-commerce stores and examples
The lower you go, the more diluted the brand gets, the riskier it gets creating associations in the minds of the consumers but the more products you sell Virtual Flagship Stores In the past, many more companies asked service providers to manage the store for them The most important activities to manage in e-commerce: the product assortment, logistics, communication, administration, customer service Through e-commerce you can influence purchasing in other channels E-Tailer - Multibrand - Discounted price They own the products and sell at lower rate -Yoox is a buyer (they own what they sell), purchases previous seasons' products, has discounts (30-40%) Online Clubs Very low variety of products Very high discounts You need to register/invite Always products from previous seasons They do not own the product
What is the future of the physical store?
The physical point of sale shall not disappear! It should transform taking into consideration the features for which the physical store is still preferred to the online channel- the possibility to look and try, immediate availability, being sure the product is right, including the features loved by consumers buying online- such as no stock out, prices comparisons, no fixed times
Role of points of sale for marketing
The point of sales becomes a strategic marketing tool contributing to the creation of the total brand experience thanks to innovative solutions in terms of visual merchandising and space planning
Role of having multiple lux segments in one company
absolute luxury is there in a company to entice people to believe that the company is wholly high luxury Ex: lifestyle luxury is the main cash cow for Bvlgari (not super expensive but lower cost)
Downstream defintion and how Basic net does that
downstream supply chain is the process of getting products from the manufacturer to the end consumer. Regarding distribution, the licensed companies belonging to the BasicNet network are licensed to market collections designed by BasicNet Group. • Additionally, through BasicItalia S.p.A., the BasicNet Group is engaged in retail distribution through Mono Brand stores Brand Outlets, and Spaccio Factory Outlets. -managed by basic net (hybrid format-some commercial license and some by basicItalia
Uber premium
everything that is truly out of reach of the vast majority of consumers Trading up from lifestyle luxury to absolute luxury
The Trickle-Across Theory
fashion moves horizontally between groups belonging to similar social levels. a leader of one social group affect the other group members, and a trend can become a "must-have" a similar product is adjusted to different social classes and marketed towards them. Ex: Uggs and Versace pink shoes (you know the one)-everybody from every social class is experiencing the same fashion trends
Future of fashion sales
fashion online sales will continue to grow-main driver for fashion sales growth
Wortmann model
illustrating different production approaches a company can implement regarding customization Decoupling point: A make-to-stock environment may decouple by stocking end units. An assemble-to-order environment would decouple by stocking subassemblies, components, and other needed items to complete the customer's order.
what is the product life cycle of fashion compared to other industries
shorter but not all fashion products go through a short seasonal lifecycle.
Showrooming vs. Webrooming
showrooming (research in-store but makes the purchases online) webrooming (ROPO, research online purchase in-store) phenomena.
Premium Brand Ex: Ray Ban
strong technical features, marketing is crucial, exclusiveness of product even after 80 years, and industrial capabilities. 4 plants to have lower time to market. 2nd reason: each factory has its own specialized competency. The plants have high automation and technology to reduce human errors and also to increase the speed of production
Trickle Down Theory aka The "conspicuous consumption"
the existence of a social hierarchy in which people seek to identify with the affluent ones and those at the top of the social pyramid. Fashion assumes a function of social ostentation-considered a vehicle of upward mobility for those who seek to imitate the styles of the wealthiest, seeking to reinforce their status of opulence and wealth People at the bottom of the social heirachy want to imitate the rich-once people on the bottom can imitate the ones on top-new styles/trends are invented to continue the elites status indicator Sum: what is fashionable is determined by the social top and the people below want to imitate
Business Model 1: luxury brands
the idea of quality, of supreme exclusivity. Mantra is product and experience. Product is king, experience is queen. -they do everything in-house
Vertically integrated company- Collection Design (Zara)
they stressed information collection through IT- important to understand what we have but also what we dont have and should have. When coming up with new collection: can stop collection-few enough stock to be able to get rid of it through overstock/sales Make small changes like new color, add buttons, or pockets Make completely new products/garments "Never do the same"- with high fashion content(unique not standard pieces) make different garments each time so people if they see it in store will want to buy it because they know that every two-three weeks something new will arrive and you will never see it again Team: share information with designers, operations-give insight on if garments can be produced within the lead time, producers
Recap of Make to Order vs Make to Stock
• High-end fashion companies (programmato): - adopt a make to order production approach: production is after/during the selling campaign and is based on sales orders, so it is a pull production strategy - are so-called product-centric companies and, from a commercial point of view, adopt a push strategy - they push the product on the market. • Fast fashion companies: - adopt a make to stock production approach: production is based on forecast, so it is a push production strategy - are so-called customer-centric and, from a commercial point of view, adopt a pull strategy- market trends pull product development
What is Li and Fung's role as a global supply chain configurator
• Li & Fung is a global supply chain configurator: on the one hand, it is able to provide a network of suppliers guaranteeing cost/quality/speed and, on the other, offers a set of added-value services guaranteeing innovation and data-driven consumer insights-what are the current consumer trends, how to adjust products while the season is in process. Made to stock inputs are forecasts-usually wrong-so need input and feedback during the season-making Li and Fung integral with the consumer insights they posses • Through its digital platform, Li & Fung not only sources excellence from a production and distribution standpoint but it is the enabler of an end-to-end supply chain partnering ecosystem.
What is Li and Fung?
• Li & Fung is a trading company whose global multi-channel sourcing platform enables Li & Fung to create tailored sourcing options to meet brands' specific requirements. • Through a growing network of over 15,000 suppliers in more than 40 countries, Li &Fung looks for quality-conscious, sustainable, cost-competitive manufacturers to match the production needs of the brands it serves worldwide. -brands usually make own designs but network companies like Li and Fung help connect brands with suppliers/producers
Business Model 4: Fashion retailers
• Retailers commercialize products received/sourced directly from manufacturers or from wholesalers, selling them directly to consumers. • Fashionable merchandise is sold in large and welcoming stores at a very convenient price.
