FASHION Flashcards
what is fashion
- everywhere, creativity, trend
- non-verbal communication: system of meanings and form of speech
- creating the dream factor: MESPC
- continuous succession of stylistic changes: planned obsolesce (artificial shortening of products lifecycle, create design meant to phase out)
- made of different acotrs
- made of many different business models
trends lifecycle
- introduction: fashion innovators (main purchasers of design at starting stage), KOLs (strong social status, opinions)
- Peak: masses (mainstream), late adopters (few seasons later)
- Decline: laggards, price sensitive, value for money
high and low fashion content
low (carryovers)
trends come from
socio-cultural trends, design creativity, media and arts, textile, tech innovation
trickle down theory
existence of a social hierarchy in which people seek to identify themselves with the affluent ones and those at the top of the social pyramid. Fashion assumes a function of social ostentation and is considered a vehicle of upward mobility for those who seek to imitate the styles of the richest, seeking to reinforce their status of opulence and wealth.
trickle up
creatives from all over the world get inspired by the “street”.The fashion trends start among the younger or lower income groups and became the source of inspiration for stylists and designers.
trickle accords
fashion moves horizontally between groups belonging to similar social levels.
* First, thanks to social media and influencers, one group member affects the others and a trend becomes a “must-have”. Then, everybody from every social class is experiencing the same fashion trends.
* It allows those from different walks of life and different backgrounds to have a trendy piece of clothing, that is being sold by various different designers at various different prices.
brand segmentation
aims at defining the segment in which the firms compete.
it forces companies to identify their own competitive positioning within the market.
steps of segmentation
- Define the business (facts & figures)
- Select key variables that will be used to group brands into different clusters (price range, style,
clients, end uses,…) - Position all competitors according to these variables
- Identify clusters of firms with similar positioning (more than 3, but no more than 8-10 per cluster) and give to each cluster a name related to the way they compete
- Identify the Key Success Factors - KSFs for each cluster (product, channel, media)
- Drive conclusions on the industry attractiveness
fashion pyramid
- haute couture: historical and long lasting French and Italian “couturiers”. KSF: superior quality, craftsmanship, and uniqueness. It focuses on focuses on creating one-of-a-kind, bespoke pieces.Few customers, few products but very important in order to build the brand image. Thanks to haute couture, companies really sell the dream, the magic.
- ready-to-wear: collections ready to be purchased and worn by customers. KSF: strong brand image associated with the designer
- Diffusion: more accessible lines of the “ready to wear” segment as well as the most premium industrial brands (ex: Max Mara). KSF: style and quality at a price. high volumes, wholesalers
- Bridge: premium industrial brands (ex: Tommy Hilfiger, Guess) and products are updated, trendy. fantasy names, mix of wholesale and retail, production outsourced
- mass market: mass retailers that offer a wide range of products at affordable prices such as Zara and H&M. KSF: efficiency, glamorous communication, entertaining shopping experience, somehow to combining the affordable price with the fashion content. usually very homogenous, now started segmenting (diff brands, customers, occasions of uses, prices)
9 components of business model
- Offering: value propositions
- Customer: customer segments, channels, customer relationships
- Finance: revenue streams, cost structure
- Infrastructure: Key resources, key activities, key partners
business models components (4 graph)
- Value proposition
The offer to the market: products, services, experiences (What)
-Clients’ segment
Targeted by the value proposition (Who) - Distribution channels
To reach the clients and offer them the value
proposition - Value chain organization Degree of vertical integration (How)
business model 1: luxury brands
- Value proposition
Timelessness, quality excellence uniqueness, exclusivity, craftsmanship (watches, jewels, leather goods, silk accessories ) - Value chain organization
Vertically integrated, up and down stream
Luxury Brands - Clients’ segment
Few, privileged, wealthy customers focused on supreme quality and timeless style - Distribution channels
DOS – exclusive distribution
Product is the king! Brands are based on iconic contents, legacy and heritage, are more conservative and less dependent on fashionability.
business model 2: fashion designers
- Value proposition
High fashion content products, anticipating and creating new trends (clothing) - Value chain organization
Usually, vertically integrated up stream - Clients’ segment
Selected target, focused on glamour, style and quality - Distribution channels
DOS, Department stores, Multibrand stores
Creative vision comes first!
* Key role of the designer: assuring brand positioning consistency new collection creation, communication, store layout. Fashion designers are the brand soul and identity.
* Governance:
– Vertically integrated, family businesses (i.e., Dolce&Gabbana)
– Designers that rely on licensing (i.e., Dsquared2)
– Designers acquired by a private equity (i.e., Valentino)
types of business models in fashion
luxury brands, fashion designers, premium brands, fashion retailers
business model 3: premium brands
- Value proposition
Value of brand (clothing and accessories) - Value chain organization
Insourcing / Outsourcing of production - Clients’ segment
Price/quality - Distribution channels
Brand stores, Department stores, Multibrand stores
Marketing is one of the main value drivers, but the industrial know-how is also fundamental.
* Time to market is crucial.
* Mix flexibility is mandatory.
* Right combination between a product that is trendy, updated, but not extreme in terms of fashionability, and a price that grants the customer a right value for money.
* Importance of creating an emotional storytelling: a strong and unique concept to engage the customer.
business model 4: fashion retailers
- Value proposition
Fashionability at convenient price - Value chain organization
Network based SC or vertical integrated SC
Fashion retailers - Clients’ segment
Price sensitive - Distribution channels
Occupying high-traffic locations and investing in huge retail space as a sign of visibility - Retailers commercialize products received 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. - Fast Fashion Retailers updating collections throughout the year (new products being brought on the racks weekly rather than by season), and are able to react to new trends in fashion.
- Speed and quick response to guarantee a weekly delivery of new fashionable products.
critical success factors for luxury products:
- Superior quality
- Craftsmanship
- Timeless and recognizable style and design
- Creation of a lifestyle
- Exclusivity: customisation (unique product or assembly of modular components): engineer to order, make to order, assembly to order, make to stock
- Uniqueness
- Association with a country of origin
luxury pyramid
- ABSOLUTE LUXURY:
most exclusive form of luxury where customers enter waiting lists to buy unique handcrafted items made of precious material.
Customers are selected by the brand. KSF:
strong brand heritage and products’ uniqueness. - LIFESTYLE LUXURY:
made of “logo brands” (i.e. Louis Vuitton), offering quality and stylish products.
Brands are selective in terms of target, media and location.
The key success factors are a strong brand reputation and brand recognizability thanks to strong symbols. - ATTAINABLE LUXURY: Goods are produced in mass quantities.
Are more accessible in terms of price, location and media (i.e. Michael Kors, Max Mara, Furla, Coach, …)
The key success factors are fair quality/price and a nice shopping experience.
-MASSTIGE: “mass” in terms of distribution (widely available) and in terms of pricing (reasonable premium price compared to non-luxury brands), “prestige” in terms of communication as they use most of the codes of the luxury brands such as limited editions and celebrity endorsement
* Masstige products can be 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: Organising fashion shows, choosing top models and VIP, collaborating with designers and celebrities, creating limited editions
what is a brand
SUMMARY OF PRODUCT ATTRIBUTED AND VALUES (TANGIBLE AND INTANGIBLE ATTRIBUTES, PRODUCT AND BRAND STORY AND VALUES) 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.
BRAND EQUITY
customer at the center, →On keeping the promises made to the consumer (→experience with products and brands)
→On the benefits that the brand creates and increases if linked to emotions and social contest
→
→On the relevance that the brand has for one or more individuals
→
→On symbolic value that the brand could create thanks to the storytelling or to the support of a testimonial / leader
MAKE TO ORDER (luxury and fashion designers)
- Material purchasing starts during the samples creation and goes on during the selling campaign. The early purchases are based on forecasts and on finished garments’ sales
- Production begins as soon as sufficient quantity of raw materials is available, when the selling campaign just started.
- Deliveries also start as soon as finished garments are available for shipments.
projections.
LONG LEAD TIME
Producing after acquiring orders from the market (distributors, wholesalers, retailers) allows to:
– minimize unsold stocks
– avoid heavy losses
– reduce capital immobilized in inventory
– get predictable cash flow
Far from the market, impossibility to fine-tune the merchandise on offer (pre-collections,
“flashes” and “capsules”).
two factors that strongly impact the collection complexity:
– The wideness, represented by the number of SKUs included in the collection.
– The variety, depends on the number of product categories in the collection (clothing, accessories, shoes).
pattern group
Pattern Mission: to cover the entire business line (Research and Development, Engineering and Prototyping, Production) of almost all fashion/luxury product categories, for many brands.
The main product categories provided by Pattern Group are:
* Men’s and women’s clothing
* Luxury knitwear
* Leather goods
The Group is made by a network of companies and factories, located in 7 regions throughout Italy, each of one leader in the prototyping and production of different categories of luxury
fashion.
MAKE TO STOCK
Less product development complexity: usually reproduction of the styles which are successfully selling (followers).
Fast fashion is linked to
seasonal and trendy items (closer to the market).
Short purchasing LT: the materials are standard lead times.
Short production LT: processes are simple and essential.
To guarantee speed, the suppliers’ network must be very well structured and dependable.
Quality is not a substantial requirement, customers seek the stylistic content of the moment and not an everlasting quality.
Selling to customers
The company is exposed to a risk of unsold products (overstock) in case they do not properly interpret market trends.
Less predictable cash flow
Make to order Vs. Make to stock
- High-end fashion companies
– 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;
– Product-centric companies and, from a commercial point of view, adopt a
push strategy - they push the product on the market. - Fast fashion companies:
– 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.
FAST FASHION: PRODUCTONS MODELS
network based and vertical integrated
NETWORK BASED
outsources everything, many suppliers. Basic net: develop the value of its brands and distribute its products worldwide through a global network of licensed companies, connected with the head company and to each other by Internet. production licensees => sourcing centres => BASICNET => commercial Liceenses (or BasicItalia: mono brand stores, brand outlets, factory outlets) FIRST VIRTUAL MARKETPLACE (all steps in the supply chain take place on the platforms)
advantages of network based production model
ITsystemallowsto:
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.
* Speed
* Efficiency (Costs)
* Flexibility
* Coordination and communication (IT)
VERTICAL INTEGRATED PRODUCTION MODEL
outsources very few activities, few suppliers zara: design, sourcing and manufacturing, distribution, retail
DISTRIBUTION STRATEGY: DIRECT AND INDIRECT
indirect:
- wholesale channel (corner, wall unit, open sale)
- online
Advantages of the direct channel compared to indirect channel
- To build the brand image
- To create a 360°shopping experience
- To have complete control on assortment/pricing/deliveriesàcontrol on positioning
- To know directly the consumers (CRM)
- To chose the location
- To get higher margins
OFFLINE RETAIL FORMATS
- flagship store: central locations, DOS, all product categories
- self-standing:
- shop in shop: stores within an external commercial structure (mall). 3-4 walls + floor, entrance through a door (separate area), specialised sales associate
- corner: External commercial setting (typically a department store). NOT A SEPARATE AREA, 2-3 walls + floor, Specialized or non specialized sales associates
- wall unit:
- Personalized retail outlets within an external commercial setting (typically a department store)
- NOT A SEPARATE AREA
- 1-2 walls
- Personnel may be specialized
online retail formats
- direct: VIRTUAL FLAGSHIP STORES
- indirect: E-TAILER MULTIBRAND – FULL-PRICE (specialized vs non specialized)
Specialized: ASOS, Net a Porter…
Non specialized: Amazon, Tmall (Alibaba)…
E-TAILER MULTIBRAND – DISCOUNTED PRICE
Yoox.com…
ONLINE CLUBS (PRIVATE SALES)
Vepee, Privalia, BuyVip, Saldiprivati…
CITY DEALS
show rooming and web rooming
The physical point of sale shall not disappear!
It should transform taking into consideration the features for which it is still preferred to the online channel, including the features loved by consumer buying online
- showrooming (research in store purchase online) - webrooming (ROPO, research online purchase in store)
OMNICHANNEL DISTRIBUTION
- Omnichannel distribution is a multichannel approach taken by companies to give customers a way to purchase and receive orders from several sales channels with a seamless integration.
The major difference between omnichannel and multichannel distribution is the level of integration.
- Multichannel: non-integrated way to approach customers
- Omnichannel requires coherent and absolute integration.
The boundaries between channels tend to vanish in an omnichannel environment, giving the customer a consistent brand experience.
fUTURE OF SHOPPING BASED ON
mobile, online-offline integration, retailtainment, artificial intelligence and machine learning.
