Marketing 440 Summer 2012 Tom Fashho Shanghai Tang: The First Global Chinese Luxury Brand
Table of Content
Pg3: What is a luxury brand? How is it different from a regular, mass-market brand? How does one build a luxury brand?
Pg4 & 5: How would you characterize Shanghai Tang’s brand image and sources of brand equity?
Pg5 & 6: What are the strengths and weaknesses of the brand’s existing
Personality and image? Pg7: What might have accounted for Shanghai Tang’s unsatisfactory results in building a global luxury Chinese brand? What could they or should they have done differently?
Pg8 & 9:
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Although tourist and the Chinese youth took a liking to his brand it was a harder sell to other segments of the population. Tang’s own personality was a source as well, he wanted to play broker between east and west but I don’t really think he took the time to understand that his clothing wasn’t the problem but instead how he tried to market his brand. He was chasing a wealthy market that didn’t really pay much attention to his dealings. His brand-exhibited things that the public just wasn’t educated enough about and his over the top execution didn’t stick to consumers like he thought it would. When consumers trust a brand and find it relevant, they may select the offerings associated with that brand over those of competitors, even at a premium price.2
What are the strengths and weaknesses of the brand’s existing personality and image?
Le Masne later abandoned Shanghai Tang marketing concept of a high fashion clothing line to wealthy Americans in an effort to focus more on China. The Idea Le Masne had been to play to the strengths instead of its weakness. The image wasn’t bad overseas it was just weak and could’ve used more research before diving in again. Even though there was a lot backing up Tangs investment he had his sights set high and couldn’t really follow through with his plans of globalizing his brand. The image and personality of Tangs may have seemed a bit pretentious and a little over the top for most middle class consumers and even
managers.) Neither the Chinese retailers nor the consumers had any understanding of the value of the World
This expansion demonstrates how the luxury industry is now run by massive corporations whose focus is only on growth, visibility, brand awareness, advertising, and most importantly, PROFITS! With growth and expansion, has come a decrease in quality and rarity. The luxury garments produced are mostly not handmade but are even outsourced to large factories in places such as China and Turkey. Also, to meet quarterly turnover projections, “designers churn(ed) out increasingly trendy collections of clothes, handbags, and shoes.” (Thomas, Pg. 246) With hundreds of new stores around the globe the surplus of designer labeled merchandise is immense hence, the proliferation of outlet malls.
For years, Louis Vuitton enjoyed high profit margins from the luxury market in Japan until other competitors such as Prada and Gucci entered the market. Counterfeiting also became a threat to the firm’s brand by satisfying consumer demand at lower prices. Other external global environmental problems included highly priced products, limited availability in stores only, and a heavy dependency on the Japanese market (Pearce & Robinson, 2013, p. 14-18). Moreover, “the after-shocks of the global recession were a threat to Louis Vuitton’s luxury business in Japan”, and Japanese women became less interested in the brand’s products (Pearce & Robinson, 2013, p. 14-18). Alternatively, Louis Vuitton could “reinvent itself and regain what used to be its well-attested
1a) In a short time, the young Chinese cosmetic market has become quite saturated with numerous firms. In order for Yue Sai to position its brand effectively, it has to draw upon unique strengths that others do not have. Madam Yue-Sai created Yue Sai with the aim “to create, produce and sell the very best beauty and skincare products that we can offer to Asian women and to the world…” The company started under her belief that the Chinese women had different standards for beauty and required specifically tailored cosmetic products. If Yue Sai under Cotyhad continued to build its brand under this positioning instead of focusing on distribution, the brand would be a far more prominent player in
The main issue the company faced is quality control issue impacting brand image. There is narrow focus in both consumer segments and product line. There is also limited brand recognition and limited geographic market such as America. The quality of yoga pants were not good because customer companied about sheer Luon Yoga Pants and the fabric is so see through.
This process has more significance in most countries except the Unites States. The approach in the U.S. is to get down to business straight away without wasting too much time on people. This is in stark contrast to the process in China where the focus is on building “Guanxi”, that is, the intricate and omnipresent network of personal relations. The U.S. approach can be a huge problem when doing business with China. The American efficiency interferes with the patient development of a mutually trusting relationship – the very basis of an Asian business agreement. This is what happened in the case study. Mr. Smith had done his research and was aware about the Chinese business methodology, but he did not think it was important to implement it. He was well advised by Mr. Tang. Mr. Tang, even though pointed out the significant features of the “American” and the “Chinese” way of doing business, did not stress enough to make Mr. Smith understand its significance. Mr. Tang also jeopardized his relationship with Mrs. Ming whom he had known for many years by not disclosing that the supplier was not a direct supplier.
The brand story was considered very strong. It is a high end brand that accounts such as Bloomingdales, Nordstrom, etc. appreciated because it was the best performing brand. It could have been too strong, before the repositioning, because it shifted certain segments away. People associated the brand as for older people, well established in their careers as well as a mom/grandmother brand. It had a very strong brand loyalty associated with it. As the company grew older so did its customers. Some people did not want to be associated with that, and did not buy the brand; therefore shifting younger segments away.
Burberry need to scan their market segments in order to gain the most competitive advantage. Pestle analysis looks at the political, economic, social, technological, legal and environmental factors that affect an organisation providing a ‘comprehensive list of influences on the possible success or failure of strategies’ (Johnson, Whittington, Scholes, 2011). However, the three main changes that focused on in this essay are Economic, Social and Environmental factors. The economy within China is currently very stable; being a part of the 4 fastest growing economies in the world (BRIC: Brazil, Russia, India, China), it has made large strides in recent years in the business and industrial sector. , the country
Sharing Zhang’s belief that a superior level of category leadership was within reach if the Li Ning brand could somehow acquire elements of brand strength equivalent to those associated with the Nike and Adidas names, vice president of marketing Abel Wu was pursuing a marketing strategy aimed at establishing in people’s minds, just in time for the Olympics, a uniquely differentiated position for the Li Ning brand. Chief among Zhang’s concerns at this point was how to integrate Li Ning’s decision-making to ensure that new opportunities could be seized while making the most of the company’s current competitive advantages.
American Apparel (AA) is a well-known United States clothing brand that has gained recognition among the retail industry. American Apparel headquarters is located in Los Angles, California where it manufactures and distributes its clothing products. It is known in today’s society, to be sweatshop free and has a strong belief of workers’ rights. However, American Apparel has had a downfall in the retail industry losing revenue. This research of American Appeal will provide feasible reasons why the company should enter China international market to improve on sales revenue.
It was very obvious that Chinese consumers were not interested in spending a lot of money on toothpaste, which was extremely different compared to other countries. CP China had a goal of dominating the market in China with this new product launch. They realized what their competition was doing and then decided to differentiate themselves by utilizing different graphics, flavors and aesthetics in their product. In order to reach their destination price, they had to really research and truly understand the market that they were about to enter. One of the first costs that had to be lowered was their media expenditure; this cost was way too high. The changes that took place in the CMF launch were appropriate because of multiple disagreeable components. Because the consumers in China were not familiar with the “breath strips”, CP China had to take initiative and rebrand them in order for consumers to understand. They changed the name to “cooling crystals.” Changing their celebrity spokesperson to Jay Chow was another change that took place. All of the rebranding changes that took place was definitely vital in order to get a kickstart in this new Chinese toothpaste market.
However, there are some disadvantages to this strategy. It may be hard to regain the appeal in a market that has not been so successful in the past. Shanghai Tang is going to have to totally restructure how they penetrate their target markets, in Asia. They will need to present the Asian market with exactly what they are looking for, which could translate into longer design lead times, and also the changing of certain manufacturers. Prototypes are going to be expensive and the cost of diverse material, with Chinese factories being labeled as “semi-couture”, could be another expensive hurdle. Lastly, an appeal in the Chinese market is going to take a lot of research for their seasonal clothing. Without a design director, someone is going to have to step up and motivate the design staff to think outside the box.
Louis Vuitton Moet Hennessy, a luxury goods provider is looking to expand their brand dominance in Asia. In order to expand successfully LVMH must evaluate challenges that may arise and get in the way of their successful expansion. In the Asian market, LVMH must deal with political and cultural uncertainties, the threat of counterfeit products, and the increased cost of products in Asia compared to France.
This is a big deal actually, going internationally and being the market leader in the home country at the same time. They have adopted a great strategy and supported it with advertisements. For Asian market focusing on Asian women, their skin and face characteristics and also they have analyzed the climate carefully and designed products accordingly so that they won’t go down early. Also keeping low prices for Asian market can be important, due to economic conditions and customer preferences, since they are price sensitive.
LVMH’s brand portfolio is a catalogue of the finest things money can buy. Arnault said, “A Star brand is timeless, modern, fast growing and highly profitable.”[iii] LVMH has positioned its brands strongly in the luxury segment offering more than 50 different brands under their five core competencies. LVMH has been successful through all of their various brands in their portfolio giving them each their independence and creativity. “LVMH is well known for leaving much operational and marketing freedom to the various brands it owns.”[iv] “LVMH has done an excellent job of brand positioning, says Ben Cavender, senior analyst at China Market Research Group. It has succeeded in securing the particularly enviable position of gaining a following among the top percentage of China’s wealthy. As the financial crisis stretches on, LVMH customers in China still have money to spend.[v] “LVMH’s brand imaging, which relies heavily on pushing its European heritage, is so successful that it has benefited other brands by proxy, says Paul French, one of the founders of Access Asia, a group dedicated to tracking regional consumer and marketing trends. “Everyone hangs on the coattails of Louis Vuitton’s brand imaging in China.”[vi]