A
Democratic Move In Luxury Industry
—Jimmy
Choo’s Collaboration Strategy
1.
Introduction:
Democratization
of the luxury brands has been regarded as a most great successful innovative
strategy for the previous market practice. Therefore it has two important
implications for this special industry: on one hand, more and more the fashion-conscious
youth have an access to the luxury world. On the other hand, it will
continuously commit to cultivating the new luxury generation and prospective
consumers. As a result, the new generation will help to create more market
share for one specific luxury brand. This paper will start with an analysis of
reason and operation that drive this great innovation shift. Then it will
explore and mainly focus on the market issue and its influences on Jimmy Choo. And ultimately the paper
will illustrate this democratic move and its impact on luxury brand extension strategy
for Jimmy Choo. Shifting boundary said: “advancing technology creates improved
technological tools for collaboration, which in turn leads to greater
innovation” (Shifting Boundary, 2014).
2.
How and why to conduct the
shifts:
2.1 Globalization
and technological advances lead to the democratization of luxury brands.
Traditionally,
luxury goods have always associated with wealth, exclusive and power. As a
result, the corresponding obsolete strategies and decisions were made on the
basis of intuition and sometimes even on bias.
However,
many events and phenomenon in recent history have changed the landscape of luxury
industry. New changes such as a mass emergent wealthy people, rapid growth of
digital, information and communication technology and the phenomenon of
trading-up and trading-down have led to a more favorable environment for luxury
consumption. In addition, high entry barriers “guarded for centuries have been
lowered due to advancement in business and management practices, driven by
globalization and the Internet” ('Management of a luxury brand: dimensions and
a sub-variables from a case study of LVMH',
2014). During this time, the industry also experienced a significant increase
in luxury demand among aspirational consumers. Like Mike Sharples said: “the technology and the learning are
developing together, and that co-evolution of learning and technology is really
important for us to understand and to develop”(Knight, 2011).
Therefor,
there are direct implications for how a luxury brand must be managed and
marketed to consumers. This “luxury society” increased financial and managerial
pressure to create relevancy to new consumer demographics and spurred the
emergence of new luxury brands. Some traditional luxury companies expanded
their product offerings vertically by providing their brand portfolios, while
some explore the new market by collaborating with the non-luxury brands.
2.2 How
has the democratization of luxury brands relate to the brand-extension strategy
as innovation practices
The
luxury brand is facing a new world and new industry landscape demand companies
in this industry reassessing their own strategy to capture this new change. Like
Keeley Wilson said: “managers must anticipate the possible toxic side of
organizational change and shelter their global teams as much as possible”
(Global Innovation Steps, 2014). Traditionally, those high-net customers,
who originally spent money during flush times on high-margin items. More
recently, however, many of these traditionally core consumers—especially those
in mature markets—began to question why they would like to purchase luxury
goods. This is perhaps one of the reasons that have lead luxury fashion brands
to reassess the way they approach these profitable segments.
From
Tiffany’s lower-margin brand to Jimmy Choo’s collection for H&M, luxury brands are without a
doubt finding an innovative way to expand their products category and to
establish and promote their image to a new market: the middle class. Developing
more democratic luxury lines emerged as a new brand extension strategy in the
early 2000s, many executives in luxury industry saw this as a profitable opportunity
and began to integrate this innovative strategy into their business extension
program. Said: “ at the creative center
of the framework is a management innovation process that orchestrates and
facilitates the interplay between a company’s external value drivers and its
internal organizational drivers. External value drivers include industry
foresight and customer insight, while internal organizational drivers include
core technologies and competencies” (A Framework for Strategic Innovation, 2014).
This
strategy seems to respond to an inevitable trend proactively. And luxury brands
have always targeted and design their products to middle-class consumers for a
very obvious reason: there is a market for them. Indeed, the increasingly
luxury profit come from rising middle class with more disposable income. What
is more, for this segment, at least 50 percent of their luxury expenditure is
spent one fashion apparel, leather goods and accessories. Therefore, it is
natural for luxury fashion companies to address their collections not only to
upper class but also to middle class consumers as well.
3.
How this strategy change
relate to the marketing issue on Jimmy Choo
3.1 Relate
how the new brand extension strategy to the new, evolving context
On
one hand, consumers today are having a different individual and special
preference and prioritizing personal feeling over social status symbol.
Consumers also exhibit a rational sense when paying the high margin products.
On the other hand, the new consumer group will form in 10 years later. So the
luxury brands have to cultivate their future consumer and give them a taste for
some luxury products, which they can afford when they are not rich enough. So
the brand extension strategy can be divided into three different ways:
sub-brands, collaboration and mixture of them. Apart from the origin luxury
products, some companies provide the new products line to cater for the new
consumer and gain the new market share. Meanwhile, the emergent markets such
China, India and South America become more and more important for the profit
growth. Like a paper referred: “ this
dimension considers everything a customer sees, hears, feels and otherwise
experiences while interacting with a company at all moments. To innovate here,
the company needs to rethink the interface between the organization and its
customers”(The 12 different ways for
companies to innovate, 2006). Luxury
has become more affordable through lower priced items, but still with a
significant premium over other products in their category. Like Chanel suit is out of reach for many people,
but its makeup products are affordable and have a sense of luxury.
3.2 What
does this particular brand extension strategy make sense for this particular
company, given this particular brand image, in this particular industry, in
this kind of global context
Fashion
collaborations among luxury and non-luxury brands are currently very popular
and very successful, as they may not only intrigue the existing luxury brand’s
clientele by offering something unexpected, but also attract fashion-conscious
customers who cannot afford the luxury brand’s offerings. Youth introduced to
the luxury brand because of similar collaborations today may become perspective
customers of the luxury brand in the future.
The
collaborations among luxury and non-luxury brands can be dangerous, as they may
disappoint the loyal clientele of the luxury brand and so damage the luxury
brand’s image. The extension would damage the brand’s perceived and established
good well image or the brand name by creating or providing the core consumers
with undesirable associations as a result this activity will alter or weaken
the existing brand associations.
Therefore,
to avoid the risk of harming or even damaging the brands’ image, the luxury brand
extension within the collaboration with a non-luxury brand has to keep the
luxury sense and the luxury brand’s criteria, qualities and values, while the
non-luxury collaborator has to be respectable and well reputed.
Jimmy Choo is a world famous shoemaker. The
brand has expanded into suit wear, handbags, accessories, eyewears and even
perfumes. A lot of famous stars wear Jimmy
Choo such as Nina Dobrev, Miranda Kerr, and Nichole Kidman. Jimmy Choo’s collaboration is a great
success as it enhances its well good image and desirability rather than making
damage to its brand. Such outcomes were achieved in Jimmy Choo brand’s collaboration with H&M a famous fast fashion producer from Sweden, Iconic British
company Hunter producing Wellington
boots normally priced at 60 a pair, and the collaboration with the iconic
sheepskin boots maker—UGG Australia
that attract our attention.
The
exclusive cooperation between Jimmy
Choo’s and H&M makes a glance
of the brand’s fascinating world available in H&M land store. Jimmy Choo will not only provide the
desirable shoes for the party accessory at H&M,
it will also offer the attractive clothes and glamorous accessories to match,
as well as dressing men from head to toe. Collaborations with high street
retailers allow this luxury brand to experience with products extension in a
less risky and less costly environment than their own retail networks. Jimmy Choo is experiencing in transition
and expands in new categories, as long as those categories are related to
shoes. Jimmy Choo is on a journey to
transcend a great product into lifestyle.
3.3 What
other alternative choices does this company have, why does it opt for this
strategy
This
giant shoe company also targets to enter into clothes, sunglasses, accessories
and even fragrance following a successful launch of a handbag line in 2003.
Therefore they don’t want Jimmy Choo
just to be known as a shoe brand. The company would like to share the risk,
lower the cost and make sustainable profit. However by providing the new
products line will result in many uncertainties, they will have a long way to
capture the new category’s consumers’ preference and may also damage the
established brand equity of the parent brand. Therefore, careful and controlled
brand collaboration with the other non-luxury brands is the best and most
effective way for Jimmy Choo to
further leverage their brand equity. This brand extension strategy can help Jimmy Choo in saving both money and
energy. Moreover, this strategy lowers the financial risk of launching a new
product
4. Why this brand extension strategy is treated
as innovative issue for Jimmy Choo
4.1 How
does collaboration and partnership injects diversity and integration of diverse
sources of know-how and market resources and enhance consumer impression and
awareness.
The
high street collaboration seems effective for Jimmy Choo to connect with a younger audience, who will become
important prospective future clients. Jimmy
Choo’s collaboration with H&M
coincided with the launch of its e-commerce platform and release of the
reasonably campaign video, which will result in bolstering social media
exposure. At the same time, by providing H&M
affordable products but also in a high premium, Jimmy Choo has more exposure to its future clients, enhance their
impression, and cultivate their band awareness. Therefore, apart from the
previous loyalty exclusive customers, they can get a new generation’s attention
that has a great passion for fashion.
4.2 How
are these practices innovation practices or innovation management practice
Under
the new global economic context, increasing middle class and new consumer
structure presentation, the luxury brand company has to react quickly enough to
capture their core clients’ preference and their potential influential
customers’ trend as well. Such as Jimmy
Choo choose the giant fashion brand H&M,
UGG, and Hunter for the brand
cooperation. And there are some critical criteria in selecting their partners.
Firstly, Jimmy Choo chooses the
well-reputed brand that will maintain the high standard products. Also it
favors the partners with a large stable audience who are the loyalty consumers
for this non-luxury brand. Secondly, they will negotiate with these brands to
offer the luxury sense products with both premium value but also the affordable
prices. Thirdly, both partners promote their new collaborate products through
the popular social media to get more exposure.
4.3 What
are the tradeoffs organizations are making when they engage in innovation or innovation management
practices?
Brand
extension strategy is created to market the new customers and to engage more
market share. So brands must decide which end of spectrum is their target and
tailor their collections to respond the need of their new audience to engage
and succeed. To keep a sustainable development, I suppose there is no tradeoff
the organization made. For the core customers, they are the influential and
high net income category. Therefore,
the quality and price may be the same. But for the new consumers, it may be
their first time to get to know the mysterious brand. As a result, the premium
quality and affordable price will keep their preference in the future.
4.4 What
are the opportunity costs? Why are they worth it? What is the risk and
uncertainty involved? What does innovation buy, new market? Resources?
Information? Know how? Risk reduction?
“Executive
vice president of marketing and advertising for Prada USA revealed that roughly 50% of the firm’s sales come from
just 5% of its customers, if Prada
engaged in this tactic to attract a lower price ticket audience, they could
risk disengaging the hugely influential 5% of its customers, which could have
an enormous impact on its bottom line” (Luxurysociety, 2014). There are no
universally agreed reasons illustrating why consumers buy luxury goods but it
contains a cornerstone that constitute an exclusive feature of the luxury
products—premium quality, longevity and craftsmanship. But when a luxury brand
attaches its name to a non-luxury product, is it defeating the purpose of its
existence or sending a confusing message to consumers as to what it stands for?
Like Robert C. Merton referred: “ the
crisis was also driven by structural interaction in the system that did not
involve the irrational, uninformed, or unethical behavior of individual”(Innovation
Risk, 2013).
However,
this innovation strategy makes Jimmy Choo
available in occupying the potential market, gaining profitable resources,
collecting useful information. If Jimmy Choo launches a new product which
uncertainty market, then gaining significant market presense becomes a time
consuming affair. That means establishment of a new brand market not only
demands time but also involves great expense. The uncertainty and risk that involved
in the brand extension strategy is whether non-luxury collaborator has a good
reputation and keeps the luxury brand’s criteria, quality and values.
Reference:
1. A
framework for strategic innonation. (2014) (1st ed.).
3. Knight, S. (2011). Emerging
Practice in a Digital Age. Joint
Information Systems Committee (JISC).
7. The
12 different ways for companies to innovate. (2014) (1st ed.).
8. Innovation Risk. (2013). Harvard Business Review.
