Topshop and Balenciaga Marketing Mix Comparison

TOPSHOP AND BALENCIAGA REPORT CATHERINE BELCHER DESN 1355 201221278

Abstract Introduction

CONTENTS

Literature Review Methodology Topshop • • • •

Product Price Place Promotion

Balenciaga • • • •

Product Price Place Promotion

Discussion Conclusion / Recommendations References Illustrations Appendices

ABSTRACT INTRODUCTION

This report has been conducted to evaluate the design and marketing mix strategies (product, price, place and promotion) for my chosen retailers, which are positioned at different market levels. Through my thorough primary and secondary research and the analysis of two similar products, I am able to highlight the different ways a brand creates their own specific marketing mix.

LITERATURE REVIEW

My main ambitions for this report were to investigate and interpret the applications of the marketing mix by two different retailers from different market levels. Through primary and secondary research, I found that each brand had a different specific marketing strategy depending on their market positioning and the marketing mix.

This report will also evaluate 2 products sold by each retailer with similar characteristics, which will allow me to highlight the differences of each brand.

Using all elements of the marketing mix are vital for a brand’s success, therefore, identifying a brands strengths and weaknesses through a SWOT and PESTLE Analysis will be able to highlight potential flaws in their marketing strategy.

Marketing: “Marketing is the social process by which companies create value for customers and build a strong customer relationship in order to capture value from the customer in return” (Kotler and Armstrong 2010). Additionally, marketing allows greater loyalty from stakeholders and provides the ability to establish partnerships within the community (Han 2018).

Product: A product is “the tangible offer that a business sells to make money” (Jackson and Shaw 2009, p.87) yet it is also a “response to a customer need and/or a solution to an associated problem” (Jackson, T and Shaw, D, 2009, p.87) Price: The price is the “amount of money agreed between a seller and a buyer for the sale and purchase of a product or service. Selling price can refer to any transaction in a supply chain. Retail price refers to the price paid by a consumer” (Jackson, T and Shaw, D, 2009, p.343) Place: “is the term used by manufacturers to cover the means by which garments become available to consumers. This involves location, operations and channels of distribution and retailing” (Bohdanowicz, J and Clamp, L, 1994, pg.75)

LITERATURE REVIEW

Promotion: “from a marketing perspective, fashion promotion includes the traditional tools of advertising, PR, sales promotion, personal selling, direct marketing and visual merchandising”. (Jackson, T and Shaw, D, 2009, pg. 156 Multi-channel Marketing: “refers to the practice of interacting with customers using a combination of indirect and direct communication channels” (SAS 2019). For example, websites, email, mobile etc. This is important to disseminate brands messages in as many ways as possible to reach your target market.

The Total Product Concept: “provides businesses with a method for structuring their product portfolio to target various customer segments. This enables them to analyse product and customer profitability in a structured way” (CGMA, no date).

PESTLE analysis: “a framework or tool used by marketers to analyse and monitor the macro-environmental factors that have an impact on an organisation (Han 2019). The result of a PESTLE is to construct a SWOT Analysis.

METHODOLOGY

SWOT Analysis: “a planning tool used to understand the strengths, weaknesses, opportunities and threats involved in a business” (Han 2019).

In order to support my report, I needed to collect both qualitative and quantitative data through extensive research. Alongside my literature review, I conducted primary research through store observations sourcing my chosen product first hand and help me to understand each brand’s marketing mix. To support this research, I carried out further secondary research through online websites, journals and articles, in addition to books and newspaper articles. I wanted to ensure I had a wide variety of sources in order to gain a better understanding of the marketing mix for both my brands

CHOSEN DESIGNERS High Street / Middle Market Luxury High End Market

BALENCIAGA, TRIPLE S TRAINERS

TOPSHOP, CIARA CHUNKY TRAINERS

MAR KET ING

MIX

TOPSHOP

Topshop is known as a “global fashion and beauty destination that connects

PRODUCT

women with the new and the next in style and culture” (Arcadia 2019).

Originally from London, “a city famed for fashion experimentation and culturally defining street style movements” (Arcadia 2019). Topshop is a part of the Arcadia Group from which they have their regular line, as well as premium lines such as ‘Boutique’, and ‘Topshop Unique’. In addition to this, Topshop also offer brands within Topshop such as ‘House of CB’ and ‘Miss Selfridge’.

Their trendy style is highlighted in figure … which accommodates to their diverse audience.

The chosen product – ‘Topshop CIARA Chunky Trainers’ – is available in a range of colours with the most popular colour being a classic white. Along with this, the materials used are 65% Leather, 20% Textile, 15% Polyurethane. These fabrics are typical of middle market trainers which is reflected in the price retailing at £39.00. This sports shape incorporates a chunky sole also known as a ‘dad’ trainer. This adds a 90s feel to the product which is a popular trend with all different products throughout Topshop.

More key attributes to the trainers include a multitude of textures which can only be specially cleaned. This further justifies the price of the trainers as a middle market retailer and reinforces their idea of ‘fast fashion’ by offering their customers current trends at a reasonable price. The shoe itself is seen as a dupe for the Balenciaga Triple S Trainers which I will analyse further later in the report.

As price is a competitive tool within high street brands, one could say Topshop’s prices are premium compared to competitors such as H&M or River Island. Although in comparison to luxury brands, many Topshop customers would agree that the prices are justifiable. This adds value to the product itself, in addition to the types of materials used reflects the quality of the trainers.

It is said that high street brands are becoming more expensive as people in their 40s are willing to enter shops targeting young adults which drives up their prices (Stout 2015). As Topshop’s target customers are mainly students, they will be price-conscious due to not having much disposable income.

PRICE

As this style of shoe is very popular, many people have bought this shoe as it is only £39.00 compared to the Balenciaga’s which are £615.

Therefore, Topshop has a customer based pricing strategy due to setting their prices according to what their customers are willing to pay.

Topshop stores are more commonly located in the high streets of town and city centres in addition to shopping centres. In the UK alone, they have over 300 stores and over 200 internationally (Topshop 2019). As Topshop is a part of the Arcadia Group, they have concessions in Outfit stores which are normally located in retail parks, as well as Selfridges and John Lewis. In addition to physical stores, their website and social media, including their free app allows their target market to observe and purchase all their clothes and accessories they have to offer at any time.

From where I made my own store observations, the Topshop store is situated in the Trinity Shopping Centre. The layout offers customers more space to browse by spreading out the clothes around the store and splitting up different product lines, such as, petite and tall as well as one large area just for all shoes. This makes it easy for the customer to make their way around

PLACE

the store as they can see what is situated where relatively easy.

PLACE

For their distribution strategy, on the Arcadia website, they claim to use three UK distribution centres where each item is processed and sent out to each outlet (Arcadia 2019).

This establishes that Topshop themselves do not have control over the production of their own garments but share with all other retailers as part of the Arcadia group. However, based on the large amount of people employed and the effort put into the relationships between them reflects how Topshop as a brand has good quality products.

PROMOTION

As Topshop is popular with students due to their reasonable low prices, the main promotion that they do as a brand is offer 10% student discount online and instore. By collaborating with ‘UNiDAYS’ app, which is only available for students further helps reach their target market. In addition to this, the Topshop app itself targets their customers by sending notifications with higher percentage discounts.

Topshop mainly advertise on social media which makes it easier to interact with customers and find out their needs and wants. On Instagram, Topshop have 9.7million followers from which they regularly upload the latest looks as well as celebrities and fashion bloggers. They encourage their followers to tag @topshop and #TopshopStyle in their photos which spreads their promotion through word of mouth. This is obviously a good way to promote their brand as the hashtag has nearly 400,000 posts.

MAR KET ING

MIX

BAL ENCIAGA

Balenciaga is known for bring “one of the most influential forces in fashion” (Fashionbi, no date). It was founded in 1919 by Cristobal Balenciaga, in Spain now owned by the group Kering who own many luxury brands. Balenciaga as a brand is known for creating iconic and radical designs for his garments in the Haute Couture style (V&A 2019). It is said that the luxury market as a whole is evolving and that sales in the “US market specifically have increased by 50%” mainly from expensive clothing and footwear. In addition to this, Balenciaga are one of the main

PRODUCT

brands that have dominated the market (Hanbury 2019) in recent years.

The chosen product – ‘Triple S Trainers’ – is available in a range of colours and materials, the most popular being a classic white or black. The trainers have an “oversized multimaterial” and “quilted effect” (Balenciaga 2019a). The materials used are 55% Polyester, 25% Calfskin, 15% Lambskin and 5% Lycra. The choice of fabrics reflects the luxurious price tag of £615, this is reinforced with the calfskin and lambskin which are both very strong, thick and durable materials. When I did my store observations, I found that the show was heavily weighted, portraying the shoe is of high quality and gives it a luxurious value. The idea of the shoe having a “complex 3layered sole”, further reinforces the quality of the trainers due to the large amounts of detail about how the shoe is made for example “embroidered logo”. Unlike the Topshop chunky trainer, it is evident that the Balenciaga trainers have been specially crafted, therefore emphasising the difference between high street and luxury brands.

As Balenciaga is a luxury/haute couture brand, consumers know the extent of the prices for their individual products. Balenciaga’s target consumers would typically be least price-sensitive compared to high street brand such as Topshop, therefore, they would typically have a higher level of disposable income. This makes Balenciaga’s products fairly price inelastic which means the price will not affect the demand of the products (Jackson and Shaw 2009, p.126), compared to a high street brand where their consumers desire a reasonable price. Because of this, Balenciaga can be seen to adopt customer-based pricing strategy, this means that they set their high prices based on what their target market are

PRICE

willing to pay for the product in addition to how they value that certain product. For example, many of Balenciaga’s consumers will agree that £615 for the Triple S Trainers are a justifiable price due to the quality of the materials used, as well as the consumer buying into the actual name of the brand. Therefore, Balenciaga also have a premium pricing strategy based on charging high prices to make the products look more desirable to consumers in addition to the prestigious label they are buying into.

Balenciaga operates in 28 different countries worldwide (Balenciaga 2019b) with the majority of their stores located in luxury retail areas. For example, Balenciaga is situated in Harvey Nichols in Leeds which is located near to Victoria Arcade.

This is where all the other luxury brands are located, therefore portrays who Balenciaga’s competitors are and how all these retailers a targeting a similar demographic. It is said that each boutique is “based on climate and landscape, and fiction and abstraction” (Purple Diary 2012), furthermore, each boutique is adapted to the city’s “local context and history” (Purple Diary 2012).

When doing store observations in Harvey Nichols, Leeds, I found that the clothes and shoes were separated in store. With small sign showing certain brands, I found it hard to find the Triple S Trainers in store as they were situated with other shoes from other brands. Although as this was not in a Balenciaga store, the consumer is surrounded by other brands from the same Kering group.

PLACE

Moreover, Balenciaga adopts an exclusive distribution strategy as there are only 6 stores and authorised retailers such as Selfridges in London. This means that customers may need to travel further to reach certain stores. Therefore, this adds exclusivity and added value to the products sold in these stores which makes them more desirable to the consumer. Consequently, Balenciaga has much more control over their distribution as a luxury retail brand rather than a high street/mass market brand such as Topshop.

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PROMOTION

In addition to their physical stores adapting to their consumers in different cities, Balenciaga has implemented a multi-channel marketing technique by communicating and interacting with their customers on different communication channels.

For example, Balenciaga have their own website, Facebook, Instagram and twitter page. This helps the brand to remain exclusive as they do not advertise on TV or billboards.

Although Balenciaga doesn’t offer any discounts, retailers where Balenciaga are sold such as Harvey Nichols provide gift cards and special reward cards which can be used instore (Harvey Nichols 2019).

Compared to a high street brand, Balenciaga keeps their exclusivity in this way and adds value by offering free shipping when purchasing online and adding a gift wrap (Balenciaga 2019c). Their ‘Client Service’ provides the opportunity to communicate with customers by offering frequently asked questions as well as a chance to email about any concerns a customer may have (Balenciaga 2019c). For their FW1617 Catwalk show, Balenciaga created a free app to watch this as a live stream, however from a Front Row perspective using VR technology, creating customer

Balenciaga also takes part in traditional advertising through magazines such as Vogue and Harper’s Bazaar, in addition to their online sites which promote their new collections. Evidentially, this maximises their editorial coverage. Celebrities such as Taylor Swift have been seen wearing their clothing, this level of celebrity endorsement increase the desire for these products and boosts the brands image by lifting the brands status and credibility. The Triple S Trainers have already been promoted due to their increasing popularity among ‘young millennial shoppers’ (Reuters 2018) due to the avant garde style, therefore the trainers have been promoted through word of mouth.

PROMOTION

By utilising all these different platforms, it increases their brand presence through the dissemination of information and increases their chance of getting their message to their target market at different stages of the buying process.

DISCUSSION CONCLUSION / RECOMMENDATIONS

The main purpose of this report was to analyse and evaluate the marketing mix of two retail brands from different market levels. When looking at my results, I found that the product and price were two of the most important elements of the marketing mix, however, if a brand wants to be successful, they should focus on all the elements equally. I can conclude that there are some significant differences between marketing mixes from different market levels, however, looking at promotion, both Topshop and Balenciaga have similar ways to promote to their consumers.

However, as my report only focuses on two retail brands, it is hard to talk about the whole fashion industry as a whole. However, I feel that my results can reflect some of the industry, for example, lower/mass market retailers will always have lower prices and lower quality products compared to luxury market retailers

To conclude, my results have shown that, the similarities and differences of the trainers was due to the intangible attributes. I have learnt that each retailers marketing mix is specific for their certain brand and target market. In addition to this, the higher the market positioning of a brand, the higher the quality of all elements of the marketing mix.

When looking at my SWOT and PESTLE analysis, my main recommendations for each brand are: Topshop • More traditional advertising due to only reaching customers mainly online, would potentially reach a larger demographic from advertising in magazines • Try and improve instore service, potentially could add more staff instore to provide a better customer service and try and diminish chaos.

Balenciaga • Product a smartphone app, therefore products are more accessible to consumers • More stores could be opened so that customers wouldn’t have to travel as far, however this could potentially damage exclusivity

PESTLE ANALYSIS Political

Economic

Brexit (taxation and exportation)

Increase in disposable income

Anti-trust issues causing government to look at how data is stored and shared

Exchange rate of the Pound is £1 = €1.16 which means exports are more expensive Low inflation

Social Changing role of women in the workplace Longer life expectancy

Technological Increasing use of social media Increase of ecommerce

Legal Compliance with laws such as modern slavery act

Environmental Climate change Global warming Rise in ethically conscious shoppers

Working conditions improving overtime

Ethical sourcing pushes up the price of goods

Low interest Baby boomers – becoming more affluent

SWOT ANALYSIS Strengths • • • • • •

Easily accessible stores Well known brand in multiple countries Strong social media presence Catering to multiple demographics Student discount Strong visual displays

Weaknesses •

• •

Opportunities • •

More traditional advertising Improvement of instore service e.g. more staff to increase store productivity

High street and shopping malls often correlate to a chaotic environment Crowded stores Not many sales associates on hand to help around store

Threats • • •

High street competitors (Zara) High street stores with cheaper prices Not as much advertising as other competitors

Strengths • • • • • •

Easily accessible stores Well known brand in multiple countries Strong social media presence Catering to multiple demographics Student discount Strong visual displays

Weaknesses •

• •

Opportunities • •

More traditional advertising Improvement of instore service e.g. more staff to increase store productivity

High street and shopping malls often correlate to a chaotic environment Crowded stores Not many sales associates on hand to help around store

Threats • • •

High street competitors (Zara) High street stores with cheaper prices Not as much advertising as other competitors

Words: 3,150

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Appendices

Appendix A

Appendix B – social media presence https://www.retailgazette.co.uk/blog/2017/08/topshop-asos-top-uks-influential-social-media-list/