Tod's Marketing Strategy Audit Report

2021

INDIVIDUAL REPORT: STRATEGIC BRAND AUDIT PREPARED BY

GIULIA AMEDEO 21446004

UNIVERSITY OF WEST LONDON

www.https://www.uwl.ac.uk

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TABLE OF CONTENTS List of Images

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List of Figures

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List of Tables

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1. Introduction

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2. Company History

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3. Company Mission

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4. Company Values

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5. Company Key Strategies

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6. Company’s Financial Performance

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7. Products and Current Positioning

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8. Micro Environment using Porter’s Five Analysis

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9. Macro Environment using PEST Analysis

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10. Marketing Communication Activities

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11. Future Challenges and Opportunities

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12. Conclusions and Recommendations

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12. Bibliography

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LIST OF IMAGES Image Image Image Image Image Image Image Image Image Image Image Image

1. Roger Vivier 2021 Collection 2. Tod's fall Fashion Show 2020 Ready to Wear 3. Roger Vivier Présentation Fall Fashion Show 2020 4. Fay fall Fashion Show 2020 Ready To Wear 5. TOD’s Celebrates Their Illustrious Craftsmanship and Italian Legacy 6. 50 Most Powerful Families 7. Tod's Mission, Values, and Ethics 8. Tod's Mission, Values, and Ethics 9. Tod’s Studios to open in Italy’s design capital 10. TOD’s Celebrates Their Illustrious Craftsmanship and Italian Legacy 11. TOD’s Celebrates Their Illustrious Craftsmanship and Italian Legacy 12. Tod's Group Headquarters

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LIST OF FIGURES Figure 1. Key consolidated financial figures Figure 2. Tod’s Group Brands Products Positioning Figure 3. Porter’s Five Forces in Luxury Goods Sector

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LIST OF TABLES Table 1. Tod’s Group Porter’s Five Analysis Table 2. PEST Analysis Table 3. SWOT Analysis

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INTRODUCTIONS This paper analysed Tods Group strategic brand audit. The report reviewed the company's history, acquainted with its values, mission, and economic positioning.

For the micro and macro environment, the paper used PEST and Porter's Five analysis.

The report also reviewed the company's marketing communications, highlighting the company's successful use of all possible marketing and advertising tools. The last sector of the paper provided future perspectives and downturns based on the company's current actions and objectives.

The paper concluded that the company positions itself as a highly high-quality luxury shoes manufacturer. Still, due to the fast-paced world of technology, the company should pay more attention to attracting the younger generation through social media.

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COMPANY HISTORY Tod's Group was born in Italy, with pioneer Filippo Della Valle, who made handmade shoes in his basement in 1920s (Tod’s group, 2021). His passion grew into a successful local business.

Filippo’s grandson Diego Della Valle together with father Dorino Della Valle, seeing loyal local customers flock to buy shoes from the basement, decided to expand the business on a larger scale.

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As early as the 1970s, production expanded so much that the company began to make handmade shoes for American Department Stores. During the hugely successful two decades, Diego, this time together with his brother Andrea Della Valle, was able to bring Hogan and Fay stores to the worldwide market. The company bought out a Roger Vivier license in the mid1990s, which is now also running its business prosperously. Diego's ambition is to expand his business globally; therefore the company constantly introduces groundbreaking marketing strategies.

Maintaining the quality of the products, the historical design of the shoes, and the close connection with the customers, became the secret of the company's success (Tod’s Group, 2021). At present, Tod's Group is known worldwide, and the chain of stores and franchises has expanded to Europe, Asia, Middle East, the US and Brazil.

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COMPANY MISSION According to the company, in the latest annual report (2021), the mission of the Tod’s Group is to provide customers with high-quality handmade products made by professional craftsmen. Maintaining the elegance and quality of the products and the authenticity and production traction are critical features included in the company’s mission.

Tod’s Group seeks continuity, passing on its values from generation to generation, as it has

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done since the 1920s. The company’s focus goes to caring for people, the environment and cultural heritage.

COMPANY VALUES Tod's Group values are divided into three parts; tradition, ethics and solidarity (Tod’s Group, 2021). The tradition is associated with a century of heritage and innovation based on passion and creativity and a desire to spread the popularity of 'Made in Italy' products.

Ethical values focus on maintaining honesty and transparency with all stakeholders. And finally, solidarity focuses on the Italian spirit

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and commitment to the community. With its importance, the company seeks to succeed financially and pay tribute to the public.

Having influence, the company helps to strengthen the image of Italy. Also, the company aims to help vulnerable people, such as in 2016, the company began building a factory named Arquata del Tronto in the region of Le Marche to help people affected by the earthquake in August of that year to have a job and recover (Italia Living, 2016). The company is constantly strengthening its values by proving it in action and by providing sustainability reports.

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COMPANY'S KEY STRATEGIES According to the Tod’s Group 2020 annual

That is 7.4% higher compared to 2019 (Tod’s

report, the company's main strategies are

Group Financial Report, 2021). However,

focused on business development and

consolidated sales in 2020 decreased by

expansion nationally and internationally. To

30.4% compared to the previous year (Tod’s

achieve this, the company has set the

Group Financial Report, 2021). In 2019, the

following goals:

company registered 234 directly-owned stores

Maintain and continue to offer the highest

and 114 franchises (Sabanoglu, 2021).

quality products.

Provide training and personal development plans for the company’s ambassadors.

Introduce new modern products to the market to expand the potential customer base.

Expand range and control distribution networks.

Ensure that activities are conducted as equitably as possible internationally, following ethical standards.

Maintain and expand sustainability ideas.

COMPANY’S FINANCIAL PERFORMANCE Due to the financial crisis caused by the pandemic in 2020, we can see a drop in the annual profit margin in Tod's Group 2020 annual report. For the same reason, the company took out a credit of €450 million in March 2020 to secure a financial reserve for the unexpected future (Tod's Group Financial Report, 2021).

As we can see from Figure 1, 81.5% of sales in 2020 came from shoes. Most sales originated from Tod's brand. Looking at the regions, we see that Europe, including Italy, accounts for 49.2% of total revenue. Yet, China, the first country affected by the pandemic, picked up enormously and brought 30.8% of the profit.

Figure 1. Key consolidated financial figures (Tod’s Group Financial Report, 2021)

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PRODUCTS AND CURRENT POSITIONING Tod's Group production structure based on

Tod's brand stands at an aspirational level due

the complete management of the production

to its elegant, classic stroke and high quality

process, from the creation, production and

with mid-high pricing. Hogan and Fay remain

marketing of design collections to their

high quality at the affordable pricing level. In

distribution (Tod’s Group, 2015). The

this way, the group ensures touching a

approach ensures the high luxury market

different demographic clientele.

position and prestige of brands. The most developed items are shoes, handbags, wallets and belts. Other leather goods, accessories and clothing are produced less frequently but

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are placed on the market.

The company uses its product combinations in factories (including 6 for footwear and 2 for other leather products) and a range of third-party workshops to create the Tod’s and Hogan collections (Dun & Bradstreet, 2019).

The development of the Fay and Rogier Vivier collections entrusted to third-party manufacturers.

Tod’s Group's four brands are positioned in three dimensions. As shown in Figure 2, Roger Vivier is classified as an ultraluxurious brand with high pricing.

Figure 2. Tod’s Group Brands Products Positioning (Tod’s Group, 2015)

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MICRO ENVIRONMENT USING PORTER’S FIVE ANALYSIS In Figure 3, we see Porter’s five-force map in the luxury goods sector (Capo, 2014), which we will apply and explain in detail in Table 2.

Figure 3. Porter’s Five Forces in Luxury Goods Sector (Cupa, 2014)

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TOD'S GROUP PORTER'S FIVE ANALYSIS

Threat of New Entry.

LOW

According to Statista (2021), luxury goods globally occupy only 7%; 51.2% of the market shares are shared by the Top 10 best luxury brands (Deloitte, 2020). Therefore, entering the market is challenging due to profoundly costly marketing expenses and maintenance of high product quality.

Threat of Substitutes.

LOW

With its four brands, the company covers a prominent aspect of differential shoes, from sneakers, classic to modern shaped sandals or high heels.

Therefore, companies' product alternatives come from the price-quality ratio. Image 3 For instance, higher prices but similar quality from Tod's competitors Ferragamo shoes, or lower prices high quality from Harrys of London. Still, Tod's Group has risen to high-quality standards with affordable prices in the luxury goods sector, making it challenging to find substitute products.

Bargaining Power of Supplier.

LOW

As mentioned before, there are only 7% of luxury goods suppliers globally (Statista, 2021), resulting in price similarity in the sector. However, Tod's Group produces most of its products in-house in Italy, enabling it to compete with competitors and improve quality independently of other suppliers (Tods Group, 2021).

Bargaining Power of Buyer.

MEDIUM

The company has product orientation more than market orientation. Hence, the firm has accumulated a loyal regular customer base that buys goods despite their high price. Therefore, the trading power decreases. However, Image 4 buyers run towards a diversity of products (Sulejmanović, 2020). As a result, the company constantly has to introduce new product differentiation to the market.

Competitive Rivalry.

MEDIUM

Tod's Group's competitors are among the leading luxury footwear suppliers worldwide. According to Yahoo Finance (2021), the group's main competitors in market share distribution are Salvatore Ferragamo, Brunello Cucinelli S.p.A, Christian Louboutin, Manolo Blahnik, Bottega Veneta. Companies are very well known in the luxury footwear sector and intensively offer new collections every season to keep customers' attention. This intensity forces the Tod's Group to keep up and constantly compete and look for new ideas, which makes the competitive rivalry medium.

Table 1. Tod’s Group Porter’s Five Analysis created by the author

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MACRO ENVIRONMENT USING PEST ANALYSIS

Political

1. In 2020, political interference caused by COVID-19 posed significant political risks to emerging countries (AON, 2021). Tod’s Group currently has stores in more than 20 developing countries, including Russia, Turkey, Brazil, Check Republic, Thailand, Malaysia, Philippines, Kuwait, and Qatar.

2. Politically motivated trade restrictions in 2020 didn't let Tod's Group direct stores operate correctly.

3. Significant risks also come from existing different levels of corruption, especially from emerging countries.

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Economical

Social

Technological

1. According to Statista (2020), Asia is considered the fastest recovering continent in the post-pandemic period, followed by Europe and North America. According to researchers, the luxury goods market is expected to grow by 103 billion. USD by 2025, and CAGR will reach 6.4% (Statista, 2020).

1. A notable increase in luxury purchases between the younger generation of millennials and the Gen Z generation (Statista, 2025).

2. Sustainability demand growth (Danziger, 2021) 1. Growth in shopping through e-commerce or with a personal shopper through social technologies, during the pandemic in the luxury sector (Sulejmanović, 2020).

Table 2. PEST Analysis created by the author

As we can see from the PEST analysis in

Image 4 in its technological infrastructure and hired

Table 1, the high risk for Tod's Group comes

people to help make the digital transition

from the pandemic in 2020. Due to political

more efficient, both with customers and the

factors, the group has developed a Control

company (Tod's Group, 2021). Still,

Model and an Anti-corruption Policy in

according to Statista (2020), while significant

stores worldwide, namely because of possible

investments in online sales are necessary, the

illegal actions in any country (Tod's Group

importance of the physical store continues to

Financial Report, 2021). Furthermore, during

grow, making it essential to maintain

the pandemic restrictions and lockdowns in

balance.

most countries, the company did not bring all

Finally, due to the social factors mentioned

products to market to protect the brand and

in Table 1, the company invests heavily in

financial position.

sustainability. The company promotes a

Due to e-commerce and personal shopping

good, respectful atmosphere in the workplace

growth, the company has recently invested

and care for the environment (Tod's Group, 2021).

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MARKETING COMMUNICATION ACTIVITIES Advertising. Tod's Group brands use almost all

Tod's Group also publishes its regular articles

advertising opportunities in video and photo

on the original websites of each brand, where

format. That includes billboard and transits,

the company often talks about the projects of

posts, online and TV commercials, paper and

that brand, the latest fashion trends, upcoming

electronic newspapers, blogs, articles, direct

collections.

emails, magazines.

Direct Marketing. The company developed its

Sales Promotion. The company usually holds

own CRM system and constantly sends thank-

two sales promotions seasons per year for its

you letters after shopping, discounts, new

brands in winter and summer. The winter

collection publications to its loyal customers

season takes place in November-January,

(Tods Sloane Apartment, 2020).

summer - from June to July. Still, according to Statista (2021), due to the coronavirus in 2020, economic growth is expected to slow further by 2% this year. As a result, the fashion industry can expect another drop in sales. Therefore, the company had to extend its summer sales until September in 2020 and did not release half of its new collection in 2021 (Tod's Sloane Apartment, 2021).

Events and Experiences. In presenting its capsule collections, new store openings, the company always strives to hold events involving journalists and public relations representatives. Every year before each new release of the design collection, all brands carry a fashion show. They try to give their EIP (extremely important person) free invitations to

Interactive Marketing. Tod’s Group actively communicates with its customers through innovative technology and social media. They engage customers as part of the process through social media. Also, communication with brand ambassadors is not limited to direct sales. Sales Advisors are constantly communicating with customers via email, phone, or on platforms like WhatsApp. Personal Selling. One of the company's strengths is the service and professionalism of brand ambassadors. Due to the substantial, loyal customer base, the company must maintain the highest level of service. Therefore, the firm organises various training every few months (Tod’s Sloane Apartment, 2021). For instance,

create an experience.

ITALIA training is available for new entry

PR and Publicity. The company makes

sales procedure. Neuro-sales training is for

excellent use of public relations to expand and

experienced salespeople to help them

attract a diverse clientele and promote its four

understand more about the customer, actions,

brands. The corporation does this through an

and feelings. The company also tries to

extensive and diverse written, electronic and

motivate its salespeople; an Aces program has

television press. Here’s Tod’s publishes articles

been created, capturing which salesperson is the

about a royal family member, Kate Middleton,

best in its continent and region. Every six

choosing to wear Tod’s high heels. And back in

months, the top ten sellers who earn the most

2017, to attract the younger generation, the

profit (calculated in euros after taxes) are

Hogan brand included the supermodel Bella

awarded a commission and a five-day business

Hadid wearing popular brand sneakers

trip.

(Almassi, 2017).

brand ambassadors. They learn from A to Z

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FUTURE CHALLENGES AND OPPORTUNITIES

Strenghts

1. Sales consultant are trained to touch more human, personalised communication with the customer to build a loyal relationship with the customer.

2. The Group had taken appropriate action to reduce costs due to the financial crisis caused by the pandemic (Tods Group Financial Report, 2021).

3. The company increases investment in the Omnichannel platform developed by the Tod's Group and connects the two commercial and plantation interconnections (Tod’s Group, 2021).

4. The company is managed based on a matrix structure (Tod’s Group, 2021).

5. Tod's Group has included the famous young generation influencer, fashion designer, Image 3 entrepreneur Chiara Ferragni on the board of the director (CE Noticias Financieras, 2021).

Weaknesses

1. Computers and the website get stuck and run slowly (Tod’s Sloane Apartment, 2020).

2. Many sales consultants do not have their customer database.

3. Loss of employees during a pandemic.

4. Due to matrix structure, the firm faces different management in different regions.

Opportunities

1. In building trust and continuity with the customers can guide the salesperson to build a loyal clientele for the brand (Morgan & Hunt, 1994).

2. The cost-cutting measures taken have had the effect of mitigating the crisis consequences.

3. The development of Omnichannel will help the Group offer innovative services and direct communication on the Group's distribution sites with customers and stores around the world. In this way, the company ensures to strengthen the relationship with the customer further.

4. The matrix structure increases productivity; managers can be involved in the day-to-day Image 4 tasks of projects, making it easier for them to solve problems and regulate communication with their subordinates, which in the long run can increase trust and independences (Stuckenbruck, L, 2019).

5. By including Chiara Ferragni on the board of directors, the company has excellent potential to expand its clientele range and grab the interest of the younger generation of Gen Z.

Threats

1. The crisis of 2020 is slowing down the profit and financial plans of the Tod's Group and could become a long journey towards recovery.

2. The matrix structure management official policies are easy to master, and one team in a unit can harm another and compete for resources. Each department has a unique purpose, making it difficult to manage. Therefore, many employees can leave due to stress and management power (Stuckenbruck, L, 2019).

3. The recent downturn and poor global economic performance will reduce people's purchasing power.

4. Due to website crashes and slowness, customers may lose interest and patience.

Table 3. Tod’s Group SWOT Analysis created by the author

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CONCLUSIONS AND RECOMMENDATIONS We can see that the company has built strong brands, which remained quite strong even during the crisis. Yet, the pandemic situation in 2020 has turned many corporation objectives and forced them to focus on survival rather than growth.

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However, the company’s plans, continuing the training of brand ambassadors, growing sustainability, accepting the younger generation celebrity Chiara Ferragni onboard, and investing in innovative technology, shows extraordinary potential for the future.

Still, investment in intelligent technologies is too low, as the technologies themselves are lessening and slow. In this way, the firm lag behind the speed of the modern world.

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