Hermès Product Development Project

Private Label Product DevelopmentFASM-310-A01 Team Presentations

Ashley Cornett, Marina Duarte Saadia, Laken Rae Howell, & Natalia Trimarchi | Product Development 2020

Company Overview Product Concept Trend Analysis Target Customer Detailed Competitive Review Time and Action Calendar Retail/Cost Forecasts and Financial Analysis Design Brief Tech Pack Production and Logistics Plan Creative Brief

Potential Regulatory and Intellectual Property Issues Quality Plan Desired Marketing Claims Testing Plan Packaging and Labeling Distribution and Product Lifecycle Plan Integrated Marketing Plan at Launch Integrated Marketing Plan for Longterm

Hermès Product Development | 2020

Agenda

Company Overview

Behind the Brand Hermès, is a French high fashion luxury goods manufacturer established in 1837. It specializes in leather, lifestyle accessories, home furnishings, perfumery, jewellery, watches and ready-towear. Its logo, since the 1950s, is of a Duc carriage with horse.

Mission Hermès is driven by its permanent entrepreneurial spirit and consistently high standards.

Hermès Product Development | 2020

History Thierry Hermès founded the company in 1837 as a harness workshop in Paris with his original intent was to serve the needs of European noblemen by providing saddles, bridles and other leather riding gear.

In the early 20th century, Thierry’s son Charles-Émile Hermès moved the company’s shop to 24 Rue Du Faubourg SaintHonore in Paris, where it remains to this very day and is the company’s global headquarters.

Gradually, the company’s product offerings expanded through generations. And in the 1920s, accessories and clothing were introduced into the portfolio with the first leather handbags entering the product line in 1922.

The brand’s travel bags introduced in 1925 were a global success. In the 1930s, Hermès introduced products that have now entered the archives of fashion as icons like the leather Sac à dépêches (renamed as the “Kelly bag” after Grace Kelly) in 1935 and the Hermès carrés (scarves) in 1937.

Hermès Product Development | 2020

History In the 1930s, the company entered the United States partnering with the Neiman Marcus department store in New York.

In the 1950s The company’s iconic duc-carriage-with-horse logo and signature orange boxes were introduced.

The “Birkin bag” was introduced in 1982, after a chance conversation between the then CEO Jean-Louis Dumas and actress and singer Jane Birkin on a flight from Paris to London.

In 1993, the company went public on the Paris Bourse and opened a significant amount of company-operated stores. As of 2014, Hermès operated 311 stores globally, out of which 207 were directly owned and operated by the company.

Hermès Product Development | 2020

Brand Positioning Hermes is best known for its craftsmanship and exclusivity, with handbags and saddlery being their staple products. Because of their dedication to craftsmanship, the brand has always shunned mass production, manufacturing lines, and outsourcing.

And according to current CEO Axel Dumas, the main strength of the Hermès brand is the love for craftsmanship.

Hermès Product Development | 2020

BUSINESS SIZE Share Price: 641.8 euros / + 0.91% Luxury goods market share: 2.4 %

Business Size Activity by Geographical Zone 2018

Number of Stores in the World 2018

Business Size

PRODUCT LINE Leather Goods- Saddlery : 50% of sales (3.414 million) Ready-to-Wear and Accessories: 23% of sales( 1.574 million) Silk and Textiles : 9% of sales ( 592 million) Other Hermés Métiers: 7 % of group's total turnover( 525 million) Perfumes: sales of 326 million Watches: sales of 193 million

*values above in euros

Production of Items

Channel of Distribution

Number of Stores: Hermès products are available worldwide through a network of 310 exclusive stores.

Hermès watches, perfumes and tableware are also sold through networks of specialized stores and in airport dutyfree stores

Online Presence: Facebook Instagram Twitter Youtube

Hermès Product Development | 2020

Company pricing Strategy Hermès has adopted the policy of premium pricing strategy in its marketing mix to evoke the sense of exclusivity which is exactly what the luxury consumers look for. Hermés does not make any discount on its products for any events, occasions, or person.

Exclusivity is also ensured by launching limited edition series. Thus, Hermès charges a very high price for its products which meet the needs (rather exclusive needs) of the target market to make profits. The price of its products depend upon the type of product and the premium prices set by competitors in that segment.

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Target Customer Demographic

Men and women Age 20-50 High income households Global Big cities

Number of potential

customers: 60 million

Behavioral Active lifestyle Love of animals

Psycographic Interested in fashion trends Likes to look expensive and prestigous Hermès Product Development | 2020

SWOT Strengths High-quality products Craftsmanship Loyal customer base Healthy financials Rich brand heritage Global presence Wide range of products Opportunities Increase brand equity among less popular product lines Global expansion

Weaknesses

High price point limits market Brand not available In many countries

Threats Competition Counterfeit Unstable economy Increase taxes/duties

Competitive Analysis Chanel Chanel is well known for its high quality luxurious suit sets and a rich brand history that is translated into products, innovation, timeless and classic designs with impeccable craftsmanship.

Sold in 310 standalone stores, e-commerce, and leased spaces in high-end department stores Market Share of Luxury Goods: 3.5%

Competitive Analysis Dior Inventing pret-a-porter, Dior has stablished itself as one of the most inventive brands of the luxury sector. From leather goods to pieces of jewelry, the brand maintains its quality, beauty, and craftsmanship while staying true to its classic aesthetic while adding contemporary details to all its designs.

Sold in retail boutiques, e-commerce, and leased spaces in high-end department stores Market Share of Luxury Goods: 16%

Competitive Analysis Louis Vuitton Known for their unique trunks bearing their iconic logo, the brand has evolved maintaining its degree of excellence. Creating handmade products but always with a touch of modernity, class and statement designs are the foundation of the brand.

Sold in retail boutiques, e-commerce, and leased spaces in high-end department stores Market Share of Luxury Goods: 18.4%

Product Objective Hermes will launch a skin care line that aims to increase their target market. The Skin care line will launch may of 2021 and hopes to makeup 1.75% ($132,000,000) of total revenues.

Target skin care fanatics who may not have ever been exposed to Hermès products and adventurous customers who enjoy a sporty lifestyle.

Make skin care routine quick and easy by creating simple, clean products that are good for all skin types.

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Product Opportunity Beauty has grown to be a $ 532 billion market

Annual growth of the global cosmetics market from 2004 to 2019* Hermès Product Development | 2020

Product Opportunity

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Product Concept Hermes is launching a new skin care line featuring 4 new products: -Face Wash -Toner -Moisturizer -SPF Being a brand that most sales are focused of equestrian accessories show that the majority of our customers spend much of their time outside. Which means that they have the need for skin products that match their social active lifestyle.

This product launch will potentially bring in a health counsious and beauty enthusiast customer.

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Hermès is planning to launch a skincare line that will consit of four new products. The product line will consist of: Face Wash Toner Moisturizer SPF - 45 These four products will be sold in two different sizes: travel and standard: Travel: 1 fl oz Standard: 4.4 fl oz There will be no shade variations as our products will works-on-all-skin-types.

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Assortment

Hermès is planning to launch a skincare line that will consist of four new products. The product line will consist of: Cleanser - $95 (standard) $40 (travel) Toner - $95 | $40 Moisturizer - $150 | $60 SPF - $95 | $ 40 Wholesale price: Face Wash - $55 | $25 Toner - $55 | $25 Moisturizer - $70 | $30 SPF - $55 | $25 Wholesale = Cost * %50 markup Retail markup- 2.5

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Assortment

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Concept board

Product Detail Benefits and features Hermès is launching a line consisting of face wash, toner, SPF, and moisturizer. What differentiates our products from competitors is that they are made of the highest quality ingredients and work for all skin types and lifestyles. We use the best ingredients that offer more than just a routine; our products will bring healthy skin from the inside out.

The main benefits are: anti-aging hydration color correction minimizes pores evens out redness reduces appearance of scars minimizes wrinkles Hermès Product Development | 2020

Product Detail Positioning Hermès has created a powerful positioning with its elegant and everlasting presence. With its French heritage, it also guarantees artisan skills, quality production, and recognition in a high social status.

Hermès high-end skincare line will reflect the quality and prestige the brand is known for. These luxurious products will rejuvenate the skin leaving you with a healthy glow.

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Trend Analisys MACRO Sustainability - packaging Fashion Technology - latest skin technology Innovation - creating a new line of products Luxury Market sales decrease - people are earning less so they are spending less Industry is paused - covid19 Asian market in shock- covid19 Europe completely shut down - covid19 More interest in healthy skin - people are more health counsious

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Trend Analisys MICRO Use of solid colors and neutral colors - Goes with Hermès aesthetic Traditional designs - Goes with Hermès aesthetic Equestrian Influence - Goes with Hermès brand integrity Classic mixed with contemporary - Goes with Hermès aesthetic Transparency - Loyal clientele Ethical products - Goes with Hermès brand integrity

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Customer Segmentation Hermès Product Development | 2020

Women 30-60 years old High Social Classes Into luxury items Avaliable disposable income Classic and modern Independent Care about visual appearance Love to travel Self-sufficient Strong personality Loyal customer Earns a signficant amount yearly Into a healthy lifestyle Family oriented Lives in Europe, Asia or North America

Traditional consumer: influenced by media in the decision process, does not invest time in the latest trend and will always take into consideration the financial ability

Beauty addicted: spends much of their time consulting blogs and tutorials, rushes to buy the latest products regardless of actual needs, the “fashion victim” of cosmetic products, considered a lead user Beauty expert: a professional makeup artists, access to a variety of information channels, not easily influenced, independent in purchase choices and loyal to a particular set of high-end brands

Main target

New entrant: begins to put on makeup when becoming an adult, increasing curiosity towards beauty products, influenced by the communication efforts put forward by cosmetics companies but is passionate for the industry

Hermès Product Development | 2020

Customer Segmentation

Hermés Overall Target Customer Hermès Product Development | 2020

Women 30-60 years old High Social Classes Into luxury items Available disposable income Classic and modern Independent Care about visual appearance Love to travel Self-sufficient Strong personality Loyal customer Earns a significant amount yearly Into a healthy lifestyle Family-oriented Lives in Europe, Asia or North America

Product Target Customer The Hermés skin care will have a very simillar target customer to the general brand.

However, since the prices of the skin care products are much lower compared to the other products sold by the brand, these will have a bigger target audience in terms of social class and available economic resources.

The line will also focus on a older group of women and it will bring the interest of customers that are beauty oriented.

Potentential number of customers: 15 million Hermès Product Development | 2020

Target Customer Segmentation Demographic

Behavioristic Interested in the luxury market Interested in the beauty market Cares about looks and appearance Likes to shop exclusive items Buys more in physical stores Open to new products Loyal customer

Active and fast learner Love the outdoors Travels often Shops on a regular basis Has a set skincare routine for day & night Business oriented

Geographic Europe, USA and Asia France, Italy, UK, Germany, NYC, LA, Hong Kong, Singapore, Tokyo, Taiwan Urban scenario Sports scenarios

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Women 35-70 years old Successful in her field of work Upper middle and high social class

Psycographic

Competitive Review Chanel

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Competitive Review Dior

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Competitive Review La mer

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Competitive Review La Prairie

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Competitive Review Positioning Chanel’s brand strategy revolves around the highest quality, luxury, French origin and heritage dating back to 1909 – themes which also constitute the DNA of another French luxury fashion brand, Dior. Both brands are widely believed to have reinvented fashion and both focus on “feminine elegance”. However, their interpretations of elegance and their artistic styles are entirely different. While Dior emphasizes femininity and is known for rich designs, Chanel accentuates its timeless modernity and promotes the concept of “uncomplicated luxury” valuing simplicity over opulence.

At la mer everything started with 6,000 experiments and 12 years of searching led to the epiphany of a lifetime – a fermentation process that transformed sea kelp and other pure ingredients into Miracle Broth™. This cell-renewing elixir at the heart of Crème de la Mer would finally transform the look of skin. This new discovery has proven to improve the look and feel of the skin to transform your skin to have a healthier radiant complexion.

The world of La Prairie has always been one of innovative scientific breakthroughs, of an elevated aesthetic and elegant precision. It is this very passion for going beyond the limits of imagination that has honed La Prairie’s inextricable link with art since its beginnings. At La Prairie, art is more than an inspiration. It is an attitude.

Hermès Product Development | 2020

Competitive Review Positioning Chanel’s brand strategy revolves around the highest quality, luxury, French origin and heritage dating back to 1909 – themes which also constitute the DNA of another French luxury fashion brand, Dior. Both brands are widely believed to have reinvented fashion and both focus on “feminine elegance”. However, their interpretations of elegance and their artistic styles are entirely different. While Dior emphasizes femininity and is known for rich designs, Chanel accentuates its timeless modernity and promotes the concept of “uncomplicated luxury” valuing simplicity over opulence.

At la mer everything started with 6,000 experiments and 12 years of searching led to the epiphany of a lifetime – a fermentation process that transformed sea kelp and other pure ingredients into Miracle Broth™. This cell-renewing elixir at the heart of Crème de la Mer would finally transform the look of skin. This new discovery has proven to improve the look and feel of the skin to transform your skin to have a healthier radiant complexion.

The world of La Prairie has always been one of innovative scientific breakthroughs, of an elevated aesthetic and elegant precision. It is this very passion for going beyond the limits of imagination that has honed La Prairie’s inextricable link with art since its beginnings. At La Prairie, art is more than an inspiration. It is an attitude.

Hermès Product Development | 2020

Competitive Review Competitive Advantage The competitive advantage that Hermès strives for is differentiation through high-quality products, premium pricing, and exclusivity. The Hermès customer knows and trusts that their products are going to be made from the best quality and craftsmanship since it has done so from the start. The customer of Hermès has never changed since the very beginning. This brand is known for serving the upper-class society like world-class celebrities, top politicians, and the richest people in many countries.

Hermès Product Development | 2020

Competitive Review Competitive Advantage The competitive advantage that Hermès strives for is differentiation through highquality products, premium pricing, and exclusivity. The Hermès customer knows and trusts that their products are going to be made from the best quality and craftsmanship since it has done so from the start. The customer of Hermès has never changed since the very beginning. This brand is known for serving the upper-class society like world-class celebrities, top politicians, and the richest people in many countries.

Hermès Product Development | 2020

Time & action Calendar PRIORITIES: 1) SCOPE 2) TIME 3) COST

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timing

Hermès plans to launch the skincare line on April 1, 2022. Based on developing the product formulas, we have given ourselves two years to build our line, including meeting with product developers, strengthening our formulas, and product testing. We chose a two-year window for production as developing and testing our product formulas will take time. Hermès is known for excellence, and we want to uphold that standard as we are moving into a new industry.

In September of 2021, we will finalize our packaging and then begin our advertisement and marketing campaigns. We are launching our campaign on January 26 to build excitement surrounding our new product line.

Hermès Product Development | 2020

Launch timing & channel

Channels To create exclusivity surrounding our product line and to test out the new industry, our products will be sold exclusively at Hermès Flagships stores and authorized sellers, such as Saks. These retail products will be sold at these high selling locations in our beauty section.

This section will consist of our skincare products and the current make-up and fragrance products.

Product lifecycle Based on the introduction and growth surrounding the skincare line, Hermès plans to turn this into a long term product. Once the product hits the maturity phase, Hermès will look into product extension, developing new formulas and products.

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Launch timing & channel

Cost Estimate

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Cost Estimate

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Cost Estimate

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Cost Estimate

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Forecasted Units & dollars For the quarter: 80% of sales from Standard Size 20% of sales from Travel Size

$132,000,000

214,634 units 132,000 units

For the Year:

80% of sales from Standard Size 20% of sales from Travel Size *based on regular retail prices, not wholesale

$26,400,000 $6,600,000

$105,600,000 $26,400,000

858,537 units 528,000 units

Hermès Product Development | 2020

$33,000,000

Profit & Loss Statement

Expenses: Marketing Launch Party (short-term) Transportation Store Installations Warehouse

$680,000 $100,000 $20,000 $20,000 $10,000

$33,000,000 $11,550,000 $21,450,000 $830,000 $20,620,000 Gross Margin= 65%

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Net Sales COGS Gross Margin Expenses Profit/Loss

Design Brief

Purpose: Luxury bottles and packaging that promotes clean living, easy user-ability, and aligns with Hermès aesthetic.

Concept: A clean luxury bottle that promotes flawless, healthy skin. The bottles will reflect our customer's luxurious lifestyle and align with their day to day activities, traveling with ease.

Must-haves: Recycled glass bottle, pump dispenser, lightweight, sleek and simplistic, cohesive with Hermès fragrance and makeup design, sizes ranging from 6 .oz to 0.5 .oz, travel safe, sustainable plastic cap, sustainable plastic bottle, sustainable box Materials: Recycled glass, plastic cap, plastic bottle, a recycled box with embossed logo.

Customers: An on the go customer who cares about beauty. They are seeking healthy, flawless skin and products that match their lavish lifestyle and social activities.

Achievement: Producing a luxurious sustainable bottle that serves the purpose of holding our contents safely and creates an enjoyable experience for the consumer.

Cost: Cleanser: $5 Toner: $7 Moisturizer: $5 SPF: $5 Hermès Product Development | 2020

Design Brief Skin Care Line Name: Formula H Cleanser: Revitalizing vitamin C gel face cleanser Toner: Antioxidant antiaging green tea tonic water Moisturizer: Water based face lotion with vitamin C and squalene SPF: Sun Shield SPF 45 hydrating water-base with green tea

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Design Brief Formula H Logo Ideas Color story

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Product & Packaging Mockups

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Chemist Brief Purpose: Our purpose is to promote healthy and flawless skin for all ages and skin types.

Concept: Creating products customers can implement into their daily skincare routine that gives them healthy skin and protection from outdoor elements.

Must-haves: Silky formula, organic formulas, clear and white coloring, formulated to fight against sun exposure, the outcome must enhance the overall look and feel of customers skin and fight against aging Materials: Flower extract, anti-aging triglyceride, vitamin A and C, organic glycerin Sizes: Cleanser: 5.oz and 1.ozToner: 6.oz and 1.ozMoisturizer: 1.oz and 0.5ozSPF: 1.oz and 0.5oz Cleanser: 5.oz and 1.oz Toner: 6.oz and 1.oz Moisturizer: 1.oz and 0.5oz SPF: 1.oz and 0.5oz Achievement: Creating a skincare line consisting of a cleanser, toner, moisturizer, and SPF that prove all of our claims and aligns with Hermès product values.

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Tech pack Hermès Product Development | 2020

CleanserBottle: Recycled Glass Cap: Pump Dispenser Carton: Sustainable Carton Ribbon: Silk

TonerBottle: Recycled Glass Cap: Sustainable Plastic Carton: Sustainable Carton Ribbon: Silk

Tech pack Hermès Product Development | 2020

MoisturizerBottle: Recycled Glass Cap: Sustainable Plastic Carton: Sustainable Carton Ribbon: Silk

SPFBottle: Recycled Glass Cap: Sustainable Plastic Carton: Sustainable Carton Ribbon: Silk

Tech pack

Hermès Product Development | 2020

Tech pack

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Tech pack

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Production & Logistics plan To create this product line, we will use a third party manufacturer located in France.

We will employ existing distribution channels in transporting these products.

After manufacturing, products will travel to distribution centers by air shipping.

From distribution, the products will travel to retailers by road freight.

E-commerce sales will be transported using road freight as well to the customer.

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Creative Brief Purpose: For this to be a successful brand will need: a new slogan and campaign that matches the product, flyers to be posted on physical stores, social media focused ads, a tab on the website, window displays, wall sized ads and an launch event for sales.

Objective: Draw in a health conscious customer through our fresh marketing focused around clean skin.

Poitioning: Hermès has created a powerful positioning with its elegant and everlasting presence. With its French heritage, it also guarantees artisan skills, quality production, and recognition in a high social status. Hermès high-end skincare line will reflect the quality and prestige the brand is known for. These luxurious products will rejuvenate the skin leaving you with a healthy glow.

Target Market: Premium Luxury – Women, 30-60 years old, High Social Classes, Available disposable income, Classic and modern, Loyal customer, Earns a significant amount yearly, Into a healthy lifestyle, Family oriented, Lives in Europe, Asia or North America Product: We will need to create content and in-store layouts based on the following (benefits): anti-aging hydration color correction minimizes pores evens out redness reduces appearance of scars minimizes wrinkles

Intellectual Property Trademark: we will need to trademark the skin care line brand, product name, design, logo and brand name.

Copyrights: on images, campaigns and all marketing materials related to the formula Patents: file formula with the FDA, patent formulas in Europe and Asia following their laws for beauty products.

Trade secrets: all of our information can be found on the product or on our company’s website, we are 100% transparent with all of our production process.

Trade dress: Most of our products will come in a light green glass packaging, with the logo, a visual detail that is the colored stripes, a quick describtion of the product, the amount that it is inside of the bottle, a lid that will match the color but with an orange finishing to maintain the Hermes look. All products will be available also in travel size and will be sold in a little orange box with a brown string as all the other Hermes products.

Quality Assurance Plan Our quality assurance plan will be focused on traits of the formulas themselves as well as the product packaging.

The line will be produced by manufacturers that have a long-standing relationship with Hermès to ensure that standards of quality will be upheld.

A team of professionals will oversee the production process in order to maintain consistent quality across the product line. -Random inspections will be performed by this team to find flaws in production consistency.

Raw materials used in this new product line will be sourced from the highest possible quality.

During the manufacturing process, workers will be required to wear latex gloves and goggles in order to promote hygiene and protect employees of the facility.

Finished products will be stored within a temperature-controlled environment to ensure that the products do not overheat before being shipped to retailers.

Multiple testing phases as the product is developed to assure that there is no uncessary incident or harm to any customer's skin.

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Quality Control Plan Our manufactured products will undergo testing in order to asses the quality of products produced and to maintain consistency - 1 in every 100 products manufactured will undergo extensive testing continuously through our production.

Testing will be based on these characteristics of the formula: color consistency feel odor function SPF must be approved by the FDA In-house satisfaction testing will be done to asses the function of the products Customer satisfaction surveys will also be done to asses the function- this will be done through giving a few units to a selected group of people for them to test it for a longer period of time.

Testing will be based on these characteristics of the packaging: shape size aesthetic resilience drop test for glass containers pump Cleanser only screw top Moisturizer, SPF, and Toner Hermès Product Development | 2020

Desired Marketing Claims Cleanser Hermès Product Development | 2020

Claims A gentle way to clean Reveals a fresh smooth complexion A deep cleanse to remove dead skin Complexion will appear smoother and softer leaving a fresh glow Daily use helps improve the appearance of blemishes, visible redness, and enlarged pores Cleans, brightens, and soothes Enhances the overall look and feel of skin Naturally calming plant extracts that leave your complexion soft and radiant looking Effectively removes impurities and long-wear makeup, gently and with minimal disruption to skin’s hydrolipid barrier

Desired Marketing Claims Toner Hermès Product Development | 2020

Claims Soothes and hydates to lock in moisture Enhances the overall look and feel of skin Combats breakouts and blemishes Helps regulate oily skin while leaving it feeling ultra-nourished Smooths skin texture and minimize the appearance of pores Enhances the skin’s natural microbiome Helps minimize the appearance of pores while removing residual impurities Leaves skin hydrated and radiant Infused with green tea and tonic water Leaves skin feeling healthy, glowing, and luminous A daily, non-stripping toner that minimizes the look of pores while increasing skin hydration

Desired Marketing Claims Moisturizer Hermès Product Development | 2020

Claims Improves the feel of your skin Soft to the touch Smoothes wrinkles Fights dry skin Helps reverse the effects of aging Softens fine lines and wrinkles Protects against sun exposure Enhances the look and feel of skin Hydrating cream Soothes skin Breathes life into stressed Clean, dewy finish Visibly evens out skin texture and minimizes the look of pores Long-lasting moisture

Desired Marketing Claims SPF Hermès Product Development | 2020

Claims A lightweight SPF 45 that protects against sunburn Instantly absorb into skin, so it plays well with makeup Helps prevent sun damage and skin cancer, and works to neutralize harmful free radicals A breathable lightweight formula that fights against sun exposure Providing broad-spectrum protection against the sun’s harmful rays while moisturizing skin with naturally derived organic oils Shields the face from the UVA rays which cause signs of aging Protects while it hydrates to promote healthy, glowing skin

Desired Marketing Claims Validation

Consumer skin looked brighter and more radiant pores looked minimized skin felt more hydrated skin felt smoother would repurchase skin texture improved

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Clinical Hypoallergenic, dermatologist tested, appropriate for all skin types, non-irritating, paraben free, alcohol free, cruelty free

Testing Safety To ensure that the use of the Formula H products is safe we will: Flammability testing Toxicology testing Microbiological testing Ingredient List Reviews Regulation reviews Phototoxicity & Photosensitisation clinical testing UVA testing Clinical Trials Open Application Patch Testing Irritation testing Allergies testing Long term use testing

Testing Consumer To better understand the need of our costumers we will: (through surveys and online reviews mainly) Measure the purchase intent How the customer reacts to the product Sell the product using the right amount of information and persistency Inform the customer enough in order for them to have an understanding and an honest opinion Carefully measure price sensitivity Use "intent to buy" data as only a reference Carefully interpret preference tests Make sure the product matches the customer needs Free samples for testing Transparency of ingredients Health focused

Testing Clinical & Quality Based on scientific data: Hypoallergenic Dermatologist tested Appropriate for all skin types Non-irritating Paraben free Alcohol free Cruelty free Comedogenicity Study UVA testing Open Application Patch Testing Frequent use reaction

Packaging & labeling - Cleanser

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Packaging & labeling - Toner

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Packaging & labeling - Moisturizer Hermès Product Development | 2020

Packaging & labeling - SPF

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Distribution & Product Lifecycle Plan Online, retail stores, & authorized sellers Customers will be able to pre-order the skin care line a week before our launch date, April, 1, 2022 For the first 6 months our products will only be sold at our 310 Hermès stores.

The following 6 months the products will be sold in luxury department stores like Saks 5th Avenue, Neiman Marcus, Nordstrom, and Bergdorf Goodman.

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Channels of Distribution:

Distribution & Product Lifecycle Plan

Units to sell:

First 6 months (first half of the year) only Hermès stores : $44,000,000 - 6 months revenue Standard size - 686,830 units Travel size - 105,600 units

Following 6 months (second half of the year) Exclusive department stores : $88,000,000 - 6 months revenue Standard size - 171,707 units Travel size - 422,4000 units *sales are expected to increase in the second half of the year since products will be sold in department stores as well as Hermès stores *

Hermès Product Development | 2020

$132,000,000 - Revenue for the year 80% of sales from Standard Size - $105,600,000 - 858,537 units 20% of sales from Travel Size - $26,400,000 - 528,000 units

Distribution & Product Lifecycle Plan $66,000,000 - 6 months revenue Standard size - 429, 269 units Travel size - 264,000 units

Saks 5th Avenue Standard size - 107,318 units Travel size - 66,000 units Neiman Marcus Standard size - 107,318 units Travel size - 66,000 units Nordstrom Standard size - 107,318 units Travel size - 66,000 units Bergdorf Goodman Standard size - 107,318 units Travel size - 66,000 units

Hermès Product Development | 2020

Following 6 months (second half of the year) Exclusive department stores :

Distribution & Product Lifecycle Plan Hermès Product Development | 2020

This will be an ongoing product line sold in Hermès.

Our skin care line will be distributed from manufacturer to distribution center where everything will be packaged according to Hermès standards, then it will be shipped to each specific retailer.

We will begin distributing our product 1 month before the release date to have all stores ready and stocked for our April 1st launch date.

After the Hermès skin care line, Formula H, has been out on the market for 1 year, a new group of products will begin to go into production targeting specific skin types (dry,oily,combo).

Integrated marketing plan at launch Reach a new customer market For the quarter we will bring in $33,000,000 Expand Hermès product category Inform customers about the new product offering Create hype around product launch Make 30% of sales for the first month in the first week Products will market themselves due to brand reputation

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Objectives

Integrated marketing plan at launch

TV Print Digital Prints Online video Online visuals Window display

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Promotional Mix

Integrated marketing plan at launch Schedule October 28, 2021 we will begin photographing and filming to create content for our ad's.

"Coming Soon" ad's will appear on our website and social media platforms January 26, 2022 building up to our launch date.

We will begin releasing ad's for "Formula H" products February 1, 2022 on platforms such as: TV, Social Media, Print, Digital Print, and Billboards.

We will send out email blast March 1, 2022 informing current customers about the product extension.

March 1, 2022 Hermès will showcase their iconic window displays announcing the coming of the new products in store.

The week leading up to April 1, 2022 we will have a count down on our Instagram and website starting March 25, 2022.

Following promotions we will have a launch party April 1, 2022 at Hermès NYC and Paris.

Soft launch April 1, 2022 in-store and online Six months later (October 1, 2022) we will expand our launch selling to authorized sellers.

Hermès Product Development | 2020

Integrated marketing plan at launch Message

"Transforming Formula H" The message we will be promoting to our customers through marketing is how our products can transform your skin, enhancing the overall look and feel, leaving you with healthy, flawless skin. For all skin types and any occasion, Formula H products will leave your skin radiant and youthful.

Hermès Product Development | 2020

Integrated marketing plan at launch Budget (For New York and Paris Flagship Launch Events) Hermès Product Development | 2020

Launch Budget: $100,000 (split for both locations) Launch party: New York and Paris location (150 at each location) Event details: Catering by: L’atelier by Joel Roubouchon: $36,000 Champagne: Veuve cliquot 400 bottels total: $20,000 DJ: $20,000 Skincare specialist to answer any questions: $10,000 GWP: travel size skincare set: $4,000 Virtual pop-up: $10,000 Programming Marketing: $300,000 Photography: $50,000 Filming: $50,000 Ad's: $200,000

Integrated marketing plan at launch Detailed Plan When launching the new skin care products, we will take into account exclusivity. We will have a launch event party at Hermès flagships in New York and Paris, inviting top customers and skin care fanatics.

Hermès will create a virtual pop-up, allowing customers from around the world to interact with products and learn more about the formulas and skincare process. The virtual pop-up will serve as a way to educate customers on how to care for their skin with our products.

We will also utilize Hermès social media channels announcing the launch by posting product images.

We will utilize TV, print, and online visuals/videos to promote our line as well to reach a broad audience.

We will send email blast to existing customers educating them on our new line.

In-store marketing will consist of classic Hermès window displays at all flagships and visuals and videos at retailers such as Saks.

Hermès Product Development | 2020

Integrated marketing plan at launch Measuring Success Hermès Product Development | 2020

Marketing We will measure the success of our marketing based on how many new customers we reach. We will measure this through website and social media visits, specifically looking at the number of people who look at our skincare products and then look at if they purchased or viewed other items.

We will monitor how our other platforms such as TV and print ad's did through the marketing agency.

We will measure success by how many people joined in for the count down on our website and social media channels.

Lastly, we will measure success of marketing by how many people clicked to learn more/ signed up for notifications for our skincare products through our email blast.

Were customers informed about the new product offerings? This will be monitored through purchases.

Integrated marketing plan at launch Measuring Success

Product We will measure product success through customer response. This will be monitored on our website and social media platforms.

How the skincare community responds to our products through outlets such as influencers and beauty blogger.

Are customers re-ordering?

Are these customers new to Hermès and are they now dedicated customers?

Hermès Product Development | 2020

Longterm Integrated marketing plan Objectives Create a new skin care category that will bring in 1.75% of overall annual sales for the company ($132,000,000).

Formula H line will bring in 2 million new customers to Hermès by January 31, 2023.

Each product has an overall 3.5 star rating by January 31, 2023.

Hermès Product Development | 2020

Longterm Integrated marketing plan Promotional Mix This will include all the events and everything we will need yearly in order to market the new skincare line properly: TV Print Digital Prints Online video Online visuals Window displays Monthly events with loyal customers Seasonal events ( holidays and season launches) Saut Hermès at the Grand Palais event/ sponsorship Hermès Product Development | 2020

Longterm Integrated marketing plan Schedule The Schedule we created is what we plan to do in terms of marketing during the years after Formula H has been launched and it already has a well known reputation.

Daily e-mail blasts with tips and offers Seasonal campaign production: this will include photoshoots, new designs for each season, the creation of online content and the look of the season, educational videos for authorized retailers + special campaigns for major holidays like Christmas in December and Easter in April.

Monthly events at the Hermes stores for customers: we want this to be a fun and small event to show appreciation for the loyal customers of Formula H. This will happen the First Wednesday of every month.

Seasonal launches Daily posts on social media Window displays will change with the season/ holidays Seasonal events ( holidays and season launches) Saut Hermès at the Grand Palais event/ sponsorship in March

Hermès Product Development | 2020

Longterm Integrated marketing plan Message "Transforming Formula H" The Message we want our customers to receive through the Integrated marketing plan is how Formula H can transform your skin, enhancing the look and texture, leaving you with a healthy and gloomy skin. We have a product for each skin type to make sure you get the result you are expecting and always wanted. Formula H products will leave your skin radiant and youthful.

Hermès Product Development | 2020

Longterm Integrated marketing plan

Annual Marketing: $380,000 Photography: $50,000 Filming: $50,000 Ad's: $150,000 Promotional events: $20,000 Window displays: $30,000 Educational videos for authorized retailers: $30,000 Saut Hermès at the Grand Palais: $50,000

Hermès Product Development | 2020

Budget

Longterm Integrated marketing plan

Detailed Plan Marketing efforts for Formula H will be closely related to the plans of marketing for other Hermès categories in order to maintain consistency throughout the brand.

Ongoing marketing campaigns: TV ads Print ads Online content Email blasts Window displays Educational videos for authorized retailers

Hermès stores will host events throughout the year in which customers can learn more about the new line of products and their benefits and features.

Hermès will advertise this new skin care line to outdoor enthusiasts in need of SPF protection at the equestrian event- Saut Hermès at the Grand Palais in Paris.

Scale Up Formula H plans to release another line of products that aims to provide excellent quality skin care regiments targeting various specific skin types (oily, dry, combo).

Hermès Product Development | 2020

Longterm Integrated marketing plan Measuring Success

Hermès Product Development | 2020

Marketing Success of marketing efforts will be based on how well we expand our reach and broaden our target market.

Records will be kept of how many new customers buy Formula H that have never purchased products from Hermès before.

The goal is to reach 2 million new customers by January 31, 2023 due to the addition of the Formula H product line.

Product We will measure the success of our products on customer reviews and ratings.

Products will be altered as necessary to better fit consumer needs and preferences.

Online reviews and influencer reviews will be monitored by a team of marketers to mine for ways to improve products.

The goal is to maintain at least a 3.5 star rating on each new product on January 31, 2023.

Launch marketing vs. longterm marketing

Longterm marketing efforts will be geared towards maintaining hype for the product line so that it can have lasting success among consumers. These longterm marketing efforts will be spread throughout the year to ensure that customers never forget to choose Hermès for their skin care needs. Longterm marketing will aim to create a lasting impression with new customers for Hermès products.

Hermès Product Development | 2020

Launch marketing will be more focused on educating consumers on the new product line, Formula H. Therefore, launch marketing will be more informative. Launch marketing will get the name of our products out there and expand brand awareness to lower social classes than the typical Hermès customer.

Marketing Marketing inspiration mood board

Hermès Product Development | 2020

Closing Hermès will launch a skin care line on April 1st, 2022 that will include moisturizer, toner, SPF, and cleanser. The line will focus on promoting healthy skin and clean living. Formula H is made for all skin types and will fight against wrinkles, aging, redness, dry skin, visible pores, and acne scars. The line will be available in all Hermès stores, online, and soon after, authorized retailers. Our marketing tactics will consist of social media marketing, print and digital content, a virtual pop-up, window displays, and marketing at Saut Hermès at the Grand Palais in Paris.

Hermès Product Development | 2020

Thank you

Resources https://finance.hermes.com/en/Group-overview/Stores https://www.hermes.com/us/en/ https://www.mbaskool.com/marketing-mix/products/16803-hermes.html https://finance.hermes.com/var/finances/storage/original/application/21d63f4965c5a00944d77f8dd24d591f.pdf https://finance.hermes.com/en/ Luxury Goods - worldwide. (n.d.). Retrieved April 13, 2020, from https://0-www-statistacom.library.scad.edu/outlook/21000000/100/luxury-goods/worldwide https://www.lvmh.com/news-documents/press-releases/record-results-for-lvmh-in-2019/ https://www.chanel.com/us/financial-results/ http://www.dior-finance.com/en-US/ https://martinroll.com/resources/articles/strategy/hermes-the-strategy-behind-the-global-luxury-success/ https://www.cew.org/beauty_news/how-to-stay-ahead-in-the-booming-skin-care-market/ https://baghunter.com/blogs/insights/hermes-brand-history-timeline

Hermès Product Development | 2020