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Elie Saab, Creative Essay Example

Pages: 1

Words: 867

Creative Essay

Elie Saab is in the business of meeting the luxury lifestyle needs of the female clientele. The company’s core product is helping clients preserve their social status through expensive and one-of-a-kind products that can only be afforded by high net worth individuals. Elie Saab’s actual products are primarily gowns though the company has lately branched into other product categories including accessories. The company’s augmented product is personalized customer service to haute couture clients, often involving the designer Elie Saab himself, customer satisfaction guarantee, and product warranties.

As far as Elie Saab’s SWOT analysis is concerned, the company’s strengths include brand, customer loyalty, distribution network, and leadership. The company’s weaknesses include business model that often sacrifices operating efficiencies in favor of quality and personalized customer service and limited brand recognition as compared to other well-known haute couture houses including Christian Dior, Chanel, and Givenchy. The opportunities available to Elie Saab include expanding scale of operations in Asia and Middle East where appetite for luxury products has been growing due to rising number of wealthy individuals and creating sister brands to target middle-income level customer groups. This strategy is followed by certain other fashion designers including Giorgio Armani which has more affordable Emporio Armani and Armani Exchange brands. The threats include unfavorable market trends such as the trend away from haute couture and loss of control over brand image due to joint ventures with local companies in international markets.

As far as Elie Saab is concerned, the company is in the growth phase of the product life cycle as evident by its impressive annual growth rate figures in the years 2007 and 2008, respectively. The company has been historically conservative in terms of expanding its scale of operations due to emphasis on quality over quantity and still has limited global presence, given the prestige and history of the brand. This is why the company’s leadership including managing director Chucri Cavalcanti and owner Elie Saab are now focused on rapid expansion because they see ample growth opportunities outside their current markets.

Elie Saab’s current entry strategy is to enter into partnerships with local companies instead of only opening flagship stores. The company believes that established local companies have good knowledge of local conditions, thus, it would reduce the international risk for Elie Saab while ensuring quick entry at the same time as well. This strategy might not have supported the company’s original vision of providing only the best products and closely monitoring the quality standards but Elie Saab’s management has realized that trends have changed. Thus, this strategy fits the company’s new vision of establishing a wide global presence because Elie Saab understands different countries have different customer characteristics and trends and local companies understand these unique factors well. The pros of partnership are that it reduces risk and also prevents the need for capital investment in flagship stores. The cons of this strategy are some loss of control over brand management as well as prestige that comes from exclusive distribution through flagship stores only.

Historically, Elie Saab has maintained tight control over quality standards and has differentiated itself by serving only high net worth individuals and providing personalized customer service, often involving the designer Elie Saab himself. Haute couture used to be a major source of total revenues but the trends have changed and haute couture is less popular in prospective markets such as Middle East and Russia. The company also maintained tight control over distribution channels through flagship stores. But now the company has been branching out into new product categories and also focusing more on ready-to-made dresses that sacrifice some of the quality and exclusiveness in favor of operating efficiencies. The company has also diversified its distribution channels by forming partnerships with local companies including Harrods in the U.K and Neiman Marcus in the U.S. The company’s differentiation strategy now also includes distribution channels as it only selects the very best local companies.

Elie Saab should target affordable luxury market because the trends have changed and its haute couture and RTW segments may continue to decline over time. Even though average profit margins are lower in affordable luxury market, there is almost unlimited upside potential in terms of overall profitability. The company may also be able to expand quickly through licensing which are valuable revenue streams with little or no risk. The size of middle class in countries like India and China alone offers tremendous growth potential.

As far as marketing mix is concerned, Elie Saab should branch out into new product categories, often through licensing. The company may create sister brands so as not to marginalize the mainstream brand. Products such as handbags, fragrances, and casual wear are often high volume. The company should adopt multi-layered pricing strategy and create brands to cover all income groups. Giorgio Armani owns Armani Exchange which is affordable yet doesn’t hurt the prestige of the mainstream Giorgio Armani brand. The company should target additional marketing channels such as fashion magazines and internet to improve brand awareness and create brand personality. The company’s current strategy regarding distribution channels may be revised to include internet as well. An e-store will enable the company to cover wider geographical markets and help sell slow-moving merchandise through occasional sales events.

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