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Elie Saab’s Core Business, Research Paper Example

Pages: 4

Words: 978

Research Paper

Elie Saab’s core business is to serve the needs and desires of select customers for whom money is not an issue. Elie Saab’s core product is meeting its clients’ desire of having only the finest products that others may not have. The company’s actual products include dresses including made-to-order haute couture and accessories and its augmented products include one-to-one consultation with the designer and owner Elie Saab and lifetime warranties on certain products.

Elie Saab’s strengths include management, pricing power, brand loyalty, and financial performance. The company’s weaknesses include low production efficiency, limited distribution of products, and unnecessary waste of limited resources due to being a couture house. Elie Saab has several opportunities available to it including entering new product markets and targeting middle income groups, especially in countries like India and China where the middle income group has been growing at an impressive rate. The threats to Elie Saab include cheapening of brand if Elie Saab enters too many product markets or licenses its trademark generously as well as loss of income due to product knockoffs as faced by other legendary brands like Louis Vuitton and Gucci. Elie Saab’ competitive advantage is endorsement by some of the most powerful women and celebrities which lend credibility to the exclusivity of the brand as well as the opportunity for clients to get personal consultation from the company’s owner and designer Eli Saab.

Elie Saab is now located in the growth phase of the product life cycle because it’s ready-to-wear (RTW) line which accounts for a significant proportion of the company’s total revenues, grew at annual rates of 27 percent and 49 percent in 2007 and 2008, respectively. This shows that the company is still growing fast and the maturity stage doesn’t seem like in the near future.  It is apparent in the case that Elie Saab has not tried really hard to grow like its competitors because the company just wanted to focus on high income groups instead of targeting everyone though it may be gradually changing now.

Elie Saab has historically maintained tight control over its operations but as the company enters new international markets, it is increasingly pursuing partnerships with local companies who have established networks and better understanding of local conditions, tastes, and preferences. This strategy is consistent with the company’s current vision because the company wants to expand its presence around the world and while there are other options, this strategy works best. For example, the company can open flagship stores, too without entering into partnerships with local companies but such a strategy will require huge capital investments and as a result, geographical expansion will be limited. In addition, there are often huge cultural differences around the world and in addition, customers may have different tastes. For example, haute couture has historically done well in U.S and France etc. but has not been embraced by customers in the Middle East and Russia. A partnership with local company prevents the need to conduct expensive marketing research as well. One of the cons of this strategy is that the company will lose control over the direction of brand in international markets. In addition, the company may be spread too thin if it expands quickly. The pros of flagship stores include tight control over international operations as well as the assurance that Elie Saab products will not be competing with other products in a store. The cons of this option are high capital requirements and greater risk of failure due to poor or inadequate understanding of local tastes and trends etc.

Initially, Elie Saab differentiated itself on the basis of limited distribution, higher quality, and one-of-a-kind customer service, often involving Elie Saab, the designer. The company competed on the basis of quality rather than quantity and charged extremely high prices to ensure access to only high income groups. But now some of the company’s core products are facing declining demand such as haute couture, thus, the company has changed its positioning and differentiation strategy. The company is entering more product markets and is working towards more expansive international distribution network to ensure easy availability of Elie Saab products. The company is still focused on maintaining brand prestige, thus, it is only choosing well-reputed partners such as Neiman Marcus and Harrod’s.

Elie Saab should aim at affordable luxury market because the current trend favors affordable luxury market around the world. First of all, middle income groups are expanding in emerging economies which offer tremendous growth potential. Second, affordable luxury market can be targeted through licensed products which will provide valuable revenue stream to Elie Saab and the company will incur little or no expense to produce the products. Similarly, product life cycles are becoming shorter so customers may be more willing to go for affordable luxury rather than spending too much on products that may go out of trend quickly. Elie Saab can continue to offer haute couture for brand prestige while pursuing affordable luxury to stay in the business and earn profit.

In terms of marketing mix, Elie Saab should offer both products that have been part of its traditional line such as haute couture and RTW as well as accessories which can be licensed and often generate high volume. Similarly, pricing may be higher for core products which sell in limited volume and/or of higher quality while accessories may be priced in line with the competitors’ offerings such as sunglasses and fragrances. Promotion may be carried out through TV, magazines, and fashion websites and blogs on the internet. In addition, the company may also build a strong presence on social media such as Facebook, Twitter, and Pinterest. The distribution network may include flagship stores, independent high-scale retailers such as Neiman Marcus, and an online shop. Online shop can be set up easily and will help the company reach markets where they may be no physical retail outlet that carries Elie Saab’s products.

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