Custom «The Hermes Group» Essay Paper

The Hermes Group is one of the famous and leading fashion brands producing company of the world. The Hermes Group is a family owned group, having 71% family share and 21% public share. It is designing, developing and marketing high quality fashion products in more then fifteen departments and distributing fashion brands in so many countries of the world. The performance of the brand is so effective in last few years as compare to its competitors (Naomi, 2000). According to Millward Brown Hermes is at second position among top ten fashion brands of the world. It has effective communication network by using efficient communication channels to create awareness about products, motivate customers all over the world. Now Hermes is focusing on heritage, sponsoring horse competition in Paris (Naomi, 2000). Hermes marketing Strategies are, youth, males, females, professionals, teen agers, fashion lovers are the target markets, it is positioning the product at high level, with high in quality, good features, competitive price, good availability, after sale services are not only positioning the brand at high level but also communicating the message of company regarding the leading fashion brands of the market (Naomi, 2000).

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This report is consists of different portions, in first part is on marketing audit of Hermes by using different analysing tool like SOSTACT, SWOT, Five forces model, Competitor Analysis and perceptual map of company and its competitors. This portion will provide the complete analysis of company, environment and competitors. After analysis we should be able to understand the clear picture of company and industry and help to design different marketing activities. Hermes is carefully focusing on the promotion of products, it is using different channels of communication like advertising on print media, outdoor media and electronic media, now company is sponsoring different events for the sake of creating positive word of mouth and effective image of brand in the mind of customers.

Next part is focusing on internal audit, description of marketing mix of company, information about customers and branding activities of the company.

Marketing audit:

SOSTACT

SOSTACT is one of the effective tools of marketing audit; it is providing all necessary information regarding all the aspect of marketing activities of the brands that provide clear understanding to reader. It is include the following steps (Smith, 2004).

Situational Analysis:

Situational Analysis is emphasis on the current position and marketing activities of the brands. Hermes is one of the leading brands; it performed well in last fiscal year with sale of over two billions of ponds. It is on second position in list of top ten fashion brands of the world. Hermes is competing on the bases of quality, best designs, attractive features, and meeting with fashion standards of market place. It is producing hand bags, belts, purses, watches, fashion products of more then fifteen departments. Products are available at so many outlets of Hermes in many cities of different countries of the world by using the exclusive distribution network strategy. Hermes is carefully focusing on the promotion of products, it is using different channels of communication like advertising on print media, outdoor media and electronic media, now company is sponsoring different events for the sake of creating positive word of mouth and effective image of brand in the mind of customers. Company is charging competitive price of quality products in market. Hermes targeting the youth because it is producing the fashion products and youth is the main user of fashion products, teenager males, females, fashion oriented ladies, professionals etc are the main target market of Hermes. New year parties, marriage parties, fashion events, charismas are the main events which providing the opportunities to Hermes (Smith, 2004).

Hermes objectives are achieving the sales and profit targets by providing the quality fashion brands to its' customers, mission of the company is to become a leading company of the market in quality fashion brands by meeting the new fashion trends of the market place. Company is spending a lot of funds on research and development activities, which are under taken for the purpose of not only to find out the new method for producing quality products but also to explore new fashion tends among customers. Company is creating the effective awareness of fashion brands in customers and also focusing on the creations of positive image and word of mouth in customers. Hermes is also focusing to sponsor the events like its sponsor horse competition in Paris (Smith, 2004).

Hermes marketing Strategies are, youth, males, females, professionals, teen agers, fashion lovers are the target markets, it is positioning the product at high level, with high in quality, good features, competitive price, good availability, after sale services are not only positioning the brand at high level but also communicating the message of company regarding the leading fashion brands of the market (Naomi, 2000).

Affective Tactics are using by the company in different marketing activities, print media, electronic media, outdoor media, and brands of the company themselves communicating the message of the company (Mark, 2009).

Different type of Action plans are designing by the company regarding market communication, distribution, product development. Setting affective media strategy, selection of effective promotion tools, sponsoring the events are the action plans of the company. Allocation of resources on research and development activities is indicating the effective action plan to find out the new ways of producing quality products and new trends in fashion among customers (Mark, 2009).

Hermes Control is very affective, control system is in the hands of top management, course of actions are to be designed for effective control. Management is controlling the performance of the brands through its sales volume, customer portfolio, and market share of the brand, brand equity, and word of mouth about brands.

SWOT Analysis:

Strengths:

• Fashion brands and High quality of brands
• Luxury image and uniqueness of products
• Good marketing strategies of the company
• Effective distributions network in all over the world
• After sale services or support services of company
• Strict policy regarding the outlets where the brands are available
• Affective research and development department
• Good positioning among competitors in market
• Good market share of the company
• Second standing in top ten fashion brands
• Affective marketing communication activities

Weakness:

• High price of brands in market
• Limited diversification of brands
• Lack of supply chain management activities
• Medium range of distribution network in different markets
• Variety of brands are low as compare to competitors
• Family owned company, so their monopoly in management
• Lack of integration activities in company
• Hermes brands are still not available in so many markets
• Communication network is not so good as competitors have
• No room for private retailers

Opportunities:

• Vacant market areas are attractive opportunity for Hermes
• Fashion trends among customers
• Increasing trends in fashion lovers
• Improvement in living standards of market place
• Good economic conditions favouring the business activities
• Increase in populations is increasing demand for brands
• Celebrating activities and events are creating demand for brands
• Increase in personal income of market place is creating demand
• Exports opportunities
• EU favourable legislations

Threats:

• Bad economic conditions
• Unfavourable legislation of the Govt.
• Inflation in market place
• Threats of live cattle industry
• Switching trends of fashion lovers and innovators
• High competition in market
• Availability of potential competitors
• Trade alliance of countries
• Import export regulations of countries
• Terrorism is creating threat for company

Five Forces analysis:

Threat of new rivalry:

The threat of new rivalry, threat of competition is always attached with company. So many competitors are working in market with Hermes and producing a lot of alternative products. Hermes is competing with very strong competitors like Louis Vuitton, Gucci, Chanel, Hennessay and Rolex etc which also attracting customers through their attractive features of products. So that is a permanent threat for company.

Threat of new entrants:

Hermes is working in free markets, where the barrier on the entry of new rival is few in numbers. That's why threat of new entrants is always present in industry for Hermes. On other hand some time none rivals or potential competitors, with the strategy of diversification in their operations become the rivals. A large number of potential competitors are working around company it is also a permanent threat for company.

Threat of substitute products:

Substitute products are the products which can be used to full fill the need of the customer. The products which are producing by Hermes, in my opinion, there is no close substitute of these products are available in market. So none availability of close substitute is removing the threat of substitute products for company in markets.

Threat of buyers' bargaining power:

Hermes is working in free market economy, where people are free regarding their market activities. What should be the marketing mix of the company these kind of all decisions are taking be company. So on issues of quality, price, production, distribution etc company is not facing threat from buyers' side. But still on other hand, consumer courts, consumers' societies, consumers' movements are also creating some pressure on company regarding its policies. So in my opinion, Hermes is facing moderate level of threat from the bargaining power of customers.

Threat of suppliers' bargaining power:

So many suppliers are working in market and meeting the needs of customer like Hermes. The production of company no doubt is depending on the supply of raw material, but a large number of suppliers are available in market to meet the demand of producers like Hermes. So the level of threat of suppliers' bargaining power is low but still on other hand, supplier are increasing their bargaining power on the bases of their quality products, on their dealings, on their operations which are not only meeting the standards of market place but also full filling the legal aspects of market place.