The luxury bags Industry… Behind the scenes

Introduction:

The main competitive forces in the worldwide luxury bags market

Key success factors of the luxury bags market

1. How does the market work?2. How to succeed in this market?

• Creation of value• Historical background• Creation of an identity• Master the quality• An adapted communication• Price positioning• Exclusivity

How does the market work?

Master control of:• The Cost• Image• Financial Independence• Suppliers (Distribution channels- autonomy)

How to succeed in this market?

An anticipated vertical integration:• Control of the quality of the raw material • Master of the origins • Price Control• Control deadlines

… and thus we get a better control on the buyer!

A limited Supply power

• Master relationships with the costumers• Controlled sales• Owned distribution channel for a better control• Growing demand in the immerging countries

(China/ brazil…)

…With the growth of the purchasing power of the buyers others industry might impose as substitutes

High demand from the buyers

• Fashion Fluctuations:The threat of changing BAGS and substitute it with another product.

• New Bag brand substitution:Either competitor brands or new entrance to the market

…Therefore what are the chances for the potential entrance?

Threats of substitutes are low …Yet they exist!

Maturity of the industry

• The bag industry Market is already saturated • Low chances for new entrants to create their

market• The luxury brands positioning and its

perception.What To do to keep it’s market share?

To keep their market shares competitors in the bag luxury industry • Brand Differentiation• Use unique distribution channels

dificult

The Competitive rivalry

How did Hermes succed in this industry?

• According to Porter’s five forces analysis:1. Differentiated: High quality, rarety, prestige luxury policy2. Limited supplier power: They hold around 30 companies

to control their production and they have partnerships with professional schools.

3. Lower buyer power: They have their own stores to control their buyers.

4. Even if the market of luxury bags is wide there is a high demand on hermes products

5. Mature and saturated market:

• Being a family buisiness allowed Hermès to maintain a luxurious image by choosing a strategy of rarety and know how.

Conclusion