When you think of International Retailers, many companies come to mind, Wal-Mart, Target, Amazon, but what we forget at times is that many luxury brands are also winning at this strategy. In this last blog Elizabeth and I will discuss French brand Louis Vuitton and how its strategy of International Retailing is taking this company to the top of its industry.
Louis Vuitton is one of the world’s leading international fashion houses; it sells its products through standalone boutiques, lease departments in high-end department stores, and through the e-commerce section of its website. With over 130 locations on all continents except Antarctica, the company works hard to customize their marketing strategies to meet the needs of the local consumers. Their biggest strategy is to appeal to the local consumers through their store locations and advertisements to make them feel like Louis Vuitton understands them. Below are just a few snapshots to illustrate what we are talking about.
Because the company is not in all countries the e-commerce section of their company works to tend to the consumers who are not able to get to the closest store available to them. The company changes the product lines, to a small extent, to meet the customer needs, but for the most part it stays the same. Additionally, there have been recent reports of the company making an exclusive product line for China. Chinese consumers do not like the fact that the bags have the logos all over them, but those rumors have been shot down by the company. It would actually be a very interesting strategy to have exclusive lines in these international retail stores because it would draw other international consumers to those stores to purchase the products because they would not be able to get it back home. Below is a map illustrating some of the locations that these stores are located.
Either way, Louis Vuitton is “doing it right” when it comes to International Retailing. For the past 6 years the high end brand has been named the most valuable Luxury brand at over $25 billion USD.
As this is our last post of the semester, Elizabeth and I hope that you have enjoyed all of our posts and learned something about Global Brands and their multiple executions. Thanks for reading and good luck on Finals!
As we enter the last month of the semester coffee is what has been fueling my eyes to stay awake and brain to keep on working. So it is fitting that this weeks blog post concerns Starbucks!
Starbucks is an international brand that has over 18,066 stores, 18% of those is Asia and 16% in Europe, the MIddle East and Africa. They target men and women ages 18-40 and utilize the following channels: retail stores, online, grocery outlets and connivence stores.
Starbucks sources their raw materials from over 19 different countries and 70,000 outbound deliveries a week. Sourcing from many different countries helps Starbucks keep costs low and ingredients superior. Once the raw materials are harvested they are sent to one of six manufacturing plants.
Starbucks opens approximately 10 stores every day and has 137,000 employees. These physical stores serve approximately 40 million customers a week.
The retail and online stores are similar channels in that the flow of materials is the same. The flow of the materials goes from the farm to the roaster to the retail store or online store then direct to the customer. Items sold through these channels are: custom drinks (coffee & tea), food items, mugs, coffee equipment and Starbucks branded merchandise.
Their grocery and convenience store locations also have similar flow of materials. The materials go from the farmer to roaster to the bottler, in this case PepsiCo, to the distribution center to the store then finally to the customer. Grocery and convenience stores sell ground coffee, instant coffee (Via), and “ready to drink” Frappuccino and double shot espresso drinks.
By expanding the channels in which they sell their products Starbucks can make sure they are part of their customers life at home and at work.
For any company, global pricing is a lot more difficult to assess than domestic pricing because of international currency fluctuations, price escalations due to tariffs, price controls, transfer pricing regulations, and the different forms of payment methods across the world. This week Elizabeth and I will discuss how global companies such as the Kellogg Company have to consider the different fundamentals that steer the decision processes when it comes to global pricing.
Kellogg products are manufactured in 35 countries and marketed in 180 countries. Every country that the Kellogg Company conducts business in, they must use the local currency. This can affect profitability for the company because each currency is susceptible to sudden appreciation and depreciation. Exchange rates can affect how the Kellogg Company conducts their business. If exchange rates for example continue to be unfavorable for an extended period of time, the Kellogg Company may decide to export products to that company in a different way, limit products that are exported, develop a manufacturing plant in the country of business, or completely stop all exports to that country if they deem it unprofitable.
Kellogg can also decide to determine transfer pricing which is used to attribute a multinational corporation’s net profit (or loss) before tax to countries where it does business. All in all it helps the company adjust the pricing of the related goods between parties. In the case of Kellogg, pricing would be adjusted for their food products, while keeping in mind fairness for the country they are conducting business in and satisfying their local laws.
Another important aspect of Global Pricing is that each company must remain competitive in markets. The Kellogg Company must work hard to price its products to retain a profit but to keep in mind that the consumer must still be able to purchase their products at a reasonable price. With the success that the Kellogg Company has internationally it is clear that they are thinking of all parties when it comes to pricing and keeps their consumers coming back for more.
Fast Company named Apple the most innovate company of 2012. Apple has been able to come out with products and services that consumers never even though would have existed and these products have changed the world we live in. Number 2 on the list is Facebook, followed by Google, Amazon and Square Inc. to round out the top 5. What do these companies have in common? And why are they so wildly successful?
Not only are these companies brands that are recognized world wide but they are all companies that have unique and relevant strategies. Each company has developed a winning strategy to complete globally for not only our wallets but also our loyalty. Apple has changed the way the world communicates, Facebook has changed the way the world stays connected, Google has been able to deliver fast efficient information (faster than ever before), Amazon has brought world sellers and buyers together 24 hours a day and Square has revolutionized how we pay for things.
Each company has specific goals that they set out to achieve internally and externally. While the goals these companies work towards may not have been the initial goal or first idea that the company began to operate on, innovation is what drives these companies towards the future. These companies have stayed relevant for years, and in some cases decades by being innovators in their respected industries. And those innovations have made them global leaders in their respective industries.
While these companies have more wins than losses another important aspect to innovation is failure. Here are a few examples of Apple and Googles biggest product failures:
By encouraging creative thinking failure is inevitable and there would be no great product with out a few duds.
Freedom is another great way to encourage innovation. By letting individuals or teams have the freedom to explore and test out their ideas new, even better ideas emerge (some even better that the original). Freedom will help encourage risk taking that may be otherwise discouraged.
Global branding is the best technique for a firm to create a consistent identity with consumers across the world. In today’s blog we will discuss how Amazon is utilizing Global Branding to their advantage and boosting visibility across the globe. Amazon is the largest online retailer. Right now, according to Interbrand’s list of “Best Global Brands 2013”, Amazon is number 19 (see image below). Amazon is one of those firms that has a stronger consumer awareness than other online markets in the world.
No matter where you are in the world, when you purchase a product from Amazon, you are going to receive a box with that same smile signifying that they serve you from A to Z. (See below). The firm currently has websites for 12 countries, but has international shipping for certain products to certain countries. Being a Global Brand adds to Amazon’s perceived value, because they are a reliable firm that services a multitude of people.
Of the four Global Branding strategies, Amazon is using the family (umbrella) branding strategy. By using this strategy they are using the name Amazon as a symbol of authority and then as a number of products brands under the corporate name. Amazon produces its own products but also has many smaller producers that are able to sell their products using the website (see image below).
Furthermore, Amazon utilizes the extension branding strategy. By expanding into other product categories such as the Amazon Kindle, Amazon Art, Amazon Instant Video, Amazon Local and many others, the firm is able to grab a larger consumer grouping that may not necessarily need their retail services.
Lastly, because of the Global Brand awareness that they now have they are able to set up fulfillment and warehousing centers in the different countries it mostly serves. These distribution stations show that Amazon is committed to serving each country to meet their needs in the best way they can. From here on out Amazon will continue to grow Globally.