Developing a Global Vision

Hermes International SCA is presented in Europe, America, and Asia through its exclusive retail shops. The company operates through numerous subsidiaries, such as Castille Investissements, Maroquinerie des Ardennes, Holding Textile Hermes, Hermes Canada, Hermes Istanbul, ERM WHG Warenhandels Gmbh and Hermes GmbH, and Manufacture des Haute Maroquinerie. Though profits last year jumped 64% to €5.65 billion from €3.44 billion last year, they were buoyed by a capital gain linked to its decision to relinquish its 23% interest in rival Hermès International SCA to shareholders. Overall, business is improving, the company said. Fourth-quarter sales grew 10% as the U.S. market gained pace and as European sales improved late in the period.


Hermes achieved its 2014 sales target and is looking to expand in Germany through bigger stores in cities where it already has shops, an executive was quoted as saying by a German paper.
However, Hermes expects sales growth to slow in this year, a sign that weakness in China’s market for high-end goods is now hitting the pinnacle of the luxury business. It expects revenue to grow 8%, decelerating from an 11% increase last year, citing “economic, geopolitical and monetary uncertainties over the world.” Year-on-year, sales in Asia outside Japan grew 8.9% in the fourth quarter. Watch sales, which fell globally by 13% at constant exchange rates in the quarter, were particularly hard hit in China, the company said. Not only Hermes sale has dropped in China, other luxury goods and premium liquor and spirits have also affected from the crack down in Beijing on corruption and luxury spending among public officials.  

The Marketing Environment

Hermes products are targeted to men and women with an exceptional taste. Not only Hermes has emerged as the most ascendant company in the $300 billion luxury market, Forbes also listed this 177 years old company as the world's 13th most innovative public company. Hermes is definitely focusing on their marketing in the new up and coming market in China as they have the most buying power.

Victoria Beckham with her Kelly bag

Victoria Beckham with her Birkin bag

Kim Kadashain with her Birkin bag

Marketing Environment Factors

Hermes has always postponed itself as a brand with strong heritage through the long history if its family which is still own and operate the company today.
Its marketing strategy is to be a unique and highly exclusive luxury brand, so mass production is not the key. As well as it only targets elites and affluent consumers who can afford their product and appreciate the luxury. According to their pricing strategy, it limits access to the brand following specific association with product characteristics. For these reasons, Hermes is not available to every market channels to maintain its exclusivity. Although it offers online retails, but exclusive products such as Kelly and Birkin bags are only available in the stores because they need to be preorder.

In 2013, Hermes Sport Life Clothes with a premium luxury goods to show their consumers that they can also look elegant and stylish while playing sports. Hermes also seeks younger consumer through social media like Facebook by posting videos of new collections, commercials, and related events. Hermes also achieves to reach young segment with contemporary comfortable collection for everyday use.

Ethics & Social Responsibility

Luxury and Sustainability seem to be the opposite words, but I think we can all agree that it feels good to be able to give back to the society in any which way we possibly could.  Some people are even willing to switch brands to the one that gives back. 

I believer that the values luxury brand like Hermes stand for align perfectly with green practices as it focuses on timelessness, durability, innovation, and fine craftsmanship. These are all of the characteristics that mirror the underlying goals of sustainability and social responsibility.

Birkin 

Its timelessness is what makes the Birkin bag sustainable because its durable and long lasting quality. Besides the quality of the bag itself, Hermes also offers spa package to the bag such as repairing minor scratches and etc that even helps the bag last longer. Uniqueness of the craftsmanship is the soul to the bag and the brand.

In addition, Birkin bags are handcrafted in Hermes factory in Paris, France which also known as their original workshop. In a month, the shop is expected to produced 15 crafted bags. For these reasons, it is able to reduce carbon footprints unlike mass production of other brands which cause global warming and other environmental issues. I believe that anything that we buy is an investment. Although the bag comes with a hefty price tag but it is truly worth the quality. There is no question asked that we all want a product that can last a life time. That's why sustainable products are very important. 

Here's the inside of the Hermes factory and part of the making Birkin bags:

According to the Guardian, slow fashion is the heart of the brand ethos which also known as sustainability and durability. Although, Birkin bags are inaccessible to the majority of people, it is very interesting to see that their profit has only been higher in the recent years. To sum up, quality is the true value of any products. The idea of luxury goes beyond price tag as it also symbolizes social status and personality of the owner of the product.

Strategic Planning for Competitive Advantage

Hermes is a French luxury brand which has been established since 1978. It has carried the craftsmanship of the family's philosophy until today. It is one of the oldest family owned and controlled companies in France. A desire of excellence in the highest quality that a client deserves has never faded as time changes. Their products focus on the beauty of precision and timelessness as well as letting the materials express their best quality through the design and cutting. “Every Hermès object has to be perfectly done and in the best material and in the best way, that’s a matter of fact for us, a basic standard. If it’s saddle, it has to be the perfect saddle, and the same goes for every other category,” explains Hardy, a creative director of Hermes fine jewelry division.

Hermes definitely has a unique brand history that enable to maintain a clear competitive edge over other brands in its niche as luxury goods. Birkin is one of the most popular collection of Hermes. The idea of the bag starts back in 1981 when the chief executive of Hermes, Jean Louise Dumus, was seated next to Jane Birkin, a British actress, during a flight from Paris to London. Barkin explained to Dumas how it has been hard to find a leather bang that not only fits her needs but as well as the style and color. For these reason, the first Birkin bag was created for Jane Birkin 1984 it has become famous sine then. To sum up, understanding your customer needs is the most important key to win your competitors. 

In 2013, Hermes has total revenue of $5.2 billion with has increase by 13% from 2012. The company is continue to grow quickly in Chinese market while other luxury brands like Louise Vuitton and Gucci sales have dropped. A currently economy gives luxury products advantage to grow significantly in a specific region, Asia. As one of the most powerful luxury brand in the world, Hermes was given an opportunity as the increase of demand in luxury products grow in countries like China and South Korea which have recently played a big role in global economy. 

Although the demand is high, their Birkin bag is far from accessible to most people as a result of its heavy price tag. Crocodile Birkin bags can retail for $60,000 in Hermès stores; leather Birkin bags for about $10,000. It has also become a social status to celebrities, socialites, and entrepreneurs. Lastly, Hermes has built termendous values in its brand and products that I have never seen any brand has done before.