HERMÈS :

Strategic Extension

Pranav Bhalaji S K
 I. INTRODUCTION

II. ANALYSIS

III. OPPORTUNITY TO ENTER A NEW

SEGMENT

IV. STRATEGIC

RECOMMENDATIONS

V. IMPLEMENTATION
TABLE OF CONTENT
VI. WHAT’S UP NEWS

VII. SOURCES
I - INTRODUCTION
● Hermès International S.A is a French high fashion Luxury goods

manufacturer established in 1837 by Thierry Hermès.

● It specializes in Leather, lifestyle accessories, home furnishings,

perfumery ,jewellery, watches and ready to wear.

● Its logo, since the 1950s, is of a Duc carriage with horse

● Nadege Vanhee-Cybulski is the current creative director.

● Revenue :€ 5,966 Million (2018)

● Net Income : €1,405 Million (2018)

II - ANALYSIS
 STRENGTHS
→ Strong notoriety: guarantee of quality.

→ Brand image and brand heritage: the Maison Hermès created its first perfume in
1951 with the emblematic « Eau d’Hermès ».

→ Customer loyalty.

→ Consistency with the brand’s universe and its image of timelessness and
modernity.

→ Differentiated positioning between each fragrance: each fragrance aims to

represent a facet of its clientele, touched by certain values.

→ No brand cannibalization: Hermès Parfum markets its products through its

Houses and a limited number of retailers capable of extending the universe and the
SWOT values of the brand in their stores.

Analysis → Hermès' mastery of distribution is a success factor.

 WEAKNESSES
→ Low visibility due to a selective distribution strategy.

→ Differentiation responding to small consumer markets.

→ Low market share.

→ No innovations.

SWOT
Analysis
 OPPORTUNITIES
→ Asian market growth.

→ New niche markets to explore: Hermès fragrances are very differentiated, and for
the most part target micro-markets. This choice comes in response to a strategy of
occupying niches, where the wealth is in the number of niches occupied.

→ The global luxury sector is growing.

SWOT
Analysis
 THREATS
→ Poor advertising communication: The flagship perfumes, unlike the other
perfumes in the range, benefit from a marketing mix with poster campaigns or
advertising spots.

→ The weak communication budget: Hermès Parfum has chosen a reduced media
budget compared to market leaders, and its marketing mix is mainly focused on the
press and television with rotary re-launches of one to two perfumes every 2 years.

→ European market saturation.

→ Strong competitive intensity.

SWOT
Analysis
 1) THE THREAT OF SUBSTITUTES
The supply of substitute products by competitors in all market segments is
abundant. The threat of substitutes is strong.

1) THE THREAT OF NEW ENTRANTS

The global luxury market is dominated by a handful of companies, the leader is
LVMH, which is well ahead, then comes PPR (Gucci Parfums) and Hermès is ranked
in 10th place.
In recent years, companies active in the sector have adopted concentration and
internationalization strategies. Hermès favors internal growth to internationalize
and control its production chain.

3) THE BARGAINING POWER OF CLIENTS

The number of products is very large, so that consumers can buy another product
deemed cheaper. They have a choice.
There are two types of power because two types of channels :
PORTER’S The vast majority of sales are made in shops wholly owned by the brand. In this

FIVE case, there is no intermediary between Hermès and its customers, their negotiating
power is moderate.
FORCES In the case of the sale of Hermès products in perfumeries in selective distribution,
distributors have bargaining power.
 4) THE BARGAINING POWER OF SUPPLIERS
Depends on the ease of access to raw resources. In the case of Hermes, the
suppliers are integrated into the group which controls the production as well as the
distribution of the products, which means the entire production chain.

5) COMPETITIVE INTENSITY
Barriers to entry being high, the competitive intensity within the fragrance market
is strong. The main market leader companies have been the same for years, they
have acquired a privileged place in luxury goods and consumers are used to their
brands.
In addition, the prospects for market growth are attractive for companies, making
competition even more intense. The forces being high, the market is therefore
profitable and attractive.

PORTER’S
FIVE
FORCES
III - OPPORTUNITY TO ENTER
A NEW SEGMENT
 Make-up Market

● The global makeup base market size was valued at 11.2 billion Euros in

2018.

● Rising participation of women in the workforce.

● Increasing physical appearance consciousness among millennial.

● Increasing millennial population.

● Increasing use of makeup among male consumers.

● offline makeup base market holds over 75.0% share of the total revenue.

● Adopt multichannel distribution

 Product Outlook

● Lipstick

● BB crème & CC Crème

● Foundation

● Concealer

● Primer

● Powder
Forecast of Make-up Market Distribution Channel
Size by 2025
 Distribution Channel

● The offline distribution channel led the makeup base market and

held over 75.0% share of the total revenue

● Consumers prefer to buy new cosmetic products such as makeup

base from brick and mortar stores.

● Online distribution channel is projected to expand at the fastest

CAGR of 6.3% from 2019 to 2025

● E-commerce allows consumers to shop anywhere, anytime, and

has a wide range of products.

● Wholesale and Retail.

 GERMANY
FRANCE
UNITED STATES CHINA
SAUDI ARABIA JAPAN

BRAZIL

REGIONAL OUTLOOK
 Competitors
● Lancôme

● Dior beauty

● Laura Mercier

● Charlotte Tilbury

● Estée Lauder Chanel Beauty

● YSL Beauty

● Tatcha

● Pat McGrath

● Nars

● BECCA

● L'Oréal
 IV - STRATEGIC
RECOMMENDATIONS
 STRATEGIES

● Permanent collections.

● Initially in their own stores mainly, in a limited distribution.

● Loyal customers, concentrating on both men and women.

● Partner or acquire companies.

● Collaborations.

● Global Market.

● Giving samples.

● Sustainable and Eco friendly move.

 SUSTAINABILITY

● The option of refilling and the plastic free packaging.

● Usage of healthy, natural and organic ingredients (Natural oils, Agricultural
plants, Bacteria).
● Preservative free, gluten free products.
● No animal testing.

Use of Natural and sustainable cosmetics:

● Environmental friendly.
● Increased effectiveness.
● Long term health.
● Improved product quality.
● Enhance brand reputation.
● Increased corporate responsibility.
V - IMPLEMENTATION
 MARKETING MIX

Product Place

We are presenting a “no gender” which is limited Hermes operates in worldwide hot fashion districts
edition for each category of our makeup products. like Japan, Europe, USA and Asia Pacific to increase
Since the leather goods also have the same concept, sales and expand its customer base.
we want to stick to the Hermès DNA of saving Hermès distributes its products through 307
heritage. Product ranges are lipstick , Bb creme & exclusive shops around the world to reinforce its
CC Creme , Foundation , concealer , primer and brand image and also serves online.78% of the
powder turnover is generated through Hermès fully owned
shops.
 PROMOTION PRICE

Hermes, being a premium consumer durable brand, Hermès has adopted the policy of premium
focuses on holistic advertising. pricing strategy in its marketing mix to imbibe
the sense of exclusivity which is exactly what
● Communication media- Hermès could advertise in the luxury consumers look [Link] pricing
print media that can smartly provide attractive should be premium and its products could be
colors, theme and fabulous images. Like- luxury and priced higher than most of its competitors.
high fashion magazines such as Vogue.

● Celebrity endorsement- Hermès Can use this tool

to create global brand awareness and add value &
enhance position of its brand in the market.

● Website - It Should support various languages for

different countries to promote the latest products
and services and to respond to customer questions. Lipstick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58€
BB&CC Cream . . . . . . . . . . . . . . . . . . . . . . .49€
● Pop up store experience and provide free samples. Foundation . . . . . . . . . . . . . . . . . . . . . . . . . 96€
Concealer . . . . . . . . . . . . . . . . . . . . . . . . . . . 68€
Primer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79€.
Powder . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 82€
VI - WHAT’S UP NEWS?
 The fragrance of the lipstick was
Twice yearly, three extra shades will be created by Christine Nagel, the
introduced, with distinctive bands of brand’s fragrance director.
colours on the packaging in unusual.

Rose Inoue, a The packaging is

The Rouge Hermès joyous pink-coral refillable (hurrah!), and
lipsticks are £58 and matte, the mechanism within
available from 4 sophisticated dark the packaging that holds
March at Hermes and berry satin shade the lipstick together is
Harrods. of Violet Incense. interchangeable.

The leather case (because your lipstick

The matte lipsticks – inspired by the
needs its own Birkin) and mirror and lip
famous Doblis calfskin.
brush in lacquered wood, are bound to
become highly collectible.
VII - SOURCES
★ [Link]

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XKzYUKHaRZA_AQ_h0wEHoECAsQBg&biw=1792&bih=960#imgrc=Tf3lR9P
efQMHZM

★ [Link]

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★ [Link]

★ [Link]
n,xetr,fr0000052292,886670,[Link]
Thank you...