Hermes
Maa’az Mohammad 60303233
Manar Alsicksick 60094146
Sayed Ali Yusuf 60301812
Abdulrehman Khalid 60103256
Introduction
Hermès founded in 1830s in France as maker of equestrian
leather goods
Iconic Birkin bag first created in 1984 for actress Jane Birkin
Jean-Louis Dumas, Hermès CEO, created original black
leather Birkin
Known for craftsmanship and made in limited quantities to
retain exclusivity
Hermès has grown into luxury brand with over 16
departments beyond original equestrian roots
Marketing Strategy
Segmentation
Targets ultra-wealthy who can afford five- and six-figure price points
Limited availability builds exclusivity among billionaire circles
Iconic bags so coveted that interest rises with shortage rumors
Qatar prime market given rising ultra high net worth demographics
Demographics
Modernizing country competes globally across sectors
Propensity for luxury signals status per local values
Elite crave iconic artistic pieces few worldwide can acquire
Market Analysis
Limits availability of Birkin/Kelly bags to retain unmatched
prestige
Bags only obtainable by most discerning, ultra-wealthy
clients
Strategic undersupply fuels frenzied demand
Record resale prices demonstrate power of exclusivity
Enables meeting demand in perpetuity
Occasional price hikes magnify perception of exclusivity
Epitomizes luxury branding fundamentals
Secrecy around ownership for bespoke bags adds intrigue
PESTLE
Political
Constitutional monarchy ruled by Thani royal family
Allies with UK, Kuwait, France, US, Pakistan, India
Provides stable environment for business growth
Economic
FIFA World Cup raised Qatar's business profile
One of the richest countries globally
Corporate tax but no personal income tax
Tax-free living attracts residents and investment
Sociological
Spotting a Birkin bag signals membership in an elite social circle
Birkins shown off to gain social capital and validation
Reinforces social hierarchies and infers one's networks/connections
Technological
Conservative Islamic culture
Residents expected to respect heritage
Peaceful country with emphasis on equality
Legal
Islamic shariah law respected across society
Peaceful and safe country
Environmental
Air quality very unhealthy due to emissions
Arid climate hinders agriculture
SWOT
Strengths
High incomes in Qatar enable luxury spending
Iconic pinnacle of luxury craftsmanship
Scarcity builds exclusivity
Localized offerings
Weaknesses
Long waitlists frustrate customers
Very high pricing limits audience
France-reliant production
Luxury dependence narrows focus
Opportunities
Sustainability draws broader interest
Customization aligns with luxury trends
Virtual expansion mitigates risks
Emerging market growth diversifies revenue
Threats
Economic declines hit luxury spending
High competition in luxury market
Asia-Pacific instability impacts sales
Marketing mix
PRODUCT
Exclusive, luxury handbag with custom options
Conveys high status and prestige
PRICE
Starts at $20,000, can reach $450,000+ for unique bags
High margins even with expensive materials and labour
PLACE
Limited availability in selective locations
3 boutiques in Doha allow scarcity
PROMOTION
Fashion shows and celebrity endorsements In-store experience builds
brand mystique
Stakeholder
Analysis
Investors
Rely on Birkin sales contributing significantly to Hermès'
profits
Employees
Craftspeople and client advisors depend directly on Birkin
demand
Luxury Retail Partners
Stock inventory in stores in return for sales percentage
Suppliers & Distributors
Provide necessary high-quality inputs for production
Fashion Media
Tabloids and magazines heavily feature Birkins to tap
consumer desire
Industry
Global luxury goods valued at $385B; $335B in personal luxury
segment
LVMH, Richemont, Kering dominate; Hermès ranks #4 in personal
luxury
Designer handbags fuel growth, represent 30% market share
Handbag market seeing 5-7% growth, on track to continue
Hermès is pinnacle of ultra luxury, especially Birkin/Kelly bags
Iconic Birkin/Kelly hold waitlists up to 6 years
Resale values $10K to $500K+ demonstrate desirability
Hermès commands premium pricing and exclusivity
Financial Feasibility
Break-Even Analysis
Assumes ASP of QAR360K, variable cost of QAR108K per unit
Fixed costs of QAR18 million per year, 25% target margin
Breaks even at 71 units sold based on calculations
At 150 target volume in Year 1, will achieve break-even and profit targets
Feasibility Confirmed
Profitability validated based on Qatar luxury market growth
Hermès Birkin investment warranted given demand
Competitor Analysis
Louis Vuitton Dior
Product Identity Alma bags Lady Dior, and Saddle bags
Product Strategy Mass luxury Mid-high-end luxury
Product Quality Moderate Moderate
Benefits Brand popularity Superior style & design
Price Strategy Mass Pricing Prestige Pricing
Price range: $400-$36,000 Price range: $3000-$7000
Promotion Strategy Mass Marketing Lifestyle branding
Placement Strategy Intensive distribution Intensive distribution
Management Capability Brand Focus Brand Heritage
Market Share 5-10% Market share 15-20% Market share
Business-Unit Strategy Craftsmanship Design innovation
Core Competency(s) Brand Heritage Design innovation
Competitive Advantage Absolutive Executive Brand preference
Recommendatio
n
Exclusive reservation system to match global
waiting lists and fuel prestige
CSR and arts partnerships to ingrain Hermès'
artisan heritage locally
Targeted boutique expansion plan informed by
customer response
Regional GCC marketing drives customized travel
to Qatar store
Customer loyalty building via invitation-only Birkin
club with exclusive access, driving brand affinity
with top-tier patrons
Localized digital innovation like Qatar-exclusive
Birkin NFT collection, reimagining virtual luxury
experiences
References
http://tradearabia.com/touch/article/RET/155319
https://www.moodiedavittreport.com/hermes-dazzles-at-hamad-international-airport-with-qatar-
duty-free/
https://www.rli.uk.com/hermes-open-new-store-at-place-vendome-qatar
https://madisonavenuecouture.com/blogs/news/how-hermes-birkin-bags-are-made#:~:text=Birki
n%20bags%20are%20crafted%20from,finest%20skins%20for%20their%20bags
Chawla, Medha . “Why Hermes’ Iconic Bag Was Named after Jane Birkin.” India Today, 17 July
2023,
www.indiatoday.in/lifestyle/fashion/story/why-hermes-iconic-bag-was-named-after-jane-birkin-24
07623-2023-07-17
. Accessed 21 Nov. 2023.
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