Market entry strategy for luxury brand valentino in India

Abstract

Valentino is an Italian Luxury brand started in 1959. It now belongs to the private equity fund Permira and is part of the Valentino fashion group. It is considered an important player in the global luxury market. Valentino offers apparel, shoes, bags, shawls, jewellery & watches. The Indian Luxury market shows immense potential with an estimated value of $4.76B (2009). It has shown a growth (CAGR) of 13% through 2007-09, with luxury products growing at 22%. With an estimated 62000 super-rich households whose wealth amounts to $1Trillion & expected growth to $5.3Trillion in five years, India is not a market that luxury brands can ignore. Three segments that fashion/luxury apparel brands have been concentrating on in India are International branded apparel, Indian designer wear & accessories. There have been multiple players operating in one or more segments mentioned above. Players include Versace, Louis Vuitton, Canali, Salvatore Ferragamo, Gucci, Armani etc to name a few. Some of these brands have succeeded while some failed. Valentino had tried for a previous entry into India through a franchise route with Mafatlal. The reasons for failure were many, including product range, launch function, franchise association & timing. As part of this study, the market entry of a few luxury brands has been observed & trends noted. Various reports and surveys from prominent consulting companies were reviewed. Moreover we supported our study by conducting a field visit to luxury stores in Bangalore as well as interviews of store executives. Based on projected sales estimates & cost of operations, the time required for break even has been calculated to be 3 years with an average of 1.7 target customer on weekdays & 3.4 on weekends. As a result of this study we propose the following entry strategy: * Based on demographic profiles, city infrastructure, competitor presence & financial viability, we advise Valentino to enter Delhi in year one and Mumbai on year two. * Out of the multiple options of partnership format, Joint Venture was identified as the best bet. * The Product mix must focus largely on Accessories as they are more universal in taste than apparel. * Considering the taxation values of an average of 35% and competitor premium pricing levels, Valentino could price it’s products at a 10% premium compared to European prices in exchange for convenience of buying locally & after-sales service. * The preferred channel of distribution was found to be Luxury malls. * Out of the array of promotional opportunities, Valentino stands best to benefit from Fashion events, good PR works, advertising in niche magazines such as Vogue & Elle, having a brand ambassador such as Katrina Kaif, tapping India’s fetish for Bollywood & presence in Social Media. * Various ways of brand building have also been identified such as value added services, ‘Indianization’ & the progress through the 5 stage Luxury framework. * Valentino must also undertake a detailed Market research before actual launch & must be careful while choosing channel partners.