MARC JACOBS using the market development strategy to expand

Marc Jacobs, born April 9th 1963, started out as the creative director at Louis Vuitton and has his own line Marc Jacobs as well as Marc by Marc Jacobs.

This blogost will be dedicated to a pitch for Marc Jacobs and why they should expand to China using the intensive growth strategy market development and expansion.

Market development is a strategy that identifies and develops new market segments for current products. A market development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments.

Marc Jacobs is a very prestigious and sophisticated fashion brand adored by many women all across the world. The patterns and design can be seen at every red carpet event held anywhere in the world. Celebrities such as Miley Cyrus, Rihanna, Kaia Gerber and Winnie Harlow are just some of the celebrities that advertise and make Marc Jacobs's designs most wanted. They design men's, women's and children's ready to wear clothing, shoes, handbags, accessories and fragrances.

They have 285 stores in 60 countries.

Marc Jacobs targets primarily women but he caters for men as well. His target market includes women between the ages 18 and 39. These women are usually open-minded, sophisticated yet edgy, self-aware and style conscious young women. The classic "Cosmopolitan" woman.

Products and Price ranges:

Women:

Ready to wear: 

- $68 Anniversay Skull Tee

- $598 Mini CDC Dress

Swimwear:

- $63 Miss Marc Tab Bikini B

- $173 Simone Stripe Romper

Shoes:

- $65 Miss Marc flip flops

- $450 Evening Bow Sandal Platform

Bags and Accessories:

- $38 Miss Marc Packable Head Case

- $528 Classic Q Francesca

Jewelry and Hair Accessories:

- $22 Logo Disc Bobby Pins

-$198 High Tide Cork Bangle

Men:

Ready to wear:

- $58 Triple Rib Tank

- $798 Washed Leather Jacket

Swimwear:

- $128 All Shorts

Shoes:

- $260 P.T. Cali Print High Top

- $460 Jumble High Top

Bags and Accessories:

- $28 Packables Zip Pouch

- $498 Zip Zip Duffle

Eyewear:

- $85 Oval Frame

- $160 Gold Frame

Tech:

- $28 Colour Pop Earbuds

- $278 15" Commuter Case

Watches:

- $120 Molly Round Face Watch

- $172 Clear Riviera Watch

Looking at Marc Jacobs, choosing the right growth strategy is crucial for the business. There are a few strategies that can be considered:

Market Penetration:

A company uses market penetration when it decides to sell existing products within the same market its been using.

Benefits:

- Fast growth: when you offer better prices than your competitors you can lure their customers away.

- Economic advantages: if your business development goes the right way it can bring cost advantages.

- Combat competitors: combating your competitors is one of the best ways to obtain success.

Disadvantages:

- Missed opportunities: marketing luxury products as cheap items are common mistakes.

- Poor company image: market penetration might be a bad idea if your brand has several lines.

- Lack of results: market penetration might just not work for your company.

Market Expansion:

A company tries market expansion when there isn't enough room for growth within the current market.

Benefits:
- New personnel: with expanding your company you get the chance to work with new, qualified people.
- Broader customer base: you get the chance to introduce your company to a broader audience.
- Relocation possibilities: you get the chance to explore new locations.

Disadvantages:
- Compromised quality: with your company growing rapidly, you may come across declining quality.
- Employee turnover: because many employees do not grow with the expansion, you have to pay close attention to hiring.
- Loss over control: if the company grows too quickly it is very easy to lose control over things.

Product Differentiation:

A company tries to develop an existing product which they continue to sell in the existing market, to increase sales and profits.

Benefits:
- Provides variety: customers are more willing to buy from you when you have a variety of products.
- Enhances creativity: in order for a company to be successful they have to be creative.
- Brand loyalty: if your company produces different products with good quality it will guarantee loyal customers.

Disadvantages:
- Cost: expanding your product could be very costly.
- Customer affordability: you also have to keep in mind how much your customer will be willing to pay.
- Cannibalization: if you produce many different products you could cannibalize your own products.

After carefully looking at places Marc Jacobs could expand to, China seems like a good and financially strong country to expand to.

Why China?

- China has the wold's second largest economy.

- China is an upper middle-income country who's economy is rapidly increasing.

- The number of wealthy individuals in China were expected to be 4.4 billion by 2015.

- Wealth in China will eventually spread to smaller cities like Chengdu and Wenzhou in the future.

Among Chinese consumers buying from the US, 53% say they buy apparel, 46% say electronics, 41% say cosmetics, 32% say food, 23% say health products, jewelry and watches and 20% say household goods and furniture.

According to PayPal, when Chinese consumers buy, they buy a lot. $485 clothing, $1 229 electronics and $52 cosmetics.

Reason why Chinese consumers spend so much money on luxury brands:

- Boasting: In 2008, 70% of Chinese consumers bought luxury brands because it was a way of showing their status and wealth. Even still today both men and women buy luxury brands to boost self-confidence and impress their peers. Chinese consumers think that the more famous the brand, the better social acknowledgement they get. They will also publicly display their valuable assets and how they climb the social ladder.

- Gifting: Giving gifts in China in an important motive in buying luxury goods. Buying gifts for special occasions is a planned purchase. Besides wealthy consumers purchasing luxury goods for family, friends and colleagues it promotes harmonious business relationships in China.

- Stress-release: In recent research it shows that Chinese consumers tend to make impulse buys against their global peers. Around 40% of those people purchase after wanting it for one day. Retail therapy is globally known as a stress reliever  and can relieve  their sadness, anger and depression. The more luxurious the item, the more willing they are to buy it.

-Self-reward: In the last few years, Chinese consumers have been spending more money purely for enjoyment and indulgence. They are willing to buy items that mean a lot to them and give them emotional comfort. They don't mind splurging on good like clothes, cars, hotels, etc. These modern Chinese consumers are seen to have more hedonistic tendencies, which were only in the past linked to western culture.

- Self-expression: 90% of Chinese women bought niche luxury brands on their last trip abroad. They use those items to reflect themselves and their personalities. The people who mix and match luxury brands are very fashion-forward.

- Investment: Many Chinese consumers buy luxury brands as investments because the value will increase overtime which is true watches, jewelry and antiques. The luxury market in China is growing in sophistication where local consumers appreciate the heritage and history of a brand.

Should Marc Jacobs decide to expand to China, here would be the ideal locations where Marc Jacobs would establish stores:

- We will aim to make Mainland China it's biggest foreign market.

- The signature Marc Jacobs stores would have:

• 3 in Hong Kong
• 2 in Beijing
• 1 in Tianjin 
• 1 in Macau

- The Marc by Marc Jacobs stores would have:

18 in Mainland China

• 5 in Shanghai 
• 4 in Beijing
• 2 in Shenyang
• 1 in Chengdu
• 10 in Hong Kong
• 1 in Macau

And of course with a new country comes a new currency so here are just a few examples of how much each item would be in Renminbi:

Ready to wear fashion:

¥13 500

$595 - 9800

Handbags:

¥15 500

$595 - 3 495

Shoes:

¥5 500

$340 - 990

Accessories:

¥2 700

$150 - 400

Conclusion:

In conclusion, looking at the statistics and and facts, I think that Marc Jacobs couldn't go wrong expanding to China. Not only do Chinese consumers love to splurge, but it is also a very busy country which means that people would be in and out of stores. This means that the stores won't only be available to Chinese consumers but would also reach a lot of foreign consumers.

"Life is a fashion show. The world is your runway."

-Marc Jacobs

Bibliography

Barbara. (2015, January 26). Six Reasons Why Chinese Buy Luxury Goods. Retrieved January 9, 2018, from Red Luxury: http://red-luxury.com/brands-retail/six-reasons-why-chinese-buy-luxury-goods-29174

Luong, C. (2011, June 2). Marc by Marc Jacobs. Retrieved January 9 , 2018, from SlideShare: https://www.slideshare.net/cluong4/marc-by-marc-jacobs-field-project

Rubel, M. (2014, April 9). Global Strategy Marketing. Retrieved January 9, 2018, from SlideShare: https://www.slideshare.net/moerubel/product-marketing-global-strategies-marc-jacobs-china-expansion-usc-mkt-440-33306081

Suttle, R. (n.d.). Growth Strategies in Business. Retrieved January 9, 2018, from Chron: http://smallbusiness.chron.com/growth-strategies-business-4510.html