Fundamentals of Marketing: Designer Bag Market Report Analysis

This report provides a comprehensive analysis of the marketing fundamentals for designer bags. It begins by identifying the target consumer segment, utilizing psychographic and demographic segmentation to focus on affluent, primarily female, customers who seek luxury and exclusivity. The report then examines the segment characteristics, noting the rising global market for luxury handbags, the shift towards smaller bags, and the importance of customization. The marketing mix is then dissected, detailing the product as unique designer handbags with premium materials and packaging, premium pricing to reflect high quality, direct distribution with online channels, and promotional strategies including television and social media marketing. The report highlights the importance of understanding consumer behavior, adapting to market trends, and implementing effective marketing strategies to achieve success in the luxury handbag market.

Running head: FUNDAMENTALS OF MARKETING 1
Fundamentals of marketing
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Consumer segment
The focus of this study is on the sale of designer bags. The market segmenting strategy
employed in the sale of this product is psychographic segmentation as well as demographic
segmentation. Under the demographic segmentation, the product is sold to the rich in the society.
This is a group of people who are willing to pay high prices for expensive designer bags. In the
same demographic categorization, gender based segmentation is done. In particular, the products
would largely be sold to women. In terms of the psychographic segmentation, the market
segment to be served would be of the high class women in the society. To develop a different
identity from the masses, they seek unique and expensive products. Psychographic segmentation
involves the division of the market into segments that are based on the values, attitudes and
lifestyle of individuals in the society (Zarrella, 2010). Segmentation is important as it enables
individuals to engage in product design. On the other hand, demographic segmentations are
based on factors such as income levels, gender and age among others. It is through the
identification of a viable segment that organizations are in a position to market their products
successfully. Such market segments are comprised of individuals with homogeneous needs
(Blick, 2013).
Segment characteristics
Around the world, the market for luxury handbags has been on the rise. In countries like
United States of America, the market segment is expected to grow with over 5%. Competition
has also been on the rise in the luxury handbag market. One of the trends affecting segment
needs is the shift from large bags to small ones. This implies that the players in this industry
must look for ways through which they can sell smaller bags to the organization. There is also
the existence of the wide luxury bags in the market. These brands are highly accessible to the

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masses.. to increase the exclusivity factor, organizations are not only developing luxurious
products, but also customized ones. Through this process, they are able to develop bags that are
in high demand within the market. The handbags and luxury market are part of the fastest
growing market segments around the world. While the segment caters for both males and
females, it is predominantly associated with females. Women have high level of variation in
states of clothing, bags and apparel s opposed to men. They also demand bags in diverse sizes as
compared to men. This makes segmenting on women a more viable idea as opposed to
segmenting on men. The rise in disposable income in the United States of America among other
countries around the world has significantly enhanced the demand for products in the industry.
The luxury hand bag market also has diverse customers who make its profitability to increase.
The expansion of the luxury bags market has been enhanced through the aggressive presence on
the social media of luxury products among other channels in which such products have been
promoted. Through aggressive marketing of such products, awareness of their presence in the
market has been increased. At the same time, the market is recording fast growth in online sales.
Such sales are expected to increase as moiré and more players in the clothing and apparel
industry continue selling their products online. Through online distribution, organizations can
reach diverse target customers in the market within a limited period of time. Organizations can
also reach customers in far markets (Blick, 2013).
Demographically, the world population has been on the rise. The population of women in
the United States of America as well as other parts of the world is high. This implies that the
market for products that target women is high. Economically, the united states of America have
recorded significant improvement. This has led to increase in the level of employment in the
country. Increased employment opportunities have in turn resulted to growth of income levels

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among individuals. This has increased the purchasing power of such individuals, increasing the
demand for luxury products. The rise in high net worth customers is thus a key driver of
economic growth within the United States of America. This market segment is nevertheless
highly competitive as many players in the industry compete in development and delivery of such
luxury bags
In regards to the psychographic characteristics within this target market, seekers of
luxury hand bags are high income women who seek lavish life. In many cases, they like to buy
designer wears as well as bags. There is high level of population who are within middle and
higher income levels and who can afford these products. They are women who like celebrity
associations. Other than this group, there is also a high number of working class women who
seek designer luxury bags in line with their status at the work place or in the society.
Marketing mix
Marketing mix refers to the manner in which an organization intends to deliver its
products in the market. In particular, it encompasses the use of the 4ps of marketing which are
product, price, place and promotion
Product
The product that will be sold in this case is luxury designer handbags. In marketing, a
product constitutes the benefits or value that a customer receives for the principal. In this case,
the organization will focus on developing a unique luxury hand bags in the market. The bags will
be designer bags that will enable the customers to distinguish themselves from the masses by
adopting such a unique technique in production (Zarrella, 2010). The clients will have to choice
from different types of materials that will be used in the development of these bags. These
materials will differ from clothing and leather among others. It will also involve the

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enhancement of the bag outer linings with silver or gold linings whenever requested for by the
customer. The bags will be packaged in water proof and elegant covers when being delivered to
the customers. Its wrappings would be like that of any other gift as the product will be very
different from other bags sold by something firms in the country. It is expected that the
packaging will increase the perception of quality of such bags to the customers. As earlier
indicated, the market segment for this product is the high income earners. The organization will
thus have to hire highly qualified designers who will be able to develop unique products that
serve the needs of such customers.
In development of the products, customers will be provided with an opportunity to
provide the details of the product that they would want developed. The organization would then
send to the customers’ image design online to confirm that is what they actually want from the
organization. It is from the organization will go to develop the product (Zarrella, D. (2015).
Price
Price indicates the payment that customers have to pay to the organization for the value
they derive from the product sold to them by the organization. Premium pricing is also referred
to as image pricing. The organization tries to create a perception of uniqueness of the product
and its quality through charging a higher price on the product. Customers tend to associate
expensive products with high quality and cheap products with low quality. A low price strategy
for designer clothing would thus not work. It’s no secret that when it comes to pricing, it is a
critical stage in development of a marketing strategy. Companies not only realize the desired
profits by setting the prices at the desired levels, they also end up targeting their ideal customers.
It is thus important that price of a new product as well as existing ones is set in a manner that
increases its ability to realize goals. Prestige pricing results to the pricing of the product above

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the average market price. Although the price may end up dissuading some customers from
purchasing the product, the higher price ends up attracting customers who get the perception that
the higher price is as a result of superiority in the quality of the product. The organization may
thus end up generating more revenues from sale of such a product as opposed to when it could
have set the price low and target the masses. In this particular case, premium pricing will be
adopted to match the higher quality and unique design of the product. One of the merits of this
price is that it increases product visibility. When raising the brand awareness, customers would
always want to know why the product is priced higher than that of competing brands. This
eagerness results to increase brand awareness in the market. Equally, through premium pricing,
the organization realizes a higher profit margin. Increase in profit margins ends up increasing
the overall level of profitability of the organization
Place
The organization will be located in Los Angeles. It is from here that it will be
coordinating all of its operations. In regards to its distribution, the organization will engage in
direct distribution as well as the use of online distribution. Direct distribution has a number of
merits as well as demerits to the organization. For instance, the approach to distribution would
result to a scenario where the organization has direct control of its operations in the industry.
This would avoid a scenario where middle men may end up compromising the quality its
products as well as the quality of the mode of product delivery (Zarrella, 2010). Equally, use of
this method ends up eliminating subsidiary expenses. The organization would thus not be
required to be incurring costs in paying the subsidiary a commission. Equally, there will be
increased customer contact. This is very important especially in a scenario like this one where
the goods are customized to the needs of the specific customers. The use of intermediaries would

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result to a scenario where such customers may not end yet receiving the customized care that
they needs. Nevertheless, it is worth noting that this approach increases work load of internal
channels. The organization is actively involved in the distribution of the products as opposed to
focusing on production alone. They may end up denying the organization significant time that it
could have used in other activities. More so, the use of direct channels places more cash
obligations on the organization. Transport costs become a major part of the expenses that are
incurred by the organization. Consequently, the profit margins in the organization are pushed
down. Nevertheless, the organization retains direct contact and control with the customers. This
eliminates scenarios where the needs of customers are not met as a result of negligence on the
part of the intermediary (Kotler, 2000).
Promotion
Promotion is the leading part of marketing mix that determines whether consumers are to
get aware of the existence of the organization’s products in the market or not. If consumers are
not aware of the existence of the organizations products in the market, such an organization
would not end up making a sale. There are three key methods that the organization will use in
promotion of its products in the market. To start with, the organization will rely on televised
communication. Televised communication ensures that the organization has wide market
coverage. It can reach a high number of customers within a short time. Through the use of
televised communication, the organization can showcase the features of its products to the
consumers. This process increases the understanding of the organization’s products in the
market. Besides this, there are many television networks and access in the United States of
America and the organization will realize high level of market awareness

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The social media is another method that will be employed by the organization in its
market communication process. There are multiple merits that are involved in the use of social
media in communication. It results to high level of referrals. It is worth noting that there are very
many people who access the social media. They add each other in groups where they have shared
relations. This implies that one purchase by a single individual in the group may end up being
communicated to another on the platform. As a result of sharing, the product awareness is
enhanced significantly in the industry. Moreover, the use of social media exposes the products to
a wide market. Unlike the local television channels whose signals do not get beyond national
boundaries, the use of internet based communication ensures that the communication can be
accessed by individuals across the world. The organization will also establish a blog that will
help in communication of its products over the internet. One merit of using the blog is that it will
bring individuals who have purchased the product in the past. Some blogs are popular with the
affluent in the society. It is this market segment that the organization intends to serve (Aaker,
2015).

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References
Aaker, D. (2015). Marketing Research. New York: Wiley. Print.
Blick, F. (2013). The Ultimate Small Business Marketing Book. Surrey: Filament Publishing.
Print.
Kotler, P (2000). Marketing Management. Upper Saddle River, N.J: Prentice Hall. Print.
Zarrella, D. (2010). The Social Media Marketing Book. Beijing: O'Reilly. Internet resource
Zarrella, D. (2015). The Social Media Marketing Book. Beijing: O'Reilly. Internet resource.
.