International Marketing Management: Prada's Competitive Advantage

This report provides an in-depth analysis of Prada's international marketing strategies. It begins by exploring various marketing theories relevant to Prada's expansion, including the marketing mix elements (product, place, promotion, and price). The report then examines the advantages and disadvantages of globalization on Prada's business, highlighting the impact of technological factors and changing customer preferences. An environmental analysis, using PESTLE and Porter's Five Forces, assesses the political, economic, social, technological, legal, and environmental factors affecting Prada's operations, along with competitive rivalry, bargaining power of customers and suppliers, the threat of new entrants, and the threat of substitute products. The report concludes by evaluating Prada's competitive advantages within the fashion industry, comparing it with competitors like Gucci, Louis Vuitton, and Burberry, focusing on value proposition, product range, and target audience.

International Marketing
Management
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
DIFFERENT MARKETING THEORIES.......................................................................................3
GLOBALISATION: ADVANTAGES AND DISADVANTAGES...............................................4
ENVIRONMENTAL ANALYSIS..................................................................................................5
COMPETITIVE ADVANTAGE.....................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
Appendix .......................................................................................................................................13
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INTRODUCTION
In the present context doing business globally is the foremost objective of the
organization that generally focuses on enhancing their market share as well as their presence in
the international market (Terpstra, Foley and Sarathy, 2012). Within contemporary scenario that
is of international business viewpoint, there are numerous of business organization that generally
focuses on developing competitive advantage through driving market or production activities.
Therefore, presently the report focuses on case study of Prada, one of the well-known Italian
fashion enterprise, is able to acquire a particular international competitive advantage based on
both the activities. However, the present report focuses on assessing the different theories of
marketing and the theories that assists the Prada in expanding their market share. Furthermore,
report will also analyses the external environment factor that support Prada to enter in the
international marketplace.
DIFFERENT MARKETING THEORIES
In order to expand activities in the international market it is essential for management of
Prada to focus on different marketing theories that would support them in determining their
target audiences as well as it will also assists in segmenting and positioning their fashionable
travel accessories in the international market (Papadopoulos and Heslop, 2014). In addition to
this, through understanding different marketing theories this will support the Prada in taking
strategic decisions related with expanding their business activities in the international market.
The different marketing theories are-
Marketing Mix elements
Another marketing theory is focusing on marketing mix elements for Prada so that they
can easily enter into the international marketplace. The marketing mix element generally focuses
on four elements that is Price, place, promotion and products (Leonidou, Palihawadana and
Theodosiou, M., 2011).
 Products- The Prada products basically consists of wide range of luxurious and high end
cloths for both men and women, travel accessories, cosmetics, fragrances etc. all these
products are the key element that Prada will distribute within the market to keep attract
their customers.
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 Place- In the present scenario, Prada is operating their stores in 65 different countries
with 250 total number of stores. Further, to succeed in the competitive environment Prada
may also adopt online technique for distributing their fashionable and stylish products to
the international customers.
 Price- Another effective element of marketing mix is focusing on pricing strategy for
their variety of fashionable products so that they can easily satisfy and meet the
requirement of their customers (Kemper, Engelen and Brettel, 2011).
 Promotion- Last element of marketing mix focuses on promotion of Prada fashionable
products within the international market. For promotion Prada features their ads in Vogue
and Elle magazines. Furthermore, the brand also host fashion shows for displaying their
variety of products. Thus, both the marketing tool are considered as persuasive tool in
fashion industry for enhancing the brand image in the international market (Piekkari,
Plakoyiannaki and Welch, 2010).
Therefore, in order to take any strategic decisions for Prada regarding entering into the
international market then SWOT analysis would be effective marketing theory for Prada.
However, marketing mix theory is being used by Prada brand for ensuring proper selection of
each and every element that result in successful accomplishment to capture international market.
GLOBALISATION: ADVANTAGES AND DISADVANTAGES
Globalization is the key aspect in the present scenario that has huge impact on the fashion
industry as through globalization Prada can easily target large customers across the international
boundaries. Various luxurious fashion brands like Louis Vuitton, Michael Kors, Gucci etc. has
experienced immense growth with globalization of their business activities. In the present
scenario, fashion industry has been increasing at the fast pace with the changing needs and
preferences of the customers. According to Ruzo, Losada and Díez (2011) the favourable impact
of globalization over the fashion industry is that through this Prada can easily provide latest
fashionable clothes and accessories to the global customers (Ruzo, Losada and Díez, 2011).
Furthermore, another advantage of globalization is that it result in modifying the individual
preferences as they would follow the latest trends and unique stylish clothes. As per the view of
Sethuraman, Tellis and Briesch (2011) the advantage of globalization is that through this Prada
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can easily unleash the different cultural designer clothes that depicts or showcase the traditional
and cultural aspect of countries (Sethuraman, Tellis and Briesch, 2011).
On the other hand, there are also some disadvantage or adverse affect of globalization to
the business activities of Prada that is according to Nath, Nachiappan and Ramanathan (2010)
with globalization company outsource their products as well as services in the totally different
market. Thus, it results in incurring high cost for Prada to outsource their production (Nath,
Nachiappan and Ramanathan, 2010). Therefore, to overcome the financial burden company often
raise the prices of their products that act as negative impact on the image of company. As per the
view of Rodrik (2011) another disadvantage of globalization is that with the increasing
technology Prada often upload the images of their designer clothes and accessories over the
internet medium that result in stealing of their design (Rodrik, 2011). Therefore, it may result in
duplication of the products.
Furthermore, there are various relevant factors of globalization that are applied to Prada
that support the firm in expanding their activities in the international marketplace that is- Technological factor- The foremost factor of globalization that is being applied to Prada
for expanding their activities in global market include increasing technological factors.
Enhancing technological factor also help the Prada in globalizing their products and
services in the different international market (Hamilton and Webster, 2012). For instance;
with the increasing technological factor customers can conveniently purchase the
fashionable products and clothing apparels through using internet medium.
 Change in the taste and preferences of customers- Another relevant factor to Prada is
continuous change in the requirement and preferences of the customers also result in
globalization of their products and services (Arnold, 2004). For instance; with the
increasing competitors in the fashion industry there are wide variety of options available
to the customers. Therefore, changing taste and customers are willing to purchase foreign
products support Prada in initiating globalization activity.
ENVIRONMENTAL ANALYSIS
PESTLE analysis
Factors Characteristics
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Political factor The foremost external factor that affect the Prada activities is political
factor of the country under which they operates their operations.
As, the company's strategy is based on FDI that is 100% control of its
investments abroad that would benefit the political structure of country
under which they are operating their activities (Zhang and Huang,
2012).
Economical factor Another factor that is economical factor also affect the Prada
operations in the international market as there are different level of
tariffs and duties in the different countries that generally affect the
prices of Prada products in each of the countries. Therefore,
economical factor must be kept in the mind while pricing the
fashionable goods.
Social factor The change in social factor also impact the demand of Prada products
within the market. The company generally deals in providing luxury
and premium travel products, leather products, fashionable clothing
apparels etc. to the customers (Piercy, 2010). Therefore, changing need
and preferences of customers fluctuate the demand of products in the
market. Thus, company also need to evaluate the latest trends within
the fashion industry so that they can easily meet the requirement
different segment customers.
Technological factor Technological factor also consider as an effective external factor that
need to be assessed so that Prada can bring more quality to their
fashionable products (Papadopoulos and Heslop, 2014). Furthermore,
with the increasing technology Prada advances their activities by
introducing online shopping of their fashionable products through
internet medium that saves time of their customers.
Legal factor Another external factor that affect the international expansion of Prada
include legal for. It has been assessed that Prada must measure the
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trade system or different legal laws of the country while importing
products and goods in the country.
Environmental factor Another external factor that need to be considered by Prada is
environmental factor so that they should minimize the negative impact
on the environment through distributing and manufacturing the leather
travel accessories.
Porter's Five force analysis
Porter's five force Attributes
Competitive rivalry within the
industry
The competitive rivalry among fashion industry is quite high as
there are large number of top brands that provide the luxurious
and premium segment fashionable apparels and accessories to
the customers. For example, Gucci, Louis Vuitton, Zara etc.
Bargaining power of
customers
The bargaining power of customers in the fashionable industry
relatively very low as they sell their fashionable products direct
to the customers through their authorized stores and e-
commerce sites (Terpstra, Foley and Sarathy, 2012).
Threat of new entrants Another force is threat of new entrants that is also low within
the fashion industry as for starting new business within the
industry there is huge requirement capital investment for floor
space as well as marketing the products and services. Therefore,
it would be difficult for the new entrants to attain the position in
fashion industry without making any contribution.
Bargaining power of suppliers Another force is bargaining power of suppliers that is also low
within the industry as Prada does not manufacture their own
products as they relies on different countries for suppliant
leather (Jain and Griffith, 2011). Therefore, the bargaining
power of suppliers is low within the industry.
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Threat of substitute products Threat of substitution is also low within the fashion industry
also the products are purchased by all income level group
customers. Therefore, the substitution of items are low within
the industry.
COMPETITIVE ADVANTAGE
Fashion industry is consider as highly volatile industry that keep change with the
emergence of new trends and fashionable clothing products in the market (Turnbull and
Paliwoda, 2013). The different premium brand existing in the fashionable industry include
Gucci, Louis Vuitton, Burberry etc. the foremost premium brand in fashion industry is Prada that
is known for leather travelling accessories that matches the individual lifestyle and needs of the
customers.
Brand competitive analysis of different luxurious brand
Prada Gucci Louis Vuitton Burberry
Value proposition Elegant and
stylish products
Cutting edge
products
Classic and
superior quality
fashionable
products
Democratic
luxury products
Range of products Clothing apparels,
leather travel
accessories,
stylish handbags,
jewellery.
Leather products,
eye wear,
fragrances etc.
Eye wear,
clothing,
jewellery etc.
Beauty products,
fragrances,
leather products
and accessories.
Target audience The target
audiences for
Prada are
fashionista those
prefer to purchase
stylish clothes.
Modern and
urban people who
prefer to purchase
fashionable
products.
Successful
audience
Middle income to
higher income
audiences.
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For instance; Gucci is also considered as renowned brand in the fashion industry that
focuses on distributing travel accessories to the different segment customers. While, Prada is
highly luxurious brand that deals in providing premium travel products and leather accessories to
the customers. Both the brand has international presence in different marketplace that keep
attract their large customers towards their fashionable and stylish accessories and products
(Moore and Doyle, 2010).
However, both the companies has distinguish business approach from each other that is
Gucci is the one that determine the power of celebrity endorsement by keep associating with the
great American and Italian movie star as compare to Prada. On the other hand Prada has not
initiated celebrity endorsement for promoting and marketing their products and accessories in the
international market.
Furthermore, through comparative analysis it can be stated that Gucci also engaged in
aggressive international expansion through keep focusing and targeting different important cities
such as San Francisco, New York, London etc. on other hand, Prada has only focuses on
acquiring the domestic share by keep targeting to meet the demand of domestic customers
(Grönroos, 2011). It can be also said that Gucci has also different licensing agreement for
enhancing their brand image in the international market that is not being used by Prada to extend
their brand image.
Louis Vuitton Prada Burberry group
Revenue $36.14B $4.25B $3.16B
Historical revenue
growth
18% 28% 19%
Revenue growth
forecast
11% 16% 15%
From the above table it can be assessed that revenue of Louis Vuitton is quite higher than
Prada and Burberry. Through this it can be stated that revenue of Louis is higher from the other
luxurious brand.
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CONCLUSION
From the above report it can be concluded that to sustain in the contemporary
environment it is essential for Prada to focus on international expansion of their business
activities so that they can capture large market share. From the above analysis it can concluded
that luxurious brand also requires effective international marketing strategies for expanding their
activities in the international marketplace. Thus, will support Prada manager for international
expansion that is- Celebrity endorsement- From the case study of Prada it can be assessed that fashionable
brand is not engaged in any sort of celebrity endorsement. Thus, for expanding their
services in the international marketplace it is essential for Prada to engage promotional
and marketing activities through ensuring celebrity endorsement. Furthermore, this will
also support the brand in enhancing the image of premium and luxurious products in the
global market. Alliance with new firm- Furthermore, it has been also recommended that Prada manager
while expanding and enhancing their reach in the international market. They must
focuses on alliance with new firm and partner that would reduces additional cost for
Prada.
 Using digital or online platform- From the above analysis it has also been focused that
Prada manager must use digital or online platform for promoting and marketing their
luxurious products in the international market.
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REFERENCES
Books and Journals
Arnold, M., 2004. The mirage of global markets: how globalizing companies can succeed as
markets localize. 2nd ed. FT Prentice Hall.
Grönroos, C., 2011. A service perspective on business relationships: The value creation,
interaction and marketing interface. Industrial marketing management. 40(2). pp.240-247.
Hair, J. F., Sarstedt, M. and Mena, J. A., 2012. An assessment of the use of partial least squares
structural equation modeling in marketing research. Journal of the academy of marketing
science. 40(3). pp.414-433.
Hamilton, L. and Webster, P., 2012. The International Business Environment, Oxford University
Press.
Jain, S. C. and Griffith, D. A., 2011. Handbook of research in international marketing. Edward
Elgar Publishing.
Kemper, J., Engelen, A. and Brettel, M., 2011. How top management's social capital fosters the
development of specialized marketing capabilities: a cross-cultural comparison. Journal of
International Marketing. 19(3). pp.87-112.
Leonidou, L. C. and et.al., 2010. Assessing the contribution of leading mainstream marketing
journals to the international marketing discipline. International Marketing Review. 27(5).
pp.491-518.
Leonidou, L. C., Palihawadana, D. and Theodosiou, M., 2011. National export-promotion
programs as drivers of organizational resources and capabilities: effects on strategy,
competitive advantage, and performance.Journal of International Marketing. 19(2). pp.1-
29.
Moore, C. M. and Doyle, S. A., 2010. The evolution of a luxury brand: the case of Prada.
International Journal of Retail & Distribution Management. 38(11/12). pp. 915-927.
Nath, P., Nachiappan, S. and Ramanathan, R., 2010. The impact of marketing capability,
operations capability and diversification strategy on performance: A resource-based
view. Industrial Marketing Management. 39(2). pp.317-329.
Papadopoulos, N. and Heslop, L. A., 2014. Product-country images: Impact and role in
international marketing. Routledge.
Piekkari, R., Plakoyiannaki, E. and Welch, C., 2010. ‘Good’case research in industrial
marketing: Insights from research practice. Industrial Marketing Management. 39(1).
pp.109-117.
Piercy, F. N., 2010. Evolution of strategic sales organizations in business-to-business marketing.
Journal of Business & Industrial Marketing. 25(5). pp.349 – 359.
Rodrik, D., 2011. The globalization paradox: democracy and the future of the world
economy. New York.
Ruzo, E., Losada, F. and Díez, J. A., 2011. Resources and international marketing strategy in
export firms: implications for export performance. Management Research Review. 34(5).
pp.496-518.
Sethuraman, R., Tellis, G. J. and Briesch, R. A., 2011. How well does advertising work?
Generalizations from meta-analysis of brand advertising elasticities. Journal of Marketing
Research. 48(3). pp.457-471.
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Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.
Turnbull, P. W. and Paliwoda, S. J., 2013. Research in international marketing. Routledge.
Zhang, A. and Huang, Q. G., 2012. Impacts of business environment changes on global
manufacturing outsourcing in China.Supply Chain Management: An International Journal.
17(2). pp.138 – 151.
Online
Louis Vuitton – All Eggs in One Basket. 2014. [Online]. Available through:
<http://www.bidnessetc.com/business/louis-vuitton-all-eggs-in-one-basket/>. [Accessed on
8th March 2016].
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