MKT3001 Marketing Research Assignment: Prada's Market Analysis Report

This report provides a comprehensive analysis of Prada's market performance, focusing on its position within the luxury goods sector. It examines industry trends, the current market situation of Prada, and consumer behavior. The report highlights Prada's underperformance compared to competitors like Louis Vuitton and Chanel, attributing it to strategic missteps and a lack of innovation. It explores market behaviors and the brand's target audience, analyzing both strengths and weaknesses. The study also includes recommendations for Prada to improve its market standing, such as reducing wholesale exposure, improving merchandising, embracing digital marketing, and targeting younger demographics. The report uses data from 2017 to 2019, including brand value comparisons and market share data, to support its findings and recommendations, providing a detailed overview of the challenges and opportunities facing Prada in the competitive luxury market.

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Marketing
Student’s Name
9/26/2019

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Contents
Introduction................................................................................................................................2
Industry Trends..........................................................................................................................2
Current Market of Prada.............................................................................................................2
Market behaviour.......................................................................................................................4
Recommendations......................................................................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10
Appendices...............................................................................................................................13
Figure1: Brand value comparison between Prada and Louis Vuitton..................................13
Figure2: Brand value comparison between Prada and Chanel.............................................13

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Introduction
Prada succeeds within the market of luxury cosmetics, cuisine, fashion, and automobiles
(O’Connel, 2018). In 2017 and 2018 the global personal luxury goods market was not
moving, but it continues to grow. The global personal luxury goods market delivers
customers with high-quality goods and services. Bain and Company (2018) described that in
2018 the global personal luxury goods market made €260 billion in revenue with global
growth of 6 %. The Americas, Europe, and Asia were the regions contributing to the growth.
Correspondingly, the increase in the spending of mainland Chinese consumers and an
increase in European tourism powered positive growth in the region. Bain and Company
2017, projected that the global luxury market will reach €390 billion globally in sales by
2025.
Industry Trends
The current trends in the global luxury market demonstrate the growth and resilience of the
fashion industry. According to Bain and Company (2017), the retail channel of the global
luxury industry continued growing by 8 % while the wholesale part of the industry grew by 3
%. Nevertheless, it is expected to achieve a better return with the help of e-commerce and
online retail. Online sales increased by 24 % for luxury sales in 2017, with a 9 % overall
market share. Asian and European markets indicated growth while the American market
achieved 2 % growth at the current exchange rates with $28 million in online sales.

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Current Market of Prada
The increasing growth in the online presence of the retail channel luxury industry has
provided the opportunity of growth in sales of Prada. The online search market has increased
by 4.97% and the social media audience has reached 23,934,422. The company has focused
on increasing its online presence through inspiring marketing campaigns and designing new
product lines. The company has reintroduced iconic nylon material as well as the label’s retro
logo to deliver the modern aesthetic influence on customers (Interbrand, 2018)
In the year 2018, the market share of Prada has increased to 2% by maintaining the
authenticity of the products and delivering differentiating products. The increasing online
presence has led to the closing of the retail stores and currently, the company operates 95
retail stores (Interbrand, 2018).
Apart from the increasing online presence and growth in the market share, the brand value of
Prada is less in comparison to Louis Vuitton and Channel. The growth of Prada is stagnant in
comparison to its main competitors. In the year 2018, the brand value of Louis Vuitton
28,152$m in comparison to 4812$m of Prada (refer to figure 1). Louis Vuitton has observed
the growth of 23 % by increasing its online presence through its hyped collaboration with
New York cult street wear brand Supreme. This collaboration has allowed the brand to
connect with the most coveted millennial luxury shoppers and have developed the new
market for untapped customers. Such behaviour of the company has allowed it to grow its
customer base and maintain the growth of the company (Interbrand, 2018).
It is also observed that the brand value of Chanel has increased to 20,005$ m which is much
higher in comparison to the brand value of Prada (Refer to figure 2). Chanel has occupied the
position of a second topmost luxury brand that delivers timeless elegance and liberated

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femininity. Chanel accentuates its timeless modernity and promotes the concept of
“uncomplicated luxury” valuing simplicity over opulence. (Interbrand, 2018)
It is analyzed Prada has been underperforming due to its various strategic missteps and offers
missing entry-level price points and has gone overboard at the high end of the market. It is
analyzed that Prada is focusing on designing new styles and has observed the downfall in the
sales of evergreen products offered by Prada. The company has developed a new customer
base by creating new leather goods products but also observes the decline of sales of ever-
green products due to weak merchandising capabilities (Meinshausen, Schiereck, and Flore,
2015).
The company is making creative efforts that dilute the energy and creates the wastage of
resources. Prada is missing its sales capabilities because the company is perceived as
oversized and expensive due to the lack of fast organic growth acceleration.
Market behaviour
Prada, Louis Vuitton, and Chanel are considered as the luxurious brands that deliver high-
quality products to the consumers and allow the consumers to feel confident and valued. The
products of the above mentioned luxurious brands help in maintaining the status symbol and
allow the consumers to follow the fashion trends (Beauloye, 2019).
Prada is positioned as a highly innovative and high-quality brand. The company focuses on
using the innovative approach through unconventional experiments in the fabrics and
collaborates with the best artists to introduce new exclusive and innovative collections. The
potential target of the company comprises of affluent customers who are culturally creative
and elegant (Beauloye, 2019).

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The slowing down of the Hongkong market has developed the need to renovate its retail
network. It has attributed to the poor performance of the company in the Milan based group.
The popularity of the company has been soared in its bags and clothes losing appeal. The
share price of Prada halved in the last three years in comparison to its competitors (Adamska,
2019).
In comparison to Prada, Chanel values simplicity over opulence and promotes the concept of
uncomplicated luxury. It revolves around high quality and luxury and focuses on reinventing
the fashion and maintains the elegance of feminine. The market behaviour of the brand
focuses on targeting customers who are sophisticated and elegant. In addition to the above,
Louis Vuitton is a high-quality luxurious brand that launches travel-inspired collections and
develops campaigns that focus on exploration and adventure. The unique brand strategies
allow the competitors to expand their market share and maintain the edge over its competitors
(Farra et al, 2019).
Prada focuses on managing brand equity through new and innovative collections and also
includes a wide range of products such as leather goods, fragrances, and eyewear. It targets
an international customer base that is modern, sophisticated, attuned to stylistic innovations
and expects craftsmanship of the highest quality. It includes leather products for men and
women. The stores of Prada are designed, constructed, and managed in accordance with
precise guidelines and their selected locations are amongst the most admired. The brand
enjoys a strong presence around the world. It develops Good advertising and branding
through print ads, online ads, etc. make it a very popular brand name. The brand currently
employs 12000 people and operated 615 stores (Gurhan-Canli, Hayran, and Sarial-Abi,
2016).

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Apart from the growth of the brand, it faces high competition and soaking industry. The
adoption of brand exposure strategy has lead to a loss of uniqueness. The fluctuation in tax
rates change and currency exchange has impacted on the performance of the brand. The
brand also faces the threat of cheaper substitutes; fast fashion offering the latest trends at
affordable prices for consumers and the increased tension due to terrorism and political
opposition at international levels (China Daily, 2018).
The main threats in the market behaviour of Prada include the high intensity of competition
and easy availability of the substitutes reduces the profit margin and decline in Prada's
business. Changes in the economy reduce the dependence on luxury fashion and global
operations highly impact business performance through recessions and poor economic
conditions, etc. (China Daily, 2018).
It is analyzed that the Prada faces the challenge of the low Chinese market and the
availability of substitutes has increased the switching cost. The profitability of the company is
also impacted by fake imitations and affects the brand image of the company (China Daily,
2018)
In order to maintain the success of the brand, Chanel focuses on delivering high-quality
products and also concentrates on high-quality packaging. It keeps the French taste in all its
products and selectively sells its products to 420 retailers. The brand applies unique
promotional strategies under which it maintains the simplicity and uses minimal lettering.
The brand is strongly associated with luxury, perfection, art and design and the whole French
Haute Couture and Pret-a-Porter culture (Farra et al, 2019).
Additionally, Louis Vuitton focuses on treading the balance between tradition and
innovation. It maintains the personalization and designs the custom goods. The company
provides high quality handmade products and is popular for maintenance of the exclusivity of

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the products. The brand is designed and promoted by the best experts that help in attracting a
large customer base (Ivanova, 2017).
In comparison to the above, Prada has not invested in delivering a unique experience to the
customers and has not rolled out new products to create the buzz in the market. As compared
to its competitors the brand has not invested much in store renovations, visual merchandising
and digital strategy. This, in turn, keeps Prada behind the curve and the economic slowdown
in China has majorly impacted the growth of Prada. The lowering of the currency value of
China has decreased customer preference over overseas products and has affected the sales of
the company (Segreti, 2017).
Recommendations
In order to improve the progress pathway of Prada, the company must focus on reducing
wholesale exposure and must stop the promotions at its full-price retail stores. It will help the
brand to achieve price discipline and will help in maintaining long-term brand equity. The
brand must focus on improving its merchandising capabilities and must reduce the selling of
fur and experimentations into new products. This increases the cost of the company and leads
to wastage of resources (Ashill, Semaan and Williams, 2019).
The brand must focus on increasing their sustainability practices in fur-free alliances and
providing vegan leather options, Prada would progress its brand reputation. Prada can
increase transparency in their brand by ensuring the make of their product, the material
original, and where their spare goods are going is disclosed. There is demand in the younger
generation of customers for luxury-quality products made with no harmful practices (Moore,
Doherty, & Doyle, 2010).

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For Prada to grow, it needs the opportunity to embrace generation X and Y via innovative
retail practices, social media, and work in partnership with appropriate influencers. The
present social media drive and overall culture fit well with Prada’s fundamental values of the
progressive embracing diversity. Prada needs to promote itself as a brand that can deliver the
current trends within the fashion, gender neutrality, body inclusiveness, and more non-
conformist values to advance loyalty from customers (The Circle of Luxury, 2015).
Prada must capitalize on the digital medium to increase its reach and must tap the untapped
market to increase its customer base. It must focus on Tie-up with fashion houses through
partnerships and can collaborate with leading hotel chains, elite clubs, etc. where rich people
could become customers. This will help in increasing the profitability and the growth of the
business (Gonzalez Romo, García-Medina and Plaza Romero, 2017).
To increase the target customer base the company must integrate the sales of its online and
physical retail stores. The brand must hire internet celebrities and pop stars that are in line
with the features of the brand. This will help in increasing the followers of the brand and
persuade the decision making of the fans towards the brand. This, in turn, will increase the
customer base and will increase the profitability of the business (Pentina, Guilloux, and Micu,
2018).
The digitalization of the world has developed the emerging need for the company to increase
its online presence and embrace a more youthful look in its advertising campaign. This will
help in influencing youth and increasing the customer base by targeting millennials.
Dependence on digital strategy will reduce the cost of maintenance of the psychical stores
and will increase the expenditure on the promotions that will help in the fast expansion of the
customer base. Through the development of effective marketing campaigns, the brand can
persuade the perceptions of the competitors and will help in describing the features of the

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brand. It also allows delivering a unique experience to the customers and creating the buzz by
developing the new product lines (Gonzalez Romo, García-Medina and Plaza Romero, 2017).
However, in order to improve the underperformance of Prada, the company must focus on
maintaining the efficiency of its ever-green product and must manage the merchandising
capabilities. The core focus on the digitalization strategy will improve the brand positioning
and will help in moving ahead of the curve by expanding the customer case and attaining the
loyalty of the customers (Okonkwo, 2016).
Conclusion
From the above discussion, it is analyzed that the global personal luxury market has grown by
6% in the year 2018 and the increase in European tourism has further provided the
opportunity of advancements. The brands are able to generate more revenue through online
channels and the presence of physical stores. It is analyzed that Prada enjoys strong brand
positioning by delivering high-quality luxurious goods and applying innovative approaches in
business. The brand focuses on adding new product lines and uses different materials for
adding innovations in the products.
In comparison to its competitors, Prada is behind the curve because of the strategic mistakes.
The brand does not focus on its merchandising capabilities and has shifted the focus on the
new products compromising its ever-green products. The brand is not able to maintain the
balance between online and offline sales and did not focus on maximizing its digital
presence.
It is analyzed that Chanel and Louis Vuitton are able to sustain their competitive advantage
by focusing more on the digital presence and has increased the customer base by maintaining

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elegance and delivering high-quality products. These companies are able to expand growth
through increasing the online presence and delivery of a unique experiences to customers.

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References
Adamska, M. (2019)The positioning of the four most valuable luxury fashion brands – 2019
update. Available From: https://brandstruck.co/blog-post/positioning-three-valuable-luxury-
fashion-brands/ [Accessed 26/9/19].
Bain and Company. (2018) Global personal luxury goods market expected to grow by 6-8
percent to €276-281b in 2018, driven by strong rebound in China. Available from: from
https://www.bain.com/about/media-center/press-releases/2018/bain-spring-luxury-report-
2018/ [Accessed 26/9/19].
Beauloye, E.P. (2019) The 15 Most Popular Luxury Brands Online In 2019. Available From:
https://luxe.digital/business/digital-luxury-ranking/most-popular-luxury-brands/[Accessed
26/9/19].
China Daily. (2018) Youth focus helps Prada sashay back to profit growth. Available From:
http://www.chinadaily.com.cn/a/201808/03/WS5b63c8c7a3100d951b8c8755.html [Accessed
26/9/19].
Farra, S.P.D., Queiroz, M.J., Prado, P.H.M. and de Queiroz, R.S.B., (2019) The Allure Of
Ubiquity: Brand Equity And Brand Authenticity Influenced By Distribution
Channels. Brazilian Journal of Management/Revista de Administração da UFSM, 12(3).
González Romo, Z.F., García-Medina, I. and Plaza Romero, N., (2017) Storytelling and
Social Networking as Tools for Digital and Mobile Marketing of Luxury Fashion
Brands. International Journal of Interactive Mobile Technologies, 11(6).