RESEARCH & ANALYSIS OF COMPANY BRANDING

Claire Dillow
Brand Strategy
Final Project
COMPANY HISTORY

Herms was completely family run until 2006 and while 80 percent of the stock
was still under family control the entire family was placed on Forbes list of billionaires.
The Herms family originally settled in France in 1828. The founder was Thierry
Herms and he opened the first shop in 1837 and it was dedicated to purveying to the
European gentlemen by creating the fines fashioned harnesses and bridles for horses.

In 1880 Herms son Charles-Emile Herms took over management from him
and then Charles moved the store to its current location 24 Rue Faubourg Saint
Honor, Paris, France. This is also when Charles introduces the production of
saddlery and began participating in retail sales. With the aid of his two sons Herms
began to supply the elite in Europe, North Africa, Asia, Russia and the Americans.
1900 was when the first bag was introduced; it was made for riders to carry their
saddles in. Once Charles retired his two sons took over Adolphe and mile-Maurice
took over and renamed the company Herms Frres. Soon mile gained the exclusive
right to the use of the zipper in France. In 1918, he introduced the first golf leather
jacket with a zipper. Throughout the 1920s mile took charge as the sole head of the
company and started a new accessories collection. The first leather bag was sold
1922, when mile's wife no longer wanted to design the bags he took over the design
himself; shortly after a new array of handbags, in diverse colors
and styles began to surface in the Herms stores. The first womens couture apparel line was introduced in

1929 in Paris. During the 1930s Herms produced some of their most desirable goods with the Kelly Bag
in 1935 and their scarves in 1937. mile oversaw every part of the scarves
manufacturing process from purchasing raw Chinese silk to weaving it into
fabric twice as strong as the competitors. During that same year he opened a
factory completely dedicated to the production of scarves in Lyon, France. This
year was also when Herms entered the United States Market by selling their
products at Neiman Marcus in New
York. Shortly after entering the new market they withdrew and would not come back to
the U.S until 1960s.
The silk tie came over ten years later in 1946 and three years later the perfume
collection was added in 1949.
In 1951 mile passed away.

He was succeeded by Robert Dumas-Herms; he was the first to run the

company that was not a direct heir. However he was connected to the family by marriage.
In the early 1950s he established the signature duc carriage with horse logo and the signature
orange box. By the late 1950s the Herms logo reached renowned status. Throughout the
1970s Herms began to open multiple locations in the United States, Europe and
Japan. Despite the recent expansion and apparent success the company began to
fall in comparison to their competitors. This was because the company refused to
use man-made materials to produce their products. In 1976 the company
continued to expand worldwide and formed its self into a holding company. In
1978 Robert passed away leaving the company to his son who was part of the
Herms bloodline.

He was succeeded by his son, Jean-Louis Dumas-Herms who became

chairman in 1978. Previously he was a buyer for Bloomingdales and he used his
past experience to revamp the silk, leather and ready-to-wear collections by
bringing in designers Eric Bergre and Bernard Sanz. They product such items as
a python skin motorcycle jacket and ostrich-skinned jeans said to be a snazzier
version o what Herms has been all along. In the 1980s Jean-Louis strengthened the
company by obtaining great stakes in prominent French tableware, glassware, and
silverware by Puiforact, St. Louis and Perigord. Strategies from the 1980s made this product
line one of Herms most profitable in the 1990s; allowing them to expand the collection in
1990 to 30,000 pieces. These new pieces were made from materials such as
porcelain and crystal. In 1993 Jean-Louis took Herms public on the Stock
exchange. 425,000 shares were floated at FFr300 (US $55) and each was sold 34
times over. These shares doubled in prices in only two years to FFr600. At this
point Herms had millions of dollars to invest and decided to enter the Chinese
market by opening a retail store in Beijing in 1996. In 2000 Herms opened their
first John Lobb footwear store in New York; along with new locations in Lisbon,
Santiago, Barcelona and Taiwan. Around 2005 Jean-Louis brought in Jean Claude
Ellena to the company to introduce the Hermessence line of discount perfume.
Next year in 2006 Jean-Louis retired from the company after 28 years as CEO.
 He named Patrick Thomas the new CEO that year. Patrick had been with
the company since 1989 while he was co-CEO alongside Jean-Louis. He was the
first non-Herms to have a chance at running the company. In 2008 he opened
new location in New Delhi and continued to add 40 new international locations in
the United States, and Asia directed towards China in particular. Today he still is
running the company which is now which is spread all across the world. Which
will also included the new locations opened last year in Turkey and Brazil. There
are currently boutiques located on 5 contents, in 46 countries,
and in 190 cities that employees 8,057 people. Below is a graph which analyzes
the workforce in terms of geographic locale. 68% of the Hermes workforce is
women and 32% are men.

Workforce by Region
Americas
Asia-Pacific 7%
(excl. Japan) Japan
14% Europe
9%
10%

France
60%

As shown a large portion of the workers are in France, which is nearly two thirds
of all employees.
TARGET MARKET

The price point for Hermes ranges from $300 to upwards of $5000. Hermes
is a luxury brand for the individual looking to accessorize their current wardrobe.
Hermes manufactures beautiful pieces in silk, cashmere, and blends for the
financially sound. Their standard demographic consists of the 35-60 year old
(predominantly women) who enjoys the signature scarf or shawl. They sell accent
pieces as well as home
dcor in an attempt to Hermify your whole life. Hermes desires to be known as a lifestyle
brand amongst both their current audience and future markets.

The current marketing strategy consists of placing key Hermes crafted

goods, a scarf, bracelet, shawl, or home fashion piece, in a scene of luxury and
intrigue. This strategy has worked to place some of the most luxurious accents
into the spotlight of the fashion industry.
PRODUCT ASSORTMENT

Herms is a French luxury fashion brand that specializes in a variety of

product lines including silk and textiles, leather goods and saddlery, ready-to-wear
and fashion accessories, perfumes, watches, Tableware, and shoes. For each of
these diverse products offered, there are only 33 manufacturers, all in France.
Below is a map depicting the manufacturing locations.
Product Categories

WOMEN:

- Ready-to-wear
- Scarves
- Little Hermes
- Belts
- Stoles & shawls
- Shoes
- Accessories

LEATHER:

- Bags & luggage

- Small leather goods
- Agendas
- Notebooks
- Accessories
JEWELRY:

- Silver jewelry
- Gold jewelry
- Enamel jewelry
- Leather jewelry
- Horn & lacquered jewelry
- Watches

FRAGRANCES:

- Women
- Men
- To share
- Hermessence
MEN:

- Ready-to-wear
- Ties
- Tie-free
- Belts
- Shoes
- Accessories

HOME:

- Bed linens
- Bath linens
- Furniture
- Table
- Art of living
- Baby gifts
LEISURE:

- Beach
- Games
- Horse riding

Best Selling Items:

Scarves One of the most recognized Herms products is their signature silk
scarf. These scarves are hand-printed with a hand stitched hem. Twice a year
Herms releases a new scarf collection along with re-prints of older designs and
some limited editions. These collections designs range from the traditional with
the Herms halters or swords from French Revolution on them to unexpected with
vibrant colors, love birds and palm trees. Most designs however, are equestrian
motifs as well coat of arms and military emblems. The size of the scarf varies from 28
by 28, 36 by 36 and 56 by 56 and the price ranges from $375 to $720. It is said that
in Paris during the holiday season that one scarf is sold about every twenty
seconds. The company held my Hermes to produce and manufacture their textiles
is called Holding Textile Hermes (HTH).
Ties - The Herms ties are made from the same silk that the scarves are made
from. The designs on the ties however are not as elaborate as they are on the
scarves. The ties are made of bright colors, simple geometric decorative motifs,
and embroidery. The sizes come in 7cm and 8cm with the price from $170 - $180.

Leather Herms is also known for their renowned handmade luggage and
handbags. Due to the labor intensive process only one crafts man is to works on
the handbag one at time, hand-stitching every seam and it can take up 24 hours to
complete one product. The Kelly Bag for instance can take up to 18 hours to
complete. The leather used by Herms to created this luxury bags includes leather
from alligator in Florida, buffalo from Pakistan, crocodile from Australia, shark
from Thailand, lizard from Malaysia, and oxen, deer, calf , goat, and ostrich from
many locations worldwide. Colors and size vary but can include bright colors like
the signature Herms orange. Prices for these bags tend to be very high and can
go up to 6 figures. Hermes holds numerous companies to manufacture and
produce their various leather goods. These companies include: Hermes Sallier,
Avril-Morio & Patte, Maroquinerie de Sayat, Ganterie de Saint-Junien, La
Manufacture de Seloncourt, Nehel, and Manufacture de Haute maroquinerie, to
name a few.
Perfume The best way to describe the scent of Herms is sense, essence, and
essential. The essence of Hermes and the very soul of perfume. A collection of
olfactory poems, with sobriety and intensity, which
freely explore new facets of emotion. Nature reinvented, unexpected and poetic. The perfume line was
introduced in 1951 and since the company has created several fragrances for
both men and women that are sold and stores worldwide. In addition Herms
has eight scents that are exclusive to their stores only, the Hermssence series.
The company that Hermes utilizes to design their fragrances is called Comptoir
de Parfumerie. This perfumer has dealt exclusively with Hermes since 2004. This
is an unusual dynamic since competitor groups typically solicit perfumers for
temporary amounts of time.

Watches- Hermes has begun to launch its newest product: watches. The
development and manufacturing of these watches is done through La Montre
Hermes.

In the words of the CEO, Patrick Thomas, We want to avoid the banality, in maintaining
the financial growth. We preferred extend the territories of the brand, in table
wear, in watches for a most of possible diversified offer and make the client surprised
with, (1988).
BRANDING

A brand is a name, term sign, symbol, design or combination of these, that

identifies the maker or seller of a product. Consumers view a brand as an
important part of a product and branding can add value to a product. Customers
attach meaning to brands and develop brand relationships.

The next disciplinary seismic shift in branding is customer experience:

building loyalty and lifelong relationships at each point of contact. It is essential
for the branding team to look up from the desktop and see the world through the
eyes of the customer. Shopping has become a subset to being engaged and
entertained. The vast amount of purchasing choices is inspiring companies to
enhance the brand experience to lure and keep customers. Every customer
contact provides an opportunity to enhance an emotional connection. A good
experience generates positive buzz; a bad experience becomes a lost opportunity
sabotaging the brand.Even the most mundane transactions can be turned into
memorable experiences. The fundamentals of brand building, from listening to and
learning from customers, to relevantly meeting their needs, have been magnified in
a world of digital communications and consumer empowerment.

The best identity programs embody and advance the company's brand by
supporting desired perceptions. Identity expresses itself in every touch point of
the brand and becomes intrinsic to a company's culturea constant symbol of its
core values and its heritage.
 Brand strategy is a road map that guides marketing, makes it easier for the
sales force to sell more, and provides clarity, context, and inspiration to employees.
Brand strategy builds on a vision, is aligned with business strategy, emerges from
a company's values and culture, and reflects an in-depth understanding of the
customer's needs and perceptions. Brand strategy defines positioning,
differentiation, the competitive advantage, and a unique value proposition.

It is usually a team of people; no one does it alone. It is a result of an

extended dialogue among the CEO, marketing, sales, advertising, public
relations, operations, and distribution. Global companies frequently bring in
brand strategists: independent thinkers and authorities, strategic marketing
firms, and brand consultants. It often takes someone from the outside who is an
experienced strategic and creative thinker to help a company articulate what is
already there.

Brand Value

Brand value is the process of building awareness, increasing recognition,

communicating uniqueness and quality, and expressing a competitive difference
create measurable results. Creating value is the indisputable goal of most
organizations. The quest for sustainability has expanded the value conversation
with consumers. Being socially responsible, environmentally conscious, and
profitable is the new business model for all brands. A brand is an intangible asset
brand identity, which includes all tangible expression from packaging to websites,
upholds that value.
 Brand identity is an asset: the brand identity is viewed as a strategic
business tool and an asset that seizes every opportunity to build awareness,
increase recognition, communicate uniqueness and quality, and express a
competitive difference. Adherence to brand identity uniform standards and the
relentless pursuit of quality are business priorities.
 Value is preserved through legal protection: trademarks and trade dress are
protected in the range of markets that are served, both local and global.
Employees and vendors are educated about compliance issues.

Authenticity

In psychology, authenticity refers to self-knowledge and making decisions

that are congruent with that self-knowledge. Organizations, who know who they
are, and what they stand for, start the identity process from a position of
strength. They create brands that are sustainable and genuine. Brand
expression must be appropriate to the organization's unique mission, history,
culture, values, and personality.
FINANCIAL INFORMATION
Last year sales were up 8.5% across the board. The Herms Groups sales came
to 1.914.3million at
the current exchange rate at the constant exchange rate the sales were up 4.1%.
All regions other than Japan
delivered growth during the full year. The Groups own stores saw a 17% increase
at the current exchange
rate and a 12% rise at the constant exchange rate. In Europe, retail sale were
driven up by 12% due to
excellent momentum in the fourth quarter. In Japan, sales decreased by 11% over
the years. However non-
Japan Asia was up by 29% that is attributed to Mainland China, Macau, and Hong
Kong. In the
Americas
retail sales were by 7% due to a fourth-quarter rebound. Sales were driven by
leather goods & saddler which
was up by 16% percent and by silk and textiles which was up 6%. The sales growth
in these sectors can be
attributed to leather bags and new silk design creations for men and women.
Ready-to-wear and accessories
were up 3% and benefited from a high demand in accessories. Perfume sales and
sales from the other sector
both fell; perfume by 7% and other by 6%. In 2009 Herms operating income
increased by 3.1% to
462.9million from 449.2 million in the previous year. The consolidated net
income stayed relatively the
same with an increase of 2.6 million. The company invested 207million on
expansion resources and
locations; to increase production capacity and expand their distribution center.
Because of this new expansion
Herms was required to hire 163 new employees.

Shown below is an overview of the turnover produced by segment of Hermes

product offerings:

Information by Sectors 2010

Silk & Textiles

12%
Ready-to-wear
Leathergoods - & Fashion
Accessories
Saddlery
19%
49%
Perfumes
6%
Watches
5%
Tableware

Other Hermes 2%
Other Products Sectors
3% 4%
Growth by Sector (% Change from 2009 to 2010)

Breakdown of Sales in 2010

Sales by Region 2010

France Europe (excl.

20% France)
Others 20%
2%
Americas
15%
Japan
21%
Asia-Pacific
(excl. Japan)
22%
Company Growth

Hermes reported an astounding turnover of 1764 million Euros in 2008

with a first quarter growth of 0.8%. Compared to the luxury market as a whole,
with a turnover of 110 billion Euros for the same year, Hermes has secured a
substantial portion of the available market. Shown below is a graph of the
company growth over the last five years:

Growth 1 Year 3 Years 5 Years

Sales % 7.27 6.87 5.52
EPS% 8.20 11.75 6.84
Dividend 5.26 14.47 12.70
%

Followed by the companys income statement for the third quarter of 2008:
 From this financial standpoint, Hermes reported a consistent rate of
growth in both sales and dividend. This has lead to its position as the second
largest luxury company in terms of capitalization. This was also made possible
by their 25.5% operating margin in combination with the companys ability to
maintain stability rate of change.

Cash Flow
(in millions of Euros)
571

379 401
357
292 306 322
273 259
242
221

Financial results confirm the effectiveness of the Hermes business model

and the validity of its definition of a luxury made of quality, refinement and
discretion in not only its objects, but also in its life and its relationship with its
customers.
BRAND IMAGE

The brand image of Hermes is built on its persistent in top grade, principle
in high quality and the unique France style. And then the fashion elements were
integrated into the foundation. This is the reason why its products possess the
timeless glamour. Hermes dedicates to maintaining the classical and quality with
the combining the top craftsmanship, durable functions with the concision,
elegant and delicate design. Hermes has long been established as a house of high
fashion, luxury and quality. Despite the advent of the assembly line, Hermes has
preferred to continue the tradition of carefully handcrafting each item to ensure
top quality craftsmanship. Only one craftsman may work at one Hermes bag at a
time. Each bag can take about 18 to 24 hours to make. Hermes is not only the
symbol of identity and status, but also the fashion items that can make your life
always be fresh and never fogy.

Hermes is very brand-centric. They focus on the product and the quality of
it, constantly updating styles while not messing with the fundamentals. They have
maintained their brand strategy throughout their merchandise changes and
marketing shifts. Therefore, they have never had to chase an aspirational
customer. They have not tried to introduce any bridge lines or more affordable
merchandise to appeal to the younger generations who cannot afford their high-
end merchandise. They simply continued to do what they did best and not deviate
from that in order to obtain new clientele. They produced their usual limited
amount of exquisite goods and they did not expand or overreach from their typical
target market. Hermes has proved that this is an effective tactic, and because of
this, they have one of the most powerful brand image in the luxury market.
BRAND EXTENSION

Paris, France, October 28, 2010 It comes as no surprise that Hermes has a desire
to further penetrate the Asian luxury market, as it has already proven to be an lucrative
endeavor. Shang Xia, meaning up down in Chinese, is somewhat minimalistic, yet chic
and elegant, which Hermes is renowned for.

Hermes chose to not simply open another Asian location, which are already
scattered across upscale Asian shopping meccas. Each of the other Asian
locations are infused with Asian themes, but carry the same French merchandise.
Instead, Hermes chose to launch its Shang Xia brand, knowing how lucrative the
Asian luxury market has proven to be.
NEW MERCHANDISE

- Specialty Items Offered for Limited Time Purchase (online)

- Furniture and furniture polish

- Hermes Universe
OTHER MAJOR PROJECTS

- Opening of store entirely dedicated to men in NYC

- Opening of Rue de Sevres in Paris, especially for home interiors

- Continued construction of the Hermes House in Shanghai

- La cite de mtiers project at Pantin

- Orient Hermes exhibition by Lela Menchari at lInstitut du Monde Arabe

- 1st edition (2010) of Le Saut Hermes at the Grand Palais

COMIC BOOK ADAPTATIONS
[Press Release]

HERMES Press
2100 Wilmington Road
New Castle, PA 16105
724.652.0511
Daniel@HermesPress.com
www.hermespress.com

October 16, 2009

FOR IMMEDIATE RELEASE

Hermes Press proudly announces its publication of complete reprints of all

of the classic Irwin Allen television show comic book adaptations: Voyage to the
Bottom of the Sea; The Time Tunnel; and Land of the Giants. Hermes Press will
kick off the series by reprinting Voyage to the Bottom of the Sea Volume One in
February, 2009 (soliciting in December Previews).

Voyage to the Bottom of the Sea Returns!

Voyage to the Bottom of the Sea: The Complete Series Volume One; ISBN 1-
932563-30-X; 8.5 x 11, full color, available February, 2009, 208 pages,
hardcover with deluxe dust jacket and end leaves, $49.99.

Its Back, the comic book adaptation of one of the most famous and popular
sci-fi television series of the 1960s: Irwin Allens Voyage to the Bottom of Sea. The
first of two hardcover volumes featuring reprints of the entire series of Gold Key
comic books featuring Admiral Nelson, Captain Crane, and the Seaview. In addition
to the comic books, this volume also presents documentary material about the
series, its designs, and special effects. The first volume reprints eight issues of the
series, digitally remastered to look better than when these books first hit the
stands. Featuring painted cover art by George Wilson with interior artwork by such
Silver Age greats as Mike Sekowsky, Don Heck, George Tuska, and Alberto Giolitti.

Following the release of Voyage to the Bottom of the Sea Volume One,
Hermes Press will publish the two issues of The Time Tunnel in a trade
paperback with over 48 pages of supplementary material, photographs, and
essays about the show and its production in July, 2009.

For Christmas, 2009, Hermes Press will issue the final volume of Voyage to
the Bottom of the Sea in a 208 page hardcover collection. Irwin Allen fans will
also get another Christmas present with the publication of The Fantasy Worlds of
Irwin Allen, an in-depth art book detailing the behind-the-scenes
production designs, special effects and histories of these classic sci-fi television
productions together with detailed coverage of Lost in Space.

In February, 2010, Hermes Press will release the last of its series of
Irwin Allen reprints with the complete hardcover edition of Land of the Giants.
ADVERTISING STRATEGY

In recent years, Hermes has not changed its advertising strategies but the
company has doubled their communication budget in the past four years to
increase total communication costs to over 100 million Euros. Advertising
represents one-third of these total communication costs. The overall strategy
Hermes employs in the communication endeavors is singularity and to focus on the
product and renew without tainting the fundamentals. In the words of Philippe
Chanet, their advertising and general communication
efforts focus on product, singularity in being worldly understandable, same message of making people
discover a singular universe and never imitate any one, same creative axe to tell
simple stories, poetical, to give the desire of entering the Hermes universe, always use
the brand codes, play with them, (2007). They preach to set themselves apart from
their competitors by highlighting the excellence of the product without regard to
production costs. Hermes consciously chooses to use this strategy instead ones
employed by its top competitors, such as Louis Vuitton, whose primary focus relies
strictly on the marketing of its products instead of the products themselves.

Hermes has limited advertising channels. Typically, Hermes advertisements are

only seen in print, such as
large advertising spreads in high fashion magazines. Advertisements for the
company are rarely seen in any
other form. This is, in fact, intentional and is designed to adhere to their marketing
technique. Christian
Blanckaert, the VP of Hermes International stated, I dont know why we should rush on what is modern
and trendyWe dont want to be a demagogue and say any what on [the] Internet. We have to keep part of
the mystery, (2008). Instead of posting advertisements over the internet or over-saturating the
market with
print advertisements, Hermes has employed several other techniques for more
subtle promotion. For
example, in 2008, Hermes developed the Life in a Pocket tie with a condom pocket to
encourage people to protect themselves. This allowed for promotion of Hermes
products as well as enhancement of the company image with the association to a
charitable cause.
 Hermes has a separate set of objectives for arriving in new countries with
emergent markets. Countries with emerging markets represent less than 20% of
the world market which spends $175 billion annually. Hermes decided to use the
predicted aftermath of the recent economic crises to their advantage by altering
some of these goals and by setting their sights on these emerging markets. They
predicted that the amount of people with high revenues will increase and the
amount of women in the workplace will increase as well. These two factors, they
predict, will amplify the figures worldwide and especially in these emerging
markets. The strategies thus changed to encompass the following strategies. First,
to focus on understanding the client segments for a better targeted offer
emphasis. Second, to concentrate on organic growth by consolidating the direct
distribution and thereby accentuate the formation policies to improve the quality
of services rendered. Lastly, Hermes seeks to enhance or initiate long-term
relationships not only with the client, but also with work and cost management.

In the wake of the economic revival, Hermes is also seeking to improve

social and environmental performance as part of deepening their luxury offering.
The recession made over-consumption undesirable, thus forcing those operating
in luxury markets to change their approach. Hermes has hereby established the
following goals:

1. Operational efficiency gains.

2. Enhanced employee relations: making it easier for recruitment, more
motivated and loyal staff, better customer service, enhanced learning and
innovation and ultimately, higher productivity.
3. More welcoming and accommodating local communities.
4. Enhanced brand reputation and trust.
5. Connections with voluntary associations and networks that generate new
market intelligence and enable success to new markets.
6. A more secure and sustained supply of raw materials: provided by more
motivated suppliers.
7. Improved relations with the financial sector, including responsible investors
and lenders.

These goals all relate to the general market trend of eco-awareness. As declared by
R. Michman and E.
Mazze, emphasis by consumers on ethics is an enduring trendMore sustainable luxury to be pursued by
luxury brands as part of their core commercial strategy. This calls upon luxury brands to redefine the term

luxury and attribute new associations to it. This is being done by using deeper
values expressed through social and environmental excellence. Therefore, any
advertisements or promotion that Hermes pursues should adhere to this new
consumer standard.

Hermes currently has themed advertisements. There are spring

advertisements, for example, that have bright colors in international
destinations.
 As for winter and fall, there are advertisements featuring igloos and
winter scenes with an Hermes handbag or scarf. An example is shown below:
Hermes 2011 Advertising Campaign:

Hermes love to tell stories, it's an integral component of why the brand
continued to be a powerhouse even during the financial woes of 2010. The story
can only be complimented by their stunning advertising campaigns which are a
tale within themselves. Here is the first set of images released for
the spring 2011 campaign, two elegantly simplistic pictures featuring Andrea
Amadei to set the mood for the campaign.
SOCIAL MEDIA

Hermes Arrives on Facebook

June 8, 2010

With spring in the air, and with it a host of new beginnings, Herms is
delighted to be greeting you from this our first official Facebook page. We have
long been touched by the warmth of feeling towards Herms amongst the
Facebook community and felt the time was right to jump into the arena and bring
you Herms' own particular voice. We hope you enjoy the mix of video, games and
photos and look forward to sharing much more with you over the coming months.
You'll also find a little special edition launch postcard from us to share with your
friends.
PACKAGING

When Hermes items are purchased, they are placed in an iconic box that is a
very deep, rich orange. The boxes are the same color as their logo, so they are
maintaining consistency. The Hermes boxes have become one of their signatures.
They are even available for purchase online without any Hermes merchandise
included. These boxes are then placed into an identical shopping bag, another
touch to keep everything cohesive and noticeable.
HERMES MARKETING STRATEGY

Marketing decisions are determined by four categories: product, price, place

(distribution) and
promotion. These are all aspects of what is known as the marketing mix. This is a term coined by Neil H.

Borden and became widespread after his article, The Concept of the Marketing
Mix. The components of the marketing mix described by Borden included
product planning, pricing, branding, distribution channels, personal selling,
advertising, promotions, packaging, display, servicing, physical handling, fact
finding and analysis. A man by the name of Jerome McCarthy later designated
these components into four general categories:
The four Ps of the marketing mix allows for the necessary actions to occur: customer
solution, customer cost, convenience, and communication.

These four categories: price, product, promotion and place, are factors that
must be considered in developing a marketing strategy. Carefully studying and
analyzing these factors will aid a company in penetrating its target market and to
potentially broaden to appeal to other demographics. Using these aspects of the
marketing mix will ultimately generate an apparent value and therefore elicit a
positive response in both pre-existing and potential customers. The marketing mix
framework for Hermes specifically is displayed in the chart below:
 In addition to the marketing mix framework, Hermes employs numerous other
strategies to maintain its strength in the luxury market and to uphold its tradition and
subsequent reputation. One strategy Hermes has acknowledged the utilization of a
tactic which integrates creation and design (innovation) while sustaining their
companys long-running tradition. This strategy is supported by consistent production
investment which provides for wide variety, constant innovation in product
development and design, and diversification to the
point of customization. This approach is exemplified by the vision of CEO Patrick Thomas,
boost the creativity in keeping the positioning of a prestige luxuryour strategy will be
a strategy of value, not a strategy of volume, we are not in the mass luxury, (2006.)

The short-term marketing strategy of Hermes is the conception,

manufacture and distribution of prestigious luxurious products. In order to ensure
this goal is achieved, the company adheres to its 200 year tradition of being the
experts in noble material and know-how. The long-term strategy of Hermes noted
from 2005 to 2008 was to strive towards a strategy based on the creativity, the
quality of the product and the reinforcement of the know-how and the art craft
spirit in each activity. For the year 2009 onward, the long-term strategy was
slightly altered to still include the mastery of know-how but also to control the
distributers network. This goal was most likely established in order to prevail the
recession.
COMPETITIVE ANALYSIS

Luxury Market Overview

The luxury market is a very exclusive and niche market. Thus, any
company wishing to penetrate or further their position in the luxury market must
focus on their market positioning strategies. There are three primary criteria for
positioning within the luxury market. First, material value, which incorporates
not only the quality of the product, but also the rarity, performance, and finish of
the materials used to create such product. Second is immaterial values, when
image reinforces market positioning. Lastly, consumer distance must be
considered. This ensures that the products offered are not accessible or
affordable to all whom may desire them. Thereby, the setting of the price
determines the selective network of clientele.

In addition to the criteria for luxury market positioning, nine attributes

are regarded to as fundamental to the luxury business. These include: beauty,
creativity, uniqueness, truth, bravery, responsibility, attention to detail,
simplicity and playfulness. All or most of these must be adhered to when
ensuring a companys success within the competitive luxury market.

The luxury market is highly specialized and has a very select group of
available clientele, thus making it a ruthless market to participate in. The most
vital characteristic for any company dealing luxury products is
customization. This aspect can make or break a company. According to Professor Paraschiv, the
fundamental values of each brand are the ways of customer loyalty and the
differentiation is mandatory. In addition, luxury brands are more susceptible to
adverse affects of a bad reputation since a higher percentage of their brand value
is obtained from client empathy and trust.
 Hermes plays a significant role and has a very strong standing in the luxury market
worldwide. Thus, they must compete with a variety of competitors such as other mono-
brand companies like Chanel, Versace, and Armani. They also compete with brand groups
such as LVMH which incorporates Vuitton, Givenchy, Kenzo, Lacroix, and Celine among
others. Other groups competing for the same market are the Gucci Group and the Groupe
Prada. In order to differentiate themselves from these other strong companies, Hermes
preaches prestige luxury as opposed to access luxury strategies of the other competitors.
When asked about the competitors of Hermes, the art director, Pascale Mussard, replied The
competitors? Its not
a topic. Hermes is not positioned regarding the other because we broach the product
creation, in each know-how, with our own meaning and with our history, (2006). Below is a
SWOT analysis for Hermes as a whole.

Hermes claims that they are not positioned regarding competitors because the
broach the product creation, in each know-how, with their own meaning and with their
history (Pascale Mussard, 2006). What sets Hermes apart is their core competencies:
conception, manufacture and distribution of prestigious luxurious products. They
boast almost 200 years as experts in noble material and know-how. Hermes strives
towards a strategy based on the creativity, the quality of the product and the
reinforcement of the know-how and the art craft spirit in each of his activites. As opposed to
LVMH and Fendi who are very focused on marketing, Hermes places all emphasis on
the excellence of the product and the production cost doesnt
matter. Upon hiring a new CEO, Patrick Thomas in 2006, Hermes wants to boost
creativity in keeping the positioning of prestige luxury.

So why is Hermes more resilient than some of its peers? Bank Vontobel's
Lenz deduced it might have something to do with its brand positioning. "Hermes
is known as the very top end of the leather-goods brands," she said, "which seem
to have a very loyal clientele that still can afford them."
 BRANDMARK

Brandmarks are designed with an almost infinite variety of shapes and

personalities, brandmarks can be assigned to a number of general categories.
From literal through symbolic, from word-driven to image-driven, the world of
brandmarks expands each day. The boundaries among these categories are pliant,
and many marks may combine elements of more than one category. Although
there are no hard-and-fast rules to determine the best type of visual identifier for
a particular type of company, the designer's process is to examine a range of
solutions based on both aspirational and functional criteria. The designer will
determine a design approach that best serves the needs of the client and create a
rationale for each distinct approach.

Sequence of cognition

Brand awareness and recognition are facilitated by a visual identity that

is easy to remember and immediately recognizable. Visual identity triggers
perceptions and unlocks associations of the brand. Sight, more than any other
sense, provides information about the world.

Identity designers are in the business of managing perception through the

integration of meaning and distinctive visual form. Understanding the sequence of
visual perception and cognition provides valuable insight into what will work best.

The sequence of cognition: the science of perception examines how

individuals recognize and interpret sensory stimuli. The brain acknowledges and
remembers shapes first. Visual images can be remembered and recognized
directly, while words must be decoded into meaning.
BRAND EXPERIENCE

The Hermes brand developed as an equestrian leather goods manufacturer in

1837 and it has since evolved into one of the worlds most prestigious luxury brands. Theirry
Hermes began the company as a
harness shop that was dedicated to creating exquisite pieces for upper class
horsemen. His original goal was to develop the first wrought harnesses and
bridles for carriages. Since then, the business has passed through many
generations of the Hermes family. This enabled the brand to stay true to its
traditions and not forget the original mission of the company. Since its creation,
Hermes has continuously evolved their merchandise and consequent business
practices to change the always-changing desires of their target customer, while
still adhering to the original goal of creating top-of-the line merchandise.

Hermes seemed to introduce a new product and then mastered its

development. Thus, each of these new products became a staple piece and was
expertly crafted to mesh with the rest of their product assortment and stick to
their original mantra of perfection. For example, the first leather golf jacket with a
zipper was made by Hermes in 1918. In the early 1920s the first Hermes leather handbags were introduced.
During the 1930s, Hermes produced most of their most notable products such as the Kelly bag for
women

and Hermes silk ties for men. In 1949, their first fragrance was released and
their philosophy was advertised as Leather, sport and a tradition of refined elegance.

By the 1950s, Hermes had become a worldly recognized and respected brand. The brands
popularity skyrocketed in 1956 when Grace Kelly was pictured carrying an Hermes Kelly bag. In the 1970s,
Hermes opened retail stores in Europe, America and Japan. The late 70s brought about a snazzier version of
what Hermes had always been, with motorcycle jackets and python skin pieces. In
1979, the company repositioned their brand image to cater to the Baby Boom
generation by launching an advertising campaign with young women in denim and the
token Hermes silk scarf. Since then the brand has continued to evolve and expand to
offer more top-of-the-line products. They have done an excellent job of ensuring that
each line they introduce is manufactured to perfection and fits with the aesthetic of
their brand. A loyal Hermes client
reflected on the brands experience by saying, much of what bears the still-discreet Hermes
label changed from the object of an old persons nostalgia to the subject of young peoples
dreams.
BRAND PORTFOLIO

As of December 31, 2009, the Company operated through its subsidiaries, such as
Boissy Retail, Clerc Thierry Creations, Castille Investissements, JL & Co, Holding
Textile Hermes, Hermes Canada and Hermes GmbH, among others.
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