Academic journal article European Research Studies

"Carolina Herrera" Internationalization Strategy: Democratic Luxury or Maximum Exclusiveness?

Academic journal article European Research Studies

"Carolina Herrera" Internationalization Strategy: Democratic Luxury or Maximum Exclusiveness?

Article excerpt

1. Introduction

Carolina Herrera is a fashion Brand name with a renown and quality image. The company has identified a market niche that demands garments, apparel and accessories to which it may offer a somewhat differentiated product with excellent quality. However, this market niche is already targeted by several companies with very renowned Brand names and great reputation, such as Loewe and Vuitton, which could clearly be identified as the leading companies and worldwide references in the luxury fashion apparel sector (Reynolds, 1985). Faced this scenario, we examine whether there is the possibility of carrying out a complete new Brand positioning to enter this market niche, or on the contrary, efforts should focus on strengthening its Brand positioning strategy within an international scope.

To answer this question, Spanish fashion retailer Carolina Herrera's (hereinafter CH) internationalization process and strategy are going to be analysed as a case study. For that purpose, three elements of marketing strategic planning will be used, such as the Benchmarking, segmentation and positioning and finally the Marketing-mix, viz., marketing variables that the Company has to reach this potential market. Because Brand plays a determining role in the firm's internationalization and in penetrating international markets (Malhotra, Peterson and Kleiser, 1999), the role played by Brand as a transmissive vehicle of internationalization strategy is analysed in this study.

2. The Company's Beginning, Conceptualization and Internationalization Process

2.1 The Beginning of the Company and the Carolina Herrera Concept in Current Context

The European textile and clothing sector is characterized by its fragmented and disperse production, with great number of small and medium size companies (Nordas, 2004), whereas textile distribution channels are characterized by their huge concentration level (Stengg, 2001). In this context, the Company Sociedad Textil Lonia, S.A, (STL) was launched in 1997, as an industrial project of clothing and sale of garments, apparel and accessories whose aim is the medium-term development of several brands in all worldwide markets.

The first brand that STL launched onto the Spanish market in 1998 was Purification Garcia, with men and women's collections, aiming at the market segment with a medium-high purchasing power and which also demands quality and design apparel.

On the other hand, fashion designer Carolina Herrera, signed in 2000 a commercial licensing contract with STL to start up the worldwide expansion of her firm and planning the inauguration of stores in Europe, the United States, South America and Asia in the medium term. CH aimed primarily at the market segment with high purchasing power, offering great quality and exclusive design products. Nowadays, the CH brand is the flagship of the company located in Ourense (Spain). Over a thirteen-year period, STL has opened 305 stores in 23 countries worldwide and 102 points of sale for the PG Brand in three countries.

The textile Company owns a commercial licensing contract for both brands. Under this contract, STL is in charge of the global design, tailoring, distribution and management of the two brands. Control of the overall procedure, including design, production and distribution is from central headquarters in Ourense.

Due to its business experience and to the abolition of quotas on textile exports in 2005, the company has reorganized its production process, getting rid of the tailoring and dressmaking activities. So, following Berkeley and Steuer (2000); and Keenan, Saritas and Kroener (2004) there is a clear example of product subcontracting of the labour intensive parts of the production process to third countries with lower wages costs.

2.2. The Business and Management Model: "One Company, Two Brands"

Dealing with two fashion projects set in different market segments such as PG and CH has forced the company to lay down two different marketing strategies for the two brands. …

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