Balenciaga Global Marketing final paper PDF

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Balenciaga

Ivana Maldonado State University Of New York at Oswego Global Marketing Final Individual Research Paper

Table of Content: 1. Introduction……………………………………………………………………………1 1.1 Founder History ……………………….…………………………………………..1 1.2 Company History ……………………………………………………………....….1

2. Kering Holland N.V Company………………………......…………………………….2 2.1 Kerings Mission …………………………….............…………………………….2 2.2 Kerings Relations with Balenciaga………………….....……………………….….3

3. Marketing in Europe………………………….………………………………………..5 3.1 Balenciaga’s original marketing strategy……………………………………….....5 3.2 The European Market ……………………………………………………………..6 3.3 Balenciaga’s current marketing strategy in Europe ….…………………………....6 4. Balenciaga’s appearance in the United States ………………………………………….8 4.1 Adaptation approach and entering the United States Retail Market……………….8 5. Balenciaga’s Global and local Business Strategies……………………………………..9 6. Cross Cultural Differences…………………………………………………………….10 7. Conclusion……………………………………………………………………………..11

1. Introduction: 1.1 Founder History Balenciaga is a luxury fashion house brand founded by Cristóbal Balenciaga in Getaria, Spain. From there Balenciaga made a quick break though into the fashion industry opening its first boutique in 1919 located in San Sebastian, Spain with plans to further expand in Madrid and Barcelona, Spain. Moving forward to 1937 Balenciaga established in Paris and opened its iconic fashion House at 10 Avenue George V and presented the first ever collection which then received immediate success by press and public. Balenciaga cloths are said to “define the concept of modernity and elegance through the mastery of techniques and the use of innovative fabrics.” (Balenciaga. May 6, 2019) Balenciaga is known for its unique geometric, colorful and body fitting deigns that have revolutionized the fashion industry and inspired many iconic designers that we know today such as Oscar De La Renta and many more. From the start Balenciaga established his brand as a luxurious and exclusive, his cloths have always seen warn by aristocracy and royalty. Balenciaga wanted to create designs that made women feel beautiful and prove that any woman no matter what shape and size woman can look and feel great in his deigns. (Balenciaga. May 6, 2019) Currently, Balenciaga’s company mission is “luxury clothes to be worn, not mothballed; product that is desirable without losing its integrity as something practical.” (Fox. May6, 2019) Starting in 1919 and on, Balenciaga expanded its market and developed produced such as perfume, men’s ready to wear accessories, handbags, shoes, accessories, and eye wear. 1.2Company History: Balenciaga was down for about 20 years after Cristóbal Balenciaga retired, then the rights was required by Jacques Bogart S.A. Since then Balenciaga furthered its success in 2015 once appointed Demna Gvasalia as their artistic director, their sales have risen over 46% and took

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Gucci’s stop as the top selling brand in the Kering group. (Disko.May6, 2019) Balenciaga’s current CEO is Cedric Charbit and he continues to uphold Cristóbal Balenciaga’s uncompromising standards, vision of comfort, and aesthetic though his exquisite techniques, masterful cuts and constantly pushing boundaries. Balenciaga entered the global market, shifted its product focus, penetrated the shoe industry, and became the most sought-after luxury sneaker since 2017; pricing their shoes from as little as $550 and at most $750. This achievement was done through innovation, branding, and rebelling against the fashion norms which is a known strategy of Cristóbal and his original philosophy. 2. Kering Holland N.V Company: 2.1 Kerings Mission Currently Balenciaga is a subsidiary of Kering Holland N.V company which is an international luxury French based group that owns luxury companies such as Gucci, Yves Saint Laurent, Alexander McQueen, etc. and recovers their image, reputation, creativity, and restores their original mission and goals. Kering has a market cap of 7.5 billion dollars due to Balenciaga begin the top selling and most searched brand out of the group. (Kering. May 5, 2019) Kering is a retail empire founded by François Pinault in 1963 as Pinault S.A and re- branded as Kering in 2013 due to the company’s shift from timber trading to solely acquiring luxury goods and brands. Kering was originally founded as Établissements Pinault then changed its name about three times before re-branding to Kering. Kerings re-naming was a marketing strategy to better enter the global industry, the name Kering was meant to resemble the English word care. (Kering. May 5, 2019) With this association method Établissements Pinault new brand image was family, welcoming, and caring about their brands and the world around them. Investors and companies now viewed the Kering as reportable and a new, safe, and promising investment outlet. As a caring action, Kering is not

only a luxury group of iconic houses, the group promotes sustainability and women empowerment. Kering states” Luxury and sustainability are one in the same, sustainability and empowering women, our signature, our mindset, our promise.” (Kering. May 5, 2019) Due to their reputable public image Kering makes it easy to nurture luxurious companies that have been failing over a few years regain their reputation, go global, and enter new industries by adding a new value of creativity that still cherishes the autonomy of the brand. To be a part of the Kering family a company go through acquisition or partner for a period of time, this is determined by specific company needs. Once a company feels mature enough to go back to an autonomous way of doing things they can leave the partnership. 2.2 Kerings Relations with Balenciaga Kerings acquisition of Balenciaga allowed the company to obtain global exposure through new and innovative marketing strategies and hiring uprising designs. Kerings role alongside Balenciaga was to restore the company to its original financial and reputable status due to the shutdown that lasted about 20 years. Kering achieved its mission though preservation of original philosophy, creating a lifestyle and movement for the brand, cross market collaborations, expansion and charitable deeds/sustainability. (Kering. May 5, 2019) Kerings early steps in restoration of Balenciaga was listing the company in the Paris stock exchange, which exposed the company to many investors from different industries and helped Balenciaga receive the financial crutches that were needed. Kerings next step was “heritage reach” which created a bridge between then and now, meaning the new designers would study the philosophy, vision and craftsmanship of the original founder Cristóbal Balenciaga and incorporate those elements into the current designs but still allowing creative freedom. (Kering . May 6, 2019) Once the identity of Balenciaga was developed and in the

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process of restoration was complete, Kering created a lifestyle and a brand ambassador program for the company. The creation of the brand ambassador program consisted of regular users and influencers from around the world collaborating to promote and bring global brand awareness. This was a very successful strategy because once the program kicked off Balenciaga was recognized worldwide and was able to break though different cultural boundaries. This was very simple for Balenciaga to achieve because they have ambassadors from different regions in different countries that can promote the product locally yet globally at the same time. The process started though recruitment of a national ambassador program from in different regions in Europe and by analyzing the success of the program in Europe. (Kering . May 5, 2019) Kering expanded the program internationally and selected the ambassadors based on their social media following, self-identification with the brand and their ability to positively promote and create a community fan base for the brand. Overall the ambassador program was successful oversees and allowed Balenciaga to break down cross cultural barriers and integrate in different countries and cultures such as America, China, and the Middle East. In short, this marketing strategy was an example of “think locally and act globally” in a cost-effective manner. Kerings sustainability strategy starting in winter 2018 allowed Balenciaga to give back to the public by supporting the world food program which also served as a form of “free” positive publicity for the company. This random act of kindness showed Balenciaga’s critics that the company is responsible, engages with the environment, and shows that fashion is useful beyond its particular purpose. This partnership with the world food organization is in efforts to end hunger by 2030 and aims to engage customers around important issues like global hunger and the importance of healthy lifestyles with building strong communities. This strategy has increase

global sales because for every Balenciaga product purchase they will give more than 200 packs of food for a family in need, when natural disasters occur, and donate 10% of sales of each WFP item partnered with Balenciaga. This world aweless campaign bought light to Balenciaga in many 3rd world, developing nationals, and flustered interest in many global designers and celebrity influencer to collaborate with the company. Due to Kering taking Balenciaga under its wing the company was able to bounce back into the public eye and surpass the initial goal. This was achieved by breaking global/cultural barriers, breaking into the shoe industry, participating in a global sustainability project, and creating a community of influencers and brand lifestyle worldwide. A few notable achievements of Kerings acquisition of Balenciaga traces back to 201l when a museum was inaugurated in honor of Cristóbal Balenciaga in Getaria in Spain, later that year an exhibit on Balenciaga was opened at the San Francisco museum of arts in the U.S. In 2012 another Balenciaga exhibit was opened in Paris, France. 3. Marketing in Europe: 3.1 Balenciaga’s Original Marketing Strategy Reiterating back to Balenciaga’s Spanish, origins Cristóbal Balenciaga opened his first store in the small town of San Sebastian, Spain which fully sparking the company’s destiny and future success in the fashion world. Although the opening of his first boutique allowed him to get a larger target market, later expand further in Spain, and across Europe his immediate success dates back to 1917 when he was creating cloths for royalty in Spain and aristocrats. In Balenciaga’s childhood, he was helping his mother make garments for the Spanish royal family and later became a sowing prodigy by age 12 and by age 24 was designing for the royal family and their inner circle. (R. May 6, 2019) The early exposure of his work allowed for many wealthy and royal families across Europe to hear his name, see his design and have interest in his

future works. This publicity allowed his small boutique to grown into the fashion empire we know today as Balenciaga. 3.2 The European Market The European market is very diverse due to many countries making up Europe, despite this obstacle there are still many similarities between each country making it possibly to create ads targeting Europe as a whole. Europe as a nation is very liberal and comfortable with sexually and expressing ones’ sexual freedom, therefor many companies incorporeal sex appeal, nudity, LGBT and gender-neutral images and sources in adds. (Migrator. May 6, 2019) A major trend in Europe is UK made goods, it is looked highly upon if a company is well established and recognized within the UK market. It is also a good strategy for a company to position their brand in the UK or emphasis that the company has some ties in the UK either through labor, investments, or major promotions. (Migrator. May 6, 2019) Europe has a reputation of promoting healthy lifestyles, safe environmental practices, and technological advancements. Therefor a company must show they are environmentally conscious and giving back to the world through acts of charity. Due to the emphasis on technology, digital marketing is a key factor for brand exposure and penetration between markets and regions. Based on a study, European consumers prefer more direct, simple and easy to access websites along with simplified yet deep images to showcase a product. (Migrator. May 6, 2019) A simple translation of the product leads to captivating the audience attention quicker and more likely to recall that item and purchase it. 3.3 Balenciaga’s Current Marketing Strategy in Europe: Balenciaga’s marketing history and strategy in Europe started when the Royal family of Spain was caught waring his designs to galas and other important events. (Balenciaga. May 6, 2019) This can be compared to celebrity endorsements and how in today’s society marketers

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creating a source of trust and familiarity between the product and the consumer. The only difference between sourcing now and then is Balenciaga’s early exposure was a form of “free” celebrity endorsement in a scenes due to the fact that he did not need to pay anyone to wear his designs. Through this process Balenciaga caught the attention of the queen of Belgium and created a wedding dress for her and other aristocracy from neighboring regions. (R. May 6, 2019) Another old school marketing ticktack that was used was to build up suspense and not release information about upcoming designs until the day before; this created an identity of exclusivity and premier for the brand. The “word of mouth” marketing and proper sourcing is what lead Balenciaga to be the company it is today. In the 21st century and relating Balenciaga’s marketing strategy with modern Europe the company uses marketing strategies such as regional social media, magazine print adds, the scaling method of media planning, and promotes using the standardize method when marketing outside their ambassador program. In 2018 Balenciaga created a co-ed collection which was gender neutral and consisted of a combination of men and women fashion. Balenciaga created a power source using non-celebrity models in ad campaigns yet conveying a message of gender identity and question gender norms. Balenciaga showcased the collection with sex appeal portraying the men as half nude and very feminine, for the female adds the models were captured as masculine not showing much skin in efforts to promote sexual awareness and acceptance. (Pithers. May 5, 2019) Balenciaga emphasizes their ties, recognition and prestige in the UK to have a stronger appeal and with the rest of Europe. Balenciaga positions their ad and latest collection information in the UK magazines such as UK Vough, UK teen Vough, and WWD. It is a known fact the Europeans want easy accessibility, simplicity, and concise information.

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Therefor Balenciaga created a simple, easy to navigate website that is direct and as minimalistic as possible. 4.Balenciaga’s appearance in the Unites States: 4.1 Adaptation approach and entering the United States Retail Market Balenciaga made a negative yet still strong presence in the U.S starting 2002 due to a scandal of their designer at the time imitating works of Kasisik Wong, a designer from San Francisco, California. (Balenciaga. May 6, 2019) Moving forward to 2005 Balenciaga received astonishing reviews of their 2005 fashion week appearance in NYC, catching the eye of many celebrities which will later endorse Balenciaga. Balenciaga later decided to enter the shoe industry, which lead to a major breakthrough in 2017 when the company released their “sock with sole” sneakers. These sneakers look like socks but can wear outside, the “sock with sole” shoe became the hottest sneaker in fashion and since then Balenciaga has been able to compete with major athletic brands such as Nike and Adidas. (Balenciaga. May6, 2019) This shoe dominated the athletic shoe industry that it created inspiration for brands such as Fendi, Zara, Nike and Adidas to create comfortable knit sneakers with light soles; very similar to Balenciaga’s original design of the “sock with sole” shoe. Balenciaga also entered the luxury bag industry, creating a collection of hand bags and luggage’s that has been endorsed by celebrities such as Cardi B and others. Balenciaga currently has eight boutiques including location in California, NYC, Vegas, and Dallas. (Balenciaga. May 7, 2019) Balenciaga was able to make this incredible breakthrough into the United States market by using the adaptation method which allowed the company to tailor to the U.S trends. Balenciaga’s target market in the U.S since 2015 are millennials because millennials make up a big chunk of consumers in the fashion industry and are likely to purchase the latest luxury styles. It is also very important for a company to have a creditable source in advertisement, especially 8

celebrities because Americans tends to follow and be inspired by celebrity culture. Balenciaga used the source, collaboration and endorsement strategy to attract millennials and gather a community of loyal consumers. Balenciaga collaborated with Kanye West to create his Yeeezy 350 line, CardiB to promote their motorcycle inspired handbag and luggage, and with Farefetch to create street style adult and kids clothing collection. (R. May 6, 2019) Due to these collaborations, the American consumers reacted well to Balenciaga’s products and wanted to be a part of the Balenciaga community and lifestyle. In efforts to reach millennials the company promoted a lot in social media and had social media celebrities wear, promote and rate their products. Due to this mass advertisement and endorsement Balenciaga because the most after sought out brand in 2018. Balenciaga also made appearances in Vough U.S which created a brand identity of luxuriousness and showed the brand as exclusive and generated a must have felling for those who are up to date with the latest fashion trends. 5. Balenciaga’s Global and local Business Strategies: Business strategies Utilized by Balenciaga is the flighting method, which means that out of the budget the company has for sales they will allocate the budget to a specific time period of time and advertise their products heavy in that time span to appeal to a more selective target audience. An example of this practice is in fashion week which takes place in September worldwide (U.S, Paris, Italy), the companies new collection usually drops every May worldwide, and in December/January consumers tend to spend more due to holidays. Therefor the company will produce more advertisements in social media, T.V, and print during September, December/January, and in May to attract consumers to their brand. Separate from Kerings localized advertisement and ambassador approach, the company focuses on a standardized approach of advertisement. (Migrator. May 7, 2019) Balenciaga created a more diverse range of

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models and promoters to advertise the brand. The company has received criticism in the past of lack of diversity and biased/ white preference in model recruitment so they hope this diversification will increase their sales and fix their image. A business approach that is used mainly in Europe but not in the U.S is the appearance of the company in outlet stores and pricing their items on sale before their new collection drop, this is done so the brand won’t lose its value and image overseas. 6.Cross Cultural Differences: A recap of the marketing mix includes the four p’s; price, product, place and promotion. Throughout this study it is mentioned that Balenciaga had to adapt to the American culture and way of marketing to make an entrance into the American market. The cross-cultural Differences between Marketing in Europe vs. the United States is the regulations on what is allowed to be promoted to the public, consumer preference, and season sales spikes. (Migrator. May 7, 2019) In Europe, the regulations are more relaxed with nudity and sexuality while in the U.S it is not common to over sexualize a product, show nudity on television such as nipples and genitals. Another important difference is the U.S is just recently accep...