Hugo Boss is a luxury product company and its core business is in the sales of high-end design clothing. However, it also sells royalties such as its colognes, watches and other merchandise to increase profits. Its strategy to drive growth would be to be more customer-oriented and to have a quick response to sales in the market. Some of its competitors would be the high-end companies such as Burberry and Armani. Its main target audience is the higher income men. With a Compound Annual Growth Rate (CAGR) of around 10. 11% in the past 6 years, it can be concluded that Hugo Boss is doing well even though there was a financial crisis and that it is a company worth investing in.
Hugo Boss was founded in 1924 by Hugo Boss himself. With 100 years of history, it is safe to say that Hugo Boss is an old company. Its headquarters is currently set in Metzingen, Germany, showing that it is European-oriented but it also has markets all over the world. It is also a big company as it has 9027 employees and in 2010 it made a €1. 7 billion in revenue and €206. 4 million in profits.
However, in comparison with the biggest company in the industry, Louis Vutton Moet Hennessy (LVMH), Hugo Boss is only 3/20 times of LVMH. From Figure 1. 1, you can see that the main growth of Hugo Boss comes from income growth. As you can see, with a CAGR of around 11. 4% in net income growth, it shows that Hugo Boss has demonstrated strength in an extremely difficult market environment. However, with a drop of 4% in CAGR in PE ratio, it may indicate that the investors are not confident in investing in the luxury market. Investors might have this mindset due to the recession.
The Essay on Economic Growth Versus Income Inequality
Economic Growth versus Income Inequality For ten years now, our economy has been growing more dramatically than any other time since World War II. . The stock market is at an all-time high. The government is spending less on itself, and more on the people-weve finally achieved a balanced budget. If were doing so well, why isnt everyone getting rich? Most economists point to the fact that the upper ...
With a 1. 4% CAGR in cash flow contribution, it shows that Hugo Boss has increased its annual dividends and it is benefiting the investors. Therefore, it can be concluded that Hugo Boss has created significant value for its shareholders. From these graphs, it can be concluded that Hugo Boss is earning more profits and over time, it will earn 1. 5 times more in net income in the future. Therefore, Hugo Boss is making more than it sells. Hugo Boss has 3 main strategies to drive growth. They are brand segmentation, production and internationalisation.
One of Hugo Boss’s main strategies is brand segmentation. The first brand that Hugo Boss started with was Boss Selection. However, Boss wanted to create the equivalent of Boss Selection but at a lower price, so Boss Black was formed. Furthermore, Hugo Boss wanted to cater to a wider range of people, so Hugo Boss created the brands Boss Orange, Boss Green and Hugo. Hugo Boss has allowed itself to produce items under different categories and it also tries to have a larger price range for every product its brands produce.
This is to allow a wider range of customers to be able to afford their items. As you can see, under every design, there is only one Hugo Boss brand. This is to prevent any of its own brands from competing with each other. This will ultimately increase growths. The size of the triangles represents the number of stores each brands has compared to one another. Therefore, Boss Black has the largest amount of stores as it is most probably the main contributor to net income.
Hugo Boss Boss Selection Boss Black Boss Orange Boss Green Hugo Highest Price of Polo Shirts / $ NIL 215 115 145 95 Percentage of overall earnings (2009) / % 3 68 17 3 9 From this table, it can be seen that the fashion lines have a wide range of prices for a certain type of shirt. Let’s take their polo shirts for an example. As you can see, the price of a polo shirt from Boss Selection is not shown. This is because Boss Selection only produces tailored suits and even so, all the suits are custom made. Therefore, the price of a suit from Selection starts from $1100. Thus, Boss selection has the highest profit margin but Boss Black is the one which has the highest profits.
The Term Paper on Brand Personality Assessment of Royal Enfield
Introduction Manufactured in Redditch, UK, the Bullet was the culmination of designs that date back to 1933. The classic 350 cc model made its debut at the Earl’s Court motor show in 1948 and was an immediate success. Its big brother, the 500 cc came along later, in 1953. In 1955, a satellite factory was established in Madras, India, to meet demands from the Indian Army. When the UK factory closed ...
In conclusion, all the brands are earning a significant amount in their fields of expertise. A brief overview of brands under Hugo Boss. For the Elite class of people looking for distinctive clothing, we have Boss Selection. With Boss Black, executives will be able to find suitable clothing. For the people looking for sporty clothing, Boss Green will be the one for them. For the more casual group of people, Boss Orange will be ideal. And not forgetting those men who just need to stand out and be more unique, we have Hugo. Hugo Boss has historically been wholesale driven.
However, it is not Hugo Boss’s retail partner but the consumer who is finally deciding about success or failure of any given collection. Going forward, Hugo Boss wants to better understand his or her needs and wants. Its own retail operations will provide Hugo Boss with a lot of market data and so Hugo Boss will be able to translate these valuable insights into meaningful collections that hit the consumers’ nerves. Of course, this requires seamless and transparent product development and production processes. And Hugo Boss must become quicker in bringing products to market.
Upon implementation, Boss will be able to switch to a true four season cycle that is more in sync with actual consumer buying behavior. And even within the seasons, Boss wants to operate with varying themes that incentivize their consumers to enter their stores more frequently. With this, they will be able to follow the customer preferences, therefore increasing the number of sales. This strategy will have a meaningful impact on top and bottom line results in the years to come. This is because originally, customers would prefer spring and autumn collections over summer and winter collections.
An example would be Asians not buying the winter collection as they do not experience winter. Therefore, production of inventories would decrease then and so profits will decrease as well. By adding different themes in between the seasons, it would ensure that customers would purchase them and so inventories can be produced at a steady rate. Positive effects will be driven by store traffic and conversion rate improvements, productivity increases and a higher portion of full price sales. Internationalisation is another key strategy to drive growth.
The Term Paper on Shiseido in China
1. What are the functions performed by the marketing and distribution channels for cosmetics products? Which of these functions are most important? Why? Distribution Channels in the cosmetics industry consist of individuals and firms, involved in the process of making cosmetic products or services available to consumers. Marketing channels make possible the flow of goods from a producer, through ...
Hugo Boss realizes that it has set up enough stores in Europe and will not be able to increase its revenue unless it expands. It realizes that Asia is a growing market with countries such as India and China. By expanding into these countries, Hugo Boss will be able to increase margins significantly. From the graph, it can be seen that Hugo Boss is deciding to put more effort into internationalisation in Asia with an increase in the number of stores by 11%. Hugo Boss is expecting the revenue which Asia generates to rise steadily and overtake America.
It can also be seen that Asia is the strongest growing market and with growth strategies in place, sales increase in Asia will be certain. Therefore, Hugo Boss wants to increase the number of stores in Asia. Now, these are some plans and moves Hugo Boss has chosen to proceed with in Asia. Hugo Boss has made more than one-third of all openings in 2009 in Asia. It plans to have an average of 20 new openings in China annually. By expanding into Asia, Hugo Boss also wishes to expand its Boss Selection line and by 2015, China will be among Hugo Boss’s top 3 single markets along with Europe and America.
In Hugo Boss’s retail operations, the set up of the joint venture in China in July was certainly the highlight of 2010. Boss knows that it needs to depend on the franchise’s knowledge of China and its network to drive growth effectively. Boss has been very successful in China over the last few years by cooperating with several franchise partners. Now, it enjoys a strong brand image and market position as one of the leading premium apparel brands in Greater China. Boss also has the first mover advantage and it is well-established in China.
Going forward, Boss wants to capitalize on this position and drive growth also in those parts of the country where Boss only has a limited presence so far. That is why Hugo Boss has taken the decision to partner with its largest franchisee, Rainbow Group. Rainbow contributes a lot of expertise and local market knowledge to our operations especially in mainland China. Boss will build on its partner’s local set up when it comes to retail operations, logistics, merchandising and warehousing.
The Term Paper on Asia China Mountains World
Asia is the Asia Asia Asia is the largest of all the continents and includes within its limits an area of 17, 159, 995 sq mi, or about 33% of the world's total land surface and the greater part of the Eurasian land mass. The border between Europe is traditionally drawn as an imaginary zigzag line passing down the spine of the Ural Mountains and through the Caspian Sea, Caucasus Mountains, and ...
Also, Boss is confident it will benefit from the good access its joint venture partner has to new mall projects across mainland China. There are now 34 stores formerly run as franchise operations and is part of the Group’s own retail network. In conclusion, Boss’s Asia experience is sure to contribute more to the total sales. Through retail expansion, Hugo Boss hopes to exploit growth options in future regions. It also wants to better understand its wholesale partners. It also wants to have a more consistent merchandise presentation for end-consumers.
Another reason for retail expansion is to allow Hugo Boss to have higher profits as high discounts are given when Hugo Boss sells its products to wholesale partners and with the increase in retail shops, this can be countered as Hugo Boss will be able to sell its products directly to their customers. The internet sales of Hugo Boss began in 2009 in the United Kingdom. However, Hugo Boss has chosen to not sell any Boss Selection products online so as to ensure that Boss Selection remains unique. Boss has set up internet sales as it knows that it already has regular customers who know their sizes well.
Thus, these customers will feel at ease when buying products online. Furthermore, in big countries such as America, It is difficult to go to the Hugo Boss stores. Thus, Boss thinks it will be better to have its products sent to them. Online sales have expanded to other countries from then. This strategy was put in place to increase profits as we are in the technological age and Boss wants to reach out to its customers. As can be seen from the graph, Hugo Boss remains as the strongest luxury company with the highest revenue gained annually.
Armani is similar to Hugo Boss but Boss has managed to be a touch higher than Armani. Burberry is actually a small company compared to Hugo Boss and Armani even though there is a common misconception that it is a big company, generating high revenues. It can also be seen that in 2009, which was the year with the financial crisis, Boss was not the only company which experienced a drop in revenue as its close competitor, Armani also saw a drop. However, Burberry managed to stay strong and increase its revenue.
This might be due to the fact that Burberry does not have as many fashion lines compared to Armani and Boss, therefore, it managed to sustain its growth. Boss and Armani might have experienced a drop in a specific fashion line, and so this affected its overall revenue. In conclusion, Hugo Boss would be worth investing now as the growth strategies will definitely increase margins in the future. However, for the people who are looking for quick buck, they should not invest in it. Also, from the strategies, it can be seen that Hugo Boss is becoming more customer oriented and Hugo boss is targeting Asia where more growth is expected.
The Essay on The Product Life Cycle and Marketing
Abstract There are many things to be considered when marketing a product. These things include: length of existence time, quantity of competitors, and the quantity “of sales or revenue the product is generating” (p264). These are ways the marketer can obtain factually information on the product. After understanding the information the marketer can then look at the product life cycle. The product ...