Diesel Marketing Mix Essay

Introduction This essay on Marketing mix is worth 30% of my Marketing module, I am going to construct a report to analyze the marketing mix of a company. The company that I chose to do is Diesel, They are an international clothing company ranging from women’s wear, men’s wear to accessories, and I am going to look at Product, Price, Place and Promotion While doing this project I am going to research the Diesel company using the Internet, I am going to look at websites such as www.diesel.com, www.wikipedia.com and any other sites I come across that will help me with information on the company. I will then construct the essay using Google docs and Microsoft word. Company background Beginning as a company focused on making quality clothing, Diesel has become part of the youth culture worldwide. Diesel is an innovative international design company, producing a wide-ranging collection of jeans, clothing and accessories. Diesel is a leader in pioneering new styles, fabrics, manufacturing methods and quality control to guarantee an outstanding product. The company is present in over 80 countries with over 5,000 points of sale and more than 300 monobrand stores (200 of which are company-owned and the rest in partnership with local distributors). When Renzo Rosso founded the company in 1978, he wanted it to be a leader, a company that  took chances and carved out a niche for itself in its field. He surrounded himself with creative, talented people – innovators who, like him, rejected the slavish trend following typical of the fashion industry. He wanted to create the most dynamic and imaginative product available anywhere: he gave his open minded design team broad stylistic freedom, and their mission was to create an apparel line perfect for independent people who follow their own unique path in life and for those style-makers who express their individuality by the way they dress. From the very beginning, Diesel’s design team, headed by Creative Director Wilbert Das, turned their backs on the style-dictators and consumer forecasters of the fashion establishment and let their own personal tastes lead them. The company views the world as a single, border-less macro-culture, and the Diesel staff reflects this: a cosmopolitan team that creates an unpredictable, dynamic vitality and energy within the company. Diesel â€Å"people† and their working methods are so unconventional, albeit productive, that they have been profiled in countless media, and have been studied by international consulting organizations and un iversities. www.diesel.com Marketing mix The Marketing Mix is one of the most famous business tools in marketing. The Marketing mix has four elements called the four Ps which are Product, Price, Place and Promotion and is often crucial when determining a product or brand’s unique selling point Some commentators will increase the marketing mix to the ‘five Ps’, to include people. Others will increase the mix to ‘Seven Ps’, to include physical evidence (such as uniforms, facilities, or livery) and process (i.e. the whole customer experience eg a visit to Disney World). The term â€Å"marketing mix† was coined in 1953 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a â€Å"mixer of ingredients†. The term became popular in the article written by Neil Borden called â€Å"The Concept of the Marketing Mix .† He started teaching  the term after he learned about it with an associate Product Since 1575, the word â€Å"product† has referred to anything produced since 1695; the word has referred to â€Å"thing or things produced†. In marketing, a product is anything that can be offered to a market that might satisfy a want or need. This includes physical objects, services, people, places, organizations and ideas. Products should meet the needs of the market Products have 4 levels: 1. Core level 2. Actual 3. Augmented product level 4. Potential product level Product Classification I would put the brand Diesel under the product classification Durable Goods. Diesel Goods are a bit more expensive than other brands but are designed to last longer. Product life cycle The stages that products go through from development to withdrawal from the market. Stages in the Product Life Cycle Products tend to go through five stages: 1. New product development stage 2. Market introduction stage 3. Growth stage 4. Mature stage 5. Decline or Stability stage I would say most of the collections at Diesel are at the growth or Maturity Stage They are always trying to keep on top and introduce new lines often. Diesel Introduced the line Black and Gold in February 2008 at new York fashion week Since the brand comes from Italy, the owners thought that a great extension for a clothing brand would be wine. The problem is that wine drinkers are very particular about the wine that they drink, and many wine enthusiasts look skeptically at a clothing company releasing its own brand of wine. The wine could be the best in the world, but because of the label attached to it and the feeling that anything but a world-class winery will do, it is doomed to fail. While an Italian company going into wine is not that out of the ordinary, a clothing company starting to sell liquor is. Deisel also wanted to break into formal wear to be on par with the likes of Ralph Lauren but after years of being a casual durable brand formal wear just didn’t kick off. http://faculty.insead.edu/chandon/personal_page/Documents/Case_Diesel%202007_corrected-w.pdf Branding Definition: The marketing practice of creating a name, symbol or design that identifies and differentiates a product from other products Branding is the process involved in creating a unique name and image for a product in  the consumers’ mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers. Before the introduction of StyleLab in 1998, the brand portfolio of Diesel SpA consisted of three main product lines: D-Diesel (including licenses), Diesel Kids and 55DSL (The brands and some of their logos are shown in Exhibit 6). Most of its production was outsourced to small and medium-sized companies, whereas design and marketing remained in-house. Brand Identity Diesel’s management team emphasized that D-Diesel and StyleLab should have distinct brand identities but with some common roots. Both brands shared values such as freedom, global outlook, creativity and thoughtfulness. Nevertheless, whereas D-Diesel stood for irony and irreverence, StyleLab stood for sophistication and mystery. Of course, the products themselves were quite different: Diesel focusing on denim while StyleLab experimented with a variety of innovative fabrics. Packaging Diesel Keep their packaging simple enough, for their clothes they are wrapped in a clear plastic bag with the word deisel in Black written on it, and then they are put into a mostly white parer bag with again the brand written in Black Block letters, For Deisel fragrances they are always very well packaged in a nice box and always have some kind of accessories free with them, usually attached to the bottle (like seen below in the image) .Usually their wallets and other sunglasses are packaged in a cream coloured box, With Diesel Logo written in light Brown on the box, with tissue paper inside. Their products always have a brown cardboard tag attached. Price Definition of Price Pricing is an integral part of a marketing strategy as it is the only one of the 4 P’s that generates revenue for the firm. Price is commonly used as a strategic weapon between competitors and plays an important role in shaping  customers perceptions of the products value and quality. Pricing will be determined by other elements in the marketing mix Price should be consistent with other elements. Diesel uses premium pricing because the price needs to reflect the value of the lifestyle experience of the brand. The people at Diesel are in tune with that lifestyle and promote what Diesel represents. Pricing Strategies Pricing strategy refers to method companies use to price their products or services. Almost all companies, large or small, base the price of their products and services on production, labor and advertising expenses and then add on a certain percentage so they can make a profit. There are several different pricing strategies, such as penetration pricing, price skimming, discount pricing, product life cycle pricing and even competitive pricing. Diesel uses a model based on premium pricing. You do not pay a premium price for Diesel jeans because they are a premium quality, that is taken for granted, You pay a premium price because the jeans and the brand fit in with and even encourage a premium, dynamic lifestyle built â€Å"for successful living†, as Diesel would say. This allows the company to price those products in a way which complements and neatly fits into that lifestyle. A strategy such as penetration pricing used by businesses making high-volume, relatively low-margin products would be inappropriate as it would undermine the quality association thus devaluing the brand and experience. From researching the price discrepancies of the Diesel brand I have found a few differences in pricing online, Firstly I looked at the Diesel online shopping website www.store.diesel.com and then compared the prices to other online sites that sell Diesel clothing, such as www.mandmdirect.com and www.asos.com . The first difference I found was at asos.com they were selling a Mens Diesel T-shirt for â‚ ¬55.00, the exact same T-shirt was on sale at the Diesel website for â‚ ¬60.00 making it â‚ ¬5 more expensive. The second website I looked at was mandmdirect.com, here I found huge differences in price as you can see from my print screens below, the same Mens T-shirt was selling for â‚ ¬45.00 at the diesel website and â‚ ¬24.99 on the mandmdirect.com, making the T-shirt â‚ ¬20 cheaper at mandmdirect.com. I also looked at womens clothes on mandmdirect.com and found the same jeans for â‚ ¬34.99 on mandm and sellinf for â‚ ¬135.00 at Diesel, thus making the jeans â‚ ¬100 less at mandmdirect.com. Also I tool a look at some americian websites(www.blufly.com & www.revolveclothing.com ) to determine weather it is cheaper to buy Diesel Jeans in the usa and by using the currency  converter on goolge, it appears that there would be no difference in the price of a pair of Diesel jeans here or abroad. â‚ ¬55 asos â‚ ¬60 diesel.com Pricing Methods I think Diesel would use perceived value pricing which means They price their items based on the Perception of the buyer of value. Competition from other brands such as levis my affect the way Diesel price their items. As you can see from the section price in comparison to competitors most of Levis garments are cheaper than Diesels. Place Definition of Place * Decisions about where to sell the product * Or concerns about where the customers are, and how to get to them * Also includes the â€Å"channel of distribution† – meaning, all the different middlemen you use to get the product out to the customer Channels of distribution Indirect and direct Number 1 is a direct channel of distribution as the product would be going straight from the manufacture to the consumer. 2,3 and 4 are all indirect. Ever since the beginning, Renzo Rosso believed in addressing the world with one product and one language, and one of his first steps was building a solid and vast distribution platform stretching across all 5 continents. Most of Diesel’s current production is outsourced, to small and medium-sized companies. Production of denim jeans is based exclusively in Italy. All international logistics operations (wholesale and retail) are centrally managed and carefully controlled. Intermediaries Often Diesel would work with different intermediaries for example they would use agents to help when sourcing different suppliers and advertising also Diesel might use overseas offices. However these can be very expensive to the company so Diesel would also look at new lower risk methods of market entry. Physical distribution Diesels approach to distribution can be seen as a mix of exclusive and selective distribution over intensive distribution. Exclusive distribution involves limiting distribution to single outlets such as the Diesel flagship stores. Selective distribution involves using a small number of retail outlets and partners to maintain the quality of presentation and communication to the customer. Intensive distribution, on the other hand, is commonly used to distribute low price or impulse goods such as sweets. When distributing their goods Diesel would have to think about warehousing, transport, packaging, Stock / inventory levels and customer service. Promotion Definition of promotion The publicisation of a product, organization, or venture so as to increase sales or public awareness it refers to the different promotional options available to the marketer such as: Brand advertising Co-operative advertising Corporate advertising Steps in the marketing communication process 1. Identification of target audience 2. Determine of communication objectives 3. Design of message 4. Selection of communication channel 5. Setting and allocation of communication budget 6. Selection of promotional mix Evaluation of results Identification of target customer * Stylistic men and women: ages of 20-35 years * Independent entrepreneur or innovator who follows their own unique path in life * This eccentric man or women is largely unaffected by fashion fads and spends a significant amount of money on quality fashion- forward clothing Communication objectives * Quality * Edgy * Unique * Eccentric Design of message Diesel Advertisements are always Edgy, stylish and sometimes controversial, they continually develop searing hot ad campaigns and innovative editorials. They have recently started a new campaign called â€Å"be stupid† The tagline ‘Be Stupid’ declares Diesel’s new philosophy that it’s way more interesting to be stupid and gave fun than be smart and live a boring life. It encourages people to take risks and move beyond the smart and sensible track for life. The campaign, developed at global advertising agency Anomaly, includes online, press and outdoor advertisements featuring â€Å"stupid† acts, a digital recruitment campaign for the Diesel music video/2010 catalogue, and viral  activity outlining the company’s Stupid philosophy. Diesel Stupid Philosophy Like balloons, we are filled with hopes and dreams. But. Over time a single sentence creeps into our lives. Don’t be stupid. It’s the crusher of possibility. It’s the world’s greatest deflator. The world is full of smart people. Doing all kind of smart things†¦ That’s smart. Well, we’re with stupid. Stupid is the relentless pursuit of a regret free life. Smart may have the brains†¦ but stupid has the balls. The smart might recognize things for how they are. The stupid see things for how they could be. Smart critiques. Stupid creates. The fact is if we didn’t have stupid thoughts we have no interesting thoughts at all. Smart may have the plans†¦ but stupid has the stories. Smart may have the authority but stupid has one hell of a hangover. It’s not smart to take risks†¦ It’s stupid. To be stupid is to be brave. The stupid isn’t afraid to fail. The stupid know there are worse things than failure†¦ like not even trying. Smart had one good idea, and that idea was stupid. You can’t outsmart stupid. So don’t even try. Remember only stupid can be truly brilliant. So, BE STUPID www.diesel.com Selection of communication channel Diesel would Use non-personal channels including Mass Media = national press, radio, TV, etc and Local Media = local press, trade or specialist publications. Setting and allocation of communication budget Three basic choices here: The affordable approach After the firm has paid its expenses then decide what you can afford The objective and task approach Determine what needs to be done (objectives) and allocate resources appropriately The percentage-of-sales method From January to September 2008, Diesel spent $5.8 million on U.S. advertising, according to TNS Media Intelligence You spend a percentage of your annual sales on communications I think Diesel would use the â€Å"The Objective and task approach† as their communication channel of choice. Selection of promotional mix This refers to the different promotional options available to the marketer, There are five elements in the Promotional Mix: * Advertising, * sales promotions, * personal selling, * public relations * sponsorship All elements of Diesel’s promotion aim to engage the customer with the lifestyle. If they like the lifestyle, they might like the products. For example, the Diesel team saw music as an inseparable part of that lifestyle and realised that exploring new music and new artists was all part of trying something different and experimenting with the unusual. 10 years later, Diesel:U:Music is a global music support collaborative, giving unsigned bands a place where they can be heard and an opportunity to have their talent recognized. It’s not about selling, it’s about giving people something they will enjoy and interact with. Diesel were the first brand to advertise their clothes through video games, normally they would Promote products mainly online, www.diesel.com and in high-end magazines such as: Elle Vogue Diesel also advertise through billboards which catch a lot of attention OTHER WAYS OF ADVERTISING ARE THROUGH MAGAZINES ADS SUCH AS BAZAAR Celebrity endorsement and sponsorship L’Oreal and Diesel launched Fuel for Life (for him and for her) in the fall of 2007. A mini-collection for Adidas was launched in 2008 called Adidas Originals Denim by Diesel. The underwear license is held by the US company Mast Industries Inc.,who also make lingerie for Victoria’s Secret. A new collaboration with AGV has seen the launch of a Helmet. Recently Diesel Home, thanks to collaborations with Moroso and Foscarini has been launched in the market. The Diesel company has acquired stakes in the brands Viktor & Rolf, Maison Martin Margiela and DSquared2. In recent years, the company has driven its attention to endorsing young creativity by sponsoring several projects such as the Diesel-U-Music Contest. Diesel has been the founding partner of International Talent Support in its various forms. Diesel has also offered sponsorship and creative contribution to the 2006 edition of Vienna’s Life Ball AIDS charity, as well as the Sundance Film Festival. In December 2008, Diesel announced a marketing partnership with Sony Computer Entertainment Europe, to sell their designs in Sony’s virtual world, Playstation Home with the majority of the proceeds going to the OTBF Only The Brave Foundation (Diesel’s charitable arm). Conclusion Here are some of the main points learned from researching the marketing mix for Diesel Brand: * By addressing the 4Ps of the marketing mix Diesel has been able to establish a new product range, choose the most effective approach to price, place it so that it is easily accessible and promote the range to customers. * Diesel is a global household name for premium clothing but it all started from one man wanting to do something unusual, something ‘stupid’. This has created a lifestyle – a whole new way to see a  brand. * By comprising an area on price in comparison I have found that other well known brands are offering the same quality jeans at cheaper prices * By looking at th Diesel brand product life cycle, it was hard to find a product of theres that did not work, and was in thee decline stage of the cycle. * Diesel have been very successful in their collaborations with loreal and also Adidas * There continues to be huge interest in the diesel brand and it doesn’t loke like that would change anytime soon. Recommendations Diesel seem to be doing a lot right with the company as you can see with the continuing profits in their sales, however I could still recommend a few points: * Diesel could look at lowering their prices a small fraction as there is a lot of competition out there from the likes of Levis, Seven for all mankind, Tommy Hilfiger etc. * They could look at different ways of distribution to lower costs * They could do more collaboration with other big name brands because they have worked well in the past. * Diesel could also look into choosing different communication channels again to lower costs in advertising especially as From January to September 2008, Diesel spent $5.8 million on U.S. advertising, according to TNS Media Intelligence Bibliography www.diesel.com www.wikipedia.com www.thetimes.co.uk http://businesscasestudies.co.uk/diesel/live-breathe-and-wear-passion/conclusion.html www.thetimes100.co.uk/downloads/_15_summary.pdf www.marketingmagazine.co.uk/news/54124/ www.freewebs.com/busecon/_15_full.pdf en.wikipedia.org/wiki/Diesel_(brand) aesessex.regulus.titaninternet.co.uk/†¦/KS4_Applied_Diesel_marketin www.peachtreeridge.org/pages/ybell/_15_lp14.pd www.managementparadise.com class notes