Business Questions
1.
Bottega Veneta’s value proposition is discreet elegance and fine craftsmanship. Therefore, the brand provides well-designed and sown pieces to ensure that they are elegant and functional to meet the needs of clientele who value quality over quantity. The value proposition is evident in the soft, high-quality leather that is usually woven using the intrecciato material. High-quality weaving is found in its products like bags, clothes, and shows. The technology used is interpreted in its offerings to ensure that the style is more evident than the emphasized logos characteristic of most luxury brands like Gucci.
The brand’s value proposition is very different from most of the other luxury brands because, unlike those that use their logos to identify them and, therefore, offer prestige, the offerings of Bottega Veneta can easily be identified through the quality of its weaving. The soft leather and high-quality sowing that is used give the products an identity. Therefore, the buyers expect to express “stealth wealth” when they wear the brand. The brand is also exclusive and innovative because of the rarity that results from its absence from social media and its limited availability. The reliance on quality and style to identify the offerings rather than the logos and mass media makes it even more exclusive and a preserve for the wealthy.
2.
The brand’s digital marketing strategy aligns with its brand identity and philosophy in several ways. First, it made its products more exclusive. For instance, the brand withdrew from all social media platforms like Instagram and Facebook, where it had a significant following, and Weibo and instead focused on using third-party platforms. It also launched its online magazine, which it used to communicate its offerings and advertise its collections. By closing down its social media platforms, it reduces its presence in mass media and platforms that are overconcentrated with fashion brands. Social media is also used by other less luxurious brands, and people have to scroll down feeds to see products. The company’s direction was based on the idea that people buying luxury goods have less time to scroll down to find products. Also, easy availability on social media makes it less scarce and exclusive as all people interact with it. Not having any social media presence directly makes the brand more mysterious. Also, using brand ambassadors to communicate the brand’s direction and offering enables the users to give their view of the offerings and create more personal engagements with the audience to build more passion and community as compared to the typical use of company-run social media accounts.
Additionally, the brand’s use of an online magazine increases exclusivity and leads to a closer relationship with its audience, which has to immerse themselves into the brand’s world. The current strategy involves the brand working closely with a group of people, like artists, through color and sound in the design and the authorship of the magazine. Also, magazine issues should avoid including logos and other material that may be voluminous to the audience to allow the audience to read and interact closely with the brand’s offerings. The minimalistic approach aligns with the slogan of the initials being enough by avoiding the use of traditional media that requires competition with other brands.
3.
Several motivations led to the brand shutting down its social media usage. First, from the company’s and other luxury brands’ experience, the conversion of the posts to sales was low. Social media marketing typically causes high spending and leads to luxury brands being over-targeted. Therefore, potential buyers were exposed to more ads in their feeds than they had time to see and respond. Therefore, the value of investment in social media marketing was not as high as it is usually perceived by companies that use social media marketing. Additionally, when many brands post products on social media, the over-exposure causes people to experience fatigue from the excessive exposure to brands and ads. Additionally, according to Daniel Lee, the head of the brand at the time, social media homogenizes culture. Therefore, he thought that using social media campaigns oversimplifies the intrinsic designs and the complex work that went into creating the brand’s identity. Therefore, the brand favored measures that enabled closer relationships with its audience.
The benefit of leaving social media is that it allows the brand to gain more exclusivity and enables its clients to become more immersed in the brand culture. It also reduced the marketing costs that went into using social media despite the poor outcomes that resulted from it. The strategy also risked secluding the brand from social media users. Social media offers opportunities for brands to directly connect with fans. Leaving the posting to third parties may lead to companies not having enough communication with their fans. Like other brands that they compete with.
4.
I agree with Pamela Danziger to a large extent. Even though social media offers opportunities for brands marketing their products by allowing sales and links to company websites, it has become overcrowded by brands. Many of the brands are also not luxury. Therefore, it is not an exclusive environment for brands that seek to appeal to the luxury niche. Additionally, from the case, Bottega Veneta has had improved sales even during the pandemic, when most other luxury brands had lower sales because of the economic effects and lockdowns. Therefore, other luxury brands are likely to learn from the company and follow suit. Luxury brands also typically value exclusivity. Leaving social media will allow them to offer their clients the exclusive experience that they seek. However, the companies will retain some of their offerings on social media by choosing their platforms to target the younger consumers that are typically hard to get using other media.
5.
Even though Daniel Lee guided Bottega Veneta away from social media usage, the scrapping of the online magazine shows that there needs to be a balance between exclusivity and bandwagon. Therefore, it is important for the company to rethink its digital marketing strategy and its usage of social media. Digital marketing has so far been very important in Bottega’s success. So far, even though the company closed its social media platforms, it has retained its use of third-party pages and use of ambassadors. Celebrities like Rihanna and others that the company has employed so far have used their social media presence to post the company’s offerings to attract sales. Also, the magazine also contributed to improving sales by enabling the company to form an online community with millions of followers.
The new digital marketing strategy for the next two years should involve using influencers on platforms like Instagram and TikTok to push sales. The company should evolve because Gen Z (31%) now uses company social media platforms more than millennials (25%). Therefore, failing to use social media may lead to the companies not making sales. The company should use social media like TikTok to attract sales by employing influencers who represent its company culture and promote “stealth wealth” rather than logos, as is the case of other brands. Using select influencers as ambassadors to push the brand will enable it to remain exclusive and also attract followers. The company should also only use a few influencers to ensure that the brand is not available to many people as it has been in the past. The increased dependence on influencers that resemble the brand’s market will enable it to evolve and, therefore, attract the younger generation that spends most of its time on social media, especially TikTok and Instagram.
FM205 CASE STUDY ANALYSIS – METHODOLOGY
- CASE SUMMARY
Bottega Veneta is a luxury fashion brand that was founded by Renzo Zengiaro and Michele Taddei in Italy in 1966. The company was based in Milan and has been known for its high quality mixed with low-key luxury. The brand, therefore, attracts clients who prefer to understate their affluence. From the beginning, the founders aimed to provide fashion that was identifiable through its high quality and discreet tastefulness. The brand’s style is based on the company’s lack of machines that could sew the thick leather that was common for high fashion. Therefore, the company preferred light leather that had to be delicately sewn, called intrecciato, to ensure pliability and durability. The quality led to the brand’s growth reaching the US, China, and Japan over time. The company also has a less obvious logo, unlike its peers in the luxury fashion niche. Even though it started with bags and shoes, now it also offers other products in the luxury fashion market, such as men’s and women’s clothes, shows, and perfumes.
The competitive environment at the time of the case included other luxury brands that also offer the same products, like Valentino, Saint Laurent, Alexander McQueen, Chanel Dior, and others. The brand was worth about $4.96 billion at the time of the case study and was about 3.5 percent of the luxury fashion market.
- STATEMENT OF COMPANY OBJECTIVE(S) AND PROBLEM(S)
The objective of Bottega Veneta is to use high-quality materials and innovation to develop and offer fashion products that are timeless and practical. Therefore, the company focuses on designing and building products that do not require a large logo to be attractive in the fashion industry. The company also aims to be exclusive to its clientele. Therefore, it limits its usage of social media and mass media to market its products. It aims to create mystery and inaccessibility in its products to keep demand high in an industry where profound logos are used to make luxury goods easily identifiable. The objectives are long-term because building a brand that will have a presence while at the same time being exclusive requires that the company takes time to cultivate its brand identity to drive sales while remaining inaccessible through social media and other typical means.
The company faces the problem of balancing bandwagon and exclusivity. First, the company aims to ensure it remains inaccessible to many people to maintain its mystery. Therefore, it limits its use of typical marketing strategies like social media marketing. Hence, it faces the problem of remaining relevant at a time when social media is among the most prominent platforms for sales and digital marketing.
- APPLYING THE CONCEPTS
One concept covered in class is culture. Culture concerns the ways that cultural dynamics or people’s way of life affects the preferences and behaviors of potential customers. Culture affects how people consume luxury brands. Social media is among the most significant features of 21st-century life. In fact, according to the case study, about 31% of Gen Z consumers and 25% of millennials use luxury companies’ social media platforms to get information and interact with each other. Between 2020 and 2021, online sales for luxury brands grew from 12 to 22 percent of the total sales. Therefore, the company’s strategy of minimizing its social media presence to remain exclusive limits its utilization of social media to directly connect with its customers.
Brand identity. The company’s use of a less obvious logo on its products affects its brand identity. It prefers to use the intrecciato and other quality materials as part of its visual identity rather than the profound logos that are common for other brands in the luxury category like Chanel and Gucci. The use of supple leather and its minimal use of logos gives the perception of stealth wealth. It enables it to offer the understated elegance that it is known for.
- DISCUSSION QUESTIONS
- PRESENTATION OF SUGGESTED SOLUTIONS
One solution is to increase social media usage in marketing like other luxury brands. The solution will make the product more available to consumers. However, it may reduce the product’s value, negatively affect its pricing, and reduce the product’s credibility. The effects on placement are that it will make the product more accessible via social media and online stores. It will reduce promotion costs on social media. The impact of social media marketing was studied using Nike by Li and Yu (2023). According to the authors, social media marketing improves product sales. However, the price promotions used in the marketing campaigns adversely affected the product. Therefore, as a luxury brand, such price promotions will adversely affect the brand’s value proposition. While it may increase the revenue, the profitability of a brand that values quality over quality will reduce.
Another solution is to avoid social media presence and retain the status quo. Avoiding social media presence promotes the brand’s value proposition by making its products less accessible and, therefore, more exclusive. Therefore, the product’s value and luxury status will increase. The strategy may also positively affect the pricing becaue strategies like price promotions will not be used to drive sales. However, it will impact promotions at a time when social media drives significant sales from other brands in the market. Even though profitability may increase in the short term, revenue may reduce with time, which will impact profitability in the long run. Products will have to be placed in company stores and online stores with limited exposure.
The third solution is to selectively use social media and influencers to drive sales. The strategy will lead to the brand using social media for promotional purposes, albeit with select individuals who represent the brand’s values. While it may limit product’s accessibility, it will protect its value proposition. It will aslo enable the company to imrpove sales withought affecting pricing and therefore retain its high prices.
- FINAL RECOMMENDATION AND MEASURING SUCCESS
Selectively and sparingly using social media is the best solution. Even though social media absence makes Bottega Veneta a more exclusive brand as compared to most of its competitors, it also denies its sales to the millennials and Gen Z, who depend on social media to know trends. However, high dependence on social media will water down the brand’s exclusivity by making it more available to people. Additionally, too much social media usage will adversely affect pricing because of price promotions. Therefore, it is necessary to find a balance between exposure and exclusivity. The brand should be exposed to only its target clientele using influencers that represent its values. Also, it should avoid price reductions and limit its availability to only its official stores.
Measuring the success of the brand should be done by determining its profitability and sales. Determining the sales can be done by knowing how many pieces the brand sells through its social media campaigns. However, profitability is more important than sales because Bottega Veneta seeks to focus on quality while minimizing the quality of sales.
References
Li, Z., & Yu, Y. (2023). The Impact of Nike’s Social Media Marketing Strategy on Consumer Demand. Advances in Economics Management and Political Sciences, 172-178. doi:10.54254/2754-1169/38/20231908