introdUCTION currently obtain 869 stores in over

introdUCTION

The following report will evaluate the brand Massimo Dutti and will
propose a brand extension in response to the changing fashion market. Through
extensive secondary research, this report will analyse Massimo Dutti’s current
position within the UK and their global success.

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KEY brand INFORMATION

Massimo Dutti, founded in
1985,  is a Spanish brand that sold modern
men’s fashion. Since 1985, the clothing giant has expanded
globally from its homely roots and now has its own stores in almost every part
of the world. In 1995, the commercial format of Massimo Dutti was purchased by
the multinational clothing group- Inditex. Inditex, being one of the world’s
largest fashion distributors and retailers, houses eight distinct brands
including: Zara, Pull, Stradivarius, Oysho, Zara Home and Uterqüe
(Inditex, no date). Since 1963 the Inditex Group have managed to obtain 7,405
stores in 94 markets globally (See Figure 1 in the appendix for additional
information). Its distinctive model has been the key element to Massimo Dutti’s
rapid global expansion and performance. 

Massimo Dutti currently obtain 869 stores in over 74 countries, operating:
Womenswear, Menswear, Kidswear, Accessories, Personal Tailoring and
Fragrance lines. (-Inditex, 2017)

KEY COMPANY STATISTICS

(-Inditex Financial Documents, Full 2016 Fiscal Year)

Mission Statement and Brand Values

‘Massimo Dutti is committed to offering all its customers a
high standard of excellence, quality, health and safety in its products, and
communicating this in a clear and transparent manner. Its products are made
ethically and responsibly.’
– (Massimo Dutti, 2017)

As shown above is Masimo Dutti’s mission statement which
explores the desire to produce ethical products with quality in mind. Their
mission statement comes with a no-strings-attached outlook as they aim to
communicate their brand with a ‘transparent manner’.

As shown in Figure 2 of the appendix,
Massimo Dutti’s parent organisation, Inditex, do not tolerate the act of modern
slavery or human trafficking. The implementation of this from Massimo Dutti can
be seen on their website imperatively titled ‘Act on modern slavery’. Figure 3
suggests why the concern is so pressing for the Inditex group. As shown, Asia
is the highest contributing supplier for their supply chain (providing 938
suppliers in 2016). In conjunction to this the Global Slavery Index (GSI) found
that nearly two-thirds of human trafficking came from Asia alone, proving the
need for Inditex’s company values. 

Massimo Dutti Values : Style, Comfort, Function, High Quality,
Elegance, Desirability and Classic Appearances 

Objectives

‘Massimo Dutti always ensures it uses high
quality fabrics that are also practical and comfortable.’ –
(Massimo Dutti, No Date)

As shown from the above and below objectives, Massimo Dutti
aim to attain high quality throughout their business as well as providing
products at an affordable price point. Their aim of global expansion within
their second objective proves promising as according to Drapers (2017), they ‘opened
a new store in Delhi, India’ to boost the global expansion of the brand.

Massimo Dutti ensures its stores ‘are found in the
best shopping locations and are designed with the customer’s ease and comfort
in mind.’
– (Massimo Dutti, No Date)

INDITEX’S SALES REACHED €1 BN IN
2012 

MASSIMO
DUTTI ENTERED THE UK MARKET IN 2003

MASSIMO
DUTTI’S LONDON FLAGSHIP IS OVER 2,000 SQ METERS

MASSIMO DUTTI OBTAIN 14 UK
STORES 

MASSIMO DUTTI GENERATED £1.293M
IN 2016

PROFITS DROPPED 0.4% IN 2014

P.E.S.T Analysis

THE MICRO ENVIRONMENT

Suppliers
Inditex have over 1,186 suppliers around the world
making it vulnerable to many factors. For instance, how adaptive Inditex can be
in order to operate in low cost regions, may affect the quality of Massimo
Dutti- being a prime objective of the brand. The recent change in
government campaigns which tackle the environmental and social impact of the fast
fashion culture will also effect suppliers. As a result, many retailers have
introduced changes in their supplier regulations. For example, Tesco is banning
cotton from countries known to use child labour. These changes in the buying
behaviour of the retailers will force Massimo Dutti to follow stricter
guidelines on their own environmental and ethical issues; in order to remain
competitive. 
Consumers
The target audience for Massimo Dutti’s
womenswear collection includes the ages between 25-45. Massimo Dutti
therefore need to continue providing for the upper middle and upper
socio-economic class rather than attracting millennials who care little about
the effects of fast-fashion companies. This womenswear consumer plays an active
role in the Inditex business model.
Competitors
Massimo Dutti’s direct competitors include: Banana
Republic, Hobbs, Mango and COS. Key elements associated with the success of
Massimo Dutti’s competitors includes how well they performed in their full 2016
fiscal year. For example, as shown in Figure 7, Massimo Dutti generated a net
profit of €1.293m, whereas Mango ended 2016 with a loss. According to Fashion
Network (2017), ‘Mango ended 2016 with 2.260 million euros in sales compared to
2.327 million in 2015, representing a 2.9 percent drop’. Although Mango are
still generating €0.967m more than Massimo Dutti, this means they are losing
market share. Mango operates twenty-eight more franchised stores than Massimo
Dutti as well as a ‘Think Up’ affordable sub-range that was introduced in 2009
for the weaker consumer climate. (fashion network, 2009)
Publics
Inditex are a team of ‘more than 150,00
critical thinking proffesionals’ (Inditex, 2017). Each employee that works at
Massimo Dutti, aids the process of the business reaching their objectives and
standards of high quality. They are able to do this through in store and online
assisting of Massimo Dutti consumers. Other public’s that contribute to the
micro environment of Massimo Dutti include mass media influences as they have
the power to persuade consumers to purchase Massimo Dutti’s products. 
Marketing Intermediaries
Marketing intermediaries include the primary
channels that assist the manufacturing to consumer process. For example, the
retailers, distributors and occasional advertising agencies. As Massimo Dutti
do not heavily rely on mainstream promotional channels such as television, the
power of word-of-mouth is integral for the brand.

S.W.O.T Analysis

Having already analysed the micro and macro outcome of
Massimo Dutti’s womenswear line, it is important to explore the swot of the
company through information previously sourced. 

Situation Analysis

Massimo Dutti currently sits within the
mid-market to luxury segment as they care for the quality of materials. For
example, as shown in Figure 11, many of the bags are produced using a ‘bovine
leather’ which has a high price point for the British high street
(£139). Inditex themselves are currently in a positive financial situation
as their gross profit increased by 14% in 2016 reflecting their positive progression
in sales. Massimo Dutti themselves, have seen a net profit of 1.293m Euros in
2016, as well as maintaing a ‘tight control of expenses’ -(Inditex, 2017).

Proposed Brand Extension

In 2008 Massimo Dutti extended their product
portfolio by adding an accessories line. Key elements within this accessory
extension includes ‘The Eyewear Collection’ and  ‘En Esencia’. There are a
number of different extensions that Massimo Dutti could explore in the future.
For example, the need of a swimwear line, as COS are currently the only
competitor which have launched their swimwear collection. Another extension
Massimo Dutti could consider includes a ‘Small Leather Goods’ collection.
Materials could be sourced ethically; whilst still attracting a wide consumer
audience. For example the inclusion of sustainable pineapple skin leather,
elevating Massimo Dutti with a USP in the market. Moreover the suitable choice
of homewear for Massimo Dutti authorizes a vast inclusion of opportunities for
the brand. 

The following choice of implementing a homewear
line at Massimo Dutti has been decided due to the many advantages. For example,
the products themselves can be ethically produced; helping to tackle the stigma
attached to fast-fashion companies such as Inditex. When competing with other
luxury brands such as Burberry, the homewear collection will be promoted using
a virtual furniture app, allowing the consumer to re-arrange Massimo Dutti
items in their own home; contributing to a new M-Commerce experience. Through
the homeware extension, Massimo Dutti will be continuously monitoring digital
news sources, blogs and articles for the latest developments and
technologies.  This brand extension falls under the ‘diversification’
method of the ANSOFF growth matrix, which can be high risk. However, due to the
financial position and economic growth of both the brand and Inditex; the
extension will open up new opportunities in order for them to become a leader
in the fashion sector. 

PERCEPTION MAP

The perception map above shows the positioning of
Massimo Dutti’s new homeware range among its furniture and homewear
competitors. The nine categories are broken down by the attributes that are
identified as important to the consumer, whether that may be due to functional
or psychological satisfaction. The Massimo Dutti homeware line has been placed
in between classic and sustainable, due to the presentation of each product and
the values behind the line that contribute to a sustainable market. The
position of Massimo Dutti’s overall brand can be seen in Figure 13.

Target Audience

When analyzing the perception map, it is evident the new
Massimo Dutti consumer will be attentive to new sustainable materials. This
reaches out to the younger demographic who are interested in investing in
sustainable products. According to a recent Nielsen global online study,
millennials are the ‘most willing to pay extra for sustainable
offerings’ showing that the target audience will start around the
typical age Massimo Dutti’s current womenswear target audience are placed at
(25). When identifying the perceptions of the consumer who will shop at the
Massimo Dutti Homeware line, the logo is also placed in between the ‘Classic’
perception, showing that the new line can span to the same older market as
Massimo Dutti’s womenswear is (54), proving that the audience has not shifted
in its demographic. 
Due to the preservation of the current
consumer audience, the target consumer would be placed within the 34% ‘Early
Majority’ segmentation (this placement can be seen in Figure 14). Although the
younger demographic draws the segmentation towards the ‘innovators’ section due
to their attentiveness towards the changing technological environment, the
‘classic’ perception brings the older demographic towards the ‘laggards’
section; proving exactly why the placement of the new Massimo Dutti Homeware line
fits within the ‘Early Majority’ section.
As this target audience is wide due to the
fact is spans a variety of different consumers, this may show signs of
complications when promotion is not direct. However, when identifying
competitor’s homeware target audience, the same applies. For example, COS x HAY
spans a wide audience from consumers in their late teens to late 50+ year
olds. 
The current loyalty of Massimo Dutti consumers
fits within the ‘infrequent users/buyers’ section. However, after the introduction
of the brand extension, consumers will be more inclined to purchase their
products, as they have sustainability in mind, allowing loyalty to increase to
the ‘Frequent users/buyers’ section. 

PEN
PROFILE : ISABELLA

PEN
PROFILE : ISABELLA

Using the geographical element of Isabella,
information was sourced based on her lifestyle. As previously mentioned,
Isabella is an innovator, but remains classic in her everyday life by reading
novels. As shown in the ‘Mobile Content’ chart, Isabella would regularly shop
online as she seeks the latest products. Although her health is poor as
described by her BMI, she wants to help the environment and social causes,
making her an appropriate consumer for the new homeware line.

ACORN: ISABELLA

ACORN: ISABELLA

Using the geographical element of Samuel, information was
sourced based on his lifestyle. For example, 128 individuals in his area live
comfortably in terms of finance. Samuel’s love of nature comes to light through
the bar chart entitled ‘ community engagement’ as 253 locals are part of an
environmental group. Other relevant findings include Samuel’s need of buying
furniture online as shown in the chart titled ‘Buy Online’. Moreover, the fact
127 individuals access social media through a mobile device, proves the need
for a Massimo Dutti homeware app.

 Due to the differences shown between Isabella and Samuel, a differentiated targeting strategy will be applied. This allows Massimo Dutti to produce a varied amount of above and below the line advertising methods, which help to target a wider audience. An undifferentiated strategy would not be of use, as Massimo Dutti need to penetrate the luxury market whilst appealing to consumers who want comfort and style. Likewise, a concentrated strategy would only attract one audience, whether that being the ‘Design Conscious Consumer’ or ‘The Innovator’. As shown in Figure 14, Inditex also apply this targeting strategy to their own business.

Branding

The first section of branding considered includes the logos
and the swing tags needed to promote the new homeware line. Having explored
using the font as well as the Massimo Dutti symbol, the fourth logo appeared
most authentic to the brand, and therefore will be used for the homeware
collection. 
Swing tag’s labeled ‘1’ and ‘2’ were first
considered. The first giving a clean look, whilst the second suggests
comfort.  Options labeled 3a and 3b will be put forward for the homeware
line due to its direct link with Massimo Dutti as the house image used is the
shoot location used for their editorial entitled ‘Evening Whispers’.

Branding

Marketing plan

Muted colours will be used throughout the Massimo Dutti homeware line, with occasional pops of colour to appeal to the design conscious consumer. Designs will remain classic in order for Massimo Dutti’s aesthetic to run throughout both wardrobe and home.

‘A marketing mix provides a framework that can be used to manage marketing and incorporate it within a business context’ (-Harriet Posner, 2011)
Massimo Dutti’s current use of marketing plans, appear effectual through the use of appropriate promotional and pricing strategies as well as their sales and distribution channels; proving they should continue their current success through to their debut homeware line.

Product

Price

Place

Promotion

When analyzing the perception map it is important to consider what Massimo Dutti’s direct competitors price their products at. For example, as shown in Figure 15, COS x HAY’s price range spans from £2-£150. Massimo Dutti’s new homeware line will equally provide a long price architecture, however due to the fact the line does not include smaller stationary products, prices will sit within the ‘mid-price product’ section and the ‘premium price product’ section. When reflecting on Massimo Dutti’s current womenswear collections, psychological pricing is frequently used
(e.g. £139). By allowing the same strategy to be used in the new homeware line, current consumers will be content with paying similar price points.

Specific product decisions including styling, practicality and emotion
will each be designed with sustainability in mind. Homeware products will
include: candlesticks, cushions, serving trays, side tables, clocks, carafes,
lamps, mirrors and other decorative items. The homeware line will consist of a
broad breadth and a shallow depth, allowing colour choices to be kept at a
minimum. Muted tones will be used throughout the extension line, with
occasional pops of colour, allowing Massimo Dutti to equally target classic
customers such as Isabella, as well as more contemporary consumers such as
Samuel. Materials will either be recycled, fair trade or made using innovative
materials such as pineapple leather; linking appropriately to their ethical
mission statement. Quality and comfort will remain key within the new
collection.

Place means ‘The right product for the right customers in the right
place at the right time’ (Anouti.C, 2017). Therefore, it is appropriate to
consider the needs of the customer. As shown in Figure 16 of the appendix,
Massimo Dutti currently provide a ‘door-to-door’ dependability for their
consumers. This concept shall also be used through the new homeware line,
however there will be a £10 minimum in order to entice consumers to purchase
more. In order to reach a high market coverage each flagship store will sell
the whole collection. This will later provide growth to ‘medium town centers’
where Massimo Dutti stores are situated e.g. Kingston when profitability
becomes increasingly high. Moreover, as Massimo Dutti stand for continual
quality in each of their products, distributing the homeware line through
wholesalers such as Selfridges, convinces potential consumers that the products
are high-end.
As the rise of m-commerce has introduced
itself into the fashion market. As shown in Figure 17, Massimo Dutti’s new
homeware app will appeal to consumers such as Isabella who take a keen interest
in obtaining innovative products.  Distribution channels that will be used
will be either 1, 2 or 3 depending on the place of purchase. 

According to Posner. H (2015) , promotion can be broken into three
categories: Physical Evidence, Process and People. In order to target a wide
range of audiences, a broader range of issues needs to be introduced.
Therefore, the promotional strategy of allowing 5% of each homeware sale to go
towards the HumanTraffickingFondation, will target the emotional appeal of
consumers. As previously mentioned, and shown in Figure 2 of the appendix,
Inditex and Massimo Dutti equally discourage global human trafficking, making
it an appropriate association to the new homeware line. ‘Differentiate’ as part
of the DRIP promotional strategy has already been handled due to the continual
use of pineapple leather found in products; also contributing to the ‘Interest’
section within the AIDA model. A range of above and below the line promotional
methods will additionally be established to aid the success of the new line.
For example, direct mail will be sent using the given email at the register via
online receipts as well as billboards which will be located close to any
Massimo Dutti store. This is cost effective and assists Massimo Dutti in
reaching their wide target audience whilst ensuring Inditex keep ‘a tight
control of expenses’. Moreover, the use of QR codes found on each swing tag,
promotes the collection further as many consumers will be testing products in
their own home.

Conclusion

Through assessing Massimo Dutti as a business, their SWOT,
Micro and Macro environments, extension line and marketing mix, the
implementation of a homeware brand will sufficiently increase the overall profitability
and the share of sales at Inditex. Through sustainable, fair
trade, innovative materials with a care for human mistreatment, each Massimo
Dutti consumer will be raised from their ‘infrequent user / buyer’ section, to
a ‘frequent user / buyer’ section, allowing growth within the company and a
disinterest towards Massimo Dutti’s direct consumers.