Ive been getting alot of questions from my readers asking “How will TSXDH compete with big name brands?” “How will you make money?” Well people, it takes some intense planning to establish any business. However, luxury branding success totally depends on which strategy you employ, and this is how I plan to break into the business
FACT: The total sales reported in the United States retail industry in 2012 exceeded 2.5trillion dollars and supported over 42 million jobs
FACT: In 2013, luxury retail sales exceeded 318 billion dollars worldwide.
Why would a company choose to establish a luxury brand?
Some people think I’m crazy for founding a luxury brand, to them it’s committing fiscal suicide. They think I’m setting myself up for failure. But in reality, luxury segmentation maximizes opportunity for expansion and profits in an uncertain economic climate by focusing on customers in a mid to high income bracket that find value in branding. Over
the next 5 years, spending has the potential to increase by 35%(www.BOF.com).
Consumer habits, social considerations, trends, and market size are important
environmental factors that contribute to a steadily expanding consumer base.
TSX Design House has implemented a blue ocean strategy. Because it’s a company that specializes in customization and “limited” collections, value innovation gives us the upper hand. This allows for a window of opportunity to stay ahead of imitators. Competition is irrelevant because we expand industry boundaries by creating a demand for the value we provide and taking advantage of uncontested market space. We’ll thrive in a marketplace of our own making.
Why Do Customers Choose Luxury Goods?
Luxury goods leaders provide a premium shopping experience,
and high quality. This is how they survive recessions and economic downturns.
The United States is the number one buyer of luxury goods with China close behind
in the number 2 slot (www.BOF.com) Driven by emerging markets and a trend of
“ affordable luxury” the market saw a 3% retail gain in 2013. Micheal Kors, COACH, and
Ralph Lauren are the American industry leaders; with Ralph Lauren reporting an
average 4.04 billion dollars in 2013 sales.
Ralph Lauren has maintained a steadfast position in the fashion industry by adhering to it’s design
philosophy and aesthetic focusing on classic lines/styles/silhouettes. This allows
them to survive trend cycles, and even increase their profit margin yearly. They have
global brand recognition and visibility, with a wide and expanding customer base.
These brands will only grow bigger as they expand into new luxury markets, like
Asia-Pacific and Africa.
TSX Design House is a high end American fashion brand positioning itself for
entry into the luxury goods market. The company is a custom design firm that creates
and sells custom made, limited edition, and Ready-T0-Wear high end fashion and art. We currently have one brick and mortar store in the midwest, and two online stores(http://www.
zazzle.com/tsxdesignhouse and http://www.Etsy.com/Shop/TSXDesignHouse). Our
current position in the market is good, but not ideal for entry. Lack of cashflow, is the
biggest obstacle we face at this time. 2012-2014 saw a profit of approximately
$30,000 after $12,000 in costs. However, as demand increases, costs will go up, while
profits may decrease or plateau. The company has yet to implement a strategy to
meet those challenges. Although we have established an industry presence,
brand recognition and visibility is limited.
Strategic Analysis: TSX Design House
The recommendation for TSX Design House is as follows:
To address the issue of lack of cashflow the company can solicit outside funding
from investors, or apply for business loans. They can also create additional cashflow
with minimum spending by taking advantage of their online opportunities, and using
that platform to test their branding strategy resulting in measurable results.
Since the luxury market is not saturated, the company will continue to pursue a blue ocean
strategy for entry into that market. To better position ourselves for entry we will
focus current marketing and sales efforts in the oniine zazzle store. Luxury shoppers
are motivated to purchase by brand loyalty. We have launched an aggressive targeted marketing
campaign via social media, radio, internet radio, e-mail marketing, print media, and direct mail.
It’s the most cost effective way to build brand loyalty, until we increase our marketing budget. Once the relationship is established customers will buy other products under the brand umbrella they trust.
When TSXDH gets a firm foot in the luxury market they can defend their position by offering
limited collections within the staple brand and co-brands. We’ve Implemented a balance
of a horizontal integration and differentiation strategy, and the brand is a prime candidate for repositioning at anytime. A strong product development foundation combined with a value based design philosophy is a major strength for the company. This can be used to our advantage while growing existing brands and clothing lines; while creating
Within five years expansion of brick and mortar locations in New York, Atlanta, Alaska,
California, Miami, Asia-Pacific, Brazil, and Africa will be possible as luxury goods
spending increases. To meet the needs of the customers, we will also expand the online business by offering online consultations via skype, virtual fittings, body scanning technology, partnerships with local tailors and in other geographic areas. There will also be an increase in in-house staff. Within the first year TSX Design House has the potential to penetrate and raise
awareness in 60% of the targeted consumer market and achieve a profit margin