Sunday, October 16, 2011
Friday, October 14, 2011
Ralph Lauren Case Study
Case: Polo/Ralph Lauren
Section 5 (2 pm), Team 1
MI021 Computers In Management, Fall 2011
Group Members:
Andrew Degand
Courtney O’Leary
Sean O’Sullivan
Hillary O’Toole
Megan Scanlon
The firm, Ralph Lauren, was started in 1967 when a line of instantly successful ties was introduced. Ralph Lauren himself did not attend fashion school and had no experience in fashion design, but he was a salesman who knew he had found a niche at the time. Their necktie business soon expanded into menswear and then to women’s clothing. Besides men’s, women’s and children’s clothing, Ralph Lauren also offers a home line, fragrance collection, restaurant and a magazine. Their clothing collections include the Ralph Lauren Collection, Ralph Lauren Purple Label, Ralph Lauren Blue Label, Ralph Lauren Black Label, Polo Ralph Lauren, Lauren by Ralph Lauren, Club Monaco, Polo Sport, Chaps Ralph Lauren and Rugby. 1 The firm currently runs 275 retail and outlet stores worldwide. They sponsor Wimbledon, the U.S. Open, the U.S. Olympic Team, and countless individuals. The CEO and chairman of the company is Ralph Lauren and the COO and President is Roger Farrah. The firm first went public in June of 1997 when Ralph Lauren sold nearly $18 million of his own shares for $465.4 million. 2 The firm made $4.9 billion in revenue in 2010 and has had a positive stock since 2008. 3 A single stock share in this firm costs about $144.93. This firm makes money through selling all of their products in their stores, on their websites and through countless advertising. Ralph Lauren has more than 350 contract manufacturers worldwide as well as many licensees. Ralph Lauren controls 90% of voting rights. 4 The firm uses many forms of technology in their advertising to entice customers to buy their products.
Ralph Lauren belongs to the highly competitive fashion industry. In regards to Porter’s Five Forces, the threat of new entrants in the fashion industry is high, for there are low barriers to entry for new firms, and low switching costs. While the threat of substitutes is low because there are very few brand-less clothing options, there is an intense rivalry in the fashion industry for there are many competitors and the market is commoditized. 5 Fortunately, the power of suppliers is low because firms such as Ralph Lauren can choose from many different manufacturers to buy their cotton and other materials needed for their clothing. 6 Finally, buyer power is high for consumers can choose to purchase competitors clothing, such as J. Crew or Nautica, if they offer a similarly styled item at a lower cost. Ralph Lauren competes in a non-favorable industry; however, due to its economies of scale, it has been extremely profitable. 7 Ralph Lauren is listed as the 451st company in Fortune 500’s 2011 listing. While this appears to be a low number on the list, Ralph Lauren lists higher than two of its major competitors; Phillips-Van Heusen is ranked 479th, and Levi Strauss is ranked 496th. According to Forbes’ 2010 Annual Report, Ralph Lauren was the fourth largest U.S. Apparel and Accessories Company overall, as well as being the third highest fortune 500 company in apparel in 2010 based on revenue.
Utilizing technology to distinguish itself from its rivals, Ralph Lauren was one of the first luxury retailers in the U.S. to launch a mobile commerce site where customers can purchase Polo products through their handsets. Placing Quick Response codes, a 2-D symbol that holds a large volume of information, in publications, billboards, mailers, and store windows, customers can scan the QR code when it appears and it will link consumers directly to the merchandise. For example, one QR code can link consumers directly to limited edition U.S. Open Collections to buy the clothing, watch current tennis videos, and read tournament articles. In addition, consumers can read RL Magazine, Style Guide Q&A, and watch exclusive RLTV videos. 8 When a consumer buys something through his or her mobile device, shipping will be complimentary. All mobile commerce transactions are secure through Secure Socket Layers, which ensure safe transfer of information. Consumers can sign up for Ralph Lauren SMS mobile alerts, informing customers about store openings, events, and other initiatives. In addition, Ralph Lauren has created apps for Apple devices that allow consumers to view collections, design personal Rugby shirts, and view the movement of the materials, fabrics, and colors from their RLX line. 9 Ralph Lauren’s RLX line introduced the RLX Interactive Experience, which gives customers live weather and skiing conditions, interactive trail maps, profiles of world-renowned Aspen Ski Patrol, style advice, footage of latest ski videos, and “First Tracks,” which allows customers to get access to things before the general public. 10 Ralph Lauren prides itself on allowing customers to fully experience the brand, which is built off of customer experience, via technology.
Ralph Lauren also creates customer experience through 4-D technology, specifically catering to the consumers’ senses. Consumers can now shop in London and New York with the 24-hour touch screen experience without ever entering the store. The 78-inch lightweight touch foil screen is directly applied to the store’s glass. 11 Customers are notified the next day via email or text message for payment and shipping information. On special occasions the same stores have had 3-D images on the facades of the stores, where lights create larger-than-life models, Polo players, and accessories that wrap the length of the building. 12 While the light show occurs, light mists are released along with the smell from the Big Pony Collection fragrances. The last time such a display occurred was for the launch of the company’s e-commerce site, which has been responsible for 21% of sales growth in 2010. 13
Brand, being “the symbolic embodiment of all the information connected with a product or service,” is the strongest source of Ralph Lauren’s competitive advantage. 14 Ralph Lauren sells more than merely clothing to consumers; the firm attests: “We were the innovators of lifestyle advertisements that tell a story and the first to create stores that encourage customers to participate in that lifestyle.” 15 Therefore, consumers are buying the clothing not only because it is fashionable, but also to buy into the lifestyle that is associated with the clothing. This is why Ralph Lauren has also been particularly successful in Europe and Asia because, as Elizabeth Blackwell, a Chicago writer, explains it, “that wealthy, relaxed, life-of-leisure image represents an easy-to-understand version of the American dream.” 16 In addition, Ralph Lauren has remained true to their “style” of classic, timeless looks since the firm’s start in 1967. Therefore, the company has built and maintained a strong brand for over forty years, which further convinces customers of its stability and high quality. The scale of the brand further increases its impact on the consumer because the message behind the brand, of communicating a lifestyle, is truly recognized.
In terms of technology, Mr. Ralph Lauren states, “technologies that help us tell our story are interesting to us.” 17 When the firm began using QR codes, they set them apart from their competitors; but today they pose a possible source of attack for rival firms. In 2009, at the time of AdAge.com’s interview with Mr. Ralph Lauren, QR codes were not commonly used in the U.S. for shopping, but today more companies are embracing this technology. He notes, “when we launched it [QR codes], we got a lot of credit for being innovators, and many people have followed suit.” 18 Therefore, the firm realized that their source of competitive advantage could be easily copied. However, Mr. Ralph Lauren is confident that his firm will still leverage this technology; he comments, “when the U.S. catches up, Polo Ralph Lauren, which spent $171 million on advertising in fiscal year 2009…will be ready.” 19
Another factor, which makes Ralph Lauren competitive is its significant scale advantage. Ralph Lauren appeals to a wide range of consumers and markets. With their expansion into the emerging market in Southeast Asia, Ralph Lauren is able to expand internationally even more. 20 Furthermore, the firm works to “[align] itself with events that attract an international audience” such as Wimbledon and the Olympics. 21 In addition, Ralph Lauren encompasses many brands that cover both low and high-end consumers, thus expanding their overall consumer demographic. Therefore, by expanding internationally into emerging markets, by placing the firm on worldwide stages, and by offering a variety of price points for items, Ralph Lauren is able to dominate the high-end fashion market.
Ralph Lauren’s strong brand enables this firm to sustain a competitive advantage over their major competitors like Liz Claiborne Company and Tommy Hilfiger. However, a threat to Ralph Lauren as a business that utilizes technology, is Tommy Hilfiger’s “operational effectiveness” approach to move away from the mainstream and focus on trying to make his lines more high end, following in Ralph Lauren’s footsteps. Due to Tommy Hilfiger’s attempt to update their strategy, “Tommy Hilfiger has always been a huge competitor for Ralph Lauren, but will now be more than ever.” 22 Any business that relies on technology is in danger of one day doing very poorly due to the fact that technology can be easily matched by “just a click away.” 23 Therefore, Ralph Lauren focuses on a variety of areas of business to be successful and popular with their customers. By having a wide spread of fashion areas, this firm creates many opportunities for itself to excel and to build its brand through encouraging its customers to support its business. Ralph Lauren’s customers are never “bored” with the products this firm has to offer because there is an immense amount offered. This firm’s use of technology only makes it easier for their customers to stay loyal to the business and to encourage new customers. Ralph Lauren’s responsibility as a sponsor of many high-end events grants them the opportunities to spread their brand name across the world, winning over new customers.
Ralph Lauren is extremely successful in the fashion industry and is continuing to excel with the help of technology. Unfortunately, a confidential event threatened to hinder Ralph Lauren’s brand. In the fall of 2009, Ralph Lauren released an image of “an impossibly thin” model “sporting the designer’s latest ensemble.” 24 However, this image was photo-edited to an extreme where the Ralph Lauren model’s waist appeared smaller than her head. Despite this obvious controversial image, it was still released in Japan by the firm. This controversy was not brought to attention until the blog, “Boing Boing,” posted this ad and offered its criticisms. Google’s Blogger posted the image as well, but agreed to remove it. Unlike Google’s Blogger, Boing Boing refused to obey Ralph Lauren’s notification to remove the ad from their sites, and continued to offer the image to the public and its criticisms. In the end, Ralph Lauren apologized for the releasing of this image claiming it was a mistake. Furthermore, any business that is partners with technology is in danger. Ralph Lauren’s use of photo-editing, and the technology of blogs, almost tarnished this firm’s reputation. Technology is “the ‘steroids’ of modern business,” but can equally serve as a major threat to a firm. 25
Bibliography
CNNMoney (2011). Polo Ralph Lauren Corp. CNNMoney.com. Retrieved Oct. 12, 2011 from: http://money.cnn.com/quote/quote.html?symb=RL
College Of Textiles (2011). Tx.ncsu.edu. Retrieved Oct. 12, 2011 from: http://www.tx.ncsu.edu/jtatm/volume4issue3/articles/Bruer/Bruer_full.pdf
Downing, K. (2011). Industry Analysis: Retail Store. Retrieved Oct. 12, 2011 from: http://www.valueline.com/Stocks/Industry_Report.aspx?id=7367
Forbes 500 (2011). Largest U.S. Apparel and Accessories Companies Overall, 2010.Business Rankings Annual. Ed. Deborah J. Draper. 2012 ed. Detroit: Gale, 2012.
988 pp. Gale Directory Library. Gale. Boston College. 13 Oct. 2011
Gallaugher, J. (2011). Information systems: A manager's guide to harnessing technology v1.2. Irvington, NY: Flat World Knowledge, Inc.
Girvin, T. (2008).
Ralph Lauren - brand storytelling: Transporting American visioning in hybrid media. Retrieved Oct. 12, 2011 from: http://www.girvin.com/blog/?p=1850
Heussner, K. (2009, Oct. 8). 11 Photo-Editing Flubs: Ralph Lauren Ad Sparks Controversy. Retrieved Oct. 13, 2011 from: http://abcnews.go.com/Technology/AheadoftheCurve/11-photo-editing-flubs-digitally-altered-photo-disasters/story?id=8780937
HubPages (2011). Ralph Lauren’s Rivalry. HubPages.com. Retrieved Oct. 12, 2011 from: http://pmlogan.hubpages.com/hub/Ralph-Laurens-Rivalry
Lendio (2011). Polo/Ralph Lauren Corporation. Fundinguniverse.com. Retrieved Oct. 12, 2011 from: http://www.fundinguniverse.com/company-histories/PoloRalph-Lauren-Corporation-company-History.html
Marketing VOX (2007). Ralph Lauren Unveils ‘Window Shopping’ Touch Screen In London. Marketingvox.com. Retrieved Oct. 13, 2011 from: http://www.marketingvox.com/ralph-lauren-unveils-window-shopping-touch-screen-in-london-030780/
Mobile Marketer (2011). Mobilemarketer.com. Retrieved Oct. 13, 2011 from: http://www.mobilemarketer.com/cms/%20/news/commerce/1545.html
Ralph Lauren Media LLC (2011). About Ralph Lauren. Retrieved Oct. 12, 2011 from: http://about.ralphlauren.com/default.asp?ab=footer_aboutus
Retail Info Systems News (RIS) (2010). 4D Technology At Ralph Lauren Flagships Spotlights Retail As Tourism. Risnews.edgl.com. Retrieved Oct. 13, 2011 from: http://risnews.edgl.com/new-technology/4D-Technology-at-Ralph-Lauren-Flagships-Spotlights-Retail-as-Tourism43954
Smashapp (2011). Ralph Lauren RLX For iPad. Smashapp.com. Retrieved Oct. 13, 2011 from: http://www.smashapp.com/iPad_Ralph_Lauren_RLX
Wikinvest (2011). Polo Ralph Lauren (RL). Wikinvest.com. Retrieved Oct. 12, 2011 from: http://www.wikinvest.com/stock/Polo_Ralph_Lauren_(RL)
Zmuda, N. (2009). Mobile marketing: How polo ralph lauren looks to innovate. Retrieved Oct. 12, 2011 from: http://adage.com/article/cmo-strategy/mobile-marketing-polo-ralph-lauren-innovate/139336/
Endnotes
1 Wikinvest, 2011
2 CNNMoney, 2011
3 Wikinvest, 2011
4 Lendio, 2011
5 College Of Textiles, 2011
6 Downing, 2011
7 Forbes, 2011
8 VOX, 2007
9 Mobile Marketer, 2011
10 Smashapp, 2011
11 RIS, 2010
12 RIS, 2010
13 RIS, 2010
14 Gallaugher, 2011
15 Ralph Lauren Media, 2011
16 Girvin, 2008
17 Zmuda, 2009
18 Zmuda, 2009
19 Zmuda, 2009
20 Wikinvest, 2011
21 Girvin, 2008
22 HubPages, 2011
23 Gallaugher, 2011
24 Heussner, 2009
25 Gallaugher, 2011
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