THE MARKETING STRATEGY OF HARVEY NICHOLS
The marketing strategy of Harvey Nichols
In this report, the company under observation is Harvey Nichols, one of the most fashionable and luxury department stores internationally. Customers can find most of the world famous fashion designers’ brands in the store. The purpose of this report is to analyze and evaluate the marketing plan and the strategies of Harvey Nichols. This has been achieved through secondary data. The secondary analysis involved research using the textbooks and articles about and of relevant marketing strategy concepts and theories, as well as investigating the company’s target market and strategy. Satisfaction of self-image is an integral part of our psychological well being and the way we choose to portray these social and symbolic needs reflects the type of person we are. The consumer to what it is intended interprets the desired image of the brand differently. Today, in this research is also investigating what Harvey Nichols means to consumers and what image it want to be.
History of Harvey Nichols
In 1813 Benjamin Harvey opened a linen shop in a terraced house on the corner of and in London. Later, the business has passed to his daughter, and started selling Oriental carpets, silks and luxury goods alongside the linens. In 1919 Harvey Nichols was bought by and in 1985 became part of the Group (). In last century, the sale of the store was depressing and slumped into a deficit. In 1991, the Hong Kong business man bought 100% of the store’s share for £53 million through (International) Ltd, and the store was come into the stock exchange market in 1996. In May 2000 the first overseas store in Riyadh, Saudi Arabia was opened. 2003, Harvey Nichols has return to private ownership and de-listed from the London Stock Exchange. Up to date, Harvey Nichols has opened five department stores in UK, where is London, Leeds, Birmingham, Manchester and Edinburg, and also five overseas store, Saudi Arabia’s capital Riyadh, Ireland’s capital Dublin, Turkey’s Istanbul, Dubai and Hong Kong.
Economy Environment in UK
UK’s economy is increase steadily year by year. The level of GDP in quarter of 2006 is 2.7 per cent higher than the third quarter of 2005. The total domestic expenditure of household on goods and service in year 2005 is £731 185 million. The expenditure of clothing and footwear is about 6 % of it, which is £46 083 million. In first two quarter of 2006, the total expenditure is £184 650 million and £186 382 million, which has raised 2% as the same time in 2005. The expenditure of clothing and footwear in the first two quarter of 2006 is £11 701 million and £12079 million, which has raised 3.5% (). As the data shows increase level of expenditure of clothing and footwear is larger than the total expenditure, residents of UK care about their self-image and what impression they are showing to others.
In the UK socio-economic classification scheme, upper-upper class people are only 3% of the whole population. These are professional people, very senior managers in business or commerce or top civil servants, who reach self-actualisation or self-esteem level, the highest two levels in Maslow’s hierarchy. Lower-upper class people are 20% and upper-middle class people are 28% of the total population. Lower-upper class people are usually middle management executives in large organisation, with approximate qualifications or top management or owners of small business. Upper-middle class people can be defined as junior management, owners of small establishments, and all other non-manual positions (, 2004). These people are the main customers of Harvey Nichols, since clothing purchases are closely tied to the consumer’s ego and self-image and goods in this store always be linked to a image of luxury and prove of social status. The need to strive to reach one’s desired social status is influenced by their peers. It involves aspects such as acceptance, self-esteem and self-fulfillment (, 1998).
Changes in the composition of the UK population have a distinct effect on the fashion industry, through factors such as lifestyle and income. Till 2006, 7857 thousand people are in the age group of 25-34, and 9645 thousand people are in the age group of 35-44 in UK. Harvey Nichols has been positioning their offer, with their customers’ base showing a strong bias to these age groups. Because fashion trends run away extremely fast, and styles get acceptance initially by being adopted by a minority of consumers (, 03’10’06). This group of consumer usually is young. It can be told through the advertisement of Harvey Nichols which will be discussed later in the report.
The Neutral Environment
Media environment can be advertisement and public relations. Advertising is defined as any paid form of nonpersonal communication about an organisation, product, service, or idea by an identified sponsor. Advertising is also a valuable too for building company or brand equity as it is a powerful way to influence customers’ perception (, 2007). Public relations is defined as the management function which evaluates public attitudes, identifies the policies and procedures of an individual or organisations with the public interest, and executes a program of action to earn public understanding and acceptance (, 2007). The media have certainly picked up on the increasing fashion awareness in society, demonstrated by the surge in popularity in the last decade of women’s fashion magazines like ‘Vogue’ and ‘Marie Claire’.
The Target Market
Market segmentation is composed of a group of buyers who share common characteristics, needs, purchasing behaviour or consumption patterns. A target segment is one that a firm has selected from among those in the broader market (, 1999). In the case of department store Harvey Nichols in Manchester, the target could be the residents of the Manchester, which is the geographic segmentation. Target customers have to have an income within a certain range, which is the demographic segmentation. Some customer require for service from a knowledgeable staff and were not that sensitive with the price, this may relates to both behavioural and psychological segmentations. Through assessment and combination of these variables it is possible to devise four potential target markets for Harvey Nichols.
The key demographic variables used to segment the market would seem to be age, occupation and income. Using age it is possible to target several consumer ranges, generating different consumer profiles. Clear potential exists to target the young and career professional market, between around 25 and 34 years, who have a considerable high disposable income. Such a group have been labelled ‘aspirers’ (, 1999), cited here as ambitious, innovative, affluent and materially conscious. Seeming to appear much more frequently in periods of economic success, these are the types of consumers who will help develop new trends through a willingness to try new things. Fashion life cycle is comparably short. It is a first in first out industry. Fashion from be launched to declined could be shorter than six months. Older age group people are likely to stick on one style of clothes and rarely change style. Thus the 25-34 age group has the high income let them able to afford the luxury merchandises, and the characteristic of willing to try new things let them easily accept the new style of fashion. Such a trait makes them become the largest target market of Harvey Nichols. Following by the group of young and career professionals, group of subordinates are subsequently involved, since Harvey Nichols is a symbol of fashion and a symbol of social status. Once a style is trickle down, and has been adopted by the subordinate group of consumers, it is not longer desired by those in higher level. For this reason, a new and innovate styles is going to be launched constantly (, 2006).
Occupation and income tie-in directly with these ideas: In targeting more affluent and image conscious individuals, Harvey Nichols created an image suitable for the middle and upper-middle classes and attracted every single person who has aspiration on fashion.
Geographic segmentation divide customer by continents, countries, regions, cities, towns and streets. Cross-border trade is today much easier to organise than in the past. Consumer in some foreign markets might be much wealthier and free spending than consumers in the firm’s own country. Also there might be less competition in the foreign market (, 2000). For these reasons, with five stores in UK, Harvey Nichols was looking for international expansion. The first store outside UK was opened in Riyadh, Saudi Arabia in May, 2000. It was the first western fashion and lifestyle department store in Riyadh.
Until today, Harvey Nichols opened four stores overseas, and the group's commercial director Patrick Hanley said: “We want to be the number one store, a highly focused fashion store, in key cities. America may have Barney's and Brazil may have Dazlu, however there are many cities that do not have comparable high-end boutiques to match the offer of Harvey Nichols.” Russia, Poland, Lebanon, India, Indonesia and more than one country in South America have been added to Harvey Nichols' wish list of potential international sites. A spate of successive new openings of licensed stores is being planned for as early as 2007. Except planning of the overseas market, Harvey Nichols also has plan for UK market. Six more stores are in list to open before 2015 (). The most recent one should be opened in 2008, at Bristol.
Psychographics relate to the consumer’ internal desire to create an external image, satisfy and promote the self-image of the individual. This includes lifestyle, attitudes, personality, group membership, interest and hobbies, education and knowledge, adopter categories (, 2006). To promote such an arguably the UK's most fashion-forward department store, it is necessary to seek out society’s ‘aspirers’ and ‘succeeders.’ In an increasingly affluent society, such consumers are on the increase, and with high disposable incomes they can be categorised as young, confident, self-assured and fashionable. Such people generally herald from a lower-upper or upper-middle class background, a distinct factor in their ambition and educational success, or from lower-middle class backgrounds who have taken advantage of modern society’s far greater degree of social mobility.
Geodemographic segment combine similar demographic, geographic, psychographic and behavioural characteristics to allow organisations develop profiles, and target consumers, by identifying specific locations (, 2006). In Scotland, Glasgow is the fashioner city than Edinburgh. However, when Harvey Nichols decided to open a new store in Scotland, it chose to locate in Edinburgh rather than Glasgow. This decision is extremely right and has changed people’s buying behaviour. When the first day Harvey Nichols store opened, it was forced to close its doors just hours after it opened because it was so full ().
To successfully position the products and target the right market is crucial. The marketing mix is includes Product, Price, Promotion and Place.Tthese 4P are combines to meet customer’s needs and wants (, 2001). Harvey Nichols deals with these 4P carefully to win the market share.
The amount of world’s famous fashion brands Harvey Nichols has got will be the primary basis for differentiating it from other department store. The buyers of Harvey Nichols have searched the international catwalks and collections to source the best of the new season’s fashion and accessories. In the latest catalogue ‘EDIT’ provided by Harvey Nichols, we can see the Autumn Winter 2006 collection of over fifty top brands in both menswear and womenswear, such as DKNY, Gucci, Matthew Williamson, Paul Smith, Marc Jacobs, D&G, etc. How fabulous these brand names mean to fashion followers! Nevertheless, Harvey Nichols has not got its own label on clothing yet, and it will not launch its own label until it has opened at least another five stores, chief executive said this week. "Own label is not taking a back seat. It has always been our goal, but we are focused on growing doors first," he told the Drapers Fashion Summit. "When we had one store we could not meet the minimum requirements for reputable manufacturers. When we have 16 or 18 doors we can satisfy those minimums ( 29’Nov’2006)."
Leather ankle strap wedges Mac by Marc Jacobs, £215; Leather ‘Tulita’ clutch bag Jimmy Choo, £425; Waistcoat Diesel, £75. These items are the lowest price in different sections I can find from the ‘’ Autumn Winter 2006 catalogue. The highest price of a cloth I found in the catalogue is a one piece embroidered tulle strapless dress by Marc Jacobs, worth £3895. Price limits Harvey Nichols’ target market to people who have high incomes and with a high fashion sense.
The places Harvey Nichols chose to launch its store always in the centre of the cities. These cities are commerce centre of the country or are commerce centre in particular areas. Harvey Nichols’ five stores in UK are located in Manchester, London, Birmingham, Leeds and Edinburgh. The Gross Disposable Household Income per head (GDHI) 2004 of these cities is relatively higher than other regions in UK. For instance, GDHI in Edinburg is £16000 and above. West London is the highest income region in UK, £22,100, which is 73% above UK average. The UK average income is £13000.
Figure 1 shows the regional share of UK household income in 2004. Yorkshire (Leeds), North West (Manchester), West Midland (Birmingham), Scotland (Edinburgh), London and South West (the future store Bristol) all contributed equal or higher than 8% ().
The stores outside UK are locating at Riyadh, Dublin, Istanbul, Dubai and Hong Kong. These cities are either the capital of the countries or the commercial cities of the countries. Harvey Nichols Riyadh located in Al Faisaliah Mall, which is the first overseas store of Harvey Nichols. Harvey Nichols Hong Kong opened at the Landmark Centre, which is the city's premium retail destination and also one of the highest rent locations in Hong Kong. Harvey Nichols Dubai within the Mall of the Emirates is the largest Harvey Nichols store outside the UK. Harvey Nichols Istanbul forms a major part of the much-awaited Kanyon Shopping Mall is a state-of-the-art design project ().
No marketing programme can succeed without effective communications. Promotion of the brand is to encourage customers to take action at specific time (, 1999). Advertising is the best-known and most widely discussed form of promotion. It is also a very important promotion tool, particularly for companies whose product and services are targeted at mass consumer market.
Harvey Nichols invests a lot into advertising and promotion. It did it successfully, and created many memorable ads. It chooses to advertise on fashion magazines and newspapers to attract the group of people who always pay attention on the latest fashion trend. Clothes are sexy; this is a concept fashion retailers’ ads always want to deliver to customer. Harvey Nichols has got a great line going in erotic advertising. The Harvey Nichols on Autumn Winter 2004 campaign brings to life the Harvey Nichols experience. It promotes wickedly sexy, irresistibly seductive, hedonistic and at the same time playful, inclusive and inviting. The advertisements stimulate and excite the senses and create the world of Harvey Nichols as a magical fashion playground.
The '' Vanity Advertisement Spring Summer 2005, promote sexy issue again. Lots of rucked-up dresses, post-orgasmic expressions and racy visual double entendres showed Harvey Nichols’s passion of fashion. It also promotes temptation is the reason of sinning, there are no place better than Harvey Nichols to indulge your wicked desires (). Beale stressed, the reality is that with high-street chains now delivering cheap fashion and the web offering cut-price designer gear, HN needs a personality that makes it every bit as desirable a brand as the ones it sells. This campaign firmly positions Harvey Nichols as the temple of fashion (, 2006).
Harvey Nichols' Calendar campaign has officially been announced as world's most awarded piece of print advertising by the Gunn Report 2006. It was presented as a calendar. March is the month in which you may eat baked beans every day in order to be able to afford a pair of gorgeous Christian Louboutins. April will see you giving up toilet paper to be able to buy a Luella bag and May will have you sitting at home every night to save up for a Martin Margiela jacket. Says , marketing director of Harvey Nichols: "The campaign taps into a real insight of the priorities of the young fashion lover of today who will do anything to get the latest must-have item ()."
People need clothes to keep warm. This is the basic needs in Maslow’s hierarchy. Harvey Nichols has successfully up-grated it to the highest level of Maslow’s Hierarchy – self-actualisation. It can make a person, especially woman feels she is complete after she buy the latest must-have item introduced in ‘Vogue’ and sells in Harvey Nichols. This phenomenon is difficult to understand by someone who has no interest in fashion. However, Harvey Nichols has built the image of itself as a international luxury lifestyle department store and attracts the right customer groups. It represents not only the latest fashion trend but also the image of a person. Sexy and tempting are always the theme Harvey Nichols promoting on. Its target customers are clearly defined as young, professional, fashion follower and with high income, and apparently Harvey Nichols plans its marketing strategy very well.
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