Diesel has been redefining the world of fashion in the American market for quite sometime now. The entry of Diesel into the United States of America was a bit late when compared to its entry into the other peripheral markets. This can be attributed to the fact that the USA (United States of America) already had some established players in the field of fashion and the market scenario was a bit different when compared to others. Diesel opened its first flagship store in 1996 on Lexington Avenue in New York. The current USA (United States of America) headquarters of Diesel is located at Lexington Avenue in New York. It employs around five hundred and fifty people approximately as of the latest figures. It recorded revenues in tune of 659 million dollars as of the recently concluded financial year. This is an estimated increase of around 16.9 percent as compared to the last fiscal. The bulk of the current revenues came from the recently launched auxiliary products like watches, bags, shoes and other fashion items.
Diesel has been pushing the envelope when it comes to the innovative marketing practices. It does not advertise on any other platforms other than fashion magazines and select retail outlet. This is an integral part of transforming the brand Diesel into a lifestyle, thereby freeing it from the ordinary consumer behaviour. The number of exclusive Diesel outlets is around fifty and the number of retail stores that sell the Diesel product is somewhere around fifteen hundred. Diesel plans to bring the number of retail stores down in order to concentrate a little more on the consumer client relationship.
The marketing strategy of Diesel can be said to be niche, since it tries to create value rather than fighting over already existing fashion norms. This can be closely related to the Blue Ocean Strategy, where the company or entity tries to create value. In terms of the competition, Diesel faces considerable competition from brands like Wrangler, Levis, G star and other smaller players. However, the factor that plays to the advantage of Diesel is that most of the brands are on the wane in terms of the market share.
The pricing strategy can be termed as premium pricing; a Diesel positions itself as a lifestyle product rather than being just a fashion product. Going by the recent trends, it can be safely assumed that Diesel shall break many new grounds in the American market.
[...] Thus overall, Diesel SpA has dominant market positioning attributed to diversified brand and market portfolio. The premium brand positioning with declining core markets might hamper long-term sustainability for Diesel SpA on short-term basis. Peer Benchmarking & Future Outlook Guess and True Religion are the closest publicly listed competitors for Diesel SpA worldwide. Although Levis is the core competitor for the enterprise, it has been neglected due to private ownership structure. Diesel Guess True Religion Growth Profit Growth Profit Growth per employee in millions) The premium brand positioning and non flexibility with pricing strategy (similar average unit price worldwide) has hampered key performance indicators such as operating profitability and revenue growth on short-term basis. [...]
[...] ➢ Product: Diesel SpA has horizontally and vertically diversified product portfolio in past 5-10 years (2001-2011). The company has shifted its brand portfolio from traditional premium denim jeans and fragrances, sunglasses and bike helmets. In 2011, it horizontally expanded its flagship apparel product portfolio (primarily jeans) in core marketspace i.e. United States (slim, bootcut and straight leg etc). The complimentary product portfolio provides long-term value proposition to customers worldwide (www.thetimes100.co.uk). ➢ Promotional: Balanced promotional campaign with high impact is the core strategy followed by Diesel SpA in past 2-3 years (www.thetimes100.co.uk). [...]
[...] Diesel SpA has strong retail outlet portfolio of 433 in November 2011. Japan and Italy are the core markets for the enterprise accounting for 33% of total outlet base (2010-2011). The company ventured into Japan in April 2008 and expanded its retail outlet network to 75 in past 2-3 years. Diesel and Diesel Black Gold are the flagship brands with strong licensing agreement with L'Oreal (fragrance), Safilo (eyewear) and Fossil (jewellery and watches). Diesel SpA is privately held corporation with OTB Holdings controlling 100% of equity (November 2011). [...]
[...] Corporate Social Responsibility-Society centric green branding The three basic pillars of corporate social responsibility stood as (Smith, 2003): ➢ Financial: The traditional pillar of businesses was to enhance profitability for its shareholders on long-term basis. The company is privately held corporation with Renzo Rosso (founder) controlling 100% of equity. It is slightly low shareholder value focused due to private ownership structure. ➢ Society: Majority of companies post scientific management has reduced emphasis on in-house and outside human capital as machines. In 2011, Diesel SpA stopped sandblasting centric apparel manufacturing process to improve health & safety for employees (causing lungs cancer). [...]
[...] ➢ Diesel SpA is planning to list on stock exchange in next 2-3 years. Downgrades in credit ratings will enhance liquidity risk and enhance cost of borrowings. ➢ The company has been aggressively marketing via social media platforms such as Facebook. Further, it has signed strategic sponsorship partnership with Ducati along with third party manufacturing contract for its fragrance, eyewear and other accessories with L'Oreal etc. Breach of partnership and alliances will hamper brand positioning. ➢ Changing consumer preference towards mid priced apparel and accessories in United States: United States is the leading luxury marketspace across the globe. [...]
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