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PESTEL analysis - Hermes Paris

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  1. Globalization
  2. The external environment (PESTEL analysis)
    1. The political environment
    2. Economic environment
    3. Socio-cultural environment
    4. Technological environment
    5. Ecological environment
    6. Legal environment
  3. Success factors and competitive edge

The luxury industry and especially the French luxury world is quite interesting when it comes to international marketing because the marketer has to take into account the fact that it is a market with its own rules and success factors. Throughout this analysi,s the idea will be to look at the main focuses the international marketer must keep in mind in general with an emphasis on how things are done in the luxury world. To make the study simpler the reference company chosen is Hermès. This old French 'Maison de luxe' has been quite successful since the 1830s and is interesting because it is one of the last Maisons to not be part of a strong group like PPR1 Gucci, LVMH2, or Richemont. Hermès started out selling saddles and harnesses and grew to become famous for its leather bags especially the 'Birkin Bag' as well as their silk scarves or 'carrés de Hermès'. They also sell perfumes and accessories as well as jewelry and have diversified quite successfully throughout the years. In terms of price, the least expensive items are the perfumes which are usually around 60 euros. The bags, however, are much more expensive. The famous Birkin bag, for example, has a price set at 3,500 euros.

[...] Indeed, while the French are proud to buy French because they are known to be true nationalists, foreigners seem to be just as proud to buy French products because it conveys a certain message of fine style and taste. This is especially true for the Japanese luxury consumers. These high net worth individuals are highly fashionable, extremely careful about the brands they buy and much more loyal than other consumers. They also relish European luxury brands because they are attracted by sophisticated, simple, high quality, and well-crafted goods which are characteristic of European goods[13]. [...]

[...] Hermes already faces a major challenge producing 3,000 crocodile bags a year.? But still, this is a major issue for Hermès. It is true that they are not killing wild crocodiles which are a rare species but they are still treading on risky grounds especially with PETA and other associations for animal rights increasing in influence. Moreover, it can require three or four crocodiles to provide enough skin for one bag and breeding these animals is extremely expensive. Legal environment Finally, knowing the legal environment of a country is as important as knowing its political environment. [...]

[...] The middle class consumers, when buying the Hermes des Merveilles?, feel as though they too can afford to dream a little and reach the inaccessible. The second paradox is relative to the products. In the mass market products respond to a basic need whereas in the luxury industry products make the consumer dream. It does not respond to a direct need such as that of food and shelter. In the Maslow pyramid it responds to a need that is much more abstract and higher in the pyramid: that of belonging, self- actualization and experience. [...]

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