Diesel has been a brand that has been synonymous with fashion over the years. It is basically an Italian design company that is based out of Breganza (Italy), but has its market presence throughout the world. It has redefined the meaning of fashion aiming the generations of youngsters. The company is currently owned by Renzo Rossi, the founder. He has been an influential figure, having been named in many of the publications throughout the world.
Diesel was founded in the year 1978 in Molvena, Italy. Currently, the company has employed around 2200 people worldwide and has recently recorded revenues of 1.3 billion. The company has around eighteen subsidiaries that are located out of America, Europe and Asia. They are responsible for the bulk selling at Diesel and comprise a very integral part of the sales machinery at Diesel. There are around 5,000 retail outlets that are responsible for the sales volumes generated by Diesel. But one of the major features of the retail strategy at Diesel is the creation of the exclusivity. In spite of the significant retail presence across the various geographic markets, the number of branded Diesels stores is only about 300.
Diesel has become a lifestyle brand because of the innovative ideas that it has brought about to market its products. It has reinforced the whole idea of Diesel being more than just a product. It uses the tagline” be stupid”, which in a way symbolizes the culture that Diesel preaches as a brand. Diesel follows a premium pricing strategy, which is reflective of the intrinsic value of the product. This is markedly different from the paradigm of penetrative pricing, where the idea is to generate bulk buying which would ultimately lead to the achievement of breakeven point. Diesel has always followed a very unconventional method of promotion. It has created a label called as ‘U music' where the unsigned artists can participate and perform. It is even tied to an online music station.
Thereby, it tends to create a “thorough the line marketing strategy”. Diesel has launched a lot of iconic products, denim being the one that has ruled the roost. The primary brand lines at Diesel are the Diesel main line and Diesel Black gold. It has also introduced Diesel kid, a clothing line for kids. Other than this Google produces eyewear, watches, footwear and clothes. Given the creation of this larger than life culture. Diesel looks set to conquer even newer milestones.
[...] SWOT Analysis Strengths Weaknesses Strong market presence in domestic Strong competitive pressures from marketspace highly commercial brands such as Lee, Vertically diversified product Levis etc portfolio worldwide Dependency on third party contract manufacturers such as L'Oreal Opportunities Threats Asia and emerging markets fastest Fluctuation in textile raw material growing for fragrance and denim pricing jeans Premium and luxury goods on a rise Strengths: Italy is the one of the core markets for Diesel SpA, with market share of approximately 15-20% in 2010-2011 (Verdict Research, 2011). [...]
[...] Diesel and Guess have strong similarity with focus on premium to mid priced casual wear and apparel marketspace worldwide (GlobalData, 2011). Further, True Religion focuses primarily on mass denim jeans and apparel segment similar to Levis, Pepe and Wrangler etc focusing on lower-middle income customer portfolio. The differentiating growth strategy focusing on volume centric emerging market growth prospects has enhanced competitive advantage for True Religion and Guess as compared to Diesel (GlobalData, 2011). Risks, challenges and Limitations Diesel SpA faces steep macro and micro risks due to its operations across 170 countries worldwide. [...]
[...] Diesel SpA Risk Map (2011) Disclaimer: The risk map is prepared on our assumptions and is not taken from any public announcement or article. 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. [...]
[...] Thus from the above initial snapshot it could be seen that Diesel SpA non core product and market portfolio are enhancing business value for the enterprise on long-term basis. Further, the company has enhanced cost synergies without third party contract manufacturing improving value proposition to end consumers. Historical & Strategic Developments Traditionally, Diesel SpA has been partnership and alliance centric youth focuses denim jeans manufacturer in Europe and United States. The company has slightly shifted its growth strategy towards brand positioning via aggressive sponsorship and marketing campaigns worldwide (2008-2011). [...]
[...] Low priced counterfeit brands from China, Vietnam and Indonesia will hamper customer loyalty and retention rates on long-term basis. Finally, natural disaster such as Tsunami, Hurricanes etc and energy shortage at production facilities will hamper business continuity and revenue growth. Volatility in the capital markets and interest rates will enhance pension expenses and impact net margins. 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. [...]
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