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Reflection – Annie Wolf Mendoza

by on November 30, 2007

If I ran a company that produced products so desirable that 300 people were willing to pay $200.00 for a T-shirt on the same day I would feel pretty good about my business. When that happened in 2005 to Sidney Toledano, Chief Executive Officer for Dior, he panicked and pulled the T-shirts off the shelves. What made him do such a seemingly crazy thing? Exclusivity. The consumers buying the T-shirts were teenagers and Toledano realized that “too much of a young following risks damaging a brand’s prestige and potentially denting its prospects for long-term growth” (Passariello).

Dior began as a couture brand for wealthy women. Over time the fashion house has added clothing lines for men as well, but again, for those with a large amount of disposable income. In 1994 when Dior sales were slumping and the brand was earning a reputation of being outdated, Bernard Arnault, Dior’s owner, cranked up the advertising campaign and began buying back licenses the company had sold years ago when it was trying to save itself from financial ruin. Arnault also hired three new designers, one of which was John Galliano. It was Galliano who first began creating designs at Dior that appealed, almost exclusively, to younger consumers. Among his creations was the designer label bag; he was the first in the industry to put such a product on the market. Dior also starting selling key chains and T-shirts displaying the brand’s logo. These items where sold at lower prices so younger consumers could afford to buy them. The products were successful and produced impressive profits for the company.

However, unlike older generations, young consumers are not as devoted to brand names. They tend to jump around from brand to brand. They aren’t necessarily interested in the quality of the products; they are interested in owning upscale brand name products. Dior realized that depending on consumers who were mainly interested in the brand name and not the quality was not going to keep them in business, hence their new focus on targeting consumers in their 30s.
It is hard to say where the fashion house will be a year from now. Running a business that revolves around expensive luxury good is incredibly tricky. Consumers are picky and fickle, designers rely on their creativity to create new designs, executives want the goods to remain desirable and appear exclusive to customers. It is a very delicate balance that could easily topple over if one side is pulled in a direction that goes against the others. If there is a field where agility and change management is more relevant I can’t think of one.

References:

Jones, Liz. Daily Mail (London). 1st, pg 41. July 2, 2007.
Passariello, Christina. The Globe and Mail (Canada). Globe Style; Designers; A
Grown-up Makeover, pg L7. October 6, 2007.
http://www.answers.com/topic/christian-dior?cat=biz-fin. Access, October 29,
2007.

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