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Ray Ban Marketing Analysis

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Ray Ban Marketing Analysis Powered By Docstoc
					Brief History
Ray-Ban is a high end manufacturer of sunglasses, founded in 1937 by Bausch & Lomb. They
were introduced for the United States Army Air Corps. In 1999, Bausch & Lomb sold the brand
to the Italian Luxottica Group for a reported $640 million.

Ray-Bans were created in 1937. Some years earlier, Lieutenant John MacCready returned from
a balloon flying adventure and complained that the sun had permanently damaged his eyes. He
contacted Bausch & Lomb asking them to create sunglasses that would provide protection and
also look elegant. On May 7, 1937, Bausch & Lomb took out the patent. The prototype, known
as Anti-Glare, had an extremely light frame weighing 150 grams. They were made of gold-
plated metal with green lenses made of mineral glass to filter out infrared and ultraviolet rays.
Pilots in the United States Army Air Corps immediately adopted the sunglasses. The Ray-Ban
Aviator became a well-known style of sunglasses when General Douglas MacArthur landed on
the beach in the Philippines in World War II, and photographers snapped several pictures of him
wearing them. (Wikipedia, 2011)

Luxottica Group S.p.A. is the world's largest eyewear company. Its best known brands include
Ray-Ban, Persol and Oakley, Inc.. It also makes sunglasses and prescription frames for a
multitude of designer brands such as Chanel and Prada, whose designs and trademarks are used
under license. Luxottica also makes sunglasses branded Burberry, Polo Ralph Lauren, Stella
McCartney, Tiffany, Versace, Vogue, Miu Miu, Tory Burch and Donna Karan. Its prime
competitor is the Safilo Group S.p.A. (Wikipedia, 2011)

By purchasing Ray-Ban in 1999, Luxottica added the biggest eyeglasses brand to its brand
portfolio.
SWOT Analysis
Strengths

     Established market, brand recognition
     Creative marketing campaign
     Quality products
     Over 80 years of experience
     Good Research & Development


Weaknesses

     Ray Ban




Challenges and opportunities
Challenges
Ray Ban is currently the biggest and the most famous sunglasses brand in the world. The design
of their sunglasses are unique and probably the most recognizable amongst people all around
the world, and also because most of their sunglasses are unisex, which means one pair Ray Ban
sunglasses can be worn by both males and females and look really fashionable, they are the
most successful sunglasses brand. However, Ray Ban struggles to compete with knock-off
brands, which make fake sunglasses and especially a lot of fake Ray Bans. As years pass by, it
is becoming harder and harder to tell if a pair of Ray Ban sunglasses are fake or real. The
makers of fake Ray Ban sunglasses are becoming better at making their products look and feel
like the real deal.

However, there are several ways to recognize if a pair of Ray Ban sunglass is real or not, but
most of the people who are buying them either don‟t about how to recognize if it is fake or not
or they don‟t really care about it as long as it looks like the real ones.

Bestbuy Sunglasses on Article Base suggests that “With the ever-growing popularity, fake Ray
Ban sunglasses started flooding the markets. Counterfeiters manufacture Ray-Ban Eyewear just
like originals, and now it has become almost impossible for customers to distinguish from the
real ones.” (Bestbuysunglasses, 2011)

Especially in Mongolia, there are a lot of fake sunglasses that come from China. Because they
are cheap and also because they are sold everywhere, people buy fake sunglasses, not only fake
Ray Bans but also knock off sunglasses of Gucci, Giorgio Armani etc. And the problem is Ray
Bans marketing campaign does not reach the Mongolian market as a whole. The way Ray Ban
could enter Mongolian market is to create a partnership with a local retail company and
advertise through different media. They could advertise about the superior quality of genuine
Ray Ban sunglasses alongside the Never Hide campaigns message.




Opportunities
Ray Ban uses a very clever and effective marketing strategy which spreads like a spam message
through the internet and it is called viral marketing or guerilla marketing.

Guerrilla Marketing (Guerilla Marketing) – Coined by Jay Conrad Levinson in his 1984
book Guerrilla Advertising (Guerilla Marketing), this unique style of alternative
Marketing relies heavily on energy and imagination, rather than big budgets and flashy
effects. Guerrilla Marketing (Guerilla Marketing) makes a far more valuable impression
over traditional media, and achieves fantastic recall numbers by interacting with consumers on a
personal level. (Zhang, 2011)

Ray Ban‟s „Never Hide‟ marketing campaign uses the viral strategy aimed at the young
demographic group, putting videos on Youtube that look like amateur home-videos and doing
crazy tricks. And at the end of every video they put the „Never Hide‟ slogan.

1. It’s not about the entire brand message Yes, Ray-Ban does communicate its brand
message in the video. But it’s not just about that message. They‟re not making the video to
communicate the message “Never Hide”, they make the video to entertain the audience. To
make Ray-Ban a cool brand.

They‟re not telling how cool the sunglasses are, how scratch resistant or how durable the
framework is. Ray-Ban creates a asset to subtle show you some cool things about a pair of
glasses and manage to communicate the message “Never Hide” in an almost subliminal way.

2. Consistent communication The communication is consistent, it‟s embedded in both on-
and offline campaign, showed everywhere and even became the tagline of Ray-Ban.

By combining several media channels and consistently communicate one message in different
ways, the assets empower each other and communicate one clear message.

3. Entertaining video – on the edge of realism The “Never Hide” viral assets are on the
edge of believable. They‟re highly entertaining and almost unrealistic.
These kinds of videos make people talk. “Do you believe this?!” Because it‟s not just about
the brand and the brand message, but about the entertaining value, consumers don’t rate
these videos as a commercial, which makes it more convenient to pass along.

4. It’s not just about the product “ViralBlog is the most awesome blog on social media
you‟ll ever read!” That is a message that‟s only about the product, ViralBlog in this example.
If we would create a whitepaper on social media – purely on the informative side – and spread
it among bloggers, it would give way much more credibility. It‟s not about the product, it‟s
about the expertise. Ray-Ban campaigns are about a deeper message in sunglasses, not about
the sunglasses.

5. It could have been amateurs Why are the videos entertaining and on the edge of
realism? It’s average Joe that’s the lead actor in the video. Not Tom Cruise, not David
Beckham and not Homer Simpson. Videos look like they are shot by hand. No big editing, 3-
D modeling and hardcore after effects. That‟s what making it realistic and believable.

Ray-Ban understands that viral video is something different then the ordinary 30 seconds
TV Commercial. A one on one copy from a television commercial to the web has a low chance
in going viral. (Roumen, 2011)




Appendix
                                 Table 1: Income Statement
                                                                   12 months 12 months
                                           12 months    12 months
In Millions of EUR (except for per share                               ending   ending
                                               ending       ending
items)                                                               2008-12- 2007-12-
                                           2010-12-31   2009-12-31
                                                                           31        31
Revenue                                      5,798.03     5,094.32   5,201.61  4,966.05
Other Revenue, Total                                -            -          -         -
Total Revenue                                5,798.03     5,094.32   5,201.61   4,966.05
Cost of Revenue, Total                       1,990.20     1,762.59   1,748.63   1,575.62
Gross Profit                                 3,807.83     3,331.73   3,452.98   3,390.44
Selling/General/Admin. Expenses, Total       2,989.47     2,677.54   2,647.44   2,493.16
Research & Development                              -            -          -          -
Depreciation/Amortization                      106.20        83.10      73.90      63.97
Interest Expense(Income) - Net Operating            -            -          -          -
Unusual Expense (Income)                            -            -          -          -
Other Operating Expenses, Total                     -            -          -          -
Total Operating Expense                      5,085.88     4,523.23   4,469.97   4,132.74
Operating Income                               712.16       571.09    731.64     833.31
Interest Income(Expense), Net Non-
                                                    -            -          -          -
Operating
Gain (Loss) on Sale of Assets                       -            -          -         -
Other, Net                                      -4.84        -3.71     -23.15     19.78
Income Before Tax                              605.53       464.78    588.37     780.68
Income After Tax                               387.32       304.90    397.87     507.18
Minority Interest                               -5.07        -5.77     -7.71     -14.98
Equity In Affiliates                                -            -         -          -
Net Income Before Extra. Items                 382.24       299.12    390.17     492.20
Accounting Change                                   -            -         -          -
Discontinued Operations                             -            -         -          -
Extraordinary Item                                  -            -         -          -
Net Income                                     402.19       299.12    390.17     492.20
                                                                    12 months 12 months
                                            12 months    12 months
In Millions of EUR (except for per share                                ending   ending
                                                ending       ending
items)                                                                2008-12- 2007-12-
                                            2010-12-31   2009-12-31
                                                                            31       31
Preferred Dividends                                  -            -          -        -
Income Available to Common Excl. Extra
                                                382.24       299.12    390.17    492.20
Items
Income Available to Common Incl. Extra
                                                402.19       299.12    390.17    492.20
Items
Basic Weighted Average Shares                        -            -         -         -
Basic EPS Excluding Extraordinary Items              -            -         -         -
Basic EPS Including Extraordinary Items              -            -         -         -
Dilution Adjustment                                  -            -         -      0.00
Diluted Weighted Average Shares                 460.54       457.94    457.84    458.53
Diluted EPS Excluding Extraordinary Items         0.83         0.65      0.85      1.07
Dividends per Share - Common
                                                  0.35         0.22      0.49      0.42
Stock Primary Issue
Gross Dividends - Common Stock                       -            -         -         -
Net Income after Stock Based Comp.
                                                     -            -         -         -
Expense
Basic EPS after Stock Based Comp. Expense            -            -         -         -
Diluted EPS after Stock Based Comp.
                                                     -            -         -         -
Expense
Depreciation, Supplemental                           -            -         -         -
Total Special Items                                  -            -         -         -
Normalized Income Before Taxes                       -            -         -         -
Effect of Special Items on Income Taxes              -            -         -         -
Income Taxes Ex. Impact of Special Items             -            -         -         -
Normalized Income After Taxes                        -            -         -         -
Normalized Income Avail to Common                    -            -         -         -
Basic Normalized EPS                                 -            -         -         -
Diluted Normalized EPS                            0.83         0.65      0.85      1.07




                                     Table 2: Balance Sheet
                                                                          As of      As of
In Millions of EUR (except for per share   As of 2010-   As of 2009-
                                                                       2008-12-   2007-12-
items)                                           12-31         12-31
                                                                             31         31
Cash & Equivalents                               5.15          2.82      288.45     302.89
Short Term Investments                          26.36         43.55       23.55      21.34
Cash and Short Term Investments                706.22        423.63      312.00     324.24
Accounts Receivable - Trade, Net               655.89        618.88      630.02     665.18
Receivables - Other                                 -             -           -          -
Total Receivables, Net                         770.70        682.17      781.63     754.18
Total Inventory                                590.04        524.66      570.99     575.02
Prepaid Expenses                                66.40         61.42      144.05     139.31
Other Current Assets, Total                     19.19         30.11      131.91     117.85
Total Current Assets                          2,152.54      1,721.99   1,940.58   1,910.60
Property/Plant/Equipment, Total - Gross       2,549.70      2,241.77   2,104.03   1,865.12
Accumulated Depreciation, Total              -1,320.57     -1,091.80    -933.33    -807.34
Goodwill, Net                                 2,890.40      2,688.84   2,694.77   2,601.84
Intangibles, Net                              1,155.01      1,149.88   1,234.03   1,306.12
Long Term Investments                            88.10         64.34       5.50      17.67
Other Long Term Assets, Total                   478.41        486.27     258.68     262.22
Total Assets                                 7,993.58      7,261.29    7,305.23   7,157.27
Accounts Payable                               565.25        458.78      398.08     423.43
Accrued Expenses                               287.21        249.44      439.01     468.28
Notes Payable/Short Term Debt                  158.65        148.95      432.46     455.59
Current Port. of LT Debt/Capital Leases        197.57        166.28      286.21     792.62
Other Current liabilities, Total               294.63        291.73       18.35      19.31
Total Current Liabilities                    1,503.30      1,315.17    1,574.12   2,159.23
Long Term Debt                               2,435.07      2,401.80    2,519.29   1,926.52
Capital Lease Obligations                           -             -           -          -
Total Long Term Debt                         2,435.07      2,401.80    2,519.29   1,926.52
Total Debt                                   2,791.28      2,717.03    3,237.97   3,174.73
                                                                                   As of      As of
     In Millions of EUR (except for per share       As of 2010-   As of 2009-
                                                                                2008-12-   2007-12-
     items)                                               12-31         12-31
                                                                                      31         31
     Deferred Income Tax                                429.85        396.05      233.55     248.38
     Minority Interest                                   13.03         16.38       47.33      41.10
     Other Liabilities, Total                           355.95        394.66      424.34     286.88
      Total Liabilities                               4,737.20      4,524.06    4,798.63   4,662.11
      Redeemable Preferred Stock, Total                      -             -           -          -
      Preferred Stock - Non Redeemable, Net                  -             -           -          -
      Common Stock, Total                                27.96         27.86       27.80      27.76
Additional
Paid-In                                                 218.82        166.91     301.53     277.95
Capital
      Retained Earnings (Accumulated Deficit)         3,294.55      3,030.34    2,789.89   2,636.87
      Treasury Stock - Common                          -112.53        -82.71      -69.99     -69.99
      Other Equity, Total                              -172.43       -405.16     -542.65    -377.43
     Total Equity                                     3,256.38      2,737.24    2,506.59   2,495.16
     Total Liabilities & Shareholders' Equity         7,993.58      7,261.29    7,305.23   7,157.27
     Shares Outs - Common Stock Primary Issue                -             -           -          -
     Total Common Shares Outstanding                    459.64        458.04     456.93     456.19




                                                Table 3: Cash Flow
                                                                     12 months 12 months
                                           12 months    12 months
In Millions of EUR (except for per                                       ending    ending
                                         ending 2010-       ending
share items)                                                           2008-12- 2007-12-
                                                12-31   2009-12-31
                                                                             31         31
Net Income/Starting Line                      407.26        304.90       397.87    507.18
Depreciation/Depletion                        322.06        285.44       264.55    232.81
Amortization                                       -             -            -          -
Deferred Taxes                                     -             -            -     -45.04
Non-Cash Items                                 42.45         49.97         8.99      16.47
Changes in Working Capital                     59.86        263.17      -101.88   -380.68
Cash from Operating Activities                 831.63       903.49      569.53      330.75
Capital Expenditures                          -230.36      -200.43     -298.23     -322.77
Other Investing Cash Flow Items, Total        -136.93       -28.84       -6.48   -1,465.27
Cash from Investing Activities                -367.28      -229.27     -304.72   -1,788.04
Financing Cash Flow Items                           -            -           -        6.31
Total Cash Dividends Paid                     -169.84      -103.48     -231.49     -191.08
Issuance (Retirement) of Stock, Net             36.61        14.67        7.13       26.64
Issuance (Retirement) of Debt, Net             -34.47      -284.66       22.85    1,585.30
Cash from Financing Activities                -167.70      -373.47     -201.52    1,427.17
Foreign Exchange Effects                        21.68        17.45      -14.38       -6.11
Net Change in Cash                            318.33        318.20       48.92     -36.23
Cash Interest Paid, Supplemental              115.01         94.09      121.18      73.20
Cash Taxes Paid, Supplemental                 186.04         70.84      266.10     454.06

				
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