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Giorgio Armani — The iconic fashion brand (Second of Two Parts)

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Giorgio Armani

The Giorgio Armani Brand Architecture
Whenever a brand gains popularity and acceptance from its target customers in its core business, the next obvious step for the brand is to charter a new course by venturing into different product lines, different segments, and ever different markets. This phenomenon seems common across industry sectors.

Giorgio Armani with its iconic popularity amongst the elite of the society and the fashion literate segment of the market has followed similar steps by extending the brand. Today the Armani brand architecture encompasses one corporate brand and five sub-brands, each catering to different sets of target customers and at different price levels.

The signature Giorgio Armani line – This is the main collection of apparel that consists of the signature Armani suits, Oscar gowns and so on, which are of the ultra-premium price points and essentially targeting consumers in the 35-50 year old age group.

Armani Collezioni – This is Armani’s venture into a slightly lower market segment. This basically caters to the segment of people who aspire to wear Armani apparel but cannot afford the ultimate signature line, or to those who crave to add extra products to their existing portfolios. The Armani Collezioni brand, with a price point of almost 20% lower than the main line, provides an excellent line of affordable fashion.

Emporio Armani – Targeted especially at the young professional segment in the 25-35 year old age group, the Emporio Armani brand provides contemporary designs that are relevant to the target customers.

Armani Jeans – This is the lowest range of Armani apparel. This is to the value segment what the signature line is to the premium segment. Catering necessarily to the young adults in the 18 to 30 year old age group, the Armani Jeans collection provides a trendy yet fashionable and luxurious line of apparel.

A/X Armani Exchange – This is the licensed brand of chain of retail outlets of Armani fashion house. This serves as the ultimate testimony to the power of the brand. By providing the entire range of its apparels and accessories, Armani Exchange provides customers with the complete feel of the luxurious fashion of Giorgio Armani.

These sub-brands help Giorgio Armani to operate in many segments of the fashion apparel market. But this is not all. Not only does Armani straddle many segments of the same product category, but also many different product categories.

Leveraging its strong brand equity in the fashion apparel market, Giorgio Armani has ventured into other related categories like eye wear, watches and cosmetics. These are made available in each of the above-mentioned brand categories to ensure that it is available to the different segments of the market. It is usually argued that eye wear, perfumes, watches and cosmetics are strongly related to fashion and luxury and thus it is natural for fashion houses to extend their brands into these categories. Giorgio Armani is a very strong example for this argument. By leveraging its expert knowledge of the fashion and luxury industry, Armani has been able to come up with winning concepts in the other product lines of cosmetics, watches, jewelry and eye wear.

But Armani has not stopped at just these product categories: Armani has extended the brand into multiple other categories such as Armani Casa (up-market furniture), Armani-branded Dolci (confectionary), and Armani-branded Fiori (Flowers). And to add to this wide portfolio of brands, Armani struck a deal with a Dubai-based property group Emaar to come up with a chain of 14 Armani branded hotels and resorts by 2011.

As is the trend in the fashion industry to operate in the entire spectrum from apparel, jewellery, cosmetics, watches, perfumes and luxury hotels, Armani has been able to leverage its brand equity to be present in most of these lucrative sectors.

Giorgio Armani’s Future Brand Challenges
The founders’ dilemma – This phenomenon is classic and occurs for any company that is built on the basis of a strong and charismatic founder and leader. As the main competitive advantage for the company is the founder/leader himself, neither the founder nor the company would think of life after the founder. Moreover, whenever the companies’ success and survival depends very heavily on the existence of a single person, such companies and its leaders should take proper action from an early stage so that proper leaders can be nurtured within the organization.

Brand dilution due to over-stretch – Strong brands, as is well known, provide companies with a very powerful tool to enter newer markets with limited investments by leveraging their strong brand equity. It gives companies numerous revenue streams. Given this simple but strong fact, it is not a surprise that most of the strong brands in the world have leveraged their brand equity and extended their brands into newer product categories, newer markets and even newer market segments.

The examples that immediately come to mind are those of Calvin Klein and Pierre Cardin. One of the many reasons that these brands diluted their brand equity was because they used their brand names on a very wide range of products. One of the main factors that make fashion houses and their products premium are their exclusivity. By franchising their brand names to literally everything, these brands lost a significant portion of their strong brand equity.

Managing brand architecture – Given Armani’s portfolio of brands within the fashion segment, as in many of the other markets that it operates in, effectively managing this portfolio of brands will prove to be the biggest challenge in the future. As the brand moves into different territories, interacts with different sets

of customers, and represents different personalities, it becomes quite a task for maintaining consistency across all of its marketing communications and other activities.

Maintaining financial independence – Armani is a rarity from a financial perspective as well. Giorgio Armani has been the only shareholder of the company from its inception till now. Armani has not taken any bank loans either. Having this financial independence has helped Armani immensely as the company tests newer territories. With no pressures from shareholders and without having to bother about meeting quarterly targets, Armani has been able to operate quite successfully.

But to continue as a one man company in the future could be quite difficult. With consolidation happening in many industries, it might just be a matter of time that it catches up with the fashion industry as well. When such a thing happens, it could pose a big challenge to the working style of Armani and its continued success.

Sustaining consistent brand personality – One of the main aspects of a fashion brand is its personality and its identity in the marketplace. Building and sustaining a personality that is relevant and one that resonates with the customer base is one of the most difficult aspects of building a strong brand. Armani, with its presence in diverse markets, a very wide brand portfolio, and interacting with diverse set of customers, faces this huge challenge of building a relevant and resonant personality.

Print ed: 09/09


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