Strategy.
Deciding on a strategy provides a plan to achieve the big idea Balenciaga is aiming for. Using Ansoff’s matrix (1957), known as “Strategies for Diversifications” (Ansoff, 1957), helps provide a structure and makes businesses aware of any potential risks. Referring to the product/Market Expansion Grid.
The big idea suggested falls in line with both market penetration and product development. Beginning with market penetration, Ansoff implies this strategy involves pushing existing products into the same market (Ansoff, 1957). For Balenciaga the product refers to using the same communication channels they always use to reach their target audience but morphing it into a friendly tone from cold and transactional. This ultimately results in growth of sales on existing products from the new tone of voice.
The reasoning for suggesting this strategy comes from researching Balenciaga's strengths, monitoring their pre-scandal growth and considering that something they were previously doing was working, but capitalising on this through repositioning.
Market penetration is a clear choice for this goal as Balenciaga know the communication channels in use work but need to develop on from the past character traits. To achieve market penetration, it involves developing a new marketing strategy to encourage customers to purchase (Ansoff, 1957), this also refers to the elevated essentials collection and driving sales for this.
A second aspect of market penetration refers to McCarthy’s marketing mix, Balenciaga’s repositioning suggestion covers all aspects of the 7 ps, featured in figure 2 below.
MANGO, S/S19 (2019)
Despite market penetration being one of the least risky options, it is important to consider them to have full judgement on the strategy. Some potential risks include missing out on markets or diversifying product (LinkedIn, n.d). For Balenciaga to overcome this, the choice to invest in their current market comes from consumer segmentation research, not just for Balenciaga but looking at the luxury consumer; this reasons why Balenciaga should continue with market penetration. A second risk could be pricing, to see results from market penetration Balenciaga would need to develop their pricing strategy on this new line. This is controlled through the big idea itself, producing an elevated essentials line coming in at a lower price but not lacking in quality will attract customers and counteract any risk involved.
Figure 2, McCarthy's Marketing Mix.
The second strategy adopted to achieve repositioning is Product Development. Ansoff implies this strategy involves developing new products for existing markets (Ansoff, 1957), for Balenciaga, the strategy changes the art direction of the product, in other words developing the existing product, like hoodies and jeans, some of their best sellers (Balenciaga, 2023) but, in a new essentials direction. The choice for essentials, comes from customer preference and trend forecasting research (WGSN, 2023), relating to the desire for streetwear, Balenciaga already excel here but must move towards simplistic designs helping reinforce the separation from scandal. As mentioned is why it is vital Balenciaga remain focused on the same target market.
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Developing the product has more than sales benefits, it helps visualise the new tone of voice, working in hand with market penetration. There is little risk regarding product development, as research has been carried out to understand the consumer desires. Investing in new products can be risky, but this has already been accounted for when suggesting repositioning. Referring to earlier, Balenciaga were excelling in their clothing pre-scandal, so there would be no risk in developing their product to appeal to wider audiences, this is based on their weaknesses including niche designs. Other risks include testing the product, once again irrelevant to Balenciaga as they have a strong heritage in fashion and can improve quality after finding this on their SWOT.
Fear of God, (2022)