I. The situation analysis
1. The environment
Dior Perfumes takes into account gender and ages profiles. There are 9 different fragrances for men and 12 for women to express several types of personality. These characteristics depend on the age of the person and its nature. For instance, with Miss Dior Chérie the company focused on young womenwhereas The Classics range is more adapted for mature women. The age and sex are part of the fragrances’ segmentation for Dior Perfumes.
A company depends on the economic cycle that moves from slump to boom and so on. Booms and upturns are pretty good for a company’s activity but then come usually downturns and slumps and leads the company to recession. But in the luxury market,some companies like Dior Perfumes are called “recession proof” because Dior targets wealthy customers that always have purchasing power and do not depend on the economic situation.
Luxury products such as Dior Perfumes are also inelastic because sales don’t significantly depend on price changes whereas majority of products’ demand are price elastic. The economic environment is however very importantfor Dior because money fluctuations and geopolitical situations are relevant in this luxury sector. But thanks to its “recession proof” characteristic Dior Perfumes copes better with bad periods.
• Natural environment
LVMH has created an Environmental Charter applied to all the companies of the group and has published its first report on this subject. There is a commitment of all thecompanies of the group to act for the environment protection.
Dior fragrance is committed to the respect of the environment concerning the production from raw material to the industrial process.
As a concrete example, in 2002 Dior created a new process in order to reduce the use of packaging. It enabled the company to save more than 92 tonnes of cardboard.
Moreover, Dior Fragrance has established acontrol of industrial waste water discharge into natural environment.
Dior Perfumes’ research laboratories are known to be very innovative with its Research Development department and make the other trademarks from LVMH benefit from it. In this niche market, creativity in innovations is as important as the technical side.
Internet enables consumers to discover all DiorPerfumes ranges through the official website. This sophisticated information technology makes the brand closer to potential customers.
• Political environment
Political situations are always relevant for the growth of a company. Government’s instability can slow down a company's development. Focusing on France, the relative security and the liberal system enable Dior fragrance to increaseits activity on the French market.
• Cultural environment
Dior Company managed to take into account cultural considerations that is to say differences between ways of life, population changes from one country to another. It succeeds in a context of multi-ethnic and multi-cultural environment. As a consequence, it personalised its offer according to the various markets.
Concerning France,Dior is a symbol of the “French touch” and represents France’s culture, and its taste for luxury, beauty and fashion.
S.A (Société Anonyme) French law status. Christian Dior’s group is held by the LVMH Company.
2. The industry: Porter’s 5 forces
a) Rivalry among existing competitors
Dior is evolving in a situation where competition is rather high. More than 40companies are present in the luxury sector concerning fragrances. This competition had particularly increased during the 1990’s years when brand such as Armani, or Gucci managed to succeed. Competition is also fierce between the companies of the LVMH group in the fragrance domain ; we can cite various famous brands such as: Givenchy, Kenzo and Celine.
Furthermore, we can highlight that one of the...