Saint Mary’s University
The case study is dedicated to the company Victorinox. It has recently acquired their competitor, Wenger. Victorinox owns Swiss army knives, household cutlery, watches, luggage and men and women clothing. With the acquisition of Wenger they get also the brand of fragrances (Fullerton & Weigand 2015, p. 146). This is a new area for Victorinox and the issue, or the problem, appears: how to operate in this new for Victorinox fragrance business and what strategy should the company use in order to make the fragrance product line profitable.
Many companies face such problems when they acquire other businesses. This is an important moment for them, because it is the time to make major decisions about the future of the firm. The same happened to Victorinox. They have always been working on the market of knives, cutlery, watches, luggage and fashion. This is a very broad brand portfolio, but the company managed to become a leader in the market of knives, and has good market positions in other sectors (Fullerton & Weigand 2015, p. 145). The company managed to tire all their brands with their core values: quality, innovation, functionality and reliability (Fullerton & Weigand 2015, p. 145). The customers see these characteristics in the company’s products. Everything works good. However, fragrance business is highly competitive nowadays. Brand awareness is important in this market and, there are already many powerful companies. Many customers buy the products of a specific brand, because they are used to it, or loyal. Usually, it is very hard to switch customers from one brand to another. So, the problem for Victorinox is how to enter a market with already a high competition and powerful competitors there and gain customers’ attention, awareness and then loyalty. The company needs to expect that other firms in the market will try to prevent Victorinox from getting into the market. Also, retailers and other distributors are very important operators in the market, because they decide what products are to be sold to customers due to the product’s potential profitability. They already have strong relationships with the most powerful brands (Fullerton & Weigand 2015, p. 149). Therefore, it will take much time and money for Victorinox perfumes distinct brand to establish profitable relations with the distributors. Marketing and relationship campaigns for the retailers and customers will be heavily needed. Also, the company should not forget about the production costs, legal issues, connected to the standards, and finding proper suppliers. Taking into account the whole situation of the company, it is necessary to evaluate the strategies, that the company can use in order to gain market niche in the market of fragrances also.
Therefore, two ways of development for Victorinox can be singled out:
Creating a new and distinct brand. The advantages are:
The new brand can enter the market with the heavy advertising campaign
No one will associate perfumes with the producer of knives
However, there are also disadvantages:
Difficulty for unknown brand to get into the market.
Necessity to conduct an extensive market research, which takes time and finances.
Transferring existing brand attributes to the perfumes. The advantages here are:
Well-known company’s image and loyal customers
Easy way to build relations with the distributors
The main disadvantage: customers’ perception can harm the image of the brand. People won’t believe that the producer of knives can create fragrances with the same high quality.
References
Fullerton, G., & Weigand, H. (2015). Introductory Marketing- MKTG 2270.1 A, B, C, D & E. Saint Mary's University.
