Ch. 4 - The Marketing Environment

Luxottica's target market is simply anyone who is in need or in want of eyewear or eye care services. In todays world selling glasses isn't as hard as it used to be. You see, many years back, glasses were the symbolic reference to your classic nerd or geek. People could have been legally blind and still refused the fact that they needed to wear those 'geeky glasses'. In todays world, that isn't so, in fact, it may be the total opposite. People love brands and the style and exclusivity that comes along with it. Many people who don't even need glasses or contacts still use them because its now considered cool.

 The eyewear business is in expansion and Luxottica is capitalizing on that. They spend hundreds of millions in advertisement across the globe. Towards the end of 2011, CEO Andrea Guerra, said “In the next few years, the target markets for our products could increase by more than 2 billion new customers.” He gives insight into plans for further expansion in different markets such as Indonesia. In early 2013 Guerra gave note to expansion plans and an update to the business saying “The start of 2013 has been particularly positive”, “Vietnam is a new option on our table”. Analysts are predicting that the company can gain double-digit growth this year. Luxottica's market share increased 26% in 2012 and the company has said it has “witnessed a shift in demand for premium and luxury brands, especially in so-called 'gateway and mega cities' and high potential channels such as travel, retail, and department stores.” Guerra said Luxottica expects to open between 60 to 70 new stores in China next year after 60 new openings this year. Expansion in different markets and locations globally calls for new strategy and even though the target market is mainly the same minor adjustments must be made specific to each region. 

Below, is Andrea Guerra in an interview hosted by the Wall Street Journal:

WSJ: How do European, Asian and U.S. customers differ?

Mr. Guerra: This is a million-dollar question. There are a lot of similarities between Mediterranean and Asian consumers: They both want a certain lifestyle, and they're in search of an emotional relationship with the objects they buy.

U.S. consumers are more pragmatic. America, compared with Europe, is always a step more conservative and traditional. Think of the most legendary sunglasses: They were all born in the U.S.—Ray-Ban and Oakley for example—but only because of their functional value. Oakley was perfect for sports, thanks to its technological value, while Ray-Bans were the pilots' sunglasses that made it easier to see in whatever climatic condition. It's all about practical features rather than a real connection with the brand. But this is changing. 

WSJ: What about Asia?

Mr. Guerra: Asia is a new discovery every day. It's like a candy store, a new world, new business models, consumers that discover a new trend every day. In China, up until five years ago, sunglasses didn't even exist. Now they're gaining ground.

Our most important markets are Brazil, Turkey, India and China. And I mentioned them in this order for a reason. Brazil is definitely our first priority. China is surely growing but is still small for us.

WSJ: How do you respond to critics who say Luxottica has used its position to keep eyewear prices artificially high?

Mr. Guerra: There are really no entry barriers in this sector. Anyone can come in and sell at competitive prices. The beautiful thing about eyewear is that you can really find them at any price—from $1 to $1,000. 

Ch. 3 - Ethics & Social Responsibility

Chapter 3 discusses Ethics and Social Responsibility. Code of Ethics are used by companies to assist members, internally or externally, in understanding the difference between right or wrong based upon values, religion and ethnicity at the same time complying with the law.

Luxottica has created a Code of Ethics for employees and for the public to see posted on their website. See Here . They created a 12 page code of ethics that covers the basic principles for how they want to be seen and act as a company internally and publicly. It was recently revised in February of 2013.

On page 1 of the Luxottica Code of Ethics it states, “All of the Luxottica Group's activities must be carried out in accordance with the law, within a framework of fair competition, with honesty, integrity, propriety and good faith and in observance of the legitimate interests of its customers, employees, trading and financial partners and the communities in which the Luxottica Group is present with its activities.” The code of ethics seeks to ensure that propriety, fairness, integrity, loyalty and professional rigor guide transactions, conduct and the way of doing business both in dealings in internal and external parties.

A Code of Ethics is great, but is it enough? Social responsibility is a businesses concern for societies welfare. A code of ethics is generally how the company is seen dealing with the morals and values more specifically on an internal view point but how important is it to the people that a company takes on the role to enriching the environment in various ways in which it operates? Social Responsibility is important and Luxottica knows it. On their Who Are We page, a page in which Luxottica describes themselves as a company, they give light to the importance of being conscious of the environment in which their huge business operates in. “Luxottica's special relationship with its local environment makes us particularly sensitive to environmental issues. As a market leader, we believe we have a responsibility- and a unique opportunity- to demonstrate how business can thrive by demonstration respect and stewardship of the environment in which it operates.” Luxottica in recent years has put forth a dedication to decrease their footprints of negative effects on the environment. They proudly state that they are continuing their commitment to promote sustainable business practice to achieving positive economic results that comply with quality, safety and the environment. Such steps they have taken have been to reduce waste, recycle, and use less materials for packaging.

Luxottica has received a ISO 14001 certification, the purpose of facilitating an achievement of environmental protection objectives through adoption of a recognized and certified system, in all of their Italian plants.

In addition, Luxottica also operates and owns the OneSight foundation in which they opened 8 global eyewear recycling centers. Annually, they recycle 2 million pairs of eyewear. Founded in 1988, OneSight has helped more than 8 million people globally to provide vision care and eyewear. The OneSight Research Foundation has also granted more than 7 million dollars to cover optical research and education expenses. Being the powerhouse that they are in the eyewear industry they are certainly making it seem like they are doing a lot to give back to the people who need it most. This is Luxottica's ethical responsibility as they are doing what seems right and fair.

Chapter 2: Strategic Planning for Competitive Advantage

Chapter 2:

Luxottica's SWOT Analysis.

Strengths – The strength of Luxottica at a business standpoint lies within the companies ownership of other eye wear brands and production and distribution of other luxury brands in the eye wear industry. Luxottica owns approximately 80% of the high end eye wear market yet few people know of the Luxottica group. Owning 80% of your business market share would be a strength to any company/business. Luxottica designs, produces, and distributes eye wear for many prestigious brands including but not limited to: DKNY, Bvlgari, Chanel, Polo Ralph Lauren, Versace, and Coach to name a few. They own some of the best selling eye wear brands including Ray Ban and Oakley. To own most of the share in the eye wear industry is a strength, however, it can also be seen as a weakness as consumers may question the exclusivity of certain luxurious eye wear and/or low end brands if they understood all products were designed and produced under the same company. That leaves us with Luxottica's weakness.

Weakness – Lets say you walk into LensCrafters (which, by the way, is owned by Luxottica) and you pick up a pair of Chanel eyeglasses and a pair of Mosley Tribes eyeglasses. The consumer (you) would look at many features of the product including the price, style, design, material etc. Most of the time, consumers tend to be more intrigued by the brand name. So even though the Chanel pair costs $404.99 and the Mosley Tribe pair is $135.99 most consumers will choose the Chanel pair because of what the Chanel brand has to “offer”. And I support this example as even I, a consumer, have before chosen a certain product specifically because the brand “means more to me”. But lets say that you went into LensCrafters and chose those same pair of glasses but before hand knew that they were designed and produced as well as distributed by the same company, how much will the 'Chanel' logo really influence your purchase knowing the quality were virtually the same? Would the name 'Chanel' logo justify the adjusted $269 price tag? If more consumers knew of this and knew that most of the eye wear products were made under the Luxottica powerhouse it will certainly affect product sales especially for the more expensive products.

Opportunities – In addition to designing and producing eye wear items for themselves and other brand name companies, Luxottica also owns the major eye wear retail stores in the world. Luxottica owns LensCrafters, Pearle Vision, and recently purchased, the worlds leader in the sunglass retail business, Sunglass Hut. With many of the big name retail shops under the Luxottica umbrella the opportunity is virtually endless. Since they own most of the businesses in the eye wear industry they can virtually dictate the prices on the various products they offer and be successful with its decision as they are the powerhouse in their market.

Threat – Being that Luxottica is the fore front runner and biggest player in the eye wear industry any company in their market holds a, most likely minimal, threat to Luxottica. Another threat Luxottica faces lies within consumers, and how they may feel deceived by the 'brand competition' if most brands' eye wear are being constructed under one house.