Marketing and advertisement matter in fashion
Marketing and advertisement play an integral role in building the brand image of products offered by apparel and fashion companies. They become even more important for companies that operate through multiple channels in a large number of countries.
Ralph Lauren’s (RL) advertising programs are created and executed through the company’s in-house creative and advertising organization. In this way, the company ensures consistency of presentation across channels and countries.
The company’s primary advertising medium is print. Its advertisements appear regularly in fashion, lifestyle, and general interest magazines. In addition, the company markets its brands through television, direct-to-consumer marketing, and special events. Marketing efforts are increasingly focused on digital and social media.
RL boosts its brand exposure by participating in prestigious fashion shows like New York Fashion Week and Milan Fashion week. The company is currently the official outfitter for all on-court officials at both the Wimbledon and US Open tennis tournaments. It’s also the official parade outfitter for the US Olympic and Paralympic Teams.
Companies in the fashion industry spend millions of dollar each year in marketing campaigns. Ralph Lauren (RL) spent ~$275 million in advertising and marketing activities during fiscal 2015. This represented ~8% of the company’s SG&A (selling, general, and administrative) expenses in 2015. By comparison, Tommy Hilfiger’s (PVH) marketing expenses stood at $150 million in fiscal 2015, while VF Corporation (VFC) spent ~712 million on marketing in fiscal 2015. Michael Kors’ (KORS) advertising and marketing expenses stood at $104 billion in fiscal 2015.
ETF investors looking for exposure to Ralph Lauren can consider the iShares US Consumer Goods ETF (IYK), which invests 0.25% of its portfolio in the company.
Continue to the next part to learn about RL’s strategies for sourcing, distribution, and inventory management.